Following Friday’s announcement of the National Association of Realtors’ (NAR) $418 million settlement of the Sitzer/Barnett lawsuit and its pledge to change its commission structure in the home sale process, a lot of people had the overwhelming urge to voice their opinion of the matter. Some of these folks took to X (formerly Twitter) to share their views, which ran the gamut from insightful to the inane.
There were some people who viewed the near future of the real estate profession in terms of Darwinian survival of the fittest. Brandon Avedikian, founder of Aspire Commercial, predicted this will result in the real estate industry’s version of separating the wheat from the chaff:
I have great news for residential realtors:
The media’s sensationalized headlines and fearmongering about the NAR settlement will keep many casual, unprofessional agents on the sidelines where they belong.
Real estate is a profession, not a hobby.
— Brandon Avedikian (@bavedikian) March 18, 2024
Dr. E.J. Antoni, an economist with the Heritage Foundation, echoed that view with his tweet:
Given the insanely high ratio today of realtors to homes for sale, maybe a mass exodus of agents is the goal…
…food for thought. https://t.co/MD48Bezptu— E.J. Antoni, Ph.D. (@RealEJAntoni) March 16, 2024
Mortgage broker John Downs had a similar consideration, but phrased it in a less derogatory manner:
Stock brokers got the comp beatdown @ the .com bust.
Mortgage LOs got gut punched with comp laws in the GFC. #Realtors – in both cases above, the industry adapted, top talent was rewarded and in the end, total comp was still rewarding.
Embrace and enjoy your evolution.
— John Downs – Mortgage Advisor (@AdvisorJohn) March 16, 2024
A few people in the media viewed the settlement as a victory for financial burdened Americans. This included New York Times reporter Debra Kamin:
The long-held standard of 6 percent real estate commission will go away. The National Association of Realtors has agreed to a landmark settlement. How will things change? For starters, home prices will go down. My scoop for @nytimes (gift link): https://t.co/edHXREKEMn
— Debra Kamin (@debra_kamin) March 15, 2024
Rob Schmitt, who hosts a weekday evening talk show on Newsmax, was a bit more opinionated in his tweet:
It’s about to get cheaper to buy and sell a house. This has been long deserved as many realtors are completely useless. https://t.co/YfgNNO5lpw
— Rob Schmitt (@SchmittNYC) March 15, 2024
And attorney Eric Pacifici of SMB Law Group hopped on that train of thought when he said:
Breaking: Absolutely enormous real estate news today that affects us all. This settlement could reduce realtor commissions by 30% and put massive downward pressure on home prices across the U.S. 🤯🚨 pic.twitter.com/0fIYjb3oMy
— SMB Attorney (@SMB_Attorney) March 15, 2024
However, another attorney had a different opinion. Bryan Jeansonne, an attorney and the owner of Lakeland Title in Baton Rouge, Louisiana, declared:
No, real estate buyer's agent commissions aren't going away, they'll be negotiated separately on the purchase agreement (like in commerical transactions) or in a separate agreement. Having a Realtor is always advisable, I explain why in episode 8 of my podcast, links below. pic.twitter.com/8FsyKRel6l
— Bryan Jeansonne ⚖️ (@bjeansonne) March 15, 2024
Nashville-based broker Austin Whitt polled his X followers by asking them to predict which one of three possible scenarios could occur:
What are the chances that this happens?
1) Realtors will ditch NAR and their realtor title to join a new association.
2) We will change out the word commission with concession and adjust a few line items on a settlement statement.
3) Nothing will change. 🙄
— Austin Whitt (@AustinWhittRE) March 15, 2024
Perhaps the most enigmatic observation came from the X account called “TheWealthCoach” with this statement:
Uber has no cars
Zillow has no houses
Realtors have no commissionsThis is the new economy
— TheWealthCoach (@indexnforgetit) March 16, 2024
And the X account “Eager1” offered their lengthy but in-depth prediction of a worst-case scenario for homebuyers in a response to investor Ross Gerber (click “Show More” for his full answer):
Let’s consider the Realtor news with a little more clarity:
Almost all Realtors are paid strictly by commission.
Typically, 2.5% to agent for buyer & same for seller agent.The real estate industry found decades ago that it is real difficult for buyers to come up with an extra…
— Eager1 (@eager28) March 18, 2024
What is your opinion the topic? Please share it in our comments section below this article.
Phil Hall is editor of Weekly Real Estate News. He can be reached at [email protected], and this site is on X at https://twitter.com/WeeklyRENews.
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Am I the only one who sees that the NAR will not exist a year from now?
I second that!
I third that!
So, NAR settled the botched case in Missouri. Where does that leave them with all of the other copy cat cases that have been filed across the country? There are an infinite number of attorneys who would love a shot at what they perceive as easy money. When they finish gutting the Real Estate Agency Profession, how long before the attorneys start losing their grip on their own overpriced (?) “profession”. I worked hard for every commission I ever received, and gave good value for my client’s investments of a portion of the proceeds to have representation for each side. Agents exist for a reason. Representation and thoughtful negotiations keeps many Real Estate deals from going sideways. Most of my Buyers would have had to save for years longer to pay for a “representation service fee” on top of the other typical closing costs. I don’t know the end of this story, but I wish the NAR had hired better attorneys.
100% agreed.
Not sure how the “touted “ price of homes comes down as result of the new fee structure. Commissions have little to do with pricing as supply and demand most likely determine price. Do we assume the seller will take less because of reduced commissions? How about the lawyers reduce their “slice of the pie” (usually about 1/3rd of the settlement) to about 15% … would the result be fewer law suits filed?
I think they should explain those exorbitant fees. The injured plaintiffs deserve more. If a Seller can sell their home and keep more of the “pie” because they paid less fees …so be it ! Most of the time “you get what you pay for” and Realtor representation will likely continue that trend.
Say it louder for those in the back!👏👏
Agreed. It also appears that some states and MLS’ allowed buyers agents to work without a buyers agency agreement. It really seems like a poor combination of errors. And honestly, I feel the agents themselves were at fault if that were the case. Marine they should not have been NAR members. Let’s face it, as in all professions, there are some shady dealings that happen.
Attorneys are charging 30-40%, They try to get in the way for buck moving anywhere. They try to make realtors look bad so they can keep their exorbitant fees. The USA is about 6% of the world population and has 33% of the lawyers! why? because they smell money and easy, sympathetic juries. Realtor commissions (brokerage fees) have always been negotiable. NAR never set the fee at 6% or any percent ever. If the lawyers can wipe out the realtor profession then all the contract work will go to them. Sellers will sell on line and say all sorts of stupid stuff to sell their homes. Buyers are liars and seller’s are worse. The lawyers will then get into more law suits.
I recently closed a transaction where the last two times prior the house sold with the parties only using an attorney. We had title issues because the two different attorneys for both of the sales didn’t use a title company. Those title issues are still being worked on by a competent title agent in my area. It’s always good to use a real estate professional that knows the business and how to get things done…right on down to using a good title company.
6% is greatly exaggerated. In the 25 years I’ve been practicing Real Estate, commissions have been negotiated. I’m also not convinced home values will drop significantly because of the NAR settlement. Buyers and Sellers in one way or another will continue to pay Buyers agent
commissions. Either by Buyer paying out of pocket for Buyer agent fees and negotiating a lower price (Seller pays by reducing price, Buyer pays by paying out of pocket) -or- Buyer negotiates through the purchase contract that Seller pay Buyers agent fees, disincentivizing Seller to reduce the price of the home. First time home Buyers in many cases may need to fold Buyer agent fees into their loan, resulting in paying interest on Buyers broker fees through the life of the loan. Not a win for Buyers and counter intuitive to the premise that homes will become more affordable. Which begs the question; does HUD allow Buyer agent fees to be part of closing costs or will that be part of codifying the terms of this settlement agreement? So much yet to know . . .
I hated realtors when I got in to the biz (helping a family member).
I hated realtors even as I became an in-demand broker known for my insightful and engaging real-talk and excellent customer service.
I hated almost every realtor I had to work with on the other side of the transaction due to ineptitude.
I started to hate myself for being in this corrupt business.
I saw all this coming down the pike last year, and my colleagues thought I was crazy.
I finally jumped ship. Not my circus, not my monkeys. Enjoy the peanuts!
Defund the police / Remove the doctor & substitute a medical technician/ Remove the cashier and check out your products yourself/ Remove the Realtor from the transaction.
Let everyone figure it out on their own, after all, there is the all-knowing internet. It will be cheaper! Results: Crime is up, medical problems are up, and shoplifting while self-checking is up! Home sales will be down. Buyers will have more trouble affording a home. Sellers will be sitting on the market with no buyers. It’s time for buyers to bring a class action suit. I think the association did a poor job defending our business, they just caved and threw buyer brokers out. Now lawyers can make money litigating instead. Funny how legal fees only seem to go up.
Commissions have been lower for years, the only real change here is the distribution of those commissions. The legal eagles are about to find out that commissions have nothing to do with the pricing of the market
Here’s one scenario I see happening with the upcoming ‘Commission AUCTION’….
Take for example a sale on a $400,000 home. Buyer finances $320,000 (20% down). However, now, must come up with possibly ALL of say a 6% (used only as an example as commission has ALWAYS been negotiable) to compensate my commission, as seller refuses to pay a commission. Due to the lack of funds, buyer must roll that commission into their loan. Do the math! Loan for $320,000 at 6.9% interest, 30 year term not including taxes and insurance for a monthly payment of $2,107.52. Now add commission. Buyer must now come up with a down payment of $84,800 in lieu of the original $80,000 they scraped up over many years, because they don’t have liquid funds to satisfy this new debt. Their payment is now $2,233.97 (taxes and insurance not included). So for basic math sake, my 6% commission, buyer is paying 6.9% interest and it will cost them approximately $45,522 after 30 years. The ONLY one benefiting from this is the lender! Call me CRAZY but, does that make any mathematical or common sense? WTH! On top of that, VA has just recently permitted the buyer to pay for insect inspections. Who’s to say VA, FHA, or USDA will allow these buyers to pay commission at all! After all, the reasons for these loan programs is the lack of funds the buyer has at their finger tips to make the largest purchase of their lives. I work enough without getting compensated. I see the real estate agent profession going down the tube, lawyers wages increasing due to value-added services for closing loans, and the entire home purchase heading to ‘SELF CHECKOUT’. It’s sad, sad, sad. Back to ‘CAVEAT EMPTOR’.
The misinformation and lies being told by the media is astounding. 6% commission was never a standard it was an industry average and has always been negotiable as it still is now. The only changes that are being implemented for all of you people that don’t have a grip, are as follows. Agents are no longer to advertise the commission disbursement on the MLS platform. Commission splits and disbursements will still happen as they are needed. Number two, buyer’s agents must have a buyer broker agreement signed before they show any homes. That’s it, business as usual. And no, prices of homes are not going down at all, it has nothing to do with this. It has everything to do with inflation and seller greed. The doj can go kick rocks as they have no clue what they are doing but are trying to enforce rules that make no sense in order to change a nationwide industry practice that has worked for decades. What they are trying to do will only cause chaos of misinformation and confuse the general public and make agents look bad
Transparency at it’s finest now!
This is a lot to do about not so much. The 6% “standard” commission is part truth and part myth. Many transactions are done for less (and very occasionally more) and are fully negotiable. Additionally, Realtors often dig into their commissions to pay for things that might derail a delicate negotiation. Plus, all those people complaining about Realtors commissions are off the mark. They do not compare to a stock broker’s commission. Realtors get no salary, no benefits, no vacation pay, nothing, until an escrow closes, and have real costs involved in the pursuit of their business. It is not unusual for a deal to fall through, which means the Realtor paid for the privilege of working. Aside from that, this will have zero affect on housing prices; those are controlled by supply and demand; a good Realtor CAN push the price received to the top of what the market will bare, but no more. Nor will prices go down because of the so called excessive commissions of agents will decrease; no they won’t; too much work, effort, expense and expertise goes into the process, and the best agents won’t work for less; you will only get a “good deal” by less skilled agents that you will more than pay for when your home falls out of escrow two or three times before you end up giving a buyer a good deal.
P.S. For those of you that feel Realtors are overpaid and don’t do much, I invite you to get licensed and get in the business, and discover for yourself how wrong you are. (A saying by old time Realtors goes something like “Being a Real Estate agent is easy money if you work hard.”)
Thank god I retired at 87 after 45 years as a realtor and broker/owner. Many years of feast or famine and hard work.
The attorneys are giving high fives to each other.