The Downfall of Realtors

r e a l t o r s Realtors and you know what rhymes with Realtors a $418 million settlement in the US OFA baby there are over 2 million wait no 3 million real estate agents that's a lot of chickens you see champ over the last few years real estate agents have made a lot of money you know because real estate's been a Bo and agents make their money from commission oh you want to sell your house well can can I have some of that money too I can I can fill in some forms for you please okay I know successful agents do way more than that they have a job where they're on call 24/7 they get no weekends or vacations they have to deal with very difficult people 80% of their clients just waste their time and don't even buy anything and their income is solely based on how hard they work oh yeah and they have to spend a whole bunch of time in the hot sun golfing when a house is sold the seller has to Pork up some of their juicy equity and pay not only their agent but also the buyer agent but then a few Midwestern were like I ain't I ain't paying that I have to Honey get the lawyer on the phone I said lawyer half a billion dollars worth of settlements later here we are so who will pay the buyer agent what will they do where will they go I made a PowerPoint about how a bunch of Realtors are probably going to lose their jobs in the next few years oh yeah and how home ownership is going to be much more difficult okay so currently Realtors wait what a realtor and a real estate agent are not the same thing you've used both both those terms they're not the same thing all right I'll explain the difference just just don't scream like that a real estate agent is someone that's licensed by the state to be able to represent a seller or buyer a real Tor is a real estate agent that is also a member of the NR okay stop stop this idiot meant to say the N not the National Rifle Association okay thanks love you by meaning they have like a code of ethics they have to follow the NRA also controls most of the MLS says or databases where agents can conveniently browse all the different types of dwellings that are for sale I like that one in this video I'm going to use these terms interchangeably most active agents are realtors anyway so okay uh currently if you sell a house for let's say $400,000 which is about the median home price you the seller will pay your agent about 2.2% or $10,000 which is about the cost of this Toyota propane for Clift you the seller would also pay the buyer agent that same 2 1/2% or $10,000 you are now down to forklifts there's also some closing costs that the seller has to pay but we're going to just ignore them for the Simplicity of this video but it would be like 2 and 1 half fork clifts or two for clifts and one of them riding mowers with the levers that can spin real good I like those ones the main reason for this seller pays for everything model is to make buying a home more affordable first-time home buyers don't usually have extra v-bucks lying around to cover a bunch of fees they barely Save open up for the lowest possible down payment that could get them a mortgage poor people gross sellers on the other hand are not as emotionally destroyed by these fees because they usually have some Equity that they could tap into to gobble them up this business model has been used for decades and is pretty common with real estate transactions 2019 a few chumbucket loads of sellers had a slumber party and decided to file a classy little lawsuit for one .8 billion with the NRA and a few other real estate companies the lawsuit it's sort of complicated but essentially the NRA was in conspiracy no no jo not that type of conspiracy uh to keep commissions high or price fixing which is illegal as in don't do that I mentioned earlier that the NRA controls most of the MLS well they sort of say we'll give you the beans but you got to pay the troll toll the beans being access to the MLS and the told be in a requirement that the agent be part of the Cooperative compensation rule allegedly they were sort of encouraging a market where the buyer agent and the seller agent were getting paid a set Commission on every single transaction no matter what so there was no incentive for the buyer agent to try to fight for the best deal they were getting paid to close in other words it was anti-competitive now important to point out that the buyer's agent commission has always been negotiable I mean you could pay as little as a dollar but it just became standard practice for the seller to pay the buyer's agent that 2 and 1/2 to 3% it was almost like if the seller told their agent hey bucko I'm paying the buyer's agent more than the price of one of them hot juicy inflation resistant Costco hot dogs well then the sellers agent would just be like sorry bud no can do boo and just refuse to list a property because they know that would drive away a large percentage of the buyers now this wasn't always the case some Realtors did operate with integrity and L represent their buyer and try to get them the best deal but the former was just encouraged and more common and the latter was just pushed over after a fierce battle and millions of dollars in lawyer fees the NRA finally said all right fine we tap under two conditions one all claims against the NRA and its members get thrown out the window and two Cooperative compensation or the buyer paying for both of the agents can still be used as an option when buying and selling it just can't be listed on the MLS it has to be something agents negotiate on you know on the Battlegrounds before I get into the possible outcomes the settlement could have I want to gently Chuck the fact that housing is not going to get any more affordable um no lol the seller saving money they're just going to drop the value of the house idiot home prices are determined by the average selling price of similar homes within a certain distance over the prior 6 months the home price does not give a Lolli pop demolishing hoop about who's paying what commission some estimates say that agent compensation could drop by 30% and since like 20% of the agents are doing 80% of the deals a good chunk of the new and untalented agents are going to be forced to go on get out of the industry driving more business to the successful ones 30% is a lot though I don't think it's going to be nearly that crazy but still I think some agents will lose their jobs because of this little half a billion dollar settlement so there's really three possible outcomes that everyone's been blabbering about one outcome is that the buyer will have to pay for their agent like I mentioned before home buyers are usually tied on cash and adding another fee that they have to pay will gently shove a good number of buyers out of the market resulting in less clients to go around and forcing some agents to lose their jobs there is some talk of paying agents hourly sure would motivate agents to try to get the best deal but it's just unrealistic for this occupation they're going to charge crazy frog hourly rates every time they show a property to a potential buyer because not only will the rate include the labor for the agent to actually show the property but it would also have to account all the other operating expenses agents have like brokerage fees licensing MLS Access Transportation and golfing I mean networking potential buyers are not going to want to pay $200 to Waddle through a two-bedroom house because the average buyer goes to like 10 houses K in the castle another outcome is getting rid of the buyer's agent altogether this one will clearly require less agents but it's kind of an unlikely outcome sure a few Savvy folks that are very well versed in real estate will just not hire an agent and be moderately fine but for the vast majority of the Knuckleheads out there hiring an agent is a must I mean do you think the average schmuck knows everything they have to do to close on a property like scheduling viewings writing offers getting Title Insurance scheduling Home Inspections and working with financing and heck what about just general knowledge stuff like crime rates school districts city permits home warranties referrals and even professionally exchanging how do you does with the sell yeah maybe a resourceful schmuck does but an average one I don't think so pal and the third outcome is that nothing really changes the buyer will still ask the seller to pay for their agent the settlement still does allow that there will still be a few instances here and there where the seller will be like I'm not paying 22% get out of here and the buyer will just go ah yes I had a feeling you're somewhat of an intellectual I can't pull a fast one on you can I well what about 1.99% h i could spot a bad deal from 10 ft away and that's a fantastic deal let's get this thing going I think this is the most likely outcome oh um ey buyers or otherwise known as the weasels that are making homeownership impossible in America Zillow red fin open door and like a dozen other others I don't think they're going to get affected by this like at all they can just all the fees on their end or the buyer side and be totally fine in fact sellers are probably going to see them as a profitable alternative than working with a buyer's agent they won't have to pay the buyer agent fees redin already does this they're even undercutting the seller agent fees once again agents will fall with all that said will this settlement even make a difference in the home buying and selling process I don't know forcing buyers to pay agent fees will put a lot of critical damage on the buyers and agents I guess sellers benefit but then if they're selling their home they're going to have to buy a new home in which case it just like cancels out ey buyers are definitely going to benefit from this but I don't think that's particularly a good thing also VA loans VA borrowers are not allowed to pay any agent fees so what are they going to do there I realize everything I just said would veryy if it's a buyer's market or a sell's market but I just didn't really want to get into that okay that's it if you like what you saw like And subscribe thank you the rat goes like this like this like this you are now a normal rat

Channel: Alex Poly

Views: 5,112

Keywords: real estate, housing market, housing crisis, mortgage rates, real estate crash, graham stephan, housing market 2024, housing market update, realtors, real estate agents, comedy, nra, national realtor, nra lawsuit, nra seattlement, real estate investing, phoenix housing market update, housing market update today, mortgage rates today, real estate lawsuit

Id: udJXRYTnCPY

Length: 10min 9sec (609 seconds)

Published: Thu Apr 18 2024