If you’re looking to buy a home right now, you probably enjoy living on the edge since the market is so insane. The process seems pretty simple, right? Just find an agent and let them do the work for you. Except that’s not exactly the case and it’s turned into kind of a racket.
Here’s Five Fast Facts About the Real Estate Market:
- 🏚️ Agent - A real estate agent works for commissions. They only get paid when a home sells and don’t get paid until after settlement. Standard commission is between 5 - 6% and is paid by the seller.
- 🏡 Broker - Licensed agents work for a broker like Century 21 or Coldwell Banker. Brokers take a cut of that commission, usually 50%. The seller’s agent and broker also get a cut. When it comes down to it, the real estate agent usually only gets about 1.5% of a 6% commission.
- 🏠 Racket - If that seems sketchy, you’re right. Sellers can sometimes account for the fee they’ll be paying and raise the listing price. If the buyer pays more, the agents and brokers get paid more. This artificially inflates home prices to an even larger level.
- 📈Nope - People have caught on and there are currently three class-action lawsuits filed against the largest brokers in the country along with the National Association of Realtors (NAR).
- 💸 We’re Out - Two of the brokers (including RE/Max) have already settled out of court. They’ve agreed to pay a total of $139M in damages and scale back their relationship with the NAR.
🔥Bottom line: Much like many other businesses, less than reputable individuals have found a way to turn the real estate market into a racket. This is going to send shockwaves through the industry and ultimately change the way we buy and sell homes. What that is going to look like is still up in the air.
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