“Not Good For Anyone”- 6% Real Estate Commission Rates Have Hidden Dangers For Homeowners

Patrick Bet-David, Adam Sosnick, Tom Ellsworth, and Vincent Oshana are joined by Chris Cuomo as they discuss the hidden dangers for homeowners by ending 6% real estate commission rates.


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Patrick Bet-David is the founder and CEO of Valuetainment Media. He is the author of the #1 Wall Street Journal Bestseller “Your Next Five Moves” (Simon & Schuster) and a father of 2 boys and 2 girls. He currently resides in Ft. Lauderdale, Florida.

Ending 6% commission Tom I'm coming to You with this could turn out to be a Venus fly trap situation where I pull up The picture of venus fly trap it's very Important for us to educate these people Who don't have a clue how do you not Know what a venus fly trap if you ever Seen the movie Little Shop of hor Audrey Yeah like what Kind I'm hungry ending 6% commission Turn out to be a venus fly trap Situation for home buyers mhm and Economist says Okay um first time I Learned what a Venus flight trap was Yesterday so National Association of Realtors settlement expected to take Effect in mid July pending approval aims To remove upfront display of commissions For buyers agents on multiple listing Service a move that that could result in Additional cost for home buyers According to a real estate Economist Ken Johnson the situation resembles a Venus F fly trap where buyers might find Themselves at a disadvantage Johnson Cautioned that approaching listing Agents directly could leave buyers IL Equipped to secure the best deal going Directly to a listing agent who Represents a seller in a legal sense Puts the buyer at an extreme Disadvantage in terms of bargaining Power and market knowledge with the Proposed changes buyers may need to

Cover their agents fee themselves Potentially adding significant expenses To their home purchase for instance on a $400,000 house paying 3% Commission into A buyer's agent would translate to an Additional $122,000 in cost for the Buyer Tom what are your thoughts on the Store well first off this is Economist Ken Johnson who represents the real Estate industry so what site is he on They didn't want the status quo to be up Upset they didn't want uh buyers and Sellers uh excuse me they didn't want People to be able to negotiate with Realtors and say hey there's a very nice House why don't you do it for 4% because There's three guys that want to Represent me oh okay do at 4% that's the Way this is going to work you know Somebody selling the house has the the Control and what they're saying is if Buyers go direct to a listing agent That's not the way it works when you Want to buy a house you you will have a Buyer's agent that will somebody Represent you and this guy's trying to Stoke fear that this law is going to Create problems and everything and so He's representing the industry but That's not the way it's going to work Somebody's going to say hey Vinnie goes He says I'm going to go buy that little House he goes up there no one's going to Say oh you're kind of screwed you're

Going to have to be paying the fees Because the guy's selling it's going to Go no no no Chris is going to say no no Wait a minute if Vinnie's capable he can Buy my house I'd like to sell him a House cuz I'd like to have a good buyer Come in i' like to sell my house I don't Want the listening to be here forever And so you make a deal and they say We've agreed with uh you know uh Adam The realtor he's going to do it for 4% We're going to do this this is basically The industry is scared to death of the Power that they're giving the buyers This a good thing or a bad thing this is A very good thing because people have Been sitting there 6% like it or not a Good thing for people like you where You're in the 1% time because you you Could actually be a realtor or is it Good for the 80% of buyers I think this Is good for the buyers and sellers who Are no longer forced into a 6% Arrangement they can negotiate with the Best listing agent they want find Someone they like and come to agreement On the commission I disagree with our Friend Tom here um cuz we're in the Insurance business we've seen what's Happened with the do laws I'm actually Shocked that our friend Tom who's been An advocate for the Department of Labor What's going on in the insurance Business isn't advocating for your real

Estate friends Tom um here's the reality We know if you're selling a $10 million House $20 million house they're going to Negotiate with you up front up front you Know the 6% is going to get split three And three that gets the trickle down Effect but to me this is the seller Trying to save 10 grand but ends up Losing out on 100 Grand in in the long Run so great so I have a good friend Gio He the podcast all the time my realtor Um he says number one you just got to be For Thread about the commissions Straight up this is how it works this is What's going on let's have this Conversation up front number two I'm Going to bust my ass for you I'm going To get the best deal possible for you my Job is incredibly hard incredibly Different I'm going to carry the brunt Of paying out the out of pocket cost to Market your house and number three if You want to go about this alone go for It good luck you're not going to do the Best job possible you're going to get Screwed so um are there situations that You can negotiate Commissioners sure but I firmly believe that salespeople in Finance in Insurance in real estate Deserve their commissions and if they Don't they're weeded out of the industry Anyway yeah I I I mean Tom this reminds Me of the one realtor that you know we Were introduced to from our church in LA

To sell our last house which I'm sure You remember this story with that smile On your face so she gets introduced to Represent our house and I watch her when People come and look at at the house and It's I'm I'm I'm it's driving me insane At this point that this girl doesn't Know how to sell this house oh no so Finally I told her I got a couple people Coming to looking at the house today I Don't want you to come don't come just Stay home so she say what are you Talking about everybody wants their Agent to be there I don't want you to be There but I'll sell for you you don't Need to come the guy comes okay I sell Him the house I give the tour everything He makes the biggest offer cash prize You know cash offer I call her I said It's done you can handle the whole thing I said from here don't talk to the Client just do the paperwork you Shouldn't be talking to clients you're Not a salesperson we sold the house she Sucked as a realtor okay so there are Certain people who will kind of go back To his point they absolutely don't do The client you know the right amount of Service to sell it because they're just Trying to kind of sell it and get it Check for them right they're not Thinking about that additional $100,000 It's 2.2 million or whatever the house Is you know I'll sell them for this

Value now some realtors that bust their Ass for you let me tell you those Guys don't get paid enough money some of The guys that do a good job but you know In some instances it's actually a great Idea in some instances I can see Tom's Argument as well because when if Tom Comes to your house Vinnie okay I Guarantee you within 20 minutes this is How Tom is this is what he do you just Lose Tom he does one of these Things in Tom mode he says you know for About $220,000 you put into this house You can probably increase the valuation By a couple million dollars if you did This and here's what I would do and Anything he buys he makes it better you Know that saying I leave you better than I found you that really is Tom not just With people with property as well that's How Tom is so Tom never needs a realtor Tom literally doesn't need a realtor for The average person they need this Service Tom when can you come to my House yeah exactly Tom is not the Average dude Tom comes in with Paperworks case studies this is the guy That doesn't need's father was a rocket Scien listen when you go to buy your House take Tom what do mean or take a Real already did already yourself I Already did you get SC to save five Grand Chris what are your thoughts on This story listen uh it's always

Tempting to have variability in a locked In system Right there is something unsatisfying About having someone tell you this is How it works it's 6% yeah and uh you Want to play with that because you're You may think like uh Pat does well one I'm very competent or my house sells Itself and you're not even doing Anything you know everybody in the Market right now is dying for this you Should take less uh so there's an appeal To that uh but also things in such a Well-worked system as real estate tend To be the way they are because that's The way it works best so I think you Have a balancing effect here I I do Wonder you you made the point Pat in Terms of the 1% the sophisticated people Like Tom but I do wonder if it's about Well what type of real estate are we Talking about if there are a thousand Units that are just like this one and The you know and there's very little Variability in price well then you're Going to have to work it to get this to Sell you're going to have to put money Into print and advertising you're going To have to work your contacts you're Going to have to do things but if we're Trying to sell your house right now I Don't know why you'd need a realtor Right all you have to do is just say on The show that you want to sell it and

You'd have like 50 offers the next Minute so I think it's Situational um and there are a lot of to Adam's point there are already a lot of Protections in place when it comes to Real estate so I don't think it's about Needing to keep the percentage locked in Where it is cuz that's where everyone's Safest I think it depends on where it is My my concern is more with the insurance Um Market that you're starting to see Industries take advantage of their Customer base uh for their own profits We're seeing that certainly in the Insurance World we're seeing in California now you guys are dealing with It here in Florida we're starting to Deal with it in New York certain Industries are looking to start Exploiting their customer base because The margins aren't what they want it to Be anymore I don't know that that's true In real estate well by the way and and It's not exploiting right it's it's more The incentive because once incentive Leaves interest leaves right so what is My interest of doing this there is no Incentive so guess what I'm out of here I don't want to do this anymore so That's the that's the problem with this But by the way Tom what was it before so After this thing was it 6% before that Now they're saying now the buyer the Seller can uh negotiate with the realtor

With the realtor right there were there Were disclosures and they weren't Remember this does this is not you know We hey let's just change the rules this Was a 15-year court case it started with An arbitration went from here to here to Here and this is a settlement that the Industry had to make you know with America and it they removed The Upfront Display of commissions for buyers agents And so that buyers and sellers could Look at it and somebody selling a house Had more control cuz remember right now Everything comes out of the sellers hide Except right the origination fees on the Mortgage a buyer comes up they pay an Origination fee or whatever fees on Their loan and that's it everything Comes out of the seller's hide hey you Know the faucet dripping I don't like That maybe well wait you're going to buy A house there's going to be maintenance You have to do yeah but I want you to Fix this and it gets Ticky Tac all that Just lands on the seller and this Basically said hey you know we have to Disclose this differently and buyers and Sellers should be able to negotiate I Almost think there's a part of it that's Already happening anyways like it's Already going on like negotiation with Yeah I'm not I'm not doing it for this Price I'm only doing it for this Percentage I'm only you know I'm not

Going to do it okay no problem you know I'm you know here's what I want you can Put all that stuff and by the way say You over negotiate and you're like hey Babe we got this guy good we over Negated his motivation goes way he's got Cases he's going to make more money on So it's like you have to also manage the Incentives but amount of traffic we're Getting right now with man is Unbelievable yesterday I can't even tell You how many Ms came through yesterday For me great conversations people Booking 15-minute calls Tom is about to 2,000 manets okay he'll be the first Person to have 2,000 paid manets uh uh There I know Chris uh is probably one of The fastest to respond on man I think He's a 24-hour guy at 100% responds back To answer so if you have any questions Today if you disagree with me or agree With Tom or Vinnie or Adam or Kom these Are their QR codes ask him any question You want on man there's a 95% chance you Get a respond back on Instagram you get respond backs 5% on LinkedIn 5% on Twitter less than 10% on Man there's a 90 to a 95% chance they're Going to get back to you so if you like This clip and you want to watch another One click right here and if you want to Watch the entire podcast click right Here

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