Hi, I’m Analise; I’m a Realtor, and I’m chronically online.
Sadly I'm not asking for help, I’m just sharing two facts in service of underscoring my qualifications to deliver this unequivocal truth: people love to hate real estate agents.
Million Dollar Listing? No problem, trash TV = good and we love a boss lady and short, well-meaning twins rendered in high-def (yes I know the latter is SELLING SUNSET okay let me make a point). Big commissions are welcome because the capitalist concept of the American dream is fun when it’s at a safe distance, plus we crave those inappropriate logo-splattered outfits. Those threads cost money, baby!
Million dollar listing…in an old Oakland condo building sold by someone you went to high school with who’s getting paid 3% of the sale price? Totally different story. Everything about this IRL version is perplexing. Resentment-building. Nevermind that the above might not be the full story, it’s an immediate reminder of economic disparity and the fact that our democracy has elected to speed-run sophomoric metamorphosis by letting its oligarch parents take off their masks.
And yeah, I just made this about a LOT in one fell swoop (sentence), but this isn't just Bay-Area Berkeley-alumna Analise spitting academic rhetoric, it is an underlying reality of homeownership:
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Not everyone can afford it
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Most people would like to
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To participate in this business however tangentially is to literally buy into a fraught institution without being able to untangle its complicating and historic factors
I do not believe that means it’s all bad, nor that the players are all bad—I count myself among them, after all. There are tons of other industries mired in the same predicament, it’s just that few are as equally front-facing about the money involved and as lacking in self-awareness as real estate.
Highrise Robbery?
A common refrain regarding Realtors is that they get paid a lot to do a little.
In the court of public opinion, agents also usually fall into one of two categories: they’re a lazy and ineffectual door-opener, or an inescapable shark who shows up in your mailbox and at your doorstep *just wondering* if you've ever thought about selling.
In either scenario, the main fear and thus source of upset is that you’re going to (over)pay an agent for an insubstantial effort, because you “have to,” because that’s just “how it is” in real estate.
Confession: I too thought all of this for most of my life (albeit with very little real experience to base it on), and I’m not going to sit here and pretend bad actors don't still exist.
I do get defensive of this industry now that I’m in it. I feel a profound responsibility to elevate the trade through transparency and impeccable service.
My hope is that by giving as much away about the way this all works, the masses might be able to conceive of the value of hiring an expert in a field that’s complex, nuanced, and intensely regulated for the express purpose of protecting you, the general public.
We’re all about bullet points today so here are three things I have to say about commissions in real estate to set us straight:
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I wholly believe good agents are worth the commissions their clients pay them.
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I agree that means that if they serve a lot of clients well, they will make a lot of money.
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I don’t think most people know very much at all about commissions.
Though there’s very little I relish more than winning a debate, I’m not going to try to convince you of anything here. If you hate this whole real estate thing, firstly how are you even still reading this, and secondly: that’s cool with me, and I’ll just assume you probably won’t be working with me anytime soon.
What I am going to do is offer clarity around commissions by way of a foray into a bit of California history, an overview of how commissions tend to work these days via fun answers to frequently asked questions, and some insight into what Realtors even actually do for you.
So Sue Me: Burnett v. NAR
Real estate commissions jumped to the forefront of the country's consciousness last year thanks to a big ol’ lawsuit brought against the National Association of Realtors (NAR) by a group of enterprising Midwest attorneys in an attempt (if we’re being generous) to combat the perception of commission-fixing.
Without belaboring the details, Burnett v. NAR stirred up quite a lot of feeling from quite a lot of people and ultimately resulted in the latter settling. The New York Times and The Wall Street Journal and all the other big guns published the requisite inflammatory pieces, strangers on the internet with varying degrees of qualification screamed at each other and congratulated themselves on the imminent death of “Realtor” as a profession, and then…honestly…business continued on as usual.
As legislation is wont to, that lawsuit happened loudly and the subsequent settlement quickly—which meant that there wasn’t a ton of time put into considering all the arenas that would be impacted by the ordered changes, or how those changes would be implemented on a logistical level.
As a further result, the lack of executional foresight meant that the parties who were supposedly going to benefit from the changes (buyers and sellers), might actually be the ones paying for them, in the form of fewer and/or lower-quality offers, increased liability from hiring a newly minted “budget” agent, or negotiation stand-offs—to name just a few examples.
Because of all this ambiguity and ever-evolving deliberation, at least here in California and the Bay Area in general, we’re still feeling our way through the required adjustments and navigating how those fit into best business practices. It means that any big-picture industry changes here are either happening slowly and more carefully than that explosive judgment suggested they would, or not happening at all.
The functional, tangible results we have implemented are largely positive.
Relevant real estate associations and brokerages updated a variety of contracts to offer more express clarity surrounding representation and payment for said representation.
Realtors employing those contracts on a day-to-day basis dug into the details and potential ramifications of the new versions in order to have different and better conversations with clients (this blog piece is like the seven hundredth iteration of my personal elevator explanation).
And, most parties who’ve found themselves in the process of buying or selling since August 17, 2024 when our contractual changes went into effect, now not only understand commissions better conceptually, but also understand and accept (god forbid even appreciate?!) why commissions tend to play out the way they do.
Next Week: Commissions 101
For this piece I skipped straight into the “why” of this all being relevant because I believe in understanding the importance of a thing before engaging further with a thing, but to revisit one of my handy bullets above: I’m willing to bet most people don’t actually understand real estate commissions or how they work or what they even are.
What is the “typical” commission rate, and isn’t that negotiable? (Quick, very necessary interjection: Yes, it absolutely is always negotiable). How or when does commission get “split” between sides? How much of the resulting commission does an agent have to give to their brokerage? To a co-agent? To insurance and fees and taxes?
Why is Redfin the Supercuts of real estate? How did the national lawsuit I mentioned find its footing in a well-documented 1950s history of price-fixing in California?
The answers to those questions and more are coming up in the two remaining parts of this three-part series. “Commissions 101” up next will answer all the FAQs foisted upon me regularly, in the form of a cheat-sheet for you, while the finale “What Do Realtors Even Do” is about...what my job is.
See you for the next installment, and in the meantime please note my frequent use throughout this piece of quotation marks and language like “tends to” and “typically.” No need or grounds to sue, thanks!
Bonus Points: It’s time for audience participation! Send me any questions you have about commissions or what Realtors are good for or anything else and I’ll aim to incorporate ’em in the next issues (anonymously, don’t worry! ...unless you want to be a STAR).
