We can be assured, this is not the last private industry that will take a hit.   Hospitality is likely the next playground to be hit by the bullies.   Having fun needs to be relegated to the elite with money, not the plebes. 

by Helena

Posted on March 22, 2024 by Helena

Houses are not affordable.  Despite all the best efforts of government to control the value of your property, they have continually failed.   Prices continue to rise.   The culprit?   Realtors.   Apparently, the agency fees to represent the buyer and seller transaction have caused the real estate boom that has made housing unaffordable.   How much truth is in this new indoctrination?

In 1940 the realtor commission was 5%.   In 1980, the realtor commission rose to 6%.   The same 6% it is today.   But somehow, despite 40 years of paying the same commission, The Economist powers that be, have decided this isn’t equitable.   It isn’t fair.   And therefore, elimination of this fee will reduce the cost of a home and make it affordable…   That would be the logic.   But what is the reality?

Homeowners have the option of selling without a realtor.  They also have the option of using the flat fee companies..   Or they had the option of utilizing the expertise of a realtor who has passed rigorous courses and exams on contract law, title law, foreclosures, and inspections.  A choice.  That choice is being removed by the Powers.  Why?

HINT:  it has absolutely nothing to do with affordable housing.  

When you remove an industries ability to charge a fee and make money, you are attacking the industry – not helping the poor.   Let’s say doctors are no longer allowed to charge a fee, does that mean healthcare costs will drop?   No.  It means there will be no more doctors and healthcare won’t exist.  For the Real Estate industry that translates to  homeowners being left to mitigate scams, fraud, theft, liability, and corruption.   And the tight housing market will become that much more tight as homeowners decide to renovate instead of move.

Builders reap the benefit.

Builders can dangle the carrot of discounted interest rates.  They run the show. When no agent is there to represent your best interest – for free – you pay top dollar.   And who is selling at top dollar?   The Hedge Funds that scooped up entire neighborhoods at a 2% fixed rate of interest and now want to divest their inventory – charging a ‘discounted’ interest rate of 5.5% when the market is 7.25%.   Now you are buying more home for the same price because of the “interest rate” – not because of realtor fees.

How much more home?   A $500,000 home at 7.25% costs $3,411 per month.   At 5.5% – you can now afford a $600,000 home for the same monthly payment.   Who wins?   The BUILDER!

Did eliminating the realtor bring down home values?   No.  It moved the buyers from existing homes to new homes that are sitting vacant.

And the headlines read:  2024 Primed To Be Stellar Year For Homebuilders.   Realtors?   Not so much.

The realtor settlement for repaying homeowners deemed to have been over-charged/gouged by 6% over the last decade – is $418 million.   Number of potential homeowners eligible for a cut?   50 million.  Amount that will go to legal representation to collect any money?   35%.   Which is somehow NOT deemed excessive.

According to The Economist, the realtor commission is a racket, a mob rule that gouges the buyer and the seller.   The average estimated savings for a median home sale – $10,000.   Example:   a house selling for $500,000 would incur a commission fee of $30,000.  A negotiated commission at 4% would save $10,000.    By comparison, a reduced interest rate from 7.25% to 4.25% would save $11,400.  If the Federal Reserve dropped interest rates to the level they were prior to Brandon, the annual savings would be $17,220.

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