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The internet didn’t shrink 6% real estate commissions. But this lawsuit might

By Patrick following x   2019 May 15, 9:08pm 288 views   15 comments   watch   nsfw   quote     share    


http://www.kvor.com/news/the-internet-didnt-shrink-6-real-estate-commissions-but-this-lawsuit-might/

For decades, Realtors’ earnings have been maintained through an opaque structure that allows home shoppers to believe that the seller covers the agents’ costs, and that the consumer has little choice in the matter.

That entire system could crumble, if a trio of recently-filed lawsuits are successful.

In a complaint filed in early March in the Northern District of Illinois, five law firms teamed up to allege that high commissions were a result of collusion by the National Association of Realtors and the nation’s largest brokerage franchises in violation of federal antitrust laws. The firms include heavy hitters like Hagens Berman, which boasts work on cases including the state tobacco lawsuits that led to a $206 billion settlement, as well as Cohen Milstein, which co-led a case against Apple for monopolizing the market for e-books.

The class so far consists of just one person — a home buyer in Minneapolis. But the lawyers are currently recruiting more plaintiffs, and stand to gain millions in attorneys’ fees if a jury awards damages. In April, two nearly identical lawsuits were filed, one by two home sellers in Missouri and one by a Minnesota corporation.

On the other side of the suits, the National Association of Realtors is a powerhouse trade group organized in active chapters across all 50 states. It spent about $150 million on federal lobbying and elections in the 2018 cycle, according to the Center for Responsive Politics. More importantly, it also controls access to the Multiple Listing Services that Realtors need in order to list and show homes. ...

brokers know that buyers’ agents might skip showing a house if the listing doesn’t offer a full 3% commission.

“I’ve been in traditional offices, watching someone go through listings,” said Tom Wemett, a buyers’ agent in Western Massachusetts. “He immediately checks to see what they’re offered, and threw away two or three listings that might have been perfect for their client. The buyer doesn’t know any different, unless they’re searching on Zillow or Trulia and says ‘why didn’t you show me this one?'”


More good news! I hope the NAR gets sued out of existence. We would all be much better off without realtors.
1   BayArea   ignore (1)   2019 May 15, 9:11pm   ↑ like (4)   ↓ dislike (0)   quote   flag        

AF told me that a good realtor is like a good rapist... he was so right.
2   TrumpingTits   ignore (1)   2019 May 15, 9:23pm   ↑ like (4)   ↓ dislike (0)   quote   flag        

Why this blatant price fixing scheme has been allowed for over 70 years always struck me as bizarre.
3   Patrick   ignore (1)   2019 May 15, 9:25pm   ↑ like (6)   ↓ dislike (0)   quote   flag        

It's easily explained. The NAR is the second biggest lobbyist in DC.

The first, of course, is the US Chamber of Commerce.
4   clambo   ignore (4)   2019 May 15, 10:26pm   ↑ like (1)   ↓ dislike (0)   quote   flag        

Yeah, it's amazing how much realtors skim from the transaction.

I know of a case or two where the seller and the buyer said screw the realtor and just had a contract made up by a lawyer and both saved thousands of bucks.

If people only knew in some cases how little education and math capability their realtor has.

I have a friend who is nice and very successful; she sold a ton of places. She has only been to high school.

She'll put up places on facebook that are 3 bedroom 2200 square feet for $1.4 million "investment property" ; but the most you can rent that place for would be $4000/month and the property taxes will be $1400/month.

I have digressed off the subject.
5   HeadSet   ignore (1)   2019 May 16, 7:28am   ↑ like (0)   ↓ dislike (0)   quote   flag        

I know of a case or two where the seller and the buyer said screw the realtor and just had a contract made up by a lawyer and both saved thousands of bucks.

This shows you don't understand what a realtor does. If you already have a buyer, you do not need a realtor. A realtor is not there to handle the details of a closing. If you do not have a buyer, and you are unable to find a buyer, that is when you use a realtor.
6   Patrick   ignore (1)   2019 May 16, 7:33am   ↑ like (2)   ↓ dislike (0)   quote   flag        

Most sellers are afraid they will not find a buyer, or not the "best" buyer, if they don't pay the realtor vig.

And realtors definitely will avoid showing a house whose owner does not submit to their power.
7   HeadSet   ignore (1)   2019 May 16, 7:47am   ↑ like (0)   ↓ dislike (0)   quote   flag        

I have a friend who is nice and very successful; she sold a ton of places. She has only been to high school.

Well, that lack of formal education has not hurt her. She must have high intelligence and great people skills. Selling real estate is a pure performance based industry - either you can sell or you cannot. Ability to sell matters more than gender, age, race, education level, or any other superficial factor. I know several realtors, including one "high school" grad lady who eventually started her own agency and then went on to get elected to the VA State government and then to US Congress. At the other end of the education spectrum, I know a retired Air Force Colonel with a Master's who did quite well financially as a mere agent.

Most real estate agents do not do so well. But I would not disparage the ones who do just because they lack education credentials. It is almost as if the college guy who paid his dues and can "sum moments about a point" resents a "lesser" achieving greater success.
8   HeadSet   ignore (1)   2019 May 16, 7:54am   ↑ like (0)   ↓ dislike (0)   quote   flag        

We would all be much better off without realtors.

No, because the average Joe cannot find a buyer for his house, mainly because buyers virtually always call a realtor. Just like average Joe calls a CPA or H&R Block to do his simple taxes. In England, the "Estate Agents" only get a 1% commission. There is no multiple listing. The problem is not so much the realtor as the customary 6% commission. I would like to see a small flat fee to list, and a 1-2% commission to the guy who actually brings a buyer.
9   HeadSet   ignore (1)   2019 May 16, 8:01am   ↑ like (1)   ↓ dislike (0)   quote   flag        

Patrick says
Most sellers are afraid they will not find a buyer, or not the "best" buyer, if they don't pay the realtor vig.

And realtors definitely will avoid showing a house whose owner does not submit to their power.


Pat, I have sold 10 houses over the years and can assure you it is difficult to impossible to sell without listing. I have bought 4 houses without a realtor by getting to the seller before he/she listed. Buyers like me are rare, though. Most buyers want a realtor to drive them around believe the realtor is needed to handle the closing.
10   Quigley   ignore (0)   2019 May 16, 8:15am   ↑ like (1)   ↓ dislike (0)   quote   flag        

I suppose it matters the most what market you’re in. In my area, just listing a place at a comparable price to the rest of the neighborhood ensures a swift offer or five. Or putting it on Zillow. That’ll work just fine too.

Realtors like to brag that they can sell your house for MOAR money and thus justify their commission. But that’ll be the buyer’s agent bringing in customers, not the listing agent. Although the listing agent gets the guaranteed commission.
11   clambo   ignore (4)   2019 May 16, 8:46am   ↑ like (0)   ↓ dislike (0)   quote   flag        

Headset, the person I am describing is a realtor because she is nice to talk to and she's a good salesman.

Having no math skills or education may be an issue for some because I know she cannot do the calculation : if you pay $1 million for a house, and can rent it for $4,000 per year, what is the % yield on this investment?

I don't resent she succeeds at selling something people want to buy anyway; I am mentioning that although she dresses nice she has no education and really knows very little about the ways of the world. If you seek someone to help you go $800,000 into debt to buy an "investment" you should be aware she has no financial or math training.
12   HeadSet   ignore (1)   2019 May 16, 9:42am   ↑ like (0)   ↓ dislike (0)   quote   flag        

If you seek someone to help you go $800,000 into debt to buy an "investment" you should be aware she has no financial or math training.

I see. But I would hope that anyone with the where-with-all to access $800k would have enough sense to know what to invest in. The realtor is not a source of investment advice, she just helps you find the suitable house that fits your all ready determined investment parameters.
13   APOCALYPSEFUCKisShostikovitch   ignore (38)   2019 May 16, 10:32am   ↑ like (0)   ↓ dislike (0)   quote   flag        

A good realtor is like a good rapist.

The whole thing should be reduced to a file format and realtors should be shot on sight as no time in jail will fix them.
14   clambo   ignore (4)   2019 May 16, 11:55am   ↑ like (1)   ↓ dislike (0)   quote   flag        

We agree that the realtor is simply a salesperson.

The problem I have is she goes around claiming knowledge she doesn't have.

Headset and I both know it's crazy to listen to her "advice" but others don't know this. Most don't know you don't need a realtor.

You might be surprised at how many people have windfalls or etc. of $500,000 or more who have no clue what is an appropriate "investment". I know several of them.
15   HeadSet   ignore (1)   2019 May 16, 12:44pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

You might be surprised at how many people have windfalls or etc. of $500,000 or more who have no clue what is an appropriate "investment". I know several of them.

Hmmm, sounds like an "opportunity" in the PT Barnum style. You may as well fleece them before someone else does. Or if you are a nice guy, explain laddered CDs and index funds.

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