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Most people would have a fit if we went to a fee for service model for buyers' agents. I can see it now. 30 min tour of town, $75. 60 min tour, $125. Each house visited for <30 min, $60. Each house visited for 30 to 60 min, $100. Writing of offer, $350. Asking questions of listing agent, $50 per (includes being available to relay the answer to buyer). Looking up data @$60/hr. Office fees, $100 per hour. Etc.
Listing agents? They potentially do a whole lot less work. Photos $200, enter data into MLS, $200, site visit and suggestions, $200. Evaluating offers? $200-500. Setting up and tracking inspectors, appraisals, specialists? $200. Networking? $0 to $5000 to more if they are actually doing this.
These are all minimums, just making a point that folks don't always know where their money is going.
I would feel better looking at 50 homes if I were compensating the agent for her time. Or what if I'm a picky buyer who only looks at a few homes a year, but takes 2 or 3 years to finally buy? Conversely, what if I buy the second home I look at?
Paying a fee to see a house would also be nice for sellers and tenants occupying the house to be sold. They won't be bothered by looky-loos who know there's a very low chance they'll want a particular house but still want to look "just in case".
And on both the seller's and buyer's side, shouldn't I be paying my agent when she shows up to unlock the door and stick around for my contractor to give a bid or do work?
Sure, it all averages out in the long run, but some transactions are a massive pay day for very little work, while others ultimately wind up earning an agent zero dollars even after a ton of work. Even with the same amount of work, the commission model is kind of weird...is it actually twice as much work to move a $125K house as a $250K house?
A potential downside is that it gives the agent less incentive to actually make a sale. They aren't going to be out there scouring listings finding you your perfect house so that they can get finally get paid.
Most people would have a fit if we went to a fee for service model for buyers' agents. I can see it now. 30 min tour of town, $75. 60 min tour, $125. Each house visited for <30 min, $60. Each house visited for 30 to 60 min, $100. Writing of offer, $350. Asking questions of listing agent, $50 per (includes being available to relay the answer to buyer). Looking up data @$60/hr. Office fees, $100 per hour. Etc.
Listing agents? They potentially do a whole lot less work. Photos $200, enter data into MLS, $200, site visit and suggestions, $200. Evaluating offers? $200-500. Setting up and tracking inspectors, appraisals, specialists? $200. Networking? $0 to $5000 to more if they are actually doing this.
These are all minimums, just making a point that folks don't always know where their money is going.
Gonna say it. As someone who has done a lot of consulting for realty firms, realtors are dealing with a well-deserved perception problem.
Mind you, every profession has its share of bad actors. There are quack doctors, bad accountants, and ambulance-chasing attorneys. But few professions have a higher percentage of iffy players than real estate agents. Not from an ethics standpoint, but from a performance standpoint.
Let's cut to the chase. The attrition rate in the real estate biz is something like 75% in the first year. The reason for this is simple. The new agent thinks it's going to be a cute little hobby job that she can work in between dropping the kids off at school and picking them up. She attends the class, takes the test, gets her license and then hits up her circle of family and friends.
They slap their photo on their business cards and bus stops (Stop doing this, by the way. I don't care what marketing hack told you this was a good idea. It makes people who are ostensibly professionals look like escorts. Or, at a bare minimum, don't get a cheesy photo). But they typically don't learn the market, they typically don't learn the needs of buyers and sellers, and they typically don't work that hard for their commission regardless of how you break it down. Too many treat it like a fly-by-the-seat-of-their-pants enterprise. They are lazy short-term thinkers who can only look ahead as far as their next commission.
So, ultimately, you have a very large percentage of actors in the profession with crappy work habits whom I wouldn't trust to sell lemonade in their front yards. And before you say, "Well, that's not how I work," just remember that you're being lumped in with these subpar folks. Maybe that's not right, but it sure is accurate. I mean, hell, all you have to do is peruse this forum and read all the horror stories about realtors to realize how you guys are being perceived.
In truth, you guys need to look at what Uber is doing to taxis and understand the dynamics in play. People are willing to get into cars with perfect strangers because the taxi services of the world did such a poor job serving the needs of the market. With internet, mobile apps, and a host of other things now at the fingertips of homebuyers and sellers, realtors are needing to figure out why the buyer and seller really needs them.
I actually had this happen in my own home sale, and it was eye-opening. My house was a distinctive property in a gentrifying part of town. Yet you wouldn't believe the number of realtors who attempted to lowball us based on the comps of houses a half-mile away in a neighborhood of a decidedly different character. In other words, rather than using their brains, they just tapped an address into a computer and slavishly went with what spat out.
The other thing? My own realtor kept pressuring me to lower the price, since it didn't immediately sell. I relented with a 5% price drop, then ignored her repeated advice to drop the price further. Mind you, we didn't have to sell. But she was far more interested in the quick hit. She put next to nothing into marketing, arranging caravans, or anything else. I had to finally break down and write the freaking ad copy. It took six months to sell our house, but it sold at a far higher price than the so-called experts said it would. Had I listened to my realtor, I would have left $100,000 on the table.
At the same time, a very small cadre of realtors actually understand, and they prosper over time. They are good at 1) creating value in the mind of the buyer, thereby getting the best possible price for a house, 2) really dialing in on the homebuyer's needs, and 3) understanding that it's a full-time gig.
With that in mind, I think the profession as a whole needs to clean up its act. It needs to raise the bar in terms of investments of time and energy into those with newly-minted licenses so that it's not just a hobby but a professional commitment. It also needs to figure out concrete ways to communicate value. After all, right now, I can do thirty minutes of due diligence online and learn a great deal about an area. So a realtor wanting to demonstrate value needs to do a great deal more than that to earn his or her commission.
Last edited by MinivanDriver; 01-10-2018 at 08:15 AM..
I've bought/sold multiple properties. I don't need their services anymore.
They unlock the door and let you in. Can't answer questions any better than the paper they hand you about the property.
They forward you an offer, and send your response back.
They sign some paperwork at closing and take a check.
Not worth many four figures, or five figures.
They have a place especially with first time home buyers/sellers. Their necessity wears off quickly.
I sometimes use them to sell cheap houses (around $150,000 and under). I've got a three home development underway. I will not use an agent, nor offer a fee to the buyers agent. The buyers can pay that if they want to use one. These homes will sell themselves (high demand area). Throw in selling the original home on the parcel without them, and it's a six figure savings.
6%, 5%+ is to me asinine. If we got rid of the brokers (who I believe typically get half) and I'd probably be more willing to use them. 3% is much more reasonable.
Won't even get into the sleezebag that wanted a retainer fee...
Last edited by LordSquidworth; 01-10-2018 at 08:27 AM..
I have seen plenty of people get lured into the Real estate Sales profession. I remember one family. They had a successful business, maybe 15 or so people working for them. No they were not Realtors. This was a different business altogether. After maybe 20 or 25 years running that business the guy decides to buy his wife the home of her dreams. The transaction goes thru and they were amazed at the commission that they had to pay. The guy decides to become a Real Estate agent. He gets his license and they sell their first home making good money. Besides that home had already been paid for, so they pocketed a lot of money on the deal. That experience works out so well for him that he decides to sell their business and focus solely on real estate sales. It takes maybe 9 months and he has his second sale. His wife is concerned but not scared yet, because they still have money from the sale of the business and the home that they sold.
Almost a year goes by before he had another sale. They need to start living on the money they have saved. Within a couple years of this they end up selling their dream home and moving to a lower cost of living area. He gave up on Real Estate walked away.
That is one story of many.
I did some work off and on for a realtor maybe 20 years back. He had been in the business for over 20 years when I met him. He told me that when things got good people would come out of the woodwork to become real estate agents. When things were bad they would walk away. The problem is that with more people taking a piece of the pie the pieces got smaller. For him he had built a client base, many of which had come back to him to sell a home and to buy another. When the market fell he worked a different business model for foreclosed homes. He seemed to do well during the five years that I knew him. Then again he knew the area and the business.
I am not saying that being a Realtor is good or bad. I am saying that you need to be a professional in what ever field you choose to enter. Sales is not for everyone. Marketing is not for everyone. Being a Realtor is not for everyone.
The great realtor rip-off | The Economist basically argues that the reason realtors get paid thousands of dollars per hour is because the whole thing is a cartel (duh!).
Opinions?
What does this have to do with you? Do you resent all professions getting paid for their work, or just salespeople?
We all have choices, and some prefer the FSBO, while most don't.
Dollar differences can be moot, as exposure and good marketing by an agent can bring a higher selling price.
I trust a professional.
I think he makes a good point about a few brokerages controlling the market in most areas...It does seem that there's like two or three big ones that have 90% of the listings...
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