The 6% commission, a standard in home purchase transactions, is no more.
In a sweeping move expected to reduce the cost of buying and selling a home, the National Association of Realtors announced Friday a settlement with groups of homesellers, agreeing to end landmark antitrust lawsuits by paying $418 million in damages and eliminating rules on commissions.
The NAR, which represents more than 1 million Realtors, also agreed to put in place a set of new rules. One prevents sellers’ brokers from setting buyers’ agents’ compensation, which critics say led brokers to push more expensive properties on customers. Another ends requirements that brokers subscribe to multiple listing services — many of which are owned by NAR subsidiaries — where homes are given a wide viewing in a local market. Another new rule will require buyers’ brokers to enter into written agreements with their buyers.
The agreement effectively will destroy the current homebuying and selling business model, in which sellers pay both their broker and a buyer’s broker, which critics say have driven housing prices artificially higher.
The really fucked up thing is the origination fee. Banks charge like 1% to do the loan paperwork. Why does the paperwork for a $400k house cost more than a $250k house? Don’t the banks make enough money on the interest?
Not to mention PMI, which should just be illegal. Oh you don’t have 20% down? Great credit score? Doesn’t matter. We’re charging you another 2%.
Home sales are a greasy business.
That 20% down payment in today’s market is just atrocious. We’re getting ready to sell our home and we will profit maybe 80k, and that’s still not enough for a detached 3-bedroom home in our area. We’ll likely need to dip into our 401k to get up to 20% to avoid PMI
This is why everyone seemingly has a real estate license. Low barrier to entry and no cap on income. I am guessing the barrier will increase now so the top producers get even more quantity to make up for the lower per transaction deal and push out the smaller fish.
Without PMI, if you don’t put 20% down, they just won’t give you the loan for that amount. Outlawing PMI would just screw the consumers who can afford the payments, but just don’t have the 20% to put down. Which was the case for me when I bought my first house.