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Like I stated I don't believe agents, brokers or any RE entity adds value. What they add is the experience and knowedge that the average homeowner doesn't have, is unwilling to learn or simply not interested in doing. For whatever reason.
Now that is an interesting angle I've not thought off. Are you saying that the articles are correct and realtors don't increase sales price but the commission is essentially payment for the services they provide? Now that's a pretty steep price for services. How much effort does a realtor spend selling a home. Lets be generous and say 100 hours. Then the $20K commission means $200 an hour ...
Luckily some of my properties are in NY. In NY there are excellent real estate attorneys who drive the closings and are quite ethical. I'm going to approach a few I know and ask them if they'll handle a few of the properties. I don't expect them to personally handle them, but they can drive the process.
I think its not very professional to attack the poster because he raises an awkward question. But as it turns out your wrong. I have not an ax to grind, but I do have 5 homes to sell (I move a lot and due to the uptick in the real estate market I've rented them rather than sell). Forking over $20K for commission is one thing but $100K in commission that's a lot of cash hence my question.
A few of the realtors have tried to poke holes in the Stanford study. I liked it because it got right to the heart of the question, but as I mentioned in the original post, there are loads of other studies that address the worth of realtors in more specific questions.
Two I know of, but there are others:
MIT Dept of Economics http://economics.mit.edu/files/5178 says higher commissions don't result in higher prices)
Since all these realtors are dominating the thread, why don't you point us to an *independent* peer reviewed publication by a reputable university that shows the benefits of realtors? Otherwise, please let the sellers have their say
Because we don't need a peer reviewed journal. We have something more accurate: The Market. Which means: Reality. If we as agents did not add value, we would be kicked to the curb because nobody wants to give away money. Especially big money. But day after day, year after year, and in the face of the Internet which democratizes access to data, we're still selling most of the houses. So take your answer from Existence.
Furthermore, collectivistic bastions such as MIT and Stanford are the LAST PLACE I am going to go to learn the truth about anything. Especially anything related to Capitalism and Freedom, which are hated concepts by the Kantian mental midgets who float amongst the headstones of intellectual graveyards such as these.
Now that is an interesting angle I've not thought off. Are you saying that the articles are correct and realtors don't increase sales price but the commission is essentially payment for the services they provide? Now that's a pretty steep price for services. How much effort does a realtor spend selling a home. Lets be generous and say 100 hours. Then the $20K commission means $200 an hour ...
Luckily some of my properties are in NY. In NY there are excellent real estate attorneys who drive the closings and are quite ethical. I'm going to approach a few I know and ask them if they'll handle a few of the properties. I don't expect them to personally handle them, but they can drive the process.
I have never believed a realtor increases the house price. A house is simpky going to be worth what a seller thinks is worth. Weather the selling agent can influence the buyer or buyers agent to pay more by using a urgency type of manipulation is debatable. I can tell you that I had a agent tell me that they got better offers by 30k. Ok. I still stayed with my offer. They refused in a rude way. The house was pending for 6 months. It sokd for 3k more than I offered. You realky think thry made out? Someone had to make 6 payments or tie up their money for 6 months. I have never been swayed by those tactics.
200 a hour? Technically yes, but ot really when you think about it. First (depending on the deal but usually) the comission gets split in half. Then his half gets shared with his broker, Then he has to Pay for all the advertizing, his own people (if he has a team) his fuel, car, telephone, etc his overhead, taxes on income, insurance, license. Some deals may be 45-60-90 days. Granted they don't always drag on but they can. AND if the deal falls through they get nothing. Bye thanks for the time and effort.
I'm sure you know this, that he doesn't exactly pocket 20k and walk away simply from putting a ad on the MLS and washes his hands you're doing all the work. I'm sure some sellers require the agent to be there at any showing.
You always drive the process. And every comission is negotiable. Personally when I sell something I want it sold. Sorry but I'm not gonna **** and moan over it. Would I like to keep the comission money in my pocket? Sure. Doesn't everyone. But hopefully the comission is covered by the higher house value.
Last edited by Electrician4you; 02-16-2015 at 10:57 PM..
Speculation? I have bought and sold homes, and know exactly what work was done for the fees. I don't have to be an agent to know what I paid for.
Im not suggesting that all homes are easy to sell, and Im sure that you and other RE professionals truly earn their fees at times. But I am equally sure that other times, RE agents and their companies are getting a windfall for the actual work and degree of expertise involved.
The reality is that because of the internet, realtors no longer have a monopoly on the ability to list or view homes on the market. Realtor and agents may have to adjust their expectations and fee structures, given that educated, internet-savvy people are becoming less inclined to pay the equivalent of thousands of dollars per hour to buy and sell homes.
But you aren't and haven't ever been an agent? Then how can you claim to know from an agents perspective what work was done?
Because we don't need a peer reviewed journal. We have something more accurate: The Market. Which means: Reality. If we as agents did not add value, we would be kicked to the curb because nobody wants to give away money. Especially big money. But day after day, year after year, and in the face of the Internet which democratizes access to data, we're still selling most of the houses. So take your answer from Existence.
Furthermore, collectivistic bastions such as MIT and Stanford are the LAST PLACE I am going to go to learn the truth about anything. Especially anything related to Capitalism and Freedom, which are hated concepts by the Kantian mental midgets who float amongst the headstones of intellectual graveyards such as these.
Real Estate is hardly free market - I believe every state requires a license to sell real estate...by definition that is not free market, that is a restricted market. Each person is capable of selling their OWN home, but if you want to hire someone to help you sell it, that person needs a license. If you truly want to place a free market value on an agent - remove the state barrier, and let anyone sell and market real estate - I think you would find that the commission rate would drop precipitously. Would you deal with even MORE idiots daily? Yes - but if it is truly free market, the elite will rise to the top, and the morons will sink themselves even if they are cheaper.
I am capable of seeing both sides....I do think the internet is going to have a bigger impact on commissions in the future....its unavoidable. There absolutely is a percentage of the population who is 100% capable of selling real estate without help and still doing as good, or better a job as an agent. Right now the MLS is still very dominant, but that dominance is weakening...facebook/message boards/zillow, they are all chipping away at the MLS slowly.
However, there is also a significant population that is not really even smart enough to even walk let alone drive that still need a place to live. These lesser beings still buy houses, and they do need help. Without an agent, these people would get obliterated by people who understand the process, the contracts, the costs, literally chewed up and spit out....I've seen some of these idiots sell to groups that buy ugly houses - thinking they were making $20-$30K selling, and when they get the closing statement they owe money b/c they have agree to pay EVERYTHING for the buyer. Its ugly out there if you are dumb.
I think agents have a valuable place - I think that most studies are worthless. Statistics are only as good as the data used, and the data used in the current studies are close to worthless. Why are they worthless? B/C they are too narrow, or ignore data that does not support their desired conclusion...many times that is because they are commissioned by someone with a vested interest.
If you think my opinion is influenced by the fact that I am also an agent it is not. Look at my past posts...I am an agent for myself and friends/family only...I have never taken a commission.....I have done it all now many many times, and I can say with complete honesty that an agent has a valuable place for most buyers/sellers. I do think Realtors would be wise to try to accommodate and worth with those who dont wish to use their services a bit more than they currently do b/c the dominance is being weakened, and agents are creating a situation where people are starting to look for and find viable alternatives.
Real Estate is hardly free market - I believe every state requires a license to sell real estate...by definition that is not free market, that is a restricted market. Each person is capable of selling their OWN home, but if you want to hire someone to help you sell it, that person needs a license. If you truly want to place a free market value on an agent - remove the state barrier, and let anyone sell and market real estate - I think you would find that the commission rate would drop precipitously. Would you deal with even MORE idiots daily? Yes - but if it is truly free market, the elite will rise to the top, and the morons will sink themselves even if they are cheaper.
I am capable of seeing both sides....I do think the internet is going to have a bigger impact on commissions in the future....its unavoidable. There absolutely is a percentage of the population who is 100% capable of selling real estate without help and still doing as good, or better a job as an agent. Right now the MLS is still very dominant, but that dominance is weakening...facebook/message boards/zillow, they are all chipping away at the MLS slowly.
However, there is also a significant population that is not really even smart enough to even walk let alone drive that still need a place to live. These lesser beings still buy houses, and they do need help. Without an agent, these people would get obliterated by people who understand the process, the contracts, the costs, literally chewed up and spit out....I've seen some of these idiots sell to groups that buy ugly houses - thinking they were making $20-$30K selling, and when they get the closing statement they owe money b/c they have agree to pay EVERYTHING for the buyer. Its ugly out there if you are dumb.
I think agents have a valuable place - I think that most studies are worthless. Statistics are only as good as the data used, and the data used in the current studies are close to worthless. Why are they worthless? B/C they are too narrow, or ignore data that does not support their desired conclusion...many times that is because they are commissioned by someone with a vested interest.
If you think my opinion is influenced by the fact that I am also an agent it is not. Look at my past posts...I am an agent for myself and friends/family only...I have never taken a commission.....I have done it all now many many times, and I can say with complete honesty that an agent has a valuable place for most buyers/sellers. I do think Realtors would be wise to try to accommodate and worth with those who dont wish to use their services a bit more than they currently do b/c the dominance is being weakened, and agents are creating a situation where people are starting to look for and find viable alternatives.
If the free market decides we need to be dumped, then so be it. I will find something else to do. I have no problem with that, as I favor a totally free society and laissez-faire Capitalism. That's how it should be with every industry. Life is change, jobs come and go, industries come and go. There are no guarantees, nor should their be.
Nevertheless, real estate agency is way more than data. It's about personalities, negotiation, re-negotiation, and dealing with the ever more complex world of selling real estate. As long as we favor statism, consumer "protection", endlessly more obstructive environmental regulation, increasingly complex rules with respect to building codes, zoning codes, etc., there will be a need for professionals to manage the transactions.
In a truly free market, we would be already be long gone!
Real Estate is hardly free market - I believe every state requires a license to sell real estate...by definition that is not free market, that is a restricted market. Each person is capable of selling their OWN home, but if you want to hire someone to help you sell it, that person needs a license. If you truly want to place a free market value on an agent - remove the state barrier, and let anyone sell and market real estate - I think you would find that the commission rate would drop precipitously. Would you deal with even MORE idiots daily? Yes - but if it is truly free market, the elite will rise to the top, and the morons will sink themselves even if they are cheaper.
I am capable of seeing both sides....I do think the internet is going to have a bigger impact on commissions in the future....its unavoidable. There absolutely is a percentage of the population who is 100% capable of selling real estate without help and still doing as good, or better a job as an agent. Right now the MLS is still very dominant, but that dominance is weakening...facebook/message boards/zillow, they are all chipping away at the MLS slowly.
However, there is also a significant population that is not really even smart enough to even walk let alone drive that still need a place to live. These lesser beings still buy houses, and they do need help. Without an agent, these people would get obliterated by people who understand the process, the contracts, the costs, literally chewed up and spit out....I've seen some of these idiots sell to groups that buy ugly houses - thinking they were making $20-$30K selling, and when they get the closing statement they owe money b/c they have agree to pay EVERYTHING for the buyer. Its ugly out there if you are dumb.
I think agents have a valuable place - I think that most studies are worthless. Statistics are only as good as the data used, and the data used in the current studies are close to worthless. Why are they worthless? B/C they are too narrow, or ignore data that does not support their desired conclusion...many times that is because they are commissioned by someone with a vested interest.
If you think my opinion is influenced by the fact that I am also an agent it is not. Look at my past posts...I am an agent for myself and friends/family only...I have never taken a commission.....I have done it all now many many times, and I can say with complete honesty that an agent has a valuable place for most buyers/sellers. I do think Realtors would be wise to try to accommodate and worth with those who dont wish to use their services a bit more than they currently do b/c the dominance is being weakened, and agents are creating a situation where people are starting to look for and find viable alternatives.
A rep was not enough, I appreciate the objectivity as always, thank you for sharing!
Realtors add value in the same way a lawyer, doctor, or mechanic add value. It's a service industry. Someone can learn to fix their own car investing the time to learn and the time to actually make the repair. If they make a mistake it could result in further damages or simply having to hire a mechanic. Someone can defend themselves in court or hire a lawyer. Is getting out of that DUI worth 5 or 10k it cost them? It's hard to assign a hard value there because it's different for everyone. Real estate agents provide a service, not a commodity. That's why most of these studies are useless as you can't have 2 identical cases in a vacuum. I believe agents add little to no increase in value to the house but a good one is certainly worth the money but to each their own.
In real estate the agent must look at the deal and determine if it's worth taking the job and the consumer must look at the cost and determine if the service is worth the cost. The answer is different for everyone. OP, if you want to FSBO that's fine but don't try to tell other people what they should or shouldn't do whether it's hiring a doctor, a lawyer, a mechanic, or an agent.
The main reason I would use an agent to sell my house is that agents would have greater credibility with the buyer. I might say that property values are going up or that the schools are good or that there are plenty of walking trails around or whatever, but the average buyer would rather believe their agent than believe me. Some might even think that sellers are always hiding something, unrealistic, greedy.
Honestly, as a buyer whenever I see "For sale by owner" I stay far away from that property. They are usually the ones that are way overpriced and I assume that they are too emotional and would be a complete nightmare to deal with (even with a realtor on our side). The place would have to be completely perfect and priced appropriately for us to even consider looking at. It just sends a message that you are someone who enjoys making everything more difficult and needs to squeeze every penny out of the transaction rather than negotiating rationally.
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