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My hot button, the NAR COE support for the shameless lie that Buyers Agency is FREEEE, appears to be one of them, at least to some degree:
"While NAR has long encouraged buyers’ agents to explain how they expect to be paid, typically through offers of cooperative compensation from sellers’ agents, there will be a rule that more definitively states that buyers’ agents cannot represent their services as free to clients."
SOOOOOO Long overdue, and the shame is, it was only done under regulatory pressure, not from internal sense of decency and integrity.
But, I look forward to seeing the new language to see how "definitive" it is.
"Last year, NAR amended the Realtor Code of Ethics to state: “Unless they are receiving no compensation from any source for their time or services, Realtors may use the term ‘free’ and similar terms in their advertising and in other representations only if they clearly and conspicuously disclose (a) by whom they are being, or expect to be, paid; (b) the amount of the payment or anticipated payment; (c) any conditions associated with the payment, offered product, or service; and (d) any other terms relating to their compensation.”
While the change was made in part for the purposes of “legal defensibility,” the DOJ’s complaint alleges that rule “allows brokers to mislead buyers by obscuring the fact that buyers have a stake in what their buyer brokers are being paid for their services. Buyer broker fees, though nominally paid by the home’s seller, are ultimately paid out of the funds from the purchase price of the house. If buyers are told that buyer broker services are ‘free,’ buyers are less likely to think to negotiate a lower buyer broker commission or to view buyer broker rebate offers as attractive.”
The time is soon coming when buyers pay buyers fees and sellers pay sellers fees.
The ones who are claiming Free Real Estate currently will now be saying, well, it's basically Free Real Estate. Sadly, i don't think this ruling will change any of that, but it will create more awareness on the buyer's side of the deal and buyer's will start asking agents to work for less money.
The time is soon coming when buyers pay buyers fees and sellers pay sellers fees.
The ones who are claiming Free Real Estate currently will now be saying, well, it's basically Free Real Estate. Sadly, i don't think this ruling will change any of that, but it will create more awareness on the buyer's side of the deal and buyer's will start asking agents to work for less money.
Buyers agent fees are not free to buyers, i.e., undeniably, they pay them and have for years.
This is just a bit of an erosion of the misleading proposition NAR has supported for years.
The needed step is to get Fannie, Freddie, etc, to recognize a drift in integrity and to allow buyers to account for their transaction expense on their side of the ledger.
That will be a hurdle, for sure.
But, almost all comps have that expense baked into the price. It is just an accounting game at this point.
Chicken or the egg. There is no commission if a buyer doesn't buy the house. The seller is paying the commission. This, in the grand scheme of things, isn't an important issue IMO. Seems like tackling professionalism and other issues would be more important than debates and lawsuits on who's paying the commission. Anyway, carry on.
Chicken or the egg. There is no commission if a buyer doesn't buy the house. The seller is paying the commission. This, in the grand scheme of things, isn't an important issue IMO. Seems like tackling professionalism and other issues would be more important than debates and lawsuits on who's paying the commission. Anyway, carry on.
This goes to the heart of professionalism, Brandon.
Directly to the heart.
If the lie on compensation is supported, any claim of professionalism after that is in doubt.
"Pay" is such a vague term, and probably inappropriate.
For the first seven years in business, with KW, I was paid by the closing attorney or the MCA.
For the last 8 years, I have been "paid" solely by the closing attorney. Since the money is THE BUYERS's money in trust, the closing attorney cannot disburse until the buyer's deed is recorded.
This goes to the heart of professionalism, Brandon.
Directly to the heart.
If the lie on compensation is supported, any claim of professionalism after that is in doubt.
"Pay" is such a vague term, and probably inappropriate.
For the first seven years in business, with KW, I was paid by the closing attorney or the MCA.
For the last 8 years, I have been "paid" solely by the closing attorney. Since the money is THE BUYERS's money in trust, the closing attorney cannot disburse until the buyer's deed is recorded.
True but if you look at it in a strict legal sense the money does not go from the buyer to the agent or the broker. The closing statement reflects that the money technically flows from the buyer to the seller and then from the seller to the broker and then not reflected on the closing statement some of that money is then paid by the broker to the agent.
To me, this is really semantics. If we somehow waived a magic wand and buyer brokerage disappeared I don't honestly believe that nationwide home values would suddenly drop by a percentage equal to the co-broke fee. So, if anyone is really taking the hit here it's the seller. Just my personal perspective. Buyer representation is not "free" but it's built into the cost of buying the house whether you decide to take advantage of it or not. It's similar to when stores advertise "0% FINANCING!!!" These stores are not running a charity. In reality, the cost of the "free" financing is built into the price of the furniture whether you take advantage of it or not. There's a furniture chain in New England called Jordan's Furniture. It was bought by Buffett from the family that started it as they sell more per square foot of their VERY large stores than any other furniture store in the country. They often run specials that offer 15% off or 0% financing and I think this further reflects my point about the cost of the financing being built in.
Just to sum up since I got a little long winded . . . buyer representation is absolutely not FREE. However, you pay for it whether you want it or not.
True but if you look at it in a strict legal sense the money does not go from the buyer to the agent or the broker. The closing statement reflects that the money technically flows from the buyer to the seller and then from the seller to the broker and then not reflected on the closing statement some of that money is then paid by the broker to the agent.
It's just an accounting ruse to get the lenders to play along.
It's just an archaic system, rooted in the days preceding buyers agency, when everything was stacked against the buyers.
Heck, many people still call the buyers' fiduciary the "selling agent." Droll. Very droll.
Quote:
Originally Posted by MikePRU
To me, this is really semantics. If we somehow waived a magic wand and buyer brokerage disappeared I don't honestly believe that nationwide home values would suddenly drop by a percentage equal to the co-broke fee. So, if anyone is really taking the hit here it's the seller. Just my personal perspective. Buyer representation is not "free" but it's built into the cost of buying the house whether you decide to take advantage of it or not. It's similar to when stores advertise "0% FINANCING!!!" These stores are not running a charity. In reality, the cost of the "free" financing is built into the price of the furniture whether you take advantage of it or not. There's a furniture chain in New England called Jordan's Furniture. It was bought by Buffett from the family that started it as they sell more per square foot of their VERY large stores than any other furniture store in the country. They often run specials that offer 15% off or 0% financing and I think this further reflects my point about the cost of the financing being built in.
It is much more than semantics, Mike.
"Semantics" is not an excuse for misleading claims, lack of transparency, spurious claims of fiduciary duty, and industry-common competitive restrictions.
Buyers agency doesn't need to go anywhere. As it is today, people should still have the choice to have representation or not.
Let the market decide whether buyers agency is valuable, and set the value.
And, one day, when the pendulum swings from sellers market to buyers market, you can be sure the comps based on a buyers agent's co-broke will ebb away a bit.
But, look at the DOJ complaints.
Buyers are often not told the commission on properties, and have no way of knowing if their fiduciary is steering them for commissions. How is that right?
Buyers often don't what their agent's compensation is until they see closing documents.
When NCAR and NCREC and the NC Bar Association agreed to mandate that buyer agents needed to be transparent, the hue and cry was childish and dismaying. I heard old dogs whining, "How is it any of their business how much I make?"
And, the above entities backed down and revised the forms to remove that transparency.
Last edited by MikeJaquish; 11-20-2020 at 08:12 AM..
What is a modern solution to this archaic problem that will work with the lending/representation infrastructure that exists or does that infrastructure effectively prevent a solution?
What is a modern solution to this archaic problem that will work with the lending/representation infrastructure that exists or does that infrastructure effectively prevent a solution?
Lending infrastructure is supported by the same US Government that DOJ works for.
It is hampering a solution, and needs to evolve, too.
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