We’d arrive at a property, and while I unloaded the car, she’d preheat the oven. While waiting for the temperature to rise, she’d clean the baseboards, believing that attention to the small details revealed the true value of a home. When the cookies were ready, we’d head out to put up the signs.
I can still smell those cookies as we returned to start the showings — a scent that would also greet potential buyers. My mother’s passion for real estate remained strong until her death in 2016, even though she noticed the change in the industry and the perception of the Realtor at large.
Let’s first rewind to 1999. The film American Beauty depicted Annette Bening obsessively repeating, “I will sell this house today” while scrubbing counters and cleaning every corner. Twenty years later, Christine Quinn from Selling Sunset epitomized a different image of real estate, with buyers being welcomed to their dream homes while she was whisked away in her Louboutin’s by her chauffeur.
Sir Anthony Hopkins recently commented that society now values image over substance — a sentiment reflected in how Realtors are perceived. With homeownership increasingly out of reach for many, especially in California where only 14% of the population can afford it, Realtors are facing scrutiny and are often blamed for housing affordability issues.
Recent legal battles have highlighted these issues. Last year, a series of lawsuits revealed that Realtors were involved in antitrust violations, leading to significant changes in industry standards. For example, in Missouri home-seller plaintiffs were awarded nearly $2 billion after arguing they shouldn’t have to pay commission to the buyer’s agent. This has led to industry-wide changes to commission structures resembling the nationwide tax revolt following California’s Proposition 13 in the late 1970s.
New contracts released by the California Association of Realtors have eliminated any mention of buyer representation being paid by the seller or their agent — barring buyer’s agent commission promises via the Multiple Listing Service and any site that syndicates an MLS feed. Additionally, agents are being advised on the increasing possibility of buyers without agent representation as listing agreements now include language for this situation, essentially calling the bluff that society can do the job of the Realtor better than licensed agents can.
Sadly, very few members of the population know or understand the work of the Realtor, and the real estate community has not done a great job of educating the public. In March USA Today reported 75% of surveyed buyers had no idea how their agent was compensated.
I have lost count how many times I heard rumblings that this change in commission would bring down home prices (it won’t) or statements that you can finally negotiate commissions (see President Biden’s ridiculous statement). Sadly, these examples illustrate how little the population is aware of the truth of the real estate transaction because the real estate community has done so poorly at regulating the practices of the agents themselves.
Contrary to the media portrayal of Realtors as indulging in luxury, less than 23% of agents work fewer than 30 hours a week, while nearly half work 40 hours or more. All expenses related to transportation, insurance, and office costs are borne by the agent, who often works on a contingent basis. They invest considerable effort in researching properties, analyzing potential returns, and navigating complex market dynamics. Meanwhile, companies like Co-Star and Zillow are acquiring residential firms to capitalize on consumer sentiment and a new opportunity to empower the public.
For first-time buyers, who typically put down around 8% of a home’s price — roughly $55,000 in California — the recent changes mean they may need to cover representation costs out-of-pocket or negotiate with the seller to include these costs in the offer, which could lead to losing the property if they can’t manage the expense in a seller rejection of the payment.
The real estate agent is a hard-working individual. We are your neighbors, coworkers, former classmates, and roommates. Think about an agent you know, how many missed soccer games, birthday dinners and holiday weekends have you witnessed? Real Estate professionals are ALWAYS working.
Yes, agents have changed since the time of my mother’s cookie baking. But there is still real value in the buyer’s agent — and its more than being a glorified chauffer. Many feel they can do the job of the Realtor better. Just remember, you do get what you pay for.
Mike Shenkman is a licensed broker, former member of the board of directors for the Greater San Diego Association of Realtors, and a lecturer in urban studies and planning at UC San Diego.
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Publish date : 2024-08-21 13:00:00
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