The Real Estate Market is About to Change Dramatically

[PleaseBlitz]

Yea, I don’t think this will increase costs for buyers. It will increase DIRECT costs, but it is likely to drastically reduce the overall costs of housing transactions, and buyers will reap a lot of that benefit. 
 

If the opposite were true, the National Association of Realtors wouldn’t be fighting it tooth and nail. 
 

Leave it to a realtor to not understand how any of this works. 

[Ball Security]

1 hour ago, hail2skins said:

The real estate market is seriously out of whack

 

https://www.yahoo.com/finance/news/40-old-dad-bought-sold-100000927.html

I wish the story had a little more detail such as where in NH the job is located. And how much equity they had in their NC home that sold for $460k.

 

$200k in combined salary but with a $20k childcare costs (which may be temporary). Do they make a relatively similar amount?

 

I’m a pretty empathetic guy, but I’m not feeling it with this one.

[PokerPacker]

This is a start to fixing the Real Estate market.  Now let's go after the investors.  Housing should be for people to live in, not an investment so rich people can make free money off of younger people who weren't old enough to enter the market before it was ****ed.

[tshile]

I was plainly told, when selling the house, we had to offer to pay the standard 3% commission to the buying agent because if we didn’t we would run the risk of certain/many/all buying agents either not showing our house, downplaying our house or its value, or otherwise somehow pushing houses that were offering 3%. 
 

I think it’s reasonable to think there is an array of value offered by a real estate agent, but that they are and should not be allowed to collude(ing) to fix the market in terms of how much money they make. 
 

I think slapping their organization super hard like this is probably a good thing. They can still provide their needed services, they still have a right to a fair earning in the market, they just have to follow fair practices. Seems reasonable to me. 

Edited November 4, 2023 by tshile

[RansomthePasserby]

16 hours ago, CousinsCowgirl84 said:

Because now the agent who helps a buyer buy a home will charge money for showings instead of the taking in the three percent they get from the seller. 
 

right now the 3 percent for the buying and selling agents comes from the sales price, eg from the seller, not the buyer. If the buyers agent isn’t getting that three percent from the seller they gotta get it from somewhere.

You’re right, if the buyer’s agent isn’t getting that three percent from the seller, they gotta get it somewhere, but the real estate industry isn’t in a vacuum and they’ll look for it in some other industry.

 

So if a buyer’s agent will now charge money for showings, admin work, etc., there will be competition between agents to provide the highest quality services at the lowest/most competitive price. Which means that those agents who aren’t motivated to scale up and increase their quality will effectively get pushed out of the industry by agents who are.
 

Unmotivated agents who are just looking for a quick buck and aren’t getting their expected return with the minimal time and effort they put in will leave the real estate industry and look for that money elsewhere. 

Edited November 4, 2023 by RansomthePasserby
Split a block of text into paragraphs

[CousinsCowgirl84]

26 minutes ago, RansomthePasserby said:

You’re right, if the buyer’s agent isn’t getting that three percent from the seller, they gotta get it somewhere, but the real estate industry isn’t in a vacuum and they’ll look for it in some other industry.

 

So if a buyer’s agent will now charge money for showings, admin work, etc., there will be competition between agents to provide the highest quality services at the lowest/most competitive price. Which means that those agents who aren’t motivated to scale up and increase their quality will effectively get pushed out of the industry by agents who are.

 

 

which probably means the buyer agents will all be ran by large corporations that can aggregate the administrative costs. Like cap center. Well, until the bigger corporations have sufficient market share, then they can raise the prices unilaterally.
 

Is that really a good thing?

 

 

26 minutes ago, RansomthePasserby said:

 

Unmotivated agents who are just looking for a quick buck and aren’t getting their expected return with the minimal time and effort they put in will leave the real estate industry and look for that money elsewhere. 

which will making finding a buying agent more difficult and expensive.

 

 

im not saying the current system is good, im just saying this won’t make anything cheaper.

Edited November 4, 2023 by CousinsCowgirl84

[PokerPacker]

11 minutes ago, CousinsCowgirl84 said:

which will making finding a buying agent more difficult and expensive.

More expensive than an agent whose incentive is to get you to pay as much money as possible for a house to increase their commission?  In a market of already inflated house values?  Doubtful.

[Die Hard]

1 hour ago, PokerPacker said:

This is a start to fixing the Real Estate market.  Now let's go after the investors.  Housing should be for people to live in, not an investment so rich people can make free money off of younger people who weren't old enough to enter the market before it was ****ed.

Housing/living affordability is the primary talking point in Canada right now.

 

And that’s a major point of contention in the discussion . As well as immigration, international students, and short-term rentals (AirBnB).

 

Interestingly enough, the stats show that 70% of Canadian parliament own investment properties (ie. they’re landlords).

 

So it’s pretty unlikely that your consideration is going to be among their first dozen approaches 😂😂

 

 

[RansomthePasserby]

30 minutes ago, CousinsCowgirl84 said:

 

which will making finding a buying agent more difficult and expensive.

 

 

im not saying the current system is good, im just saying this won’t make anything cheaper.

Right now the cost is 3% of the price of a house. So if a house is $400K the realtor alone costs around $12K plus 8% interest over 30 years if the buyer is paying with a mortgage. There’s no way to know the future, but I’d guess the chances of the cost of a realtor lowering are much higher than the chance of the cost increasing. 

[Fergasun]

That's why I asked in post 2.  Do we just need RE lawyers to help with contracts?  $2000 to review contract terms? 

 

I wanted to DIY buying and selling without a lawyer... my wife thought I was nuts (I even bought a books) and didn't allow it.  Our agent was nice, and there were some complexities with our location, but not 3% worth it.  

 

But, in my white collar field, 3 percent of $500k is $15000, about 160 hours of labor.  Our agent probably did about 40 hours of labor.   Athough I was also paying for their experience.  

[RansomthePasserby]

34 minutes ago, Fergasun said:

That's why I asked in post 2.  Do we just need RE lawyers to help with contracts?  $2000 to review contract terms? 

 

I wanted to DIY buying and selling without a lawyer... my wife thought I was nuts (I even bought a books) and didn't allow it.  Our agent was nice, and there were some complexities with our location, but not 3% worth it.  

 

But, in my white collar field, 3 percent of $500k is $15000, about 160 hours of labor.  Our agent probably did about 40 hours of labor.   Athough I was also paying for their experience.  

The problem with the current system is that due to comps the cost of the realtor is built in to the value of the house (which makes zero sense when you think about it). So you wouldn’t necessarily save any money by doing the work yourself unless you were able to negotiate with the seller and convince them that they would be getting a better deal if they sold to you vs. selling to someone else who has a realtor.

 

EDIT - Which is where the collusion issue enters because in the case of the DIY buyer, the seller’s realtor has an incentive not to negotiate with a DIY buyer and instead shut the DIYer out and sell to another realtor at a higher price even if it’s not in the best interest of the seller since the seller’s realtor also gets commission from the cost of the house. 
 

Disconnecting the cost of the realtor from the value of the house would make DIY buying/selling more feasible. 

Edited November 4, 2023 by RansomthePasserby

[Ball Security]

9 minutes ago, RansomthePasserby said:

The problem with the current system is that due to comps the cost of the realtor is built in to the value of the house (which makes zero sense when you think about it). So you wouldn’t necessarily save any money by doing the work yourself unless you were able to negotiate with the seller and convince them that they would be getting a better deal if they sold to you vs. selling to someone else who has a realtor.

 

EDIT - Which is where the collusion issue enters because in the case of the DIY buyer, the seller’s realtor has an incentive not to negotiate with a DIY buyer and instead shut the DIYer out and sell to another realtor at a higher price even if it’s not in the best interest of the seller since the seller’s realtor also gets commission from the cost of the house. 
 

Disconnecting the cost of the realtor from the value of the house would make DIY buying/selling more feasible. 

Trying to think of an example of when it wouldn’t be in the seller’s best interest to sell for the highest price. 

[RansomthePasserby]

1 minute ago, Ball Security said:

Trying to think of an example of when it wouldn’t be in the seller’s best interest to sell for the highest price. 

So Ferguson calculated it costs $15,000 to pay a buyer’s agent. If he decides to go DIY he could negotiate with the seller to pass a portion of that $15,000 to the seller, and he could still pay less for the house than he would have if he had an agent. 

[CousinsCowgirl84]

1 hour ago, PokerPacker said:

More expensive than an agent whose incentive is to get you to pay as much money as possible for a house to increase their commission?  In a market of already inflated house values?  Doubtful.

I find it doubtful that in a market with fewer real estate agents and the same number of buyers, that the real estate agents will choose to get paid less for doing more work than they do now. Anyone who thinks otherwise is incredibly naive.

[PokerPacker]

7 minutes ago, CousinsCowgirl84 said:

I find it doubtful that in a market with fewer real estate agents and the same number of buyers, that the real estate agents will choose to get paid less for doing more work than they do now. Anyone who thinks otherwise is incredibly naive.

Do you understand how free markets work?  When they are controlled by the laws of supply and demand rather than through collusion and perverse incentives?  If given the option of paying a realtor $15k to show me houses (2.5% of $600k) or just looking at houses for myself and paying a lawyer maybe a couple grand to handle all of the closing paperwork for me, I'll go with the lawyer.  Enough people take that option and real estate agents will have to lower their demands or be priced out of the market.

Edited November 4, 2023 by PokerPacker

[CousinsCowgirl84]

2 minutes ago, PokerPacker said:

Do you understand how free markets work?  When they are controlled by the laws of supply and demand rather than through collusion and perverse incentives?  If given the option of paying a realtor $15k to show me houses (2.5% of $600k) or just looking at houses for myself and paying a lawyer maybe a couple grand to handle all of the closing paperwork for me, I'll go with the lawyer.  Enough people take that option and real estate agents will have to lower their demands or be priced out of the market.

They will be priced out the market.

[CousinsCowgirl84]

Always funny how people talk about how other people should/will accept less for doing the work while at the same time complain about the erosion of the middle class, how you can’t earn a living wage ect. This change will just benefit large real estate firms.

[PokerPacker]

13 minutes ago, CousinsCowgirl84 said:

Always funny how people talk about how other people should/will accept less for doing the work while at the same time complain about the erosion of the middle class, how you can’t earn a living wage ect. This change will just benefit large real estate firms.

They should accept fair market value rather than ****ing with the markets to extract value that would not otherwise be due to them.  The current market is not working correctly.  It's not "You should accept less for your work", it's "You should stop using collusion to artificially inflate your income at the expense of other people".  Just because they're not the big-dog billionaires doesn't make their use of collusion right.

[TheGreatBuzz]

26 minutes ago, CousinsCowgirl84 said:

Always funny how people talk about how other people should/will accept less for doing the work while at the same time complain about the erosion of the middle class, how you can’t earn a living wage ect. This change will just benefit large real estate firms.

 

Much like the disappearance of the typewriter repairman. 

[Jabbyrwock]

3 minutes ago, TheGreatBuzz said:

 

Much like the disappearance of the typewriter repairman. 

 

That's just what the typewriter repairmen lobby wants you to believe.  Don't fall for the propaganda from big ribbon.

[Dr. Do Itch Big]

When I watched Marge becoming a real estate agent, I figured the job was a scam 

[tshile]

Um. I don’t understand the confusion over  @TheGreatBuzz ‘s sisters text. She said it’ll increase out of pocket expenses. Because you’ll pay your agency directly, on however that’s agreed. Instead of them getting 3% of the sale price which comes out of your down payment/loan, and is a line item on the closing sheet but not an out of pocket expense.

 

she didn’t comment on whether it would be more total money or not, just that it becomes an out of pocket expense. 
 

and she’s right - cheap money let people spend way more than they should and drove up prices. 

And corporations buy homes to rent them out. 

[PokerPacker]

15 minutes ago, tshile said:

Um. I don’t understand the confusion over  @TheGreatBuzz ‘s sisters text. She said it’ll increase out of pocket expenses. Because you’ll pay your agency directly, on however that’s agreed. Instead of them getting 3% of the sale price which comes out of your down payment/loan, and is a line item on the closing sheet but not an out of pocket expense.

 

she didn’t comment on whether it would be more total money or not, just that it becomes an out of pocket expense.

On the other hand, if the house is purchased for $15k less due to not adding in a commission to the buying realtor, that's $15k less in the purchase price of the home, and with a down-payment of 20%, that's $3k less in down-payment.

Edited November 4, 2023 by PokerPacker

[RansomthePasserby]

Just now, PokerPacker said:

On the other hand, if the house is purchased for $15k less due to not adding in a commission to the buying realtor, that's $15k less in the purchase price of the home, and with a down-payment of 20%, that's $3k less in down-payment.

And/or $15k less potentially contributing to the principal of a loan. 

[tshile]

2 hours ago, PokerPacker said:

On the other hand, if the house is purchased for $15k less due to not adding in a commission to the buying realtor, that's $15k less in the purchase price of the home, and with a down-payment of 20%, that's $3k less in down-payment.

Yes. The expense is still out of pocket so it’s not really on the other hand, they go together.