5 ms·

If there was a serious opportunity to arbitrage under the 6% fee, you bet that someone would have done it already — and well before the AI era.

rco8786 2y ago
To be fair, NAR goes to great lengths to maintain their monopoly and lock out anyone who tries to buy or sell a house without using them....specifically because they know they're priced insanely high for the services they provide and are in real danger of being undercut.
- DLA 2y ago
  You can buy, for example, literally millions of dollars of corporate bonds for “The smaller of $250 or 1% of Trade Value” at IB. https://www.interactivebrokers.com/en/pricing/commissions-bonds.php https://www.interactivebrokers.com/en/pricing/commissions-bo... The real estate market is still largely price fixed and quite inefficient.
- ethbr1 2y ago
  > NAR goes to great lengths to maintain their monopoly Went to great lengths, considering they've lost a few major court cases and are now prohibited from their prior shenanigans. https://en.m.wikipedia.org/wiki/National_Association_of_Realtors#Antitrust_lawsuits https://en.m.wikipedia.org/wiki/National_Association_of_Real...
  - rco8786 2y ago
    It’s not stopping them. It’s just causing them to change tactics. NAR still has a stranglehold even after the lawsuits.
- lotsofpulp 2y ago
  Ever since Zillow/Redfin came out, there hasn’t been a need to use a real estate agent. All buyers are getting push notifications 24/7. If you want to save on commission, then get the pics taken yourself, and pay a listing service a few hundred dollars for your property to show up on Zillow/Redfin.
  - rco8786 2y ago
    To be fair to realtors. There is A TON more work and expertise that goes into any transaction than just taking pictures and listing the property.
willturman 2y ago
> When the National Association of Realtors signed a landmark $418 million settlement in March, economists and academics predicted that the deal — which included an agreement to upend key practices concerning how real estate agents are paid — would create the most significant shift to the industry in a century. [1] https://www.nytimes.com/2024/08/16/realestate/realtor-commission-fee-rules.html https://www.nytimes.com/2024/08/16/realestate/realtor-commis...
- Raffi_Isanians 2y ago
  We are already seeing the shift in practice. The changes went into effect just over a month ago (August 17th).
  - dirtbag__dad 2y ago
    What exactly are we seeing?
gregschlom 2y ago
Yes that's what Redfin does actually. And I'm sure a bunch of others.
- toomuchtodo 2y ago
  Redfin only charges 1% if you both buy and sell with them within a window of time (365 days if I recall from our Redfin broker). I've used them exactly once on both the buy side and sell side, and I was not impressed. I would not use them again, even with the 1% vs a more traditional 5% broker fee.
  - Raffi_Isanians 2y ago
    They're a bit sneaky on this one too. You pay full when you buy, but then they only charge 1% when you sell. So you only save on the sell, pay full price for the buy.
    - gnopgnip 2y ago
      Things changed with the NAR settlement, it's 1.5% to buy and 1.5% to sell in most markets now
joshstrange 2y ago
This is the thing, the NAR settlement didn’t really change anything, the fee was always negotiable and there always were agents who would offer under 6%. They were typically scummy agents who didn’t last long (they popped up when real estate was hot then disappeared after they burned enough clients and/or the market cooled off). As in all things you will get what you pay for. I’m not interested in fighting with anyone about what a realtor is worth but I will say: * All agents are not created equal * A good agent is absolutely worth it * 6% is only high if you don’t value your time and/or if you are ok getting a worse deal because you don’t know what you are doing
- zaptheimpaler 2y ago
  This logic justifies any amount of fees. They can be excellent brokers and still not deserve $6000 (selling a $1M house) for maybe 40 hours of work as a very generous estimate.
  - WillPostForFood 2y ago
    They don't deserve $6,000, or $60,000 which is 6%!
  - bookofjoe 2y ago
    6% of $1M = $60,000
    - sgc 2y ago
      More typically in that price range: 5% of 1m = 50k. / 2 brokerages so 2.5% = 25k. * 80% to agent = 20k. - agent costs = You would cry at how little net most agents make. You are not paying an agent hourly for the amount of time they work on your transaction, but for their knowledge and experience - which cost them significant amounts of money - to guide you through the transaction and not shoot yourself in the foot. There is a fine line to walk between getting rejected outright and a deal never happening, and overpaying. You also might be buying a lemon (and not just from the perspective of a home inspection - people *regularly* want to do things with properties and transactions that just won't fly. They need to hear that from somebody on their side before they wind up losing much more than a couple percent). An agent will help you avoid them. Add on top of that how agents can help avoid the many lawsuits there are when people feel slighted and/or are actually slighted in RE transactions, and real estate agents are a decent value. Agents are functionally like mini-attorneys + advisors for real estate. You wouldn't walk into a court room without a lawyer, and it is not a whole lot smarter to enter into a real estate transaction without an agent.
evantbyrne 2y ago
Prior to the changes which only went into place in August, agents were colluding to keep fees artificially high. Buyers' agents would actually hide listings that promised less than what they wanted and all of that information was hidden from buyers until the buy/sell agreement. It is way too early to say exactly what the impact will be, but as an anecdote my agent accepted 2% on the home I just closed on. My prediction is fees will decrease significantly, because it just doesn't make financial sense to pay agents as much as people have been. Also, agents wouldn't have been colluding to the extent they had been if they believed a free market was good for their bottom lines.
- edmundsauto 2y ago
  Some fees will drop, there will definitely be an H&R Block version of agents. Other agents will have such demand, their fees will remain high. It’s not clear to me as a potential buyer that I want to go with the commodity, especially in quirky areas like TICs in San Francisco. We’re in for an interesting ride, best of luck to this team!
- poulsbohemian 2y ago
  >agents were colluding to keep fees artificially high Sitzer-Burnett involved a very narrow definition of collusion... essentially one Kansas City MLS had a mandatory input field for a seller-paid buyer commission. Realizing the risk of copycat lawsuits, the NAR got involved and decided to settle. Both Sitzer and Burnett should have gone after their own agents rather than turning this into a national issue. >My prediction is fees will decrease significantly And my prediction as an agent is somewhere between "business as usual" and "buyers are going to pay more out of pocket and will find it harder to buy homes." Further - many buyers will opt to not use an agent and I'm already making popcorn waiting to see what a clusterfuck that will be as buyers and sellers sue each other into oblivion.
  - evantbyrne 2y ago
    The mandatory "Buyer Broker Commission Rule" was in the NAR Handbook, which was binding for MLSs. Moehrl vs NAR went after twenty offending MLSs and the four largest national real estate broker franchisors in America. They got caught red handed price fixing they had no choice but to settle. Realtor services are valuable, but they aren't worth 6% of a person's largest investment. On the median home that's $24k, which is considerably more than other professional services related to buying a home.
mbesto 2y ago
Someone has tried - it's called OpenDoor and its stock is ummm not doing well: https://www.cnbc.com/quotes/OPEN https://www.cnbc.com/quotes/OPEN

rco8786 2y ago

To be fair, NAR goes to great lengths to maintain their monopoly and lock out anyone who tries to buy or sell a house without using them....specifically because they know they're priced insanely high for the services they provide and are in real danger of being undercut.

DLA 2y ago
You can buy, for example, literally millions of dollars of corporate bonds for “The smaller of $250 or 1% of Trade Value” at IB. https://www.interactivebrokers.com/en/pricing/commissions-bonds.php https://www.interactivebrokers.com/en/pricing/commissions-bo... The real estate market is still largely price fixed and quite inefficient.
ethbr1 2y ago
> NAR goes to great lengths to maintain their monopoly Went to great lengths, considering they've lost a few major court cases and are now prohibited from their prior shenanigans. https://en.m.wikipedia.org/wiki/National_Association_of_Realtors#Antitrust_lawsuits https://en.m.wikipedia.org/wiki/National_Association_of_Real...
- rco8786 2y ago
  It’s not stopping them. It’s just causing them to change tactics. NAR still has a stranglehold even after the lawsuits.
lotsofpulp 2y ago
Ever since Zillow/Redfin came out, there hasn’t been a need to use a real estate agent. All buyers are getting push notifications 24/7. If you want to save on commission, then get the pics taken yourself, and pay a listing service a few hundred dollars for your property to show up on Zillow/Redfin.
- rco8786 2y ago
  To be fair to realtors. There is A TON more work and expertise that goes into any transaction than just taking pictures and listing the property.

willturman 2y ago

> When the National Association of Realtors signed a landmark $418 million settlement in March, economists and academics predicted that the deal — which included an agreement to upend key practices concerning how real estate agents are paid — would create the most significant shift to the industry in a century. [1] https://www.nytimes.com/2024/08/16/realestate/realtor-commission-fee-rules.html https://www.nytimes.com/2024/08/16/realestate/realtor-commis...

Raffi_Isanians 2y ago
We are already seeing the shift in practice. The changes went into effect just over a month ago (August 17th).
- dirtbag__dad 2y ago
  What exactly are we seeing?

gregschlom 2y ago

Yes that's what Redfin does actually. And I'm sure a bunch of others.

toomuchtodo 2y ago
Redfin only charges 1% if you both buy and sell with them within a window of time (365 days if I recall from our Redfin broker). I've used them exactly once on both the buy side and sell side, and I was not impressed. I would not use them again, even with the 1% vs a more traditional 5% broker fee.
- Raffi_Isanians 2y ago
  They're a bit sneaky on this one too. You pay full when you buy, but then they only charge 1% when you sell. So you only save on the sell, pay full price for the buy.
  - gnopgnip 2y ago
    Things changed with the NAR settlement, it's 1.5% to buy and 1.5% to sell in most markets now

joshstrange 2y ago

This is the thing, the NAR settlement didn’t really change anything, the fee was always negotiable and there always were agents who would offer under 6%. They were typically scummy agents who didn’t last long (they popped up when real estate was hot then disappeared after they burned enough clients and/or the market cooled off). As in all things you will get what you pay for. I’m not interested in fighting with anyone about what a realtor is worth but I will say: * All agents are not created equal * A good agent is absolutely worth it * 6% is only high if you don’t value your time and/or if you are ok getting a worse deal because you don’t know what you are doing

zaptheimpaler 2y ago
This logic justifies any amount of fees. They can be excellent brokers and still not deserve $6000 (selling a $1M house) for maybe 40 hours of work as a very generous estimate.
- WillPostForFood 2y ago
  They don't deserve $6,000, or $60,000 which is 6%!
- bookofjoe 2y ago
  6% of $1M = $60,000
  - sgc 2y ago
    More typically in that price range: 5% of 1m = 50k. / 2 brokerages so 2.5% = 25k. * 80% to agent = 20k. - agent costs = You would cry at how little net most agents make. You are not paying an agent hourly for the amount of time they work on your transaction, but for their knowledge and experience - which cost them significant amounts of money - to guide you through the transaction and not shoot yourself in the foot. There is a fine line to walk between getting rejected outright and a deal never happening, and overpaying. You also might be buying a lemon (and not just from the perspective of a home inspection - people *regularly* want to do things with properties and transactions that just won't fly. They need to hear that from somebody on their side before they wind up losing much more than a couple percent). An agent will help you avoid them. Add on top of that how agents can help avoid the many lawsuits there are when people feel slighted and/or are actually slighted in RE transactions, and real estate agents are a decent value. Agents are functionally like mini-attorneys + advisors for real estate. You wouldn't walk into a court room without a lawyer, and it is not a whole lot smarter to enter into a real estate transaction without an agent.

evantbyrne 2y ago

Prior to the changes which only went into place in August, agents were colluding to keep fees artificially high. Buyers' agents would actually hide listings that promised less than what they wanted and all of that information was hidden from buyers until the buy/sell agreement. It is way too early to say exactly what the impact will be, but as an anecdote my agent accepted 2% on the home I just closed on. My prediction is fees will decrease significantly, because it just doesn't make financial sense to pay agents as much as people have been. Also, agents wouldn't have been colluding to the extent they had been if they believed a free market was good for their bottom lines.

edmundsauto 2y ago
Some fees will drop, there will definitely be an H&R Block version of agents. Other agents will have such demand, their fees will remain high. It’s not clear to me as a potential buyer that I want to go with the commodity, especially in quirky areas like TICs in San Francisco. We’re in for an interesting ride, best of luck to this team!
poulsbohemian 2y ago
>agents were colluding to keep fees artificially high Sitzer-Burnett involved a very narrow definition of collusion... essentially one Kansas City MLS had a mandatory input field for a seller-paid buyer commission. Realizing the risk of copycat lawsuits, the NAR got involved and decided to settle. Both Sitzer and Burnett should have gone after their own agents rather than turning this into a national issue. >My prediction is fees will decrease significantly And my prediction as an agent is somewhere between "business as usual" and "buyers are going to pay more out of pocket and will find it harder to buy homes." Further - many buyers will opt to not use an agent and I'm already making popcorn waiting to see what a clusterfuck that will be as buyers and sellers sue each other into oblivion.
- evantbyrne 2y ago
  The mandatory "Buyer Broker Commission Rule" was in the NAR Handbook, which was binding for MLSs. Moehrl vs NAR went after twenty offending MLSs and the four largest national real estate broker franchisors in America. They got caught red handed price fixing they had no choice but to settle. Realtor services are valuable, but they aren't worth 6% of a person's largest investment. On the median home that's $24k, which is considerably more than other professional services related to buying a home.

mbesto 2y ago

Someone has tried - it's called OpenDoor and its stock is ummm not doing well: https://www.cnbc.com/quotes/OPEN https://www.cnbc.com/quotes/OPEN