The National Association of Realtors recently settled a series of lawsuits.
One of the terms was to end the practice, known as “tying,” meant that sellers were essentially required to pay a commission to the buyer’s agent’s broker as a condition of listing their property on the MLS.
Yet no local Realtor will list my daughter’s home, without seeming doing exactly this.
Am I missing something?
My wife and I just talked with a real estate agent. He said that virtually every buyer today has a buyer’s agent, something that was very rare when we last bought a house. Commissions are negotiable, as is the split between buyer’s and seller’s agents.
I’m not sure what the agents are telling your daughter, but they may just be explaining the new reality. If buyer’s agents won’t deal with seller’s agents who stiff them there may be no one to risk offending them.
From my understanding , they are acting as if the new settlements, never happened.
And telling her she must pay for buyers agent.
Likely need to get a bit more hands on; as we are helping with the purchase.
Pay the buyer’s agent, or pay the buyer’s agent’s broker? Two different things.
Both as to what was changed by the lawsuit and as to what OP’s daughter is being required to do.
Like so much else in the USA, buying and selling homes seems to have a mess of leeches sticking their hands out for a slice of the pie.
I accept that a seller needs to pay someone to put their house on the market, although these days I would have thought DIYing would be easy on the internet. The idea that the seller should also pay a “buyer’s agent” seems wrong to me.
If I want to buy a house and employ an agent to help me, surely that’s a cost that I should bear.
The Realtors your daughter has contacted likely don’t want to waste their time listing a house which is harder to sell. They’re not obligated to list your daughter’s house. A seller doesn’t have to offer a cut to the buyer’s agent, but that might affect how many buyer’s agents show that house to their clients. If the buyer’s agent sees one house where the listing says “2% to buyer’s agent” and another house where it says “Buyer must pay their own buyer’s agent”, the agent will be more likely to recommend the house where they get the cut from the seller. The buyer’s agent needs to get paid somehow. The agent knows it will be easier to make a sale if the buyers don’t have to pay the 2% from their own pocket.
I think there are budget “realtors” which basically have fixed costs, like $300 to list your house in the MLS. But they don’t do anything for you that you don’t explicitly pay for. It’s basically like a for-sale-by-owner situation. It’s actually not all that hard to buy and sell a house without a realtor as long as you don’t mind figuring out the necessary paperwork and stuff. And it may take longer since you’ll need to find a buyer who is either willing to pay their agent out of their own pocket or be a buyer without an agent helping them. But otherwise, if agents are involved, they’ll need to get paid somehow.
I don’t understand what the difference is - doesn’t the buyer’s agent normally work for a broker?
And are we talking about an actual buyer’s agent who represents the buyer, or are we talking about the arrangement where I walk into a real estate agency and the agent who shows me houses is still representing the seller ?
I believe this practice (explicitly stating what is buying offered to the buyer’s agent in the listing database) is one of the new prohibitions from the settlement. I’m sure that gets discussed at some point, but as you said it puts a huge amount of pressure on the seller to agree to paying that extra 2% if they know the buyer’s agent will know about it before even deciding what houses to show their clients.
They do.
Which is part of what makes no sense to me about the NAR settlement. In every jurisdiction I’m familiar with an agent cannot do business except under the “supervision” of a licenced broker. That’s by law / regulation. As a result, every agent, buyer or seller, has a W-2 employment agreement (or a 1099 consultant agreement) with some broker. Which contract specifies how the broker is compensated out of the agent’s commissions.
The NAR settlement seems to have nullified that part of the agent/broker contract. Which would leave brokers with no income, comprehensively breaking the entire industry.
Clearly I misunderstand something, or this settlement is some kind of eyewash that appears to square an impossible circle by being unimplementable and hence be roundly ignored in practice while blind eyes are turned every which way but loose.
I was talking about a genuine buyer’s agent. Which are universal in the jurisdictions I’ve lived in since the 1980s. But I know there are plenty of other areas where local practice is quite different.
A walk-in such as you were talking about who shows you houses they own the seller’s listing on is totally not a “buyer’s” agent in the parlance I’m familiar with. They certainly do not owe you the duties of diligence or fair dealing; that’s reserved back to their seller(s) and only their sellers.
I don’t know who the OP is talking about. Hence my questions.
I’m not sure about this settlement, but let me see if I understand what you’re asking.
Standard practice in the US is that the sale of a home includes a 5% commission, paid out of the sale price half and half to the buyer’s and seller’s agents 50/50.
You’re asking to list a house and only offer your agent their 2.5% or whatever, without putting anything up for the potential buyer’s agents?
I have some thoughts and suggestions, but I’m not sure if I have that straight or not.
My understanding of the settlement. They can not require seller to pay buyer’s side of commission.
So commission would seemly be about half of previous, or about 2 to 3 percent,
And buyers could find their own home - with the internet being a thing.
Hire their own inspector, attorney and such for far less than a buyers commission.
Seems current tactic is universal 5% commission on sellers, but realtor will out of goodwill cover buyers commission.
From my perspective, that is effectively the same sort of illegal practices they just settled over,
But with a wink
But I am open to the thought i am misunderstanding the situation.
Friends in the business, seem purposefully vague.
I also understand, I am living in property developer version of America 
Seems reasonable. I hire Bob to sell my home, and ask for a price. Bob sells my house, hands me the price we agreed on, minus his commission. What happens on the other side of the sale is someone else’s problem.
I suspect the agents don’t like the idea of having to tell the buyer “you have to give the lawyer escrow account X minus (X*0.025) which you then give to me. Lawyer will forward the balance when the title transfer happens.”
Buyers have always paid for their own inspector and attorney. Neither comes out of the buyers agent (either legally or colloquially “buyer’s agent).
You have agents advising buyers to forego one or both of those services, which imho was self serving in the extreme, because it loaded up the risk on your client of ending up in a bad deal, but reduced the risk of you not making a commission. Real estate agency is an odd profession where the interests of both agents are fundamentally at odds with their respective clients. The buyer’s agent wants to convince their client that the house is worth more, and the seller’s agent that it is worth less. It’s worth less the minute the ink is dry on the exclusive listing agreement, that is. Just like the buyer can absolutely find what they want in their budget until they sign the buyer agency agreement, then their budget must creep up and they need to be more “creative” about financing.
My wife is a real estate agent. It seems that very little has changed in practice and that the standard approach to the issue is to spread FUD and try to keep the existing system going but on a “voluntary” basis for most cases.
It’s too early to tell if there is a real impact on commissions. Rates have been inching down for decades as home prices have far outstripped incomes and CPI. So for a realtor 1.25% of a transaction value today is worth more than 1.35% of an average transaction 15 or 30 years ago in real terms and indeed as a percentage of average incomes. It’s hard to say if the last few months have accelerated any downward trend.
The data availability is challenging (quelle surprise!) and of course other things have not remained the same. The six parties always had SOME negotiating power (buyer, buyer’s agent, buyer’s agent’s broker, seller’s agent’s broker, seller’s agent, seller) which changes not just by the settlement agreement, but also by market forces.
It’s middleman all the way down 
So, here’s the issue. When you hire a realtor, in exchange for the 2.5% you give the seller’s agent, they’re going to do a bunch of work: list the house, yes, but also advertise it, hold open houses, handle all your paperwork, etc.
They don’t get paid for that work until you make the sale. If partway through you change your mind, or are unable to get an offer you are willing to sell for, the agent gets nothing for their work.
Normally, the buyer also has an agent, who also does a bunch of the work, including - most importantly - showing the house to prospective buyers. Without the buyer’s agent, your pool of prospective buyers goes way down, because most buyers on the market are using an agent, and will only ever see houses their (buyer’s) agent shows them. If you aren’t offering a commission to the buyer’s agent, the buyer’s agent isn’t incentivized to sell the house to you in particular.
Your potential seller’s agent knows that they will have to work harder to make a sale if there isn’t a buyer’s agent on the opposite side also working for a commission. Since the seller’s agent gets paid the same either way, why would they want to take a much harder job for the same pay?
The thing the settlement changed is that on the MLS listing itself the buyer’s commission isn’t listed, so buyer’s agents can’t just sort by “highest commission”.
But at the end of the day, the agents still need to be paid for their work. It might come as a commission paid by the seller, as it has been traditionally; or it might come because the buyer says “we have to pay the commission ourself on this sale? Then we’ll offer 15k less than we did for the comparable house down the road”.
If you want to save money, you have to do some of the work yourself.
For example, a buyer can choose not to use a buyer’s agent. They can just find houses that are for sale on their own, approach the seller’s agent, and ask them to represent you both for let’s say 3% instead of 5%. The seller keeps more of the home’s sale price, the buyer can potentially pay less for the house while beating out other offers (since what the seller cares about is how much money ends up in their pocket, rather than the actual sale price), and the agent actually ends up with a higher commission than they would have had otherwise. Everyone wins (other than the agent the buyer didn’t hire, I suppose). It’s not even that much harder than going to houses a buyer’s agent points out to you, with how convenient sites like Zillow are nowadays.
You can do the same thing as a seller, but it’s a lot more work. First, you do have to pay a realtor to put your house on the MLS, but there are agents who will list your house for a flat fee and then leave you on your own to actually market your house, hold open houses, coordinate with buyer’s agents, and generally do the work of actually selling the house.
And then, presuming that the buyers you find used an agent - which they almost certainly did - that agent will need to be paid. That will be negotiated at the time of sale. The cost will end up being around 2.5% of the sale price of the house. And you will end up paying for it, in one of two ways: either the buyers will pay it out of their pocket, and will take that into account when making you an offer; or you’ll be paying it out of the sale price, and the buyers will know that and be willing to go higher on the offer.
Interesting that people are saying the standard was 5%. In my area the standard has always been 6%.
What are the standards where the rest of you live?
How can an agent represent both parties in a transaction?
The selling agent wouldn’t be representing the buyer. The selling agent would be acting as a salesperson. The buyer wouldn’t have a contract with the seller. The seller couldn’t scam or cheat the buyer, but they are under no obligation to help the buyer get the best price or anything like that. It’s not that much different than if you worked with a salesperson to buy a car. It’s up to the buyer to do their own due diligence, be able to understand what comes up on inspections, figure out if there are any neighborhood issues, etc. The seller’s agent won’t tell the buyer stuff that might make the buyer back out (e.g. a big highway is planned to cut through the neighborhood).
It’s called a dual agency, and it’s fully legal (at least in California) as long as you properly disclose everything.
There are situations where they don’t have to, but they certainly can.
In a dual agency situation, that would be a violation of the seller’s fiduciary duty to the buyer, I believe.
On the other hand something like telling you what other offers are coming in would be a violation of their fiduciary duty to the seller (unless the seller instructs the agent to do so as a negotiating tactic, of course).
The agent needs to be cautious in navigating both fiduciary duties, but it’s certainly not impossible.
Gotcha. It’s not in Texas, which is why it surprised me.
Representing both parties can make it difficult for an agent to equally advocate for the interests of each party. Recognizing these challenges, the Texas Real Estate Commission (TREC) does not permit dual agency. Therefore, agents cannot modify their licenses to act as dual agents in Texas.