Hat tip to the three people who sent in this article:
https://www.axios.com/real-estate-fee-showdown-lawsuits-5e88b18c-3baa-4cb0-8302-2a2a8fa16eda.html
It’s a sexy topic because the realtor industry is terrible at explaining commissions, and then reporters jump into the middle of it with their pre-conceived ideas and write articles like this one that make it worse.
Let’s sort out the two issues.
#1. Do agents steer their buyers based on commission being paid by listing agent? Yes.
Will disclosing the commission rate stop steering by agents? No. Will buyers insist that their agent show them those listings any way? Maybe, but agents will find a different reason why they don’t want to show it so it won’t be about the discounted rate.
Sellers should insist on rewarding the buyer’s agent – pay them a bounty for selling your home. If the listing agent is paying 2% or less to buyer-agents, it discourages them from showing your house.
#2. Everything else is an assault on buyer-agents, who are getting squeezed out of the business.
Redfin and Rex want to convince buyers that they don’t need help. Just find yourself a house that you want to buy, and they will do the paperwork for you. They will say anything to convince you it’s all you need.
If the day comes that buyers have to pay for their agent, then they will just go straight to the listing agent who will have worked out a deal with the seller to handle those cases.
In either case, buyers won’t get good help. They will get no help – not from an agent who represents the best interests of the buyers, and advocates on their behalf.
Buyers don’t realize how much they want and need good help until it’s too late – but this doesn’t get considered by the Department of Justice, NAR, or reporters.
From 2018:
The obvious question: If buyer-agents are getting removed from the equation, then why pay them a hefty fee – especially in a hot market?
Because the current system is the one that works the best if you want to sell your home for the most money, and least inconvenience.
It gets every agent excited about bringing their best buyers to the game, and push them to outbid the rest. It’s the confidence/assurance given by the agent that makes the buyer add a little extra mustard to their offer price.
Conversely, if you pay peanuts, you attract monkeys.
Once the buyer-agents are removed from the equation, then this price run-up will end. Listing agents want to hurry up and do volume – slam this deal quickly and get on to the next. They won’t spend their time pushing the prices when they have another vacation waiting.