Are Realtor's Obsolete?

With the recent rulings against the National Association of Realtors (NAR), many are asking "Are Realtors obsolete?" These court cases have sparked debates about the necessity and legality of realtors and their commissions in the home buying and selling process. While some may question the role of real estate agents in light of these rulings, I'd argue that the expertise and guidance they provide are more valuable than ever. In this blog post, I'll explore the recent NAR rulings and make a case for why working with a realtor remains a wise choice.

Understanding the NAR Rulings:

The recent rulings against the NAR have raised concerns and shed light on certain practices within the industry. Issues such as anti-competitive behavior and the impact on consumers have come under scrutiny. The ruling determined that brokerages were conspiring to keep commissions high and thus adversely affecting consumers. While these rulings aim to address these concerns and promote a fairer marketplace, it's essential to recognize that they don't diminish the value that realtors bring to the table.

Understanding Real Estate Commission Structures

The typical real estate commission is 6% of the sale price of a home. At escrow, the commission is split between the buyers and sellers brokers in an agreed upon division. However, the commission percentage can be negotiated by the listing agent and their client (the seller) at the time the Listing Agreement is taken and signed. I can't emphasize enough that this is a NEGOTIABLE rate... For all you Sellers out there, you can negotiate the percentage! I was recently involved in a transaction that the Seller only paid 3% and the two brokers split it in half. A good agent will give you a Net Sheet that shows how much you will make after loans, liens and commissions are paid. Look at everything BEFORE you sign and Listing Agreement. (Note, you can easily Google a net sheet to get an idea of your net income before you meet with an agent.) If you are unhappy with the bottom line, discuss it then with the potential listing agent. If you're still not happy, find an agent that will negotiate the percentage. Keep in mind that certain agents might be worth the extra percent or two if they can sell your house for more, or sell it faster than a discounted agent. You know the saying "You get what you pay for?" It's true in real estate as well.

How the NAR Ruling could effect Buyers.

The argument against the NAR is that Sellers should NOT have to pay for the Buyers agent fees and that prices of homes will go down if Sellers don't have to pay for the other fees. Honestly, I just don't see a universe where that will happen. Sellers will always want to get top dollar for their home. Period. Agents don't drive home values up, the Market does. Interest rates, supply & demand, location, weather, economy, etc all influence prices of homes. I don't think a Seller out there will say, "I'll take $20K off if the Buyer doesn't have an agent!" If someone's willing to pay, they'll take it.

So if Buyers need to pay their own agent fees, how will this affect Buyers? First, Wealthy and savy buyers will be fine. They know how to buy, they've done it before, and they can do it again with or without the help of agents. They have lawyers, they have people...They can get things done.

The Buyers most negatively effected will be the new, infrequent, and lower income Buyers. And these are the Buyers that need an agent the MOST! If Buyers are required to pay their Agents fees in addition to the cost of the home, escrow fees, insurance, etc they may forego using an agent altogether or rely on the Seller's agent who will have no fiduciary obligation to that Buyer. Buyers need someone on their side dedicated to looking out for their needs and rights. Unfortunately, first time and low income Buyers are often the most time consuming for agents. If there's not a payday in the future, what agent will want to show endless properties and write offers? Can you imagine an agent invoicing a Buyer every time they show a home or for writing an offer? It simply doesn't make sense! As a result, Sellers might not have anyone showing their homes and agents will focus on getting listings and ignore Buyers altogether.

Conclusion:

While recent rulings against the NAR have sparked discussions about the real estate industry's practices, the value of Realtors in the buying and selling process remains undeniable. Realtors bring expertise, negotiation skills, and convenience to the table, enhancing your overall experience and ensuring a smooth transaction. If you're selling a home soon, negotiate your commission carefully and keep in mind that in order to sell your house, you need a buyer to see it and that means giving something to their agent so you can get a lot! As you navigate the real estate landscape, consider partnering with a realtor to leverage their knowledge and guidance for a successful outcome. Contact me, I'd love to chat with you if you're looking to purchase here in Florida!