Real Estate Crash thread

[PNWbrit]

Are realtors fiduciaries?

Yes.

[east or bust]

Maybe this has already been discussed - does anyone think real estate attorneys are going to become more popular? Maybe not for first time/less experienced home buyers, where a good agent can be super helpful. But for a more seasoned home buyer wouldn't it be feasible to bypass the buyer's agent altogether and just have an attorney review the paperwork to make sure you're not missing something or getting fleeced? Wouldn't that usually be way less expensive than even paying a lower commission to a buyer's agent?

[Danno]

The whole "agent's steeting buyers only to properties with higher commissions" thing is kinda funny. It's a low inventory environment. Any agents not putting a home in front of their buyer over 0.5% or 1% difference is insane. If there are agents out their doing that they don't stay agents very long anyway.

With all due respect, you have been in the business for how long? You've only seen the "low inventory environment" and only in a fairly rural area. There have been many periods where it was not a "low inventory environment", quite the opposite, and as singlesline noted, in large metro areas the situation can be quite different.

Not to mention that there are more ways for agents to steer buyers one way or another than "not putting a home in front of their buyer".

[Whiteroom_Guardian]

With all due respect, you have been in the business for how long? You've only seen the "low inventory environment" and only in a fairly rural area. There have been many periods where it was not a "low inventory environment", quite the opposite, and as singlesline noted, in large metro areas the situation can be quite different.

Not to mention that there are more ways for agents to steer buyers one way or another than "not putting a home in front of their buyer".

I've been in the business 6 years. I have family members who have been in 20-35+ years. I have seen slow/high inventory markets with some level of understanding. I get that different markets are different.

[BmillsSkier]

Yes.

Interesting. From my perspective (and to Danno's point), maybe the fiduciary standard isn't enforced the same as it is in other relationships (despite that it should mean the same regardless of industry)?

Maybe this has already been discussed - does anyone think real estate attorneys are going to become more popular? Maybe not for first time/less experienced home buyers, where a good agent can be super helpful. But for a more seasoned home buyer wouldn't it be feasible to bypass the buyer's agent altogether and just have an attorney review the paperwork to make sure you're not missing something or getting fleeced? Wouldn't that usually be way less expensive than even paying a lower commission to a buyer's agent?

In my state real estate closings are handled with closing attorneys which some people like and some people bemoan. In other states where I've bought/sold property title companies are used similar to most commercial property transactions. Personally I like the closing attorney route as we haven't used realtors in the last two houses we bought so it minimized costs and you were still getting doc review/escrow services/settlement services/recording services all under one roof. As with anything YMMV.

[PNWbrit]

Interesting. From my perspective (and to Danno's point), maybe the fiduciary standard isn't enforced the same as it is in other relationships (despite that it should mean the same regardless of industry)?

Yep.

From NAR

Fiduciary duties are all the duties that a real estate agent or broker is legally beholden to when working with a client.
These duties, which are in the client’s best interest, can be summarized by the acronym OLDCAR: obedience, loyalty, disclosure, confidentiality, accounting, and reasonable care.
Agency is created once an agreement is signed, though a small number of states allow oral agreements.

[BmillsSkier]

Learn something new every day. Thanks.

[Core Shot]

Which states are the ones that allow oral agreements with a realtor.

This concept intrigues me.

[Ted Striker]

This article touches on how that steering worked in practice:

https://prospect.org/justice/2024-03...estate-cartel/

I notice that article uses the UK for examples, but despite their lower commission costs, the average home cost is significantly higher than in the US - both in price to income, and in real £/$. Same goes for Canada.

It's easy to point to previous commissions being part of a home's total cost/price to date, but it's magical thinking to claim supply/demand/rates aren't what really dictate future prices.

[Supermoon]

It definitely factors into selling decisions. if you basically lose 6% of your home value selling, then buying, that’s a big chunk of cash that’s removed from your next purchase.

It’s also funny how big of a part of my RE license training a few years ago was about not accidentally entering into an assumed contract with a client.

[Ted Striker]

When we got our mail forwarded to our new house, there was one of those "your neighbor just sold!" color postcards of our old house with the price. My wife, in a very rare moment of pure pettiness, took that postcard and dropped it in the mail to the first realtor with a simple note, "looks like our price was right!"

We got one of those cards when the house next door sold. Didn't recognize the agent, so obviously not a big player in this town, but the general implication was that they sold it. Except it was my wife's listing. Fuckin dirt pimps

[J. Barron DeJong]

I notice that article uses the UK for examples, but despite their lower commission costs, the average home cost is significantly higher than in the US - both in price to income, and in real £/$. Same goes for Canada.

It's easy to point to previous commissions being part of a home's total cost/price to date, but it's magical thinking to claim supply/demand/rates aren't what really dictate future prices.

Yeah, realtor fees aren’t what drive home prices. UK, for example, is woefully behind in building new housing.

But I don’t mind if realtors end up collecting lower fees because buyers don’t see that they were providing a valuable service at the cartel rates.

[Art Shirk]

Maybe this has already been discussed - does anyone think real estate attorneys are going to become more popular? Maybe not for first time/less experienced home buyers, where a good agent can be super helpful. But for a more seasoned home buyer wouldn't it be feasible to bypass the buyer's agent altogether and just have an attorney review the paperwork to make sure you're not missing something or getting fleeced? Wouldn't that usually be way less expensive than even paying a lower commission to a buyer's agent?

For sure. Not sure why more people don’t do it. People buy companies with attorneys, why not a house. I just connected a family member to a friend who is an amazing RE attorney and he helped with the paperwork on a very very high dollar house purchase recently. Same guy helps all the local sports stars buy their homes.


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[Ted Striker]

It definitely factors into selling decisions. if you basically lose 6% of your home value selling, then buying, that’s a big chunk of cash that’s removed from your next purchase.

Yeah, absolutely. Total guess, but there's probably a big chunk of the mid-high market that gets shaken loose. Like someone selling their million plus house in Bellingham to buy a million plus in Bend.

[PNWbrit]

I notice that article uses the UK for examples, but despite their lower commission costs, the average home cost is significantly higher than in the US.. and in real £/$

As the UK market stood in December 2023, the average price for a home was 290,000 British pounds ($368,000)

US market average Q4 2023 is $417,000 from that article

(Both numbers are actually the median it looks like the $417K one comes from the Federal Reserve Bank of St. Louis)

There are far more variables and far more powerful economic forces on UK/US house prices than realtor costs though.

[Ted Striker]

Yeah, realtor fees aren’t what drive home prices. UK, for example, is woefully behind in building new housing.

But I don’t mind if realtors end up collecting lower fees because buyers don’t see that they were providing a valuable service at the cartel rates.

Agree, and so are we. And no sympathy for agents from me either. It's just that I've been privy to just how stupid buyers can be, and having someone in your corner to possibly save you from yourself is generally a good thing.

If I didn't already say it, buyers' agents are going to be a thing of the past like landlines, Blockbuster, and 35mm film.

[dan_pdx]

Interesting. From my perspective (and to Danno's point), maybe the fiduciary standard isn't enforced the same as it is in other relationships (despite that it should mean the same regardless of industry)?

That's an incredibly polite way to say "fiduciary duty? They sure don't fucking act like it!" The fact that steering exists at all, or the rubber stamp home inspectors that they recommend etc etc.

[phatty]

If I didn't already say it, buyers' agents are going to be a thing of the past like Blockbuster.

So only used in Bend, OR?

[yeahman]

If I didn't already say it, buyers' agents are going to be a thing of the past like landlines, Blockbuster, and 35mm film.

I don't think so. The compensation structure might change, but there will still be a lot of people unwilling to spend 500k+ without some sort of expertise in their corner, aside from an attorney to look over the docs.

[neufox47]

The same ones who predicted a major downturn for 2023, and/or failed to predict the 2008 financial crisis? Yeah, I'm ok with that.

Predicting the future is nothing like assessing the economic impact of a fee structure. Do you not believe in economics?

[XXX-er]

https://www.cbc.ca/news/canada/briti...pact-1.7148033

a timely artical on RE

I think prices up here are pretty stupid probably stupider than down south it's hard to buy or rent somewhere to live

[Toadman]

As the UK market stood in December 2023, the average price for a home was 290,000 British pounds ($368,000)

US market average Q4 2023 is $417,000 from that article

(Both numbers are actually the median it looks like the $417K one comes from the Federal Reserve Bank of St. Louis)

There are far more variables and far more powerful economic forces on UK/US house prices than realtor costs though.

Looks like retiring to the British country side is worth looking into. Probably impossible for a Yank to get more than a touron visa I would imagine. I'm guessing the skiing isn't so great in the UK though.

[BmillsSkier]

Fed holds pat on rates, still indicates 3 cuts coming in '24.

https://finance.yahoo.com/news/feder...180231430.html

[PNWbrit]

I'm guessing the skiing isn't so great in the UK though.

Clearly you never went to the Becton Alps.

[skaredshtles]

Clearly you never went to the Becton Alps.