Lawsuits are such fun aren’t they?
A few years ago a lawsuit against the National Association of Realtors and a couple of huge brokerages was filed, claiming, in essence, price fixing. I first became a realtor in the early 90’s and the common commission rate was a 6% split between the seller’s agent and the buyer’s agent. When I came back into Real Estate, that was still the standard. Please keep in mind, I am a licensed Realtor that works under a broker. The broker is the one who ultimately decides the commission on listings or gives the agent leeway to adjust it. The 6% Commission rate can usually be explained like this: 6% commission, always paid by the seller in the Listing Agreement contract, is split between the listing agent, and the agent who brings the buyer. This incentivizes both agents to get your home sold. The 3% commission is typically split 3 ways between the broker, the agent and of course the IRS. In recent years with some of the newer brokerages, they have gone to a flat fee for the agents which has allowed the agents versatility in this structure. For instance, when an agent lists a house, instead of a percentage split with the broker, they pay a flat fee regardless of the price of the home. This allows the agent to pay less to the broker and therefore they can negotiate a little more with the seller on the commission. More traditional brokerages still use the full 6% model simply because it covers all of the overhead needed and really incentivizes the buyer’s agent to bring someone to your home. The results of this lawsuit is over $1 Billion (yes that is a ‘B’) in damages and now bringing the commissions into a state of flux. Closer to home, other lawsuits have been filed against Texas Realtors, the state licensing organization and we are already seeing changes in commissions. One of the outcomes is that some realtors are having the seller only pay commissions to the listing agent and none, that is 0, to the buyer’s agent. This brings another dynamic into play where the buyer will have to pay the buyer’s agent their commission. I have actually seen some listings recently like that in the metroplex. It is really hard because most buyers only have enough money for downpayment and closing costs, not extra to pay the realtor. This actually disincentivizes the buyer’s agent to show that home. Remember, buyers’ agents may show many homes, drive many miles, and work for hours with a buyer to find the right home. They also help the lender and title company, negotiate with the seller’s agent, and much more, so they work hard for their piece of the pie. While our licensing requires that we don’t discriminate against certain properties if the commission is low, it puts the agent in a tough situation to recoup their costs of working with a buyer. If a buyer finds a home that they want to look at, and the seller is not willing to pay the commission, that buyer may have to go directly to the seller’s agent to see the home. Then if they want to purchase the home, they will have to work with the listing agent directly. The listing agent is bound by the listing agreement to ONLY represent the seller, which means that the buyer has no representation to protect their interest. There is no one who can legally walk them through, giving wise advice or counsel, and help them truly understand the process. When one agent works both sides, it is called ‘Intermediary’ and I have had to do it a few times. It is really tough. The only time I will do it is if the buyer is a very savvy home buyer, having bought multiple homes and fully understands the process. All I can do for them legally is give information, no counsel or guidance. This makes it very tricky for buyers and can put them in a difficult position with no trusted advisor to help them. All of this said, the landscape of real estate is changing and who knows where it will land. We are in a different time and that calls for different tactics and understanding of how to sell or buy a home. Just make sure to have good conversations with realtors when reaching out. Make sure you understand exactly how the compensation will work and what the best strategy is to buy or sell a home. When looking online at homes, this information isn’t readily available to buyers. Don’t be afraid to ask your realtor about it. It may help you make a better decision in the long run. Remember, a realtor is a trusted advisor and having open conversations about the entire transaction only benefits you as a buyer or seller. Here are links with more information. NAR lawsuit: After a $1.8 billion verdict, the clock is ticking on the 6% real estate commission | CNN Business What the Compensation Lawsuits Filed in Texas Mean for You – Texas REALTORS® (texasrealestate.com)
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February is here and many, who are tired of winter, may be looking toward Spring and Summer. Often that includes dreaming of purchasing property at a lake somewhere. This dream often conjures up images like the one here. Water sports, green off in the distance behind homes with docks, and all the fun that may include. But in reality, if you go out to Lake Bridgeport right now, you may see this. As a realtor, I've shown and sold property on Lake Bridgeport, and have not seen it this low in several years. This gives you an idea of what it looks like when the lake is approximately 16 feet low. (This is a level tracker, but may change depending on when you are reading this Lake Bridgeport Water Level (lakesonline.com)
The second photo is an aerial photo of the bridge in Runaway Bay and the buildings around it. Not sure when it was taken, but it is pretty sad. I'm not giving you this information to be a Debbie Downer, but to remind you that having an agent who understands the lake property you may be looking at is extremely important in your search. Every lake has different 'owners' or management organizations and there are always rules, lots of rules. So ensuring your agent knows and understands this information can prevent problems down the line. Lake Bridgeport sits in the Trinity River Basin and is fed by the West Fork of the Trinity River. It is what I call a feeder lake, managed by the Tarrant Regional Water District and is often sending water down to Eagle Mountain Lake in Fort Worth. There is some controversy about the whys of letting the water out of the lake, but you can investigate that for yourself. Bridgeport is also a water source for some of the surrounding towns, and when it gets this low, it can be problematic. The good news is that what goes down, must come up, or is it the other way around? Oh well, don't despair. Wise and Jack Counties, where this lake is located, has been in a severe drought and are praying that as the rains come, it will soon fill back up and be beautiful and enjoyable. Just remember, if you do decide to buy a lake home during drought season like this, make sure you get everything checked out, especially the dock. Docks that float may have some damage if it ended up on dry ground. But it can always be fixed. And don't expect to get a killer deal if you buy during a drought. You may be able to find one, but they will go fast. Most of the owners know that the water level will come back up at some point and will hold out for those prices. Lake property is more for your enjoyment, not so much an investment. Keep that in mind. If you want to investigate lake properties so you can be ready when summer gets here, give me a call. I'm familiar with most of the lakes in this area and have realtor friends that can help you with lakes in other parts of Texas. Time to start dusting off the summer fun! |
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