Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A)
No. of Recommendations: 1
No. of Recommendations: 6
Does someone really understand this?
Can you provide a 20 word explanation of the issue at hand?
What cooperative compensation means in this case, and what subtlety of it was determined to have been violated?
To my naive ears the article seems to be speaking about the usual commission split rule in MLS being a no-no.
i.e., By listing with MLS, the listing agent pre-agrees that the closing agent will get a certain cut of the ultimate total commission.
If that is forbidden, it sure would be a big change to the market.
Jim
No. of Recommendations: 1
Here's a brief passage from a New York Times article on the case. Note that damages are subject to being tripled to over $5 billion. Jury deliberated less than 3 hours.
Under a N.A.R. rule, a home seller is required to pay commissions to the agent representing the buyer, which sellers claimed forced them to pay excessive fees to the agents. The home sellers said the brokerages collaborated with N.A.R. to enforce what is called the 'cooperative compensation rule.'
But under the verdict, the sellers would no longer be required to pay their buyers' agents, and agents would be free to set their own commission rates, which could be slashed in half or less. For example, a home seller with a $1 million home can now pay as much as $60,000 in agent commissions ' $30,000 to their agent and $30,000 to the buyers' agent.
https://www.nytimes.com/2023/10/31/realestate/nar-...
No. of Recommendations: 2
Here's a brief passage from a New York Times article on the case. ...
That does sound like a description of the basic MLS commission splitting rule.
If that is deemed unlawful, that sure would throw a monkey wrench into the whole industry.
A much bigger issue for the value of HomeServices / BH than just the cost of this judgment.
I wonder if there is a way around it.
For example, maybe they change the commission splitting agreement so that the selling agent gets the whole commission agreed with the owner, but then by virtue of being an MLS member is separately committed to paying the closing agent some portion of that.
Then there is no intimation that the seller is being forced to pay anything, to anyone, not already explicitly agreed to--which sounded like the nub of the case.
Jim
No. of Recommendations: 1
Some MLS groups have already changed allowing the selling agent to have a $0 buyer agent split. The implication being that if a selling owner so chooses this would reduce their commission. Buyers would need to have separately paid buyer agents.
No. of Recommendations: 1
As of October 2023, National Association of Realtors® (NAR) has changed its commission rule, also known as its Participation Rule. It now allows listing brokers to offer buyer brokers $0 in compensation when listing a home in any of the 500 Realtor-affiliated MLSs across the U.S.
As the Sitzer/Burnett commission lawsuit trial is set to begin on October 16, an attorney for the plaintiffs is calling NAR's reversal of the commission rule a 'stunning admission of guilt,' as reported by Inman.
NAR's Participation Rule previously required listing brokers to offer buyer brokers a commission in order to list a property on the MLS'even if the commission was as little as one penny. With two class action lawsuits gearing up for trial (the Sitzer/Burnett trial set to take place this month and the Moehrl lawsuit trial is expected to begin in the first half of 2024), NAR has changed the details of the rule.
No. of Recommendations: 4
one way or another, RE Commissions in the US are coming down - way down. The trend started already and this just ignites it.
Paying 6% is madness. All negotiable especially on high $ homes.
No. of Recommendations: 2
We've used Redfin for recent sales. 1.5% and 2.5% seller/buyer split. 4% total and properties moved quickly.
No. of Recommendations: 2
I have family in UK and Australia. They were shocked to hear that real estate brokerage commission is 6% of sales price in US. (Of course they are envious of our 30-yr fixed rate mortgages.) It is typically 2% or less there. Anecdotally I have heard Canada has 3% commission. In all these countries the seller pays the broker commission, not the buyer.
I also like the Aussie practice of selling via auction. A home is listed online, broker holds 2-3 open houses. An auction is held about a month later, unless the seller agrees to a private bid before. Most houses sell at the auction, and there is very little uncertainty about when and whether a house will sell.
No. of Recommendations: 4
I also like the Aussie practice of selling via auction. A home is listed online, broker holds 2-3 open houses. An auction is held about a month later, unless the seller agrees to a private bid before. Most houses sell at the auction, and there is very little uncertainty about when and whether a house will sell.
This is pretty common in a lot of places...but usually only during times of booming markets.
If buyers are more scarce, it generally pays to "work" the sale more, and the auction trend usually fades.
In France the commissions seem to vary a lot, if you know they will negotiate. Generally quite negotiable, since agents REALLY want listings...there is no equivalent of MLS.
I once negotiated a commission of "constant + 20% of the amount by which the final offer exceeds XXX".
(a very hard to value property, so nobody knew how close we would get to the high asking price--I wanted the agent to be very highly motivated to elicit an offer close to it)
Jim
No. of Recommendations: 1
I also like the Aussie practice of selling via auction. A home is listed online, broker holds 2-3 open houses. An auction is held about a month later, unless the seller agrees to a private bid before. Most houses sell at the auction, and there is very little uncertainty about when and whether a house will sell.
Here, on the east coast of the U.S., we effectively have this practice. A highly desirable house, which is listed at $700k+, will post a sign "coming soon". Next, the sign is changed to "Open House Sunday 12-5pm". At the open house interested buyers are told that offers are due Monday at noon. The winning offer might be 10%-15% above listing price, especially when buyers use escalation clauses.
No. of Recommendations: 0
. The winning offer might be 10%-15% above listing price
I have always wondered about that. If I was a seller I'd simply bump up my listing price by 10%...and then watch buyers offer 10%-15% above that.
No. of Recommendations: 1
... which is exactly what my wife did when we went to sell our pre-retirement house when I retired.
The realtor suggested a listing price, and Madge bumped it up by 10%. The realtor said "If you insist, but it will not get that price."
Two weeks later she said, "Well color me shocked. You were right. My buyer is offering what you asked and didn't even try to negotiate down."
