Michael Bordenaro: 100’S of Thousands of Real Estate Agents Going Broke!
Last week, the National Association of Realtors (NAR) settled a lawsuit for $418 million. The lawsuit will also prevent future buyer’s agent commission offerings starting in July.
Most view this as the potential end of the 6% commission offered in the real estate market. That commission is split between a buyer’s agent and seller’s agent. While the commission has been factored into home sale prices, the end of commissions may cause havoc in the real estate market.
That’s because realtors provide services such as preparing comparables, staging homes for sale, and using networking connections to bring together buyers and sellers.
Some may balk at massive commissions on the sale of multi-million-dollar properties. However, the fact remains that a home sale entails considerable work.
Once the new rule takes effect in July, real estate agents without a listing will effectively lose significant visibility to potential clients. And it will likely be a race for the bottom, as agents agree to lower and lower commissions simply to land deals.
Yes, keeping prices low is desirable. However, the lowest priced commission may not provide the best service for a potential buyer or seller.
The end result will be lower prices, but also lower quality service. And many real estate agents will likely go out of business.