 Little Harrison is sure happy and his parents well, they're over the moon. We saved $22,000 That's how much they would have had to spend on the commission if they had used an agent to sell their house Instead the hatchers did the marketing staging at open houses themselves. We're a young family We're just starting out. This is our second home that we're just moving into and Headed to look at a new possible listing Welcome to my next possible listing if I get this listing I've already agreed to a 5% commission rate and it's a referral from another agent So I'm gonna pay a 25% referral fee on the listing side and I'm gonna split that 5% as I do every listing I've ever had 50-50 with the buyer's agent the only time I never split a commission 50-50 with the buyer's agent as if I were taking less I've never paid a buyer agent less than two and a half percent Okay, so what inspired me to do this video was an email I got last week from in men that stated the buyer's agent Commission has fallen to the lowest point since 2017 So I wanted to shed a little light on this and give you the positives of this situation Tell you what I think is going on now We've heard all kinds of stuff about Commissions lately over the past say two or three years. You know, we've got red fin that is disclosing to the public with the buyer's agent Commission is I did a video on the Wall Street Journal article a couple months ago about how real estate agents are gearing up for a fight to save Their commissions that stated that Joe Biden in a wide-ranging Executive order asked the Federal Trade Commission to adopt rules to address unfair or Exclusionary practices in the real estate industry. I found another recent article from Forbes That really goes into the depth here in the beginning about the history of the National Association of Realtors Which is very interesting to kind of hear this story play out Then the article takes a turn that real estate commissions are fixed and that six percent is just a number that real estate agents have Kind of just gotten out of thin air and they just won't go any lower and that's a form of price fixing and he writes yet Price fixing in the form of commission standards in spite of all the rules and regulations is still happening today Is that why most real estate agents and brokers still charge six percent commission better question? Who selected that percentage and why was it the dishonest curb stoners? Even better question if laws were put in place to stop price fixing Why do most agents and brokers still charge six percent? Why is it still six percent? Well, the fact is that it's negotiable, right? He goes on to say that it's negotiable He's trying to scream to the public that hey guys, it's negotiable. The commission is negotiable You do not have to pay six percent. You can negotiate. I'm here to tell you that I believe the general public understands very well The commissions are negotiable. I'm getting asked to negotiate my commission on every deal I negotiate my commission on every deal. So I believe that the public is in well educated position to to know that this is a negotiable situation the fact is is that We do a lot of work and that's what this article doesn't want to go on to say what they say is that The commission works to benefit neither buyer nor seller and creates little incentive to bribe the outstanding service that agents are capable of That is wrong, right? That is absolutely wrong. And if that were the case Then commissions will be much lower because sellers and buyers would not pay the commissions They're paying today, but why do they pay the commissions that they pay today? Well, it's because they know that we do a lot of work behind the scenes that they do not want to do It is a very tedious job Believe it or not now the people that are out there that sell tons of properties with very little effort They worked their ass off to get in that position. They put systems in place They have admin they have systems for this that and the other and they've leveraged their self So that's true. But however Leveraging and hiring and having employees so on and so forth also costs a lot of money So people have to understand that this is not an easy job. There's a lot of liability there's a lot of moving parts and if the public was You know if they wanted to pay less they would pay less trust me The fact is they can't find anybody to do it for any less because of what kind of job It is even with all the discount brokers the advancements in technology I'm still getting five to six percent now I've taken some lower than five in the past year I've always said for a long time many years we can pull up past videos that I think that Eventually it's going to get to where four is the standard where we're getting two and two totally Possible totally possible and still extremely Lucrative right, but however you are working for the money Let's dive into this in an article buyer agent commissions fall to the lowest point since 2017 They say intense competition appears to have driven down the average buyers agent commissions last fall to their lowest point since at least 2017 they don't know Before that because they're going by a redfin data, which only started collecting this data since 2017 that aren't really know before prior to 2017 Again, it's only looking at the buyers agent So we really don't know based on this article or the redfin data what the listing agent commission is or what that total commission is And I disagree with the immediate tagline here that intense Competition appears to have driven down the average buyers agent commissions not true at all I'll go on to explain this in just a second So here we're looking at the actual chart and the data that they're going by here And we're seeing the average buyer commission here was at 2.75 back in 2017 and it's at 2.63 now You can see by the chart that there were waves where it did increase, right? But the trend was lower now. Why is this commission rate going lower and lower and lower? Well, there's there's two things I want to show you here number one is the average dollars per Transaction for a buyer's agent and this is redfin data right here I'm kind of wondering why they didn't you know magnify or put a spotlight on this part of the data where the average commission for a buyer was $9,610 back in 2017 it hit a high of over $13,000 earlier in 2021 and right now we're at about $12,415 so it went from let's just say it was you know under 10,000 back in 2017 where now it's over 12,000 agents buyers agents are making more per Transaction right now than they were back in 2017 and that's by a lot and that ladies and gentlemen is because of the increase in Prices we've had such an incredible price run that naturally we're making more per transaction Even though the actual rate for a buyer agent has dropped a little so this is actually the natural progression of Commission rates when we go through these market cycles, okay when prices go up the rates going to come down a little bit because we're making more Money, okay, and the buyers and sellers, you know It ends up being more and more and more of a chunk because the percentage naturally It's going to put downward pressure on the rates, but as prices increase We're actually making more money with real estate prices soaring real estate commissions in real dollar terms have been rising right along with So I was in the market back in 2002 when I got in the business I was there through the big boom of the 2003 four and five. I was here through the crash I got out of the business came back in built myself back up right into the point that we are now in the cycle So this is my second huge You know jump in price part of the cycle that I've been through and this is the same thing that happened back in the 2002 and three range I found this chart here Which actually shows you the total commission for listing agent and buyer agent combined Okay, and this goes all the way back to 1992 and if you look at this chart back in 1992 on average We were getting six percent on average. Okay now look at it in 2005 at a drop from six percent to five point zero two percent Okay, so a big drop there Okay, but then then that's when the boom happened okay 2003 four and five naturally It's gonna put some downward pressure and then look what happened as we went through the crash Commission rates went back up five point three five point three eight But then in 2012 I would say is the first year that we saw that appreciation kind of coming back until that point It was coming down down down naturally as prices come down commission rates are gonna rise a little Okay, and then as prices started to come up we see commissions over the next, you know six seven years Kind of trend down. Okay, but then in 2019 and 20 we see it kind of spiked back up We're gonna see those ebbs and flows in the average commission rates and this chart doesn't show you 2021 or 2022 but I can guarantee you if it did it would show a decline because in 2020 towards the end of the year. That's when things really took off and in 2021 of course things just went really crazy Price-wise and that's gonna put downward pressure on commissions and in many of us says it right here Even though the buyer agent is technically getting a smaller share of the pie their check is six point nine percent Bigger than it was a year ago So they're making six point nine percent more on average than they were just a year ago And it says that could change if home prices start to level off of course It's gonna change as prices start to level off. That's what happens. That's the market cycle. That's how this thing works My question to M&S is why didn't you put a subject and title the article that says buyer agent commissions are up six point nine percent? So I dug a little deeper here and found this article where it says real estate agents target record a hundred billion as Home sales boom, which I thought was really interesting now this article was written mid last year Okay, so this wasn't the official number But what I thought was really interesting in this article is it showed us a chart here of the total commissions paid out since 2002 when I started in the business so it goes back 20 years and it shows you the different Billions of dollars in commissions that were paid out year-over-year and last year we hit a high 2020 we hit a high 90 billion 2021 is estimated to hit a hundred and five billion now I couldn't find the article that actually gave me what we ended up with you can find that article Please send it to me. I'd love to read it, but I would say without a doubt We hit a hundred billion dollars in commissions last year So I'll tell you something else that I think is going on here And this goes along with the fact that Red Thin was collecting the buyer agent commission data and it shows buyer agent Commissions down a tad as far as the rate goes again. They're making more money However, there is a thing going on the market right now where more and more listing agents are taking more of the commission than the buyer Agent they're not split in 50 50. They're taking more from the buyer's agent and I never understood that Philosophy I never understood why a listing agent feels like they deserve more if anything the buyer agent deserves more There's nothing I hate more than Doing a deal with an agent coming down to closing looking at the HUD statement realizing they've made thousands of more dollars than me It just didn't make any sense. We were working together on the deal I brought the buyer if I bring the buy if I don't bring the buyer. There is no deal Of course if there was no listing then there was no deal either. I get that However, if you were to survey agents and say which one's easier, which one is less work Everyone is going to say Listing agents have the easier job of the two. Okay, if you don't want to go out there and show property Run people around help people get financing deal with the inspectors deal with all the different things that are involved on the buyer side Okay, when you add all that stuff up It's tremendously more work than the listing agents and what they actually put into the deal And I'm talking about everything from prospecting marketing for the listing go to listing appointment I get all that but at the end of the day How are you going to sit here and say that this is more valuable than what the buyer agents bring into the table? And I'm not saying that the buyer agent is doing more even though I believe they are Okay, but I still think that even what that being said 50 50 is the way to go. I've always done 50 50 I've never paid anyone less than two and a half percent of any of my listings the ones I take under five I take less as the listing agent than the buyer agent in that circumstance and my second and last point with this is that sure real estate Commissions may have some downward pressure, but that's because the market is Exploded so much we're actually making more money per transaction right now You need to be eating this up with everything you got you need to be going all in with this But at the end of the day as things level out we may get into the next cycle of the market What's gonna happen then? The commission rates are gonna come back up just like they did after every crash in history So I appreciate you watching today's video. I'm here to help you right? I'm the same passion you feel from this video is the same passion I'm gonna use to help you with whatever it is that you're trying to accomplish. I'll see you guys on the next video We'll talk to you soon