If you haven’t seen or read the recent new, I will tell you the two colossal stories. The National Association of Realtors settled its case with the Justice Department concerning the “supposed” fixing of commissions. It was a whopping $418,000,000. However, Berkshire Hathaway is the only brokerage that is appealing their case, as Warren Buffet has unlimited funds of $168 billion in cash to pursue the company’s innocence.
Whereby, the ex-president penalty was considerably more. He has to come up with 110% of the charges of $454 million by about March 25 or lose the opportunity to appeal his case!
The National Association of Realtors decided to settle the case. If they were to appeal, like Berkshire Hathaway, the costs of fighting the case might have bankrupted the corporation, especially if they lost. I am wondering who is going to pay the $418 million over approximately four years and will it be divided over all of the 1,554,604 Realtors in 106,548 brokerages (as per The National Association of Realtors) in the U.S. in 2024? There are some 2 million licensed agents. If you aren’t part of an MLS, you are not considered or allowed to use the Realtor’s name or logo. Calculating the cost per agent, if divided among all the current licensed Realtors, it would be $268.88, and in the big picture and in the scheme of things that isn’t that bad.
My professional opinion is that it all revolved around the sellers having to pay a commission to a buyer’s agent if their client purchased and closed on the home. However, there are times when the buyer does pay the fee to their buyer’s agent who represents them. But indirectly, it is the seller who pays the buyer’s agent. However, listing agents have the right and the choice not to pay a buyer’s agent. But what usually happens is the buyer’s agent includes their commission in their offer, so the net to the seller is minus the commission to the buyer’s agent. Thus indirectly the seller is still paying their fee.
However, if they are bringing their clients to view the available homes on the market, isn’t it a benefit to the homeowner by creating more showings? So, why not remunerate them? The more traffic the better, especially with our 50-year low in housing inventory. The buyer is already paying a hefty sum for their purchase, so why should they pay the fee? I do not see why this was such a monumental part of the issue in the Department of Justice lawsuit.
When it comes to fixing commissions by brokerages getting together and conspiring and colluding together, which was part of the DOJ case, I find that very suspicious, sketchy and extremely rare on Long Island, at least from my 42 years of experience in the industry. Of course, there is always a possibility that it might have occurred, but is a rarity.
Sellers have the right to discuss the commissions, say no, and then negotiate. But sellers and buyers need to realize the cost of doing business today since that commission check isn’t all profit. I have seen commission splits that can range from a 50/50 split to 100% for the agent. But there are other fees that those agents on the higher commissions have to pay from desk and transaction fees, advertising, business cards, as well as E and O (errors and omissions insurance in the event of a lawsuit, an agent is covered w/the exception of fraud or other events and situations that might not be included). In addition, there are car expenses, e.g. gas, repairs, wear and tear, etc.
When one calculates all the costs, the fees asked for are warranted and proper for those true professionals who are part of the 10% club in earning an excellent income. They will always handle their clients in a transparent, upfront, and candid fashion while doing their business to find their purchasers the next place to call home. For those who tarnish the industry and sometimes give it a bad name, they are far and few between.
Lastly, New York State has a larger number of spotters out there in 2024 to watch over and catch those who do not abide by the rules, regulations, and code of ethics, so they need to watch their back and be aware not to break the law.
P.S. Have you entered my contest yet? Whoever provides the correct answer on how many interest rate reductions or possible increases plus the total percentage reduced or increased this year will be the winner. Your reward will be a dinner with my wife and me and a special surprise bonus! The contest was going to end on 3/15/24, but due to the overwhelming response, we have extended our contest until 4/15/24 at midnight. The final drawing will be on 12/28/24 and the winner will be notified.
Check out My New Digital Business Card that my friend has created the software. I am the National Distributor in the U.S.A. My question is are you still using your old 1900s passé paper business card? Do you still have a rotary phone? Of course not! So, get on board in 2024 with cutting-edge revolutionary and transformational technology that will assist you in propelling your business and profits to the next level. Save my information Videos/Virtual and drone Tours/Bio/Reviews to your Cell/iPad/iPod and PC contacts by clicking on the link below, and clicking on Create, then “DONE, then “DONE” again.
https://WWW.onetapconnect.com/turnkeyrealestate-philraices
Hoping you, your Family, Friends, and Business associates have a Healthier, Safer, Happier, and more Lucrative 2024!
Philip A. Raices is the owner/Broker of Turn Key Real Estate at 3 Grace Ave Suite 180 in Great Neck. For a 15-minute consultation, value analysis of your home, or to answer any of your questions or concerns he can be reached by cell: (516) 647-4289 or by email: Phil@TurnKeyRealEstate.Com or via https://WWW.Li-RealEstate.Com
