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I will want to start this thread with the words of Tom Barnett, the the Acting Assistant Attorney General in charge of the Antitrust Division back in 2005. This is part of what he said.
One question we might ask is, why are brokers making so much money? Inquiring minds want to know. And certainly the FTC and the Antitrust Division want to know.
He concluded with these words.
Finally, I will mention just briefly that one other possible source of the rise in real estate commissions and potentially profits is, of course, private agreements beyond the scope of what I've just been talking about, and I'll have no further comment on that for now.
First, I want to answer the question Mr Barnett asked, Why are we making so much money? I think there are multiple answers to that. Because we can, because we need to, Why not? come to mind.
What is important here is not the question, but the fact that the USDOJ is asking it.
The second part of the quote is where to problem gets bigger.
Mr. Barnett is the head of the anti trust division, so by golly, the USDOJ has decided that this is going to be an anti trust problem and they are going to prove it, even if they have to invade another country looking for weapons of mass anti trust violations.
Sure enough, after this workshop, the USDOJ began a relentless search and sue campaign for anti trust violators.
The sued everybody and their broker. Needless to say, the USDOJ did not find what they were looking for.
So, the USDOJ opened a website and went home.
Today, they are chasing some phone company and are leaving the Real Estate Brokerage Industry alone.
But where is smoke there is fire. Maybe, it is not that Real Estate brokers make too much money. Maybe is how they make it. This is what I mean.
If Joe Seller walks into a broker’s office to sell his 300 K home, he is asked to pay, lets say 4%, so we don’t get too hung up on the 6% figure. He has to pay 12K in commissions. If his brother Jimmy Sellers walks into the same office to sell his 600K home, Jimmy has to pay the same 4% or 24K. Is the agent really going to put 12K more of work on this?
Why can’t brokers charge let’s say, 20 K for selling homes, any home?
That way if I want to shop around for a cheaper broker, maybe my home will sell easier, I can look for someone that will charge 18 K or maybe 14K no matter what the price range of my home is.
This is, I believe, what consumers are complaining about.
Since the USDOJ brought it up, it is fair to say that perhaps, maybe there is a problem and that is why bubbleboy wants to talk about it. Lets just make sure everything is OK.
A word of caution. The points I am illustrating are not the real problem of why Real Estate Brokers are making so much money or where the solutions is going to be found. This is sort of the tip of the iceberg, so please pace yourself. If all possible, take a look at the link to the workshop transcripts found in this post. In those transcripts many Real Estate heavies testified and gave their opinions. I will be referring post questions that already addressed and answered in the workshop to them transcripts.
Here is that link: http://www.justice.gov/atr/public/workshops/220657.pdf
The questions I am starting my thread with are:
What does a consumer have to do to negotiate a lower commission?
Who do they have to talk to?
What do they have to say or do?
Who wants to be first?
BB
Last edited by bubbleboy; 02-23-2013 at 03:23 PM..
Reason: Typos
[font=Arial]What does a consumer have to do to negotiate a lower commission?
They have to take the time to interview agents. The majority of consumers hire the first agent they meet. Many brokerages have minimum fee requirements so you can't always negotiate with the agent. You need to shop brokerages.
Quote:
Originally Posted by bubbleboy
Who do they have to talk to?
You start with the agent as sometimes they can negotiate their rate, sometimes they can't. You don't know until you ask.
Quote:
Originally Posted by bubbleboy
Quote:
Originally Posted by bubbleboy
What do they have to say or do?
Do the Dougie. But please not the Macarena or Mambo #5.
They just have to ask and be prepared to keep hunting until they find an agent that will take the rate they are willing to pay.
They have to take the time to interview agents. The majority of consumers hire the first agent they meet. Many brokerages have minimum fee requirements so you can't always negotiate with the agent. You need to shop brokerages.
You start with the agent as sometimes they can negotiate their rate, sometimes they can't. You don't know until you ask.
Do the Dougie. But please not the Macarena or Mambo #5.
They just have to ask and be prepared to keep hunting until they find an agent that will take the rate they are willing to pay.
Dear Silverfall.
You are absolutely right. Consumers have to do what you said. There is not way around that.
I am going to refrase the question, but I will get off your post, that way it won't look that I am in any way single you out. Thanks Silverfall.
On a lighter note
Do you really mean what you say about the macarena? I like the macarena. Macarena is cool.
You must mean the horse riding gangnam style dance? are you sure you mean Macarena? LOL
So far, it is clear that:
Consumers have to negotiate.
If consumers don't like what they hear, they can stand up and walk.
Agent is too expensive, ask too much money?
Oh well, get another agent, sell it yourself or become an agent.
That is true and that is the way it works and it is not a bad thing.
Now.
A buyer walks into an agent's office and says that he wants to hire an real estate agent to represent him in finding a home to buy and wants to know how much that will cost.
The agent says, I will be your agent, and you don't pay me anything. The seller's agent (or any one else) pays me. I will be your agent and you don't pay.
The consumer agrees with the agent and decides to go along with the agent under those conditions. The agent does not give the buyer an agency disclosure form or signs any contracts and begins doing tasks for which a real estate license is required. Later, when they find a property, the buyer signs the offer and an agency disclosure form disclosing that the agent is the buyer's agent.
Should the agent have given the buyer, before they began looking for a property to buy, an agency disclosure form stating that the agent was a sub agent for the seller and therefore the agent did not represent the buyer?
If you are thinking dual agency, you are going to need a written agency relationship agreement with the buyer for the dual agency to be valid, so dual agency is out.
Dual agency does not mean one agent, with only one valid written agency agreement representing the buyer and the seller. Dual agency means just that. Two written valid agency agreements.
Am I right? Please elaborate a little.
I know that today, cooperating brokers are paid by the seller because they are their sub agents of the seller's agent, according the the Multiple Listing Service rules. I also know that the same agent, the cooperating agent working with the buyer, will give the buyer a signed agency disclosure form stating that such agent is an agent for the buyer, in fact disclosing a verbal agency agreement, that, in California is invalid.
I'll come back later and break it down a little.
Anybody?
Please be nice, If you don't have anything nice to say, please don't say it.
I might be wrong, and that is not a crime.
Last edited by bubbleboy; 02-23-2013 at 08:57 PM..
Reason: typo
Consumers have to negotiate. You don't like what you hear, you stand up and walk.
Your agent is too expensive, ask too much money?
Oh well, sell it yourself.
Now.
A buyer walks into an agent's office and says that he wants to hire an real estate agent to represent him in finding a home to buy and wants to know how much that will cost.
The agent says, I will be your agent, and you don't pay me anything. The seller's agent (or any one else) pays me. I will be your agent and you don't pay.
Now, set of trick questions.
What does a consumer have to do to negotiate a lower commission?
Who do they have to talk to?
What do they have to say or do?
Anybody?
"What does a consumer have to do to negotiate a lower commission?"
Work with an agent who is willing to work for what the consumer is offering.
"Who do they have to talk to?"
Real estate agents.
"What do they have to say or do?"
They have to say what they will pay, and not agree to pay more.
"Anybody? "
Glad I could step up and put this thread to bed.
"When does this thread get interesting?"
Survey says, "Don't get your hopes up on that chance."
I just cut and pasted this from one of the multitude of commission threads, may not be entirely an answer to the OP but pretty much sums it up. No one is forced to pay a commission, period.
Quote:
You can sell FSBO, FSBO with help, MLS only Brokers, Discount Brokers, Full Service Brokers.
This covers the whole range of costs and it is your choice. No one forces anyone to list their home and if you do not want to buy a house because you think the agent is going to make too much money, even though it is not going to cost you more, then only look at FSBO's."
The reason many of these structures are not widely available is due to the fact that they are not profitable or they do not work.
There you go, no commission, buy a FSBO. It may take longer, it may go quicker, it may not go smoothly, it may go without a hitch. But you won't have to worry about paying that commission.
"Who wants to be first? " Glad I could step up and put this thread to bed. "NEXT!!"
Let's give the OP a break. (His thread in the CA forum got closed down as a result of people being sarcastic and frankly, unbelievably rude.) If people who are reading this discover that they can pay a lower commission when buying/selling their property, give them to chance to find out.
You are a real estate agent and a buyer walks into your office.
You tell her that you will be her buyer agent but that she is not responsible for your commission.
You sign a agency disclosure form saying you are her agent and you give it to her. After the transaction is over you collect from the escrow company the 3% MLS money (is not an agency commission) from the seller and keep it? The buyer is entitled to most of it, but you never discuss that with her.
The real estate agency commission is the amount of money mentioned in the agency relationship agreement and is between the agent and either a buyer or a seller. On dual agency, the agent will need two separate agency agreements.
And agency disclosure form disclosing an oral agency relationship is invalid.
The MLS agreement, the cooperating broker fee is a sub agent fee and is the product of a unilateral broker to broker agreement
Not understanding this might mean that if you are a real estate agent and you are doing it this way, giving Agency Disclosure forms to buyers saying you are their agent and then collecting the MLS fee to yourself, you might be hurting people and not know it.
The USDOJ says it is 60 billion dollars per year problem, and I agree with them.
Some people are taking this very seriously.
But again, this is only the tip of the iceberg.
I'll be back when 1000 more people have visited the tread.
You are a real estate agent and a buyer walks into your office.
You tell her that you will be her buyer agent but that she is not responsible for your commission.
You sign a agency disclosure form saying you are her agent and you give it to her. After the transaction is over you collect from the escrow company the 3% MLS money (is not an agency commission) from the seller and keep it? The buyer is entitled to most of it, but you never discuss that with her.
The real estate agency commission is the amount of money mentioned in the agency relationship agreement and is between the agent and either a buyer or a seller. On dual agency, the agent will need two separate agency agreements.
And agency disclosure form disclosing an oral agency relationship is invalid.
The MLS agreement, the cooperating broker fee is a sub agent fee and is the product of a unilateral broker to broker agreement
Not understanding this might mean that if you are a real estate agent and you are doing it this way, giving Agency Disclosure forms to buyers saying you are their agent and then collecting the MLS fee to yourself, you might be hurting people and not know it.
The USDOJ says it is 60 billion dollars per year problem, and I agree with them.
Some people are taking this very seriously.
But again, this is only the tip of the iceberg.
I'll be back when 1000 more people have visited the tread.
Why would the buyer be entitled to the agents commission and why are you recycling 6 year old issues?
Is there some new DOJ antitrust issue which was not covered back in 2006-2007?
We'll see you in few years when the thread gets up to 1000 views, unless of course you plan on visiting daily to recycle it.
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But please not the Macarena or Mambo #5. 
Silverfall
You don't pay, the other broker pays me
"
