Seismic shift in residential real estate commissions now underway

[gypsychic]

Originally Posted by Above Average Bear

Does anyone know how much realtors make hourly on an average sale? I’m guessing it’s pretty damn good! Especially in an up market.

A good realtor does really well. However, probably the majority of realtors (and or part-timers) probably don't even make minimum wage. Remember, they are independent contractors, and not only split their commissions with other agents but their brokerage firms, and all of their expenses (for the most part) are their own. So it isn't always as good as people think. I used to be one back in the 70s, but things were very different then.

It doesn't take much to get a real estate license, but it is a LOT of hard work to become a good, successful realtor.

[Sunshine Rules]

Originally Posted by gypsychic

A good realtor does really well. However, probably the majority of realtors (and or part-timers) probably don't even make minimum wage. Remember, they are independent contractors, and not only split their commissions with other agents but their brokerage firms, and all of their expenses (for the most part) are their own. So it isn't always as good as people think. I used to be one back in the 70s, but things were very different then.

It doesn't take much to get a real estate license, but it is a LOT of hard work to become a good, successful realtor.

We also have to pay 100% of the social security & medicare taxes due on any profits we make. The IRS gets very cranky if we don't make the appropriate quarterly payments.


There's an article out on Housingwire that explains buyer representation and what may be the end results of these "seismic changes" for buyers going forward. The outlook is quite different then the headlines CNN and others have been blasting for the past few days.

Here's the link for those wishing to read the entire article, it's not actually that long:
https://www.housingwire.com/articles...n-real-estate/


It starts out explaining that co-brokes & buyers commissions were not always part of the real estate industry, but rather changes that came about in the early 1990's.

Before the 1990s, the concept of “buyer beware” prevailed, leaving buyers without representation and vulnerable to exploitation or disadvantage. Many buyers struggled with the financial burden of covering closing costs, making it difficult or impossible to also cover the compensation for agent representation.

The dramatic volume of lawsuits filed by aggrieved buyers highlighted the urgent need for change—a need our government in all of its infinite wisdom (sarcasm intended) failed to address at the time. Stepping up to this challenge, real estate professionals pioneered a solution to safeguard these unrepresented buyers. This innovation, known as commission sharing or “cooperative compensation,” fundamentally altered the real estate landscape and better protected buyers.



Also from the article:

The prospect of buyers directly compensating their agents, rather than relying on sellers to do so, might appear equitable at first glance. However, this shift risks significant repercussions, particularly for buyers with limited capital. Many buyers, especially first-timers, might find themselves unable to afford representation, potentially foregoing it altogether.

and

The Department of Justice’s (DOJ) drive to prohibit sellers from compensating buyer’s agents poses a particularly severe challenge for low-income home buyers. While affluent purchasers of million-dollar properties may navigate the market with ease, regardless of representation costs, they represent a mere 7% of the real estate market. Conversely, properties priced below $400,000—encompassing around half of all U.S. home sales—often attract buyers who are stretching their financial limits to achieve home ownership.

Many here in the Sarasota area are fortunate to be affluent enough not to have to worry about adding buyer agent fees to their costs, so the upcoming changes will not have much of an impact on them, but that cannot be said for 93% of the home buying public.