That is a short sentence that packs a wallop that should not be dismissed by newer inspectors.
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yea, that’s a very good way to put it.
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A fee structure based on sqft is loosely correlated to value within a given area. My concern would be loss of objectivity. If the HI was paid based on sales value then it could be asserted that deficiencies were overlooked to boost value. Not a good place to be.
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Well said Scott! Thank you.
This case has been going on for a while but it looks like a judge has just certified it for class-action status. If the NAR is unsuccessful in their appeal, this could mean big changes. My theory is that it could lead to the end of “buyer’s” agents because the buyer’s agent would have to be paid out-of-pocket by the buyer.
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This is interesting.The listing agents’ agreement is between the listing agents and seller regarding commissions paid and has nothing to do with how the commission is split upon the sell of the property. There is no agreement between the seller, list agent and a potential buyer’s agent and I don’t think there ever will be because of the ambiguity in trying to implement such. The list agent and seller agree on a commission structure. How the list agent wants to share is up to them and I don’t see how a seller can dictate who and where it goes. Waste of money on this frivolous suit.
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I think the plaintiffs are claiming that the agent’s commission is unreasonably high because it has to be split in most instances among two agents. The plaintiffs are saying that the commission should be lower as they should have no obligation to pay the buyer’s agent. Also, they claim the defendants have colluded to artificially inflate commission due to the requirement to split it. That’s my take any way.
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And the norm has been 7%, down to 6% and many times 5% over at least 45+ years, usually with a 50/50 split, and the realtors are now colluding to artificially inflate commissions to split? Something is going over my head here.
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I think the crux is that the seller’s agent is required by NAR and MLS to split it. Absent that requirement, the commission would/should be lower. Thus my statement above that buyer’s agents may have to find a new way to get paid if this suit prevails. Interesting enough, there is a similar suit proceeding in Chicago.
I see what your saying, but it isn’t going to happen. The seller has many low fee avenues to list their property besides a conventual realtor and they are not forced to only use that one avenue. Trying to make the list agent more aggressive to sell their property to the extent of lowering their commission to compete is pure hogwash in my opinion.
Yeah, I mean I don’t pretend to know the nuances of how agents work behind the scenes as I have no experience in that area. But it is interesting to me to see how this plays out nonetheless. There may also be more to it than what I am reading on the surface. I’m sure it will take a few more years and hundreds of thousands of dollars in lawyer fees to figure it out though, lol.
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Buyer’s agents will disappear. Buyers agents will be a thing of the past.
The commission 1000 percent negotiable all the way down to for sale by owner.
Even FSBO’s often offer a commission to a buyers agent. You’ll see the term “agents protected” which means the FSBO will pay a commission.
They worry about collision? Wait until the buyer has no representation except for a listing agent who has a fiduciary responsibility to the seller.
Commission percentage is somewhat customary, but it is market driven. In a buyers market, you’ll see that commission increase with bonus added to the buyers agent side.
This may get tweaked in court, but ultimately I suspect it is dead in the water.
Not necessarily. What they are saying is that the buyer’s agent should be paid for their services by the buyer, not by the seller. If this case gains traction, I would expect to see buyer’s trying to roll their agent’s fee into their loan.
I know what they are saying.
If I have a buyer and you have a home to sell, how are you going to attract me to bring my buyer to your home vs someone else’s? Commission
So even if you did away with it, sellers would immediately reintroduce it.
After reading this thread… it feels as if there are more Real Estate agents commenting than home inspectors 
You guys are comparing a soccer mom job with inspecting 
Oh… myyyy gawd! that poor mom had to abandon her children over the weekend to “show” some houses. OMG! We better pay her $5,000 to show 30 houses. How many hours of work is that? OMG!
I can tell you. Five houses in one day is about max. So, six days in showings. Prior to that, you have to make 30-50 calls to set up the showing. Then, write the contract. Negotiate the contract. Schedule Inspection. Write inspection amendment. Negotiate inspection amendment. Keep buyer in contract with all loan requirements. Schedule closing, attend closing, bring gift and the give your broker 35%.
But, you also have to attract the buyer. That’s a ton of work as well. The listing side is hard too.
And, everyone is very emotional.
I guess that’s why realtors don’t make it very long in the business. Because, like home inspection it’s a lot of work.
LOL… As a professional I understand the hard work agents do and respect the fellow professionals I work with. On the flip side I can only imagine what the disgruntled agents say about inspectors 
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Not sure how they do things in Chicago or Missouri, but in North Texas it’s all negotiable. The listing agent’s commission is negotiable, either as a percentage of sales price or a flat fee. It’s not uncommon in an aggressive market for a listing agent to propose a 5% commission, with 2% going to them and 3% going to the buyers agent.
Through the MLS listing, the buyers agent commission is also negotiable. It’s usually 3%, but I’ve seen 2% and 1% as well. And sometimes there is a bonus offered to the buyer’s agent, usually from builders for new construction. And sometimes the buyer’s agent will have a contract with the buyers that guarantees compensation if the buyer buys a house that was found by the buyers agent, such as a FSBO or off-market sale.
One thing to remember (at least in Texas) is that the commissions are paid to the brokers, not the agents. So the broker gets to decide how much of the commission to pay to the agents, typically 50-80%. The broker also approves the proposed commissions for the listings. Most of the companies listed as defendants in the suit are pretty strict about not letting their agents negotiate the listing commission, which might be about to bite them in the butt.
Why I wish inspections fees were a % of the sales price:
I live in Los Angeles. The cost of living here is high. The average home we are inspecting is priced at $700,000-$1,000,000.
And yet the average cost of a typical home inspection here is the same as just about anywhere else in the country. Seriously.
We have way more liability, way more costs to cover, and yet make the same gross income as a typical guy in the midwest.
Why I am glad inspections fees are NOT a % of the sales price:
We inspect mobile homes too. They take just as long as a regular home, and you know there will be a crawlspace, usually on rocky soil at best.
We charge the same as a regular home even though the mobile home cost 1/3 of a regular home.
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Very good points, Ian. That’s the sort of conversation I was hoping for, I never meant to say much at all about how much realtors make.
Good point about the mobile home work load, but you could still make it work somehow. The pricing structure would be something like:
(Base price based upon sq. ft., age, etc) + (premium based upon $/sq. ft.)
Houses below a certain $/sq. ft. would be priced normally.
It’s definitely something I would do if I had more work than I could handle.