This Real Estate Agents Settlement With Plaintiff's Will End Up Hurting Home Buyers!

Members of Congress should take action to respond to this settlement between the national real estate agent association and plaintiffs because if they don't very bad public policy will result because good public policy should promote home ownership because home ownership allows people to build equity and wealth in their home over their lifetime which can be used as a retirement account to support the homeowner(s) when they are older and can no longer work. What the settlement does is it does not require home sellers to indicate in the public listings of their homes whether or not they will pay the buyer's real estate agent a commission or fee from the sale of the seller's home. The thinking behind the settlement and overall considering all home sales in America it is foolish thinking, the thinking is that if the home seller does not make a commitment to pay the buyer's real estate agent a commission the buyer will be able to get a lower purchase price on the home, saving the difference between the purchase price where the seller pays the buyer's real estate agent a commission and the purchase price where the seller does not pay the buyer's agent a commission. In reality probably this settlement just increases home sellers profit from the sale of their homes because it will result in them not having to pay the buyer's agent a commission or a lower commission.

The result of this settlement is that it will make it harder for Americans to become buyers of homes because it will make it more costly they will now have to come up with monies to pay the buyer's real estate agent and they won't be able to amortize this cost over the length of the mortgage loan because now this cost is embedded into the purchase price of the home and the mortgage loan, that pays this purchase price, which the buyer pays in their monthly mortgage payments. To remedy this bad development, legislation should be enacted in Washington that requires home sellers when they make a public listing to indicate what if any commission or fee they will pay the buyer's real estate agent, no answer on this question home cannot get added to the public listings. All agreements of sales for homes must address this issue of what if any amount of commission or fee the seller will pay to the buyer's real estate agent if the agreement of sale is silent on the matter the seller must pay the buyer's real estate agent the same commission or fee the seller's real estate agent is getting from the sale unless the buyer's agreement with the buyer's real estate agent calls for a lesser commission or fee where in that case the buyer's agreement will control the issue, in any event the maximum commission or fee the seller will be required to pay the buyer's real estate agent is three percent of the home\s purchase price. Furthermore, the Congressional legislation should allow home buyer's if need be meaning the seller is not paying the entire commission or fee to the buyer's agent to amortize this buyer's cost over the length of the mortgage loan and do so by the buyer being able to increase the home sale purchase price over the amount in the agreement of sale by the amount of this expense of the buyer and require the seller to pay this amount to the buyer's real estate agent at the closing; this amortization path would be allowed as long as the buyer or buyer's agent gives the seller or the seller's real estate agent forty-eight hours notice prior to closing that they want to proceed in this way.

 

I've never understood why realtor commissions are a percentage of the selling price. Does it really cost twice as much to sell an $800K house as a $400K house?

True, having a percentage commission does slightly align the seller's and seller's agent's interest in getting higher price for the house. But the effect is pretty small and the seller's agent is probably more interested in closing the deal and getting on to the next property than getting absolutely top dollar.

And having the buyer's agents commission increase as the price goes up is contrary to the interests of the buyer, who wants to close at a lower price.

In general, the fees should be unbundled and priced rationally on the basis of services rendered. The seller could incentivize his agent with a specific bonus depending on how much above the listing price the house sells for.

 

Commissions are really unaffected. Sellers' agents just cannot post fee splits for buyers' agents on MLS listings.

 

It's pretty simple... read the fine print before you sign, and if you don't like the deal, go back to bargaining. If the deal isn't acceptable after renegotiation, don't sign.

We don't need more laws and regulations. We each need to do due diligence and take responsibility for our decisions.