Latest / Connor with Honor: AI, Real Estate and Real Life / Selling homes and real estate, nothing to see here regarding commissions, truly things are mostly the same

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Selling homes and real estate, nothing to see here regarding commissions, truly things are mostly the same · Connor with Honor: AI, Real Estate and Real Life

• 0:00
  SPEAKER_00: As it relates to real estate commissions in Santa Clarita Valley, San Fernando Valley, Greater Los Angeles, Animal Valley, you as a property owner have options.
• 0:12
  SPEAKER_00: It was the case before these lawsuits that you've seen a lot about in the media that the seller was responsible for paying the buyer's agent something.
• 0:24
  SPEAKER_00: Some kind of compensation had to be offered.
• 0:27
  SPEAKER_00: Now that's changed.
• 0:28
  SPEAKER_00: So what it was back in the day is typically usually both agents split the commission.
• 0:34
  SPEAKER_00: The agent that you hired to represent you to sell your home.
• 0:38
  SPEAKER_00: And also they usually split the commission 50-50 with the agent that was hired or that actually brought the home buyer to your home, and everybody got together, made the deal happen, and then of course closed escrow.
• 0:50
  SPEAKER_00: You, as the real estate seller, usually paid both of those sides.
• 0:55
  SPEAKER_00: So you paid the agent you hired, and then the agent bringing the buyer.
• 0:59
  SPEAKER_00: That's now changed where you don't have any obligation.
• 1:03
  SPEAKER_00: Even back then, you had to offer at least a dollar.
• 1:07
  SPEAKER_00: Now you don't have to offer the dollar.
• 1:09
  SPEAKER_00: Back then it was standard, about half of the commission was offered.
• 1:12
  SPEAKER_00: But again, that was also different depending on markets, depending on agents, depending on greed, depending on all sorts of things.
• 1:20
  SPEAKER_00: So as it is now, you as a real estate seller have a decision to make.
• 1:25
  SPEAKER_00: And I don't know how your agent, the one that you're going to hire, is going to present this, but this is the way it makes most sense to me.
• 1:32
  SPEAKER_00: And hopefully, maybe you'll glean some kind of insight from my substantial knowledge in real estate.
• 1:40
  SPEAKER_00: Seriously, though, how it looks is this if a seller wants to hire me to sell their house, then I negotiate with them a commission, somewhere around 3% or thereabouts.
• 1:54
  SPEAKER_00: That commission is then talked about between me and the seller, and we will then discuss what I will do to earn the commission that we've negotiated.
• 2:06
  SPEAKER_00: 1%, 2%, 3%, more, whatever it may be, we're going to sit down and have that conversation.
• 2:12
  SPEAKER_00: We'll look at what those numbers reveal.
• 2:14
  SPEAKER_00: Then we're going to have to speak about where the buyer is going to come from.
• 2:18
  SPEAKER_00: Is the buyer going to come from me and me alone?
• 2:21
  SPEAKER_00: If that's the case, and the buyer works directly with me in something called dual agency, meaning I now, as myself with my brokerage, we now represent both the buyer and the seller on the same transaction through the same agent.
• 2:40
  SPEAKER_00: That being the case, that's something known as dual agency.
• 2:44
  SPEAKER_00: And you can do your research about it.
• 2:46
  SPEAKER_00: In the state of California, the disclosure regarding dual agency is pretty thick with very small print and a lot of legal ease in other states.
• 2:58
  SPEAKER_00: And I believe somewhere in Canada, if not all of it, but there are rules and restrictions, and even it's illegal to have dual agency in those states.
• 3:10
  SPEAKER_00: So they're doing that for a reason in those venues.
• 3:13
  SPEAKER_00: Here in California, it's still legal.
• 3:16
  SPEAKER_00: That being the case, now if we say I'm going to bring the buyer, now I'm representing the buyer and I'm representing the seller in the sale of the same residence.
• 3:27
  SPEAKER_00: And that's great.
• 3:29
  SPEAKER_00: But the question could come in, especially when I come back to the seller and say, the buyer wants this repaired.
• 3:37
  SPEAKER_00: And the seller says, I told you, Connor, we're not doing any repairs.
• 3:41
  SPEAKER_00: Why are you even talking to me about this?
• 3:44
  SPEAKER_00: I go back to the buyer and say, the seller's not going to be doing any repairs.
• 3:48
  SPEAKER_00: The buyer says, I know you told me that, but you also told me it's okay if we ask for it.
• 3:54
  SPEAKER_00: And I said, Well, yes, I did.
• 3:56
  SPEAKER_00: It's always okay to ask for something, but at the beginning we agreed with no repairs.
• 4:00
  SPEAKER_00: They said, I understand that, but I wanted to ask anyway.
• 4:03
  SPEAKER_00: I say, okay.
• 4:03
  SPEAKER_00: So I say, well, Mr.
• 4:04
  SPEAKER_00: Seller, they just wanted to ask.
• 4:06
  SPEAKER_00: And so Connor, I so the argument ensues, and then as a result of dual agency, you can see how it might actually break down a little bit.
• 4:18
  SPEAKER_00: Now you have a single point, an intermediary, the real estate agent now functioning for both ends.
• 4:26
  SPEAKER_00: As a real estate seller, does that work for you?
• 4:29
  SPEAKER_00: And is your agent capable of working all of those dynamics?
• 4:35
  SPEAKER_00: If so, great.
• 4:37
  SPEAKER_00: If not, then a consideration should be given to if there's going to be an offering to the agent that might have a buyer for your residence.
• 4:46
  SPEAKER_00: Is it going to be publicly advertised to other agents stating, hey, me as a seller, I'm going to offer you, if you bring me a well-qualified buyer, this amount of money?
• 4:57
  SPEAKER_00: That's where we are.
• 4:59
  SPEAKER_00: So as it is now, now there has to be no offering of money to the buyer's agent.
• 5:05
  SPEAKER_00: And that's up front, we're going to see a lot of real estate listings on the market that are making no such offering to a buyer's agent, where those listing agents are going to be working diligently in capturing the other end of it, the buying end of it.
• 5:19
  SPEAKER_00: But then the question is, what are you then willing to pay your agent on top of what you're already going to be paying them in commission to represent you in the sales of your property to also represent a buyer on your property?
• 5:34
  SPEAKER_00: Is it going to be the same?
• 5:36
  SPEAKER_00: What will they accept?
• 5:37
  SPEAKER_00: Will they accept that 3% or 2% or 1%?
• 5:41
  SPEAKER_00: Or is it going to be more?
• 5:43
  SPEAKER_00: And then the other questions that could come into play, not that it really matters to sellers, but there are other fees involved to advertise and market.
• 5:57
  SPEAKER_00: There are other fees involved for escrow and title.
• 6:00
  SPEAKER_00: There are other fees involved in the real estate process besides the commission being paid.
• 6:06
  SPEAKER_00: So then looking at all of those numbers, what's the best way to balance that?
• 6:11
  SPEAKER_00: And then looking at it, are we going to be offering a commission to the agent representing a buyer if in fact they bring one?
• 6:20
  SPEAKER_00: And then right now we have a seller's market.
• 6:23
  SPEAKER_00: Here's something else.
• 6:25
  SPEAKER_00: So it's not too difficult if the property is priced correctly to get offers on the property.
• 6:33
  SPEAKER_00: Those offers can come directly from buyers seeking out that listing agent.
• 6:39
  SPEAKER_00: Most cases it is not that.
• 6:42
  SPEAKER_00: It is the actual buyer's agent that has capable buyers that are bringing their buyer to the residence, offering them to the seller via the seller's agent because there is a commission being offered.
• 6:56
  SPEAKER_00: And of course, they're going to make money.
• 6:58
  SPEAKER_00: In the future, if that's cut out of the equation, then we have those other things to consider.
• 7:05
  SPEAKER_00: As a real estate seller, thinking about where those buyers are coming from right now in a seller's market really isn't too far of a stretch.
• 7:13
  SPEAKER_00: Usually you're going to get many inquiries.
• 7:15
  SPEAKER_00: But once the market does change to now it's a buyer's market, those buyer's agents are going to be holding a lot of the cards because they're still going to be working with capable and qualified buyers, and you, as a real estate seller, wanting to sell your residence at that time in that buyer's market, you're going to want that buyer's agent to bring those buyers to your residence.
• 7:41
  SPEAKER_00: So at that time, would you be offering a buyer's commission?
• 7:45
  SPEAKER_00: And then finally, we'll get into the we talked about the good and the bad and the ugly.
• 7:52
  SPEAKER_00: We haven't talked about the ugly.
• 7:53
  SPEAKER_00: The ugly could be this.
• 7:57
  SPEAKER_00: Maybe agents don't need to exist.
• 8:01
  SPEAKER_00: Maybe people can sell their residential real estate without real estate agents.
• 8:07
  SPEAKER_00: I do know that in Southern California, there are a lot of disclosures that go along with each sale of real estate.
• 8:15
  SPEAKER_00: Condominium has even more than single family residential, as does townhomes, as does property that has homeowners associations attached, as does property that happens to be located in different zones, fire zones, flood zones, earthquake zones, liquefaction zones, rivers, floods.
• 8:37
  SPEAKER_00: There's so much.
• 8:38
  SPEAKER_00: And now we have insurance issues here in Southern California.
• 8:42
  SPEAKER_00: With insurance policies not being written on residential real estate, there's just so much gravity to a real estate purchase.
• 8:51
  SPEAKER_00: It'll be interesting to see how this plays out.
• 8:54
  SPEAKER_00: But as it is now, the sellers, you don't have to offer a commission to the agent representing the buyer.
• 9:01
  SPEAKER_00: But are you 100% certain that your agent's able going to being is your agent going to be able to bring a qualified buyer and will that buyer be the best buyer capable of purchasing your residence at the best terms for you and at the highest price for you?
• 9:21
  SPEAKER_00: It makes sense in lots of markets, including real estate, to have multiple people interested in buying one piece of property, at least as a seller's benefit.
• 9:34
  SPEAKER_00: And in our current market, that's what we're seeing.
• 9:37
  SPEAKER_00: When this market changes, however, it's going to be an entirely different animal and it will create stress in the world and potentially make this decision be thought about in a different way.
• 9:50
  SPEAKER_00: I'm Connor with honor.
• 9:52
  SPEAKER_00: Thank you for watching.
• 9:52
  SPEAKER_00: You be well.