After the real estate earthquake last week . Is insurance next ?

[UKTX]

I think anything is up for grabs at the moment...the feds are hungry for cutting anything out.........especially in MAPD.

 

[rousemark]

It's still a cost to the consumer in the total pricing of the plan . Let's say a fe product at 150% first yr and 10% renewals . $100 a month premium is about $1800 of total comp first yr . The consumer could say I want $500 of that back in rebate . That lowers there cost not the first yr . But I admit it's different than real estate in that's a lump sum up front . Why it's much different in insurance is that lump sum an agent gets is an advancement and it's unearned till it's earned . So if you gave 30% of your advancement away and the client nsf's the first or second payment you have a lose . Not only did you lose the 30% you paid the client you got to pay the full advancement back .

Think about it . Every business wether a paint contractor or car mechanic can give part of their profit ( like ins commissions) back . I can't think of any other industry were profits ( ins commissions) regulated .

Florida allows rebating. Doesn't seem to have had aby big effect on agents doing business there

 

[DonP]

Florida allows rebating. Doesn't seem to have had aby big effect on agents doing business there

It's super complicated and cumbersome to rebate in Fla . Many rules

 

[axeman462]

I could see an id!ot like Bernie Sanders saying something like "all commissioned sales should be illegal"

 

[rousemark]

It's super complicated and cumbersome to rebate in Fla . Many rules

WAnd you think a system developed by thevfeds would be less complicted?

BTW, I have mentioned this settlement to a couple of realtor friends of mine and they are not concerned. They laugh and say the public is the only ones making a big deal of this settlement. They said that realtors are regulated by the states not the feds just like insurance agents. In TN there is not fixed comission rate and the firms can charge whatever the market will bear. According to them the way this is being reported bt the media is very misleading (what else is new). They already negotiate their fees downward to get large listings.

 

[DonP]

WAnd you think a system developed by thevfeds would be less complicted?

BTW, I have mentioned this settlement to a couple of realtor friends of mine and they are not concerned. They laugh and say the public is the only ones making a big deal of this settlement. They said that realtors are regulated by the states not the feds just like insurance agents. In TN there is not fixed comission rate and the firms can charge whatever the market will bear. According to them the way this is being reported bt the media is very misleading (what else is new). They already negotiate their fees downward to get large listings.

I've read 15 articles on it . There wrong it's a huge deal . There will be no more listing of commissions on the mls .Agents will no longer be able to steer clients to the highest commissions . What it does is open a huge door for flat rate brokers to come in big . I've read so many detailed articles on this from professionals in the business . Your right you could always negotiate commissions . But guess what ? If you put the commission to the sell side agent was 1.5% on the mls nobody would ever show your home . They'd steer clients to 3% on the sell side . Now the commissions won't be on there . Here's the thesis . It takes no more effort to sell a $1mil house vs a $500 k house yet the commission is 2x . Now with coming explosion of flat rate you'll say I'll pay $10k flat to sell this . As consumers catch on commissions will fall over the coming yrs . I'm reading articles that commissions will fall 30-50% in the yrs ahead . There saying 70% of agents could leave the business ( heck 70% of real estate agents are part time )

 

[Yagents]

Got to agree with donnyp. Fees are the future in real estate, much like what financial advisors went through a decade ago.

Same for ACA and IFP, went from % to pmpm flat fee. I'd make a killing if still was % with tripling of premiums

 

[sman]

I recall many years ago there was a term carrier who offered commission free life insurance. Their rates weren't that competitive. In the grand scheme of things, on term life anyway, the commission is a small part of the overall price structure as none of them pay renewals. You get a 20 year term that has a $100 monthly premium. Let's say it's a 100% contract. That's $1,200 in commission that is technically spread out over 20 years as far as the total cost built in. That adds $5 per month to the premium in that scenario.

As far as the real estate commissions go, my understanding (could be wrong), you will no longer be able to list a commission for the buyer's agent. The selling agent can still put it at 3% that the seller will pay. If the buyer has an agent (and most do), they will have to try and negotiate their fee. I suspect what will happen is the seller will end up paying it. They will likely negotiate it just like they do when they put something in the offer regarding the seller paying a certain amount of closing costs. Now they'll add that the seller will pay a certain amount to the buyer's agent.

Could the percentages end up going down? Absolutely. But listing agents will still be able to put that 3% in the contract for themselves. What we could end up seeing is buyers will come in without an agent so most agents will start focusing on listings instead of helping buyers. It could make the buying process a little more difficult for some buyers. I recall when we were looking to buy our second home (we were around 26-27 years old). We were moving a couple of counties over and didn't really know the area. The agent we worked with was worth his weight in gold as far as narrowing down the area and the homes.

The next home we bought, the agent made out like a bandit because we found the home ourselves and we also found the buyer for the home we sold.

 

[DonP]

I recall many years ago there was a term carrier who offered commission free life insurance. Their rates weren't that competitive. In the grand scheme of things, on term life anyway, the commission is a small part of the overall price structure as none of them pay renewals. You get a 20 year term that has a $100 monthly premium. Let's say it's a 100% contract. That's $1,200 in commission that is technically spread out over 20 years as far as the total cost built in. That adds $5 per month to the premium in that scenario.

As far as the real estate commissions go, my understanding (could be wrong), you will no longer be able to list a commission for the buyer's agent. The selling agent can still put it at 3% that the seller will pay. If the buyer has an agent (and most do), they will have to try and negotiate their fee. I suspect what will happen is the seller will end up paying it. They will likely negotiate it just like they do when they put something in the offer regarding the seller paying a certain amount of closing costs. Now they'll add that the seller will pay a certain amount to the buyer's agent.

Could the percentages end up going down? Absolutely. But listing agents will still be able to put that 3% in the contract for themselves. What we could end up seeing is buyers will come in without an agent so most agents will start focusing on listings instead of helping buyers. It could make the buying process a little more difficult for some buyers. I recall when we were looking to buy our second home (we were around 26-27 years old). We were moving a couple of counties over and didn't really know the area. The agent we worked with was worth his weight in gold as far as narrowing down the area and the homes.

The next home we bought, the agent made out like a bandit because we found the home ourselves and we also found the buyer for the home we sold.

The seller of the real estate when listing his property will now surely negotiate 1.5-2% ( I don't know if the seller has to put that in mls up front ) for the listing agent . The buyers agent will now have to haggle for his side . The question now let's say your client likes a property and you put bid in. You say you want 2.5% as the buying agent . The sellers agent brings offer with 2.5% commission. The client says no give him 1.5% .Does buyers agent go back to his client and say we got to ad 1% on for my 2.5% commission ? Top agents will resist this at first saying my sales get results !!! I believe flat fee will be the industry norm in 5-10 yrs . No haggling this is what I'm paying commission period

 

[WinoBlues]

The next home we bought, the agent made out like a bandit because we found the home ourselves and we also found the buyer for the home we sold.

Some of them do very well. Especially with California prices.

I sold a home last year. We met the agent, a family friend, at noon to sign a listing. Went to look a home, 20 minutes. In that time she had called her photographer to start taking pictures. We all drove to our house. I stopped to buy something. 15 minutes later she had a family walking through and their kids were in the pool. The parents signed the full asking on the patio over a beer. Sold in about an hour.

We found another house on our own and she scored half of that also.