Source: Housing Wire —
Critics argue that prospective homebuyers should pay real estate agents directly out of pocket — as opposed to the more common practice of the listing broker paying the buyer broker’s compensation. What those critics fail to account for are negative effects this would have on fair housing in America.
This push toward “decoupling commissions” is a movement built on assumptions that have been dispelled — once again — by a recent, nationwide study that demonstrates the harmful effects this proposed change would have on the residential real estate market, particularly first-time homebuyers and those from minority groups. “Be Careful What You Ask For: The Economic Impact of Changing the Structure of Real Estate Agent Fees,” was conducted by two former Freddie Mac executives and a former senior advisor at the Department of Housing and Urban Development.
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Aside from the Fair Housing issue, which is very real and very important, this move will assist the big real estate firms by squelching independent agents and brokers. The bigs have already done a number on independents through rule changes that allow Realtor.com, Redfin, and Zillow to hijack listings from smaller brokerages that cannot afford to advertise with them. They replace the listing agent’s information with brokerages that pay to play. Decoupling the commissions would kill the smaller firms as the big agencies already control the marketing for listings. This would assure higher listing commissions and lower sales commissions, obliterating the little guy.
Steven,
The big Real Estate companies aren’t zillow customers. They are made up of individual agents who are (usually) independent contractors. Established “big” agents don’t need or pay for Zillow placement. More likely they too resent Zillow taking their listings and placing another agent paying Zillow to put their info with them. More likely tha agent paying Zillow is a newer agent who needs the exposure.
You may be right about Redfin though. They don’t allow their individual agents to promote themselves, but use only the generic company signs on listings for instance.
Small agencies proliferate in my area in good times but don’t have the financial depth to survive a downturn of the market.
The fair housing folks have a legitimate concern about buyer broker fees without seller offers of cooperation.