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Old 08-08-2012, 02:49 PM
 
1,727 posts, read 2,288,477 times
Reputation: 3428

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Quote:
Originally Posted by Silverfall View Post
A $1M+ home is a luxury home in most areas and agents do not just take some photos, and throw it on the MLS. Good agents take pro shots which on those large homes often involve two shoots to get twilight shots so they can run you $1,000 for photos. A good quality video will be $1-$2k. Staging will often be several thousand. Broker luncheons are $500+ since they are often catered in that price range. There there are custom websites...on and on. Luxury homes are not marketed in the same way as a $200,000 home is.

See the problem that you have is that when you help people write up contracts for homes you just do the contracts, you do zero marketing, nor do you show any properties. Marketing takes time, effort and money. It isn't 20 hours worth of work. Not even close. I spend more time than that on my $125,000 listings. The average home for me from list to close is about 50-80 hours of work, not including short sales. I do time studies every other year to track how much time it takes me to do things. So on a $125,000 listing I make about $60 an hour. I need to make about $125-$150 an hour to pay business overhead, pay taxes, and then actually make money. Cheap listings are essentially pro bono work.

Making $60 an hour as an employee with taxes and expenses paid already is not the same thing as a business owner bringing in $60 an hour who then has to pay taxes and business expenses. So on that $1M home, if I make $30k and only put in 100 hours, I make $300 an hour. Put aside the additional marketing expenses for a minute and the increased risk you have with luxury homes. Seems like a lot to some people but as a business owner, if I don't do that, I can't sell cheap homes. I would have to walk away from helping people. We need to make a higher rate on expensive homes to offset the essentially pro bono work we do on cheaper homes.
Ive decided to put this to rest as Ive been given a contract to review...We will have to agree on some points and disagree on others...To just end the personal annoyance I have, I am just going to get my license.....

Let me ask this though...assuming I carry through and get my license and I go to buy another rental for myself.....are the brokers still going to refuse to give me the buyers 3% because I am the Buyer and the agent? My blacklisted broker conversations tell me that they wont have a problem with it, but my inner skeptic tells me that they will still want to keep it for themselves since I would be the Buyer.

Am I no longer Greedy at that point b/c I got my license?

 
Old 08-08-2012, 02:58 PM
 
Location: Gilbert - Val Vista Lakes
6,069 posts, read 12,705,016 times
Reputation: 3810
Quote:
Originally Posted by marksmu View Post
...
so please tell me why a realtor who will do less than 20 hours of actual work deserves to be paid more than a normal Joe Blow working 8-5, 5 days a week, 51 weeks a year? Please enlighten me as to the special skills involved in this. I dont see it...
Your "less than 20 hours of actual work is not a representative number.

The average work on a transaction is 20-25 hours just for the handling of paperwork and email communications to get documents from both sides of the transaction.

This does not include the time required to work with a seller to provide comps, staging advice, hiring professional photographers and meeting them to do the photographing, the planning of marketing, building individual home web sites, designing and ordering flyers, keeping up with the marketing, making reports, communicating with buyer agents, scheduling showings, many times on upscale homes, having to be present for all showings, negotiating contracts, and many many other details that have to be accomplished during escrow

The Realtor is paid for his knowledge, experience, skills and time. It takes greater skills and knowledge, more marketing money, and a lot more time to sell a million dollar home than it does a one hundred thousand dollar home.

What is a normal Joe Blow?
  • What business expenses does he have?
  • What knowledge, experience and skills does he have?
  • Is he paid a salary, or per hour.
  • Does he have paid medical insurance,
  • paid sick days,
  • paid vacation,
  • pension?
  • Does the company pay social security for him?
The Realtor is an independent contractor:
  • She pays all of her own business expenses,
  • pays her own medical insurance,
  • Has NO paid sick days,
  • NO paid vacation,
  • NO pension,
  • NO social security contributions,
  • And her pay is CONTINGENT on a successful transaction closing.

Therefore, I fail to see your comparison.

Your bias and apparent envy of real estate agents is well documented, and as you lose on the arguments you're trying to advance, you keep trying new arguments. It is not working. You should know when to throw in the towel.
  • Why do Buyers use Realtors for free and then drop them, electing to not buy a home after the agent spends 40-50 hours with them, and hundreds of miles on their car.
    .
  • Why do buyers call listing agents asking them to show them a home, telling them they are unrepresented by a Realtor, but lying.
    .
  • Why do Buyers object to paying a Realtor up front, to be reimbursed at escrow IF they buy a home? Because of Greed. They want to use the Realtor for free.
    .
  • Why do Buyers lie about working with Realtors when they are really working with two and more?
    .
  • Why do sellers not pay the listing agent by the hour?. Why do they not pay for the marketing material?
    .
  • Why do listing agents not get paid when a home does not get sold due to no fault of the listing agent?
How many hours work per year do you think Realtors put in and not get paid by the people who use and stiff the Realtors? It could be as high as 50% in any given year.

It's already been mentioned on this thread, that if buyers and sellers were willing to pay the agents by the hour, a sufficient amount to cover their expenses, overhead and reasonable profit, then many Realtors would probably be willing to accept that.

However, as long as buyers are not willing to pay for the agents time and expenses as they occur, and sellers are not willing to pay for our time and expenses, but continue to have us work on contingency, then they will pay more for the contingent commission arrangements.

You work on salary, and apparently do not understand the business that a real estate agent is in, so you would not understand this.

You may be an investor and have some knowledge of buying investment property, but it's obvious from your statements in this thread that you don't have a clue as to what it takes to operate a successful real estate business.
 
Old 08-08-2012, 03:05 PM
 
Location: Gilbert - Val Vista Lakes
6,069 posts, read 12,705,016 times
Reputation: 3810
Quote:
Originally Posted by marksmu View Post
Ive decided to put this to rest as Ive been given a contract to review...We will have to agree on some points and disagree on others...To just end the personal annoyance I have, I am just going to get my license.....

Let me ask this though...assuming I carry through and get my license and I go to buy another rental for myself.....are the brokers still going to refuse to give me the buyers 3% because I am the Buyer and the agent? My blacklisted broker conversations tell me that they wont have a problem with it, but my inner skeptic tells me that they will still want to keep it for themselves since I would be the Buyer.

Am I no longer Greedy at that point b/c I got my license?
A licensed real estate agent who has the license held by a licensed Broker is entitled to the commission that the listing agent states in the MLS (in AZ)

The commission must be paid to that buyer agents Broker. The Broker pays the agent.

The listing agents offer to cooperate is with all Brokers and agents. It does not matter if the agent is the buyer. As long as they are licensed and hang their license with a Brokerage, they will be paid the commission.

(However, you're still an attorney, and that may be held against you)
 
Old 08-08-2012, 03:38 PM
 
Location: Salem, OR
13,757 posts, read 31,670,380 times
Reputation: 12136
Quote:
Originally Posted by marksmu View Post
Ive decided to put this to rest as Ive been given a contract to review...We will have to agree on some points and disagree on others...To just end the personal annoyance I have, I am just going to get my license.....

Let me ask this though...assuming I carry through and get my license and I go to buy another rental for myself.....are the brokers still going to refuse to give me the buyers 3% because I am the Buyer and the agent? My blacklisted broker conversations tell me that they wont have a problem with it, but my inner skeptic tells me that they will still want to keep it for themselves since I would be the Buyer.

Am I no longer Greedy at that point b/c I got my license?
They have to pay you per MLS rules. Doesn't matter if you are representing yourself as an agent. So here is the final irony...it often makes more sense as a licensee to waive the buyer agent commission and negotiate a price cut instead so you don't have to pay income taxes on the commission. As long as your broker gets their fee, of course.
 
Old 08-08-2012, 03:52 PM
 
397 posts, read 493,010 times
Reputation: 210
Quote:
Originally Posted by marksmu View Post
I'm resisting the urge to say what I am thinking...so let me dumb it down for you...Ill use small whole numbers for you so you can follow the math without a calculator.

LA contracts with seller to sell a house for $100,000 with a 10% commission. The local accepted norm as to commissions is that the listing broker gets to keep 5% and the buyers broker keeps 5%.

Unrepresented individual we will call a "Buyer" comes to the table and tells you the Listing Broker - I will buy that house for $100,000 but only if you agree to credit me the Buyers portion of the commission $5000.

Broker now has 2 options.

1) Reject the Buyer b/c he is unwilling to offer 5% to the Buyer
2) Accept the Buyers proposition and sell the house and credit back 5% to Buyer.

Nowhere has the Buyer interfered with a contract between seller and Agent. The Seller PAID the LA 10%. The LA refunded the Buyer 5%.
Marksmu,

Just to clarify, when you say the LA "credits" the buyer, is this something that will be paid after closing (off the HUD) or is it on the HUD or are you proposing that the LA credit the buyer via a credit to the seller (5k price reduction)?

I bought a house where the agent paid me the "credit" after the closing and I was taxed on it. This option does offer the advantage of leaving the original LA intact.

Is it legal to have an agent contribution to the buyer on the HUD? Is it taxable income?

Having the purchase price reduced seems like the best tax advantage, but it requires the LA to be negotiated.
 
Old 08-08-2012, 04:13 PM
 
3,404 posts, read 4,152,853 times
Reputation: 2397
Quote:
Originally Posted by marksmu View Post
Ive decided to put this to rest as Ive been given a contract to review...We will have to agree on some points and disagree on others...To just end the personal annoyance I have, I am just going to get my license.....

Let me ask this though...assuming I carry through and get my license and I go to buy another rental for myself.....are the brokers still going to refuse to give me the buyers 3% because I am the Buyer and the agent? My blacklisted broker conversations tell me that they wont have a problem with it, but my inner skeptic tells me that they will still want to keep it for themselves since I would be the Buyer.

Am I no longer Greedy at that point b/c I got my license?
Part of the reason I have my license is because I represent myself buying investments. I buy 1 - 3 houses a year and I get the buyers commission for doing so. I answered anyway though I think your are asking the question just to be snotty.
 
Old 08-08-2012, 04:34 PM
 
Location: DFW - Coppell / Las Colinas
30,020 posts, read 34,685,876 times
Reputation: 36053
Funny how an attorney keeps talking about greed, ethics and how much is "Fair Commission".

Don't understand why you guys keep having the discussion. He is in no postion to decide what a Broker and their client can freely decide is appropriate.
 
Old 08-08-2012, 05:44 PM
 
Location: Salem, OR
13,757 posts, read 31,670,380 times
Reputation: 12136
[quote=Rakin;25544243]Funny how an attorney keeps talking about greed, ethics and how much is "Fair Commission".
/QUOTE]

It is important for consumers to understand how it works so they can ask these questions at the time of a listing appointment so I think there is value in that.

I think he just has an employee mentality like most people, which is different from the business owner mentality. Most people just don't get how hard it is to run a business and how much it really costs to do so. All of the costs are hidden from employees so they don't really grasp the behind the scenes numbers and such. Most people don't understand that agents are a business within a business.

I love my company attorneys but I have a good people picker.
 
Old 08-08-2012, 05:55 PM
 
4,383 posts, read 8,712,138 times
Reputation: 2333
Quote:
Originally Posted by Silverfall View Post

Making $60 an hour as an employee with taxes and expenses paid already is not the same thing as a business owner bringing in $60 an hour who then has to pay taxes and business expenses. So on that $1M home, if I make $30k and only put in 100 hours, I make $300 an hour. Put aside the additional marketing expenses for a minute and the increased risk you have with luxury homes. Seems like a lot to some people but as a business owner, if I don't do that, I can't sell cheap homes. I would have to walk away from helping people. We need to make a higher rate on expensive homes to offset the essentially pro bono work we do on cheaper homes.
The shop rate at a machine shop I worked out was between $70-$90/hr(and that's pretty high too, a lot of shops get less). Welding, machining and sheet metal. I'll bet that overhead was bigger than the overhead of being a real estate agent. No one should begrudge you making as much money as you can(ethically, which I'm sure do), and I'm sure most people here complaining about greedy agents do the same thing. But pro-bono work? Really?
 
Old 08-08-2012, 06:12 PM
 
Location: Salem, OR
13,757 posts, read 31,670,380 times
Reputation: 12136
Quote:
Originally Posted by jdm2008 View Post
The shop rate at a machine shop I worked out was between $70-$90/hr(and that's pretty high too, a lot of shops get less). Welding, machining and sheet metal. I'll bet that overhead was bigger than the overhead of being a real estate agent. No one should begrudge you making as much money as you can(ethically, which I'm sure do), and I'm sure most people here complaining about greedy agents do the same thing. But pro-bono work? Really?
Really. It doesn't pencil out at all on the cheaper homes. In fact some agents won't take listings under a certain amount because it is pro bono work. You sell those cheaper homes, especially under $100k and you are working for free. You don't have to believe me, but it is the truth. A local agent and I were chatting on tour not to long ago and she sold a mobile home for someone. The commission was so small that it didn't cover her required brokerage fees so she had to PAY the brokerage to sell that trailer on behalf of the seller since she owed them more. Seriously. Pro bono, or if you aren't good a math like this agent, you are in the negative.

The reason is because of the all-or-nothing nature of most real estate transactions. Agents carry massive business losses compared to other businesses. A machine shop gets paid regardless most of the time. Their business losses are small. It is the risky nature of the real estate business that most people struggle to understand. It is kind of like gambling. High risk means high reward.
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