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Old 11-04-2023, 09:02 PM
 
Location: Cary, NC
43,265 posts, read 77,043,330 times
Reputation: 45612

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Quote:
Originally Posted by Chas863 View Post
If all commissions are negotiable and agencies can't set any minimum, then how are real estate agencies going to stay in business? Any agent with the company could cut the throat of another agent in his same company by offering to list a property for a slightly lower commission.

This means that a shrewd seller could play one agent against another agent in the same company, not to mention the fact that he could play one company against another company.

Example:

Agent Tom: Mr Jones, I'll list your house for only 1.5% commission.

Mr Jones: But Agent Mary (at your company) said that she would list my house for only 1% commission.

Agent Tom: In that case, I'll list your house for only 0.75% commission.

Mr Jones: Let me get back to you. I need to check with Agent Mary to see if she'll list it for 0.5% commission.

Where does this end? It appears that it will end with real estate agents working for minimum wage (or less).

Firms stay in business with revenue from commissions.
As explained earlier:
Quote:
Originally Posted by MikeJaquish View Post
In addition to monetary compensation, the settling defendants also agreed to make the following changes to their business practices:
...

Eliminate any minimum client commission requirements that Anywhere Real Estate owned brokerages may have;
Easy to circumvent the intent. Brokerages would only need to set up minimum agent commission splits. I.e., agent would have to generate a commission that would pay the broker and, if desired, produce a personal profit.
Firm says, "Your fee per transaction will be 1.2% of the contract price." No minimum commission requirement, but the agent knows they have to cover the split.

...
How to prevent agents in the same firm from lowball cutthroat competition besides a minimum split to the firm?
Easy:
Have agents register leads in the firm database, and then be protected as exclusive firm reps, so that other agents cannot steal those leads or come in later. Associates are already responsible for providing the firm with copies of all correspondence and communication with potential clients (although no one does) so enforcing that requirement would help provide a good framework.
Or have the successful agent pay splits to any or all other agents who saw the seller.
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Old 11-04-2023, 09:23 PM
 
5,959 posts, read 3,706,857 times
Reputation: 16985
Quote:
Originally Posted by MikeJaquish View Post
Firms stay in business with revenue from commissions.
As explained earlier:


How to prevent agents in the same firm from lowball cutthroat competition besides a minimum split to the firm?
Easy:
Have agents register leads in the firm database, and then be protected as exclusive firm reps, so that other agents cannot steal those leads or come in later. Associates are already responsible for providing the firm with copies of all correspondence and communication with potential clients (although no one does) so enforcing that requirement would help provide a good framework.
Or have the successful agent pay splits to any or all other agents who saw the seller.
"Register leads"???? LOL. Hell, some agents would register everyone in town that they had seen or spoken to in the past 20 years. A "lead" is worth absolutely zero until you get their "John Henry" on the listing form.

Or "pay splits to any or all other agents who saw the seller." LOL. Hey, Mike, the idea is to come up with a system that works, not start fistfights among agents in the same office.

If these are the best ideas for handling the new rules, then there's a whole bunch of real estate agents that had better be updating their resume's for a new line of work. I hear that they're hiring down at the Magic Suds Car Wash.
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Old 11-04-2023, 09:28 PM
 
Location: Beacon Falls
1,361 posts, read 990,279 times
Reputation: 1767
Quote:
Originally Posted by MikeJaquish View Post
Oh, please clarify.
What I am saying is maybe the guy actually said:

I am questioning you about your compensation offering in the local MLS because it is .25% less than standard

But was actually trying to say:

I am questioning you about your compensation offering in the local MLS because it is .25% less than what I typically collect

You could argue that both of those things mean the same thing; I would beg to differ. I am not trying to defend the guy; all I am suggesting is that maybe it was a poor choice of words, and that he could have phrased the Q better. In any event, I don't see how that is even close to a fireable offense.
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Old 11-04-2023, 11:56 PM
 
Location: San Diego
5,733 posts, read 4,688,017 times
Reputation: 12791
Quote:
Originally Posted by MikeJaquish View Post
What "flat fee" would you propose?
Something in the neighborhood of $5K - $10K.
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Old 11-05-2023, 04:15 AM
 
Location: Cary, NC
43,265 posts, read 77,043,330 times
Reputation: 45612
Quote:
Originally Posted by riffwraith View Post
What I am saying is maybe the guy actually said:

I am questioning you about your compensation offering in the local MLS because it is .25% less than standard

But was actually trying to say:

I am questioning you about your compensation offering in the local MLS because it is .25% less than what I typically collect

You could argue that both of those things mean the same thing; I would beg to differ. I am not trying to defend the guy; all I am suggesting is that maybe it was a poor choice of words, and that he could have phrased the Q better. In any event, I don't see how that is even close to a fireable offense.

No.
What he said is what he meant.
I am speaking from years in brokerage and contact with hundreds of agents who refer to "standard commission" as a set number.
Silverfall knows exactly what he meant, without semantic acrobatics to rationalize it.
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Old 11-05-2023, 04:16 AM
 
Location: Cary, NC
43,265 posts, read 77,043,330 times
Reputation: 45612
Quote:
Originally Posted by Chas863 View Post
"Register leads"???? LOL. Hell, some agents would register everyone in town that they had seen or spoken to in the past 20 years. A "lead" is worth absolutely zero until you get their "John Henry" on the listing form.

Or "pay splits to any or all other agents who saw the seller." LOL. Hey, Mike, the idea is to come up with a system that works, not start fistfights among agents in the same office.

If these are the best ideas for handling the new rules, then there's a whole bunch of real estate agents that had better be updating their resume's for a new line of work. I hear that they're hiring down at the Magic Suds Car Wash.

You speak from inexperience and lack of understanding of brokerage management.
Brokerages will protect agents who perform for them. That will not change, regardless of rules.

And, this competition that concerns you is exactly what the plaintiffs and the court want.
Regardless, the brokerage will get their revenue, their commission shares, whether the agents make money or not. That is how it is today and will not change.

Last edited by MikeJaquish; 11-05-2023 at 04:42 AM..
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Old 11-05-2023, 06:18 AM
 
Location: North Carolina
3,051 posts, read 2,027,362 times
Reputation: 11332
I am not a RE agent, although decades ago I studied for and passed the test, never worked as an agent. I love real estate and have bought and sold many properties, never as a flipper, they were our homes.

I'm very glad some improvements are being made in the buy/sell process because it is greatly needed.
I'm not sure the lawsuit will solve the main problem which, in my experience has been the biggest: most agents are looking for THEIR paycheck, rather than representing the buyer or seller, they are representing themselves, a big conflict of interest.

Finding the right agent has always been my biggest goal. In 2 sales (2 different states) we used agents we thought were great the first time and the next time we used them they were total crap. Believe me it wasn't us, it was them. Some sales were in the millions, some sales were in the 100 thousands. Like trying to find a spouse using online dating, unreliable.

We are in our "last" home (OK I've said that 2x before lol) and here in Charlotte North Carolina buying was not the FUBAR it was in Florida. But who knows what will happen...next time.
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Old 11-05-2023, 06:41 AM
 
7,736 posts, read 3,778,838 times
Reputation: 14610
Quote:
Originally Posted by Silverfall View Post
RE/Max and Anywhere (Coldwell Banker, ERA, etc), settled earlier instead of going to trial.
Are any terms of that settlement public? I wonder if the remedies in that settlement are merely money, or if there is some change in business practices.
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Old 11-05-2023, 06:48 AM
 
7,736 posts, read 3,778,838 times
Reputation: 14610
Quote:
Originally Posted by SmartMoney View Post
I

Anyway, in the spirit of Dodd/Frank, I'm feeling some legislation is coming (maybe not soon) that will impact RE sales commission. These cases may be interesting reading.
According to Open Secrets, the Real Estate industry is among the leaders in political contributions - $275,525,874. That buys a lot of legislation at the federal, state & municipal levels.
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Old 11-05-2023, 07:30 AM
 
7,736 posts, read 3,778,838 times
Reputation: 14610
Quote:
Originally Posted by MikeJaquish View Post
Factually, the seller passes all fees on to the buyer.
Buyer covers all brokerage fees.
Americans who aren't enlightened in finance are easy marks for self-serving lies they have been told by NAR members.
Quote:
Originally Posted by MikeJaquish View Post
Commission expenses have always been a buyer burden.
The economic analysis of commission structures is identical to the economic analysis of business taxation. Once tax-induced changes in behavior throughout the industry are accounted for, the final distribution of the economic burden of taxes is called its economic incidence. It is also referred to as the tax burden faced by individuals in their roles as consumers, workers, and investors.

One of the fundamental lessons of economics is that the entity that bears the statutory burden of a tax has nothing to do with where the burden of that tax ultimately falls. "Statutory burden" means the entity that must fill out a tax form & send it off to the IRS or to local taxing authorities. In the following, you can substitute real estate buyer & seller in to the analysis of a tax on a corporation being allocated among customers and business owners.

Any statutory burden of a tax on a corporation is allocated as follows:
  • X% is borne by customers in the form of prices higher than they otherwise would be
  • Y% is borne by employees in the form of total compensation (and hours worked) lower than they otherwise would be
  • Z% is borne by business owners (shareholders) in the form of profits lower than they otherwise would be
...where X+Y+Z=1.0 (that is, X%+Y%+Z%=100.0%)

The burden of that statutory tax is always allocated to a combination of customers, employees, and business owners (shareholders).

There quite literally is no place else for the tax to flow: it must go to a combination of the three.

I may not of done the clearest job explaining this concept - the following links probably do a better job.

EconPort - Tax Incidence
https://www.khanacademy.org/economic...-tax-incidence
https://en.wikipedia.org/wiki/Tax_incidence
http://ase.tufts.edu/economics/papers/200607.pdf

So when it comes time to analyze the incidence of a tax or a commission, the question is merely what are the percentages of X, Y, Z above - and that is all about the price elasticity of supply and the price elasticity of demand, their intersection on a supply-demand chart, the slopes of the lines, and the resultant "consumer surplus" and "producer surplus." In other words, is it a seller's market or is it a buyer's market, or balanced in-between.
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