this post was submitted on 31 Aug 2024
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Economy
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And this is exactly what the NAR said would happen if buyers' agents' commissions went away. Yes, the "standard fee" was anti-competitive, but it favored customers, not agents. All of the risk, all of the upfront costs, it was all on the agents. It's like reverse insurance.
Agents were mostly individuals drawn in by the promise of large comissions, but it was a losing proposition. 90% of agents make less than minimum wage. Now that they have no incentive to do the work, the void creates an opportunity for predatory corporations to exploit a captive market.
I'm not defending the NAR or its anti-competitive practices. In fact, I'd argue that the way they atructured the settlement just created another vector for them to control the market and squeeze home buyers and sellers. They could have encouraged rate negotiations and MLS competition without eliminating the buyer's broker commission and made it more obvious that it is negotiable. By removing commissions from the MLS entirely, they screwed agents and buyers at the same time.
Commission encourages both sides of agents to push for as many closings as they can in as short amount of time as they can. It does not favor the buyer or the seller.
Commissions encourage closings, yes, but buyers and sellers want closings, and ultimately the buyers and sellers are entirely in control of the closing. If the buyer or the seller refuses to sign on the dotted line, it is nearly impossible, and possibly career suicide, to collect any payment at all. And while I agree the NAR engaged in bad faith practices making commissions standard, they have always been negotiable. It's like the NAR got caught with their thumb on the scale, so they threw out the scale and started charging entrance fees to the market instead.
Claiming the buyers and sellers are totally in control is a cop out when they're relying on these experts' opinions. Yes, they technically are in control.