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One more major effect: Institutional buyers that have their own in house buying experts will be able to buy properties at a lower total price than an individual buyer. If a property is $500k a corporation can buy it for $500k with their in house real estate person handling the transaction. A individual will now have to pay $515k if they have to pay their own agent 3% on top of the home price.
Selling a house is hard. Buying a house is also hard. Most people don’t do it very often, so they hire experts to help them. These people are called agents. The agents get a little bit of the money that the buyers give the sellers.
A long time ago, the agents all worked for the sellers. Because they worked for the sellers, buyers sometimes didn’t get very good deals. It got pretty bad and everyone decided we should fix it. But buyers were spending all their money on the house and didn’t have more money for an agent. And banks wouldn’t loan money to the buyers for an agent. So we decided to make the house cost more, and have the seller give the buyers’ agent some money. This was a way to get the banks to loan the money, since it went into the price of the house.
Now some sellers are mad that they have to pay for the buyers agents. They want to keep more money when they sell their houses. So they sued, and won.
Soon, buyers will be on their own again, unless they can pay for an agent out of their savings, or ask the sellers to pretty please pay for the agent. No one is exactly sure what will happen. There is a lot of guessing.
Some things that could happen are:
* most people buying a house don’t use an agent any more because now they have to pay directly, and some of those people get ripped off like they used to
* agents who used to work for buyers have to find new jobs because buyers don’t want to pay them out of their own pockets
* big companies like redfin and zillow that made their money by working for buyers have a hard time making money
* rich people who can afford to pay a buyers agent now have another advantage
* sellers will save some money
* lawyers will make a lot of money
Things that probably won’t happen:
* home prices probably won’t go down, because there are not enough houses in the places where people want to live. This doesn’t fix that
* buyers will probably not save money, at least until there are enough houses in the places where people want to live
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