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#realestate #housingmarket #business
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Rising home prices suck for almost everybody, even people that own there own homes are not really better off financially if they sell their overpriced home… because they will just have to buy ANOTHER overpriced home unless they want to live on the street. If there is one group of people that actually are enjoying homes becoming unaffordable, it’s real estate agents…
Realtors across the country have used their surprising market power to make this problem much worse and charged a nice fat commission while doing it. But they may have pushed their luck too far and a new landmark antitrust lawsuit could radically change how we buy and sell our homes for better… or for worse… Realtors are more than just the people that open the door and tell you about the schools at an open home, they are a shockingly organized group that has a lot of influence over how the real estate market functions.
Real estate agents and Realtors are technically two different things, all Realtors are real estate agents, but not all real estate agents are realtors. They both buy and sell houses on behalf of clients for whom they act as agents, but for a real estate agent to call themselves a realtor they must be part of the National Association of Realtors, an industry group that represents most agents in America.
As part of their membership Realtors get access to the Multiple Listing Service or MLS which is a database of all residential real estate listings in the area. If you want sell houses as an agent, you really can’t compete without access to this database and if you want to get access to this invaluable market information you MUST register as a realtor. That membership is a pretty good investment anyway. The NAR behaves almost like a union for its independent members ensuring that home sellers can’t get agents to compete with one another for lower commissions.
The industry standard is six percent [6%] which gets split between the listing agent selling the home and a buyer’s agent if the purchaser uses one. The commission gets paid from the proceeds of the home sale before the remainder of the money gets transferred to the sellers’ bank account. This commission covers the expenses of selling real estate, like running open homes, posting on sites like Zillow, taking photos of the property, insurance and signposting the home.
Whatever is left goes to the agency which has its own expense, and then whatever is left after that goes to the Realtors themselves split between the buy and sell side. According to data from the Department of Housing and Urban Development, the average home sale price in America has risen from two hundred and seventy-two thousand dollars [$272,000] in 2010, to four hundred and NINETY two thousand dollars [$492,000] in quarter 4 of last year.
Since the realtors is based on the sales price it means that average commission paid to Realtors has DOUBLED in just thirteen years, outpacing inflation by one hundred and twenty percent [120%].
It gets even better for real estate agent though because their expenses have not increased as fast as home prices which means they are keeping more of that six percent [6%] for themselves.
Realtors have broken the already broken real estate market in three ways, but poor market conditions, not to mention a landmark lawsuit could actually make things worse for everybody… including the realtors…
So it’s time to learn How Money Works to find out how your most important financial decision ever is made for you.