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The number of freshly minted realtors tends to increase when markets get hot, and everyone jumps on the bandwagon. As with the homes themselves, anything churned out expeditiously to meet a demand is sure to be of compromising quality.
The main reason is that real estate transactions can get emotional. The Realtor is a buffer between the seller and the buyer. I've sold two houses using a Realtor and both times, the buyer was behaving irrationally toward the end. I was glad to have a Realtor approach them diplomatically.
Sometimes, the transactions are emotional because the realtor(s) like them to be.
In my experience, many realtors intentionally make the process adversarial by keeping the buyer and seller apart. They convince both parties that no one will reach an accord unless the realtor is there to mediate. This is the only way some realtors can justify their existence.
Up until now, I have always used a realtor to buy and sell (partly because my then-husband could not tolerate conflict - real or perceived - of any kind), but my friend never has. She prefers taking the FSBO route and enjoys meeting and negotiating with her potential buyers/sellers. Putting a human face on the deal makes it easier, she says, not harder. It's a give and take, and her deals don't close until both sides are happy.
My friend does use the services of a real estate attorney for the paperwork, but it's amazing how the nature of the transactions changes when you don't feel like you are going to war.
hard costs only. your time isnt accounted for because well.... its your job and you'll get paid for your time when the job is complete. better sell quickly!
What are hard costs for a teaching job? $50 for a white board and $10 for a ream of paper?
Hard cost for cabinets? That wood to build them probably cost less than a $100 to purchase.
Hard cost for an engineer? $1,000 for laptop and software.
Hard cost for a dentist? Probably less than $5 for the equipment and the free toothbrush, but it sure does cost me $100 for the trip.
Hard cost of a cleaning company? $10 worth of cleaning materials?
An attorney? Close to nothing.
You get the idea. What are the "hard cost" for your job familyman?
Real estate is a service industry. I do have costs, but at the end of the day I am primarily compensated for my time and knowledge.
Sometimes, the transactions are emotional because the realtor(s) like them to be.
In my experience, many realtors intentionally make the process adversarial...
Only if they aren't very smart, or they won't last long. If the other Realtor involved is any good, the opposite is true.
A big unheralded part of my job is actually to try to discourage and smooth over a lot of unproductive and unfounded suspicious and adversarial posturing and postulating about the motives of the other parties involved. In this business, a potential new agent would be well advised to take classes in family and marriage counseling, in between the other coursework in real estate law, lead generation and salesmanship.
Working together with the other parties, we've negotiated many very amicable arrangements where buyer and seller are both kept on track and guided toward the same goal: an amicable and fair transaction where we DONT need to keep the sides apart. We deal with a lot of farms and complex properties, and possession arrangements, where the knowledge from the seller about where things are and how they work is important information for the new buyers to know. We've had many sellers give great informative tours and explanations of systems and we would be fools to keep those parties apart.
We've also had a few - but only a few, where that valuable trust broke down and we were the only thing keeping the parties from cutting off their own noses to spite their faces... so to speak. I've become better than I ever thought I would need to be in trying to calm down explosive situations. That wasn't in any of the licensing classes I took.
Last edited by Diana Holbrook; 01-04-2019 at 09:09 AM..
Reason: clarity...
Sometimes, the transactions are emotional because the realtor(s) like them to be.
In my experience, many realtors intentionally make the process adversarial by keeping the buyer and seller apart. They convince both parties that no one will reach an accord unless the realtor is there to mediate. This is the only way some realtors can justify their existence.
Yes, some agents like drama and love to feel powerful by trying to pummel the opposite party into submission. There aren't a whole lot of them though. I have to say that I think online reviews have mostly cured this problem in my area. We get the new rookies that are overly aggressive because they don't know any better, but the longtime aggressive agents have mellowed out now that online reviews are in play.
Most buyers and sellers have no desire to meet each other. Really, they don't. The type of buyers that are willing to approach FSBO's are generally more laid back people who take things in stride and tend to be reasonable.
Very few agents keep them apart, but honestly, it is awkward for most people. They don't like it because homes are a safe, private place. Inevitably someone feels personally invaded by meeting the other party. I had a buyer refuse to go into a home for a showing because the seller was there. I've had sellers turn down requests to meet the buyers when asked to do a "home tutorial walkthrough" and visa versa. The problem with the general public is that they tend to think everyone thinks like them and don't allow for all of the personality differences, and home sale situations that occur every day.
Most every real estate sites mention 6% as the standard rate and I bet it is the starting point for most. The average commission rate in 2018 was around 5.2% according to realtrends.com which means many people are still paying too much commission. Granted you cant expect someone to work for free but $25k+ in commissions on an average home sale is highway robbery.
The total commission rate is built into the sellers contract with the agent so the seller is stuck paying for both sides of the deal. In the event your realtor is both the buying and selling agent they will cut you a break on the rate as they should if there were no buying agent at all. Its best to sell it yourself and use the saved realtor fees as negotiating power should you need it. It would be the perfect storm if you had a qualified buyer with no agent as well.
At the end of the day how have prices increased dramatically, information and marketing become a lot easier, but the commission rate has not adjusted ? paying 5.2% wouldn't be a big deal if the median home price was $100k. But this isn't 1980 any more.
There is no standard rate for commissions. Commissions are negotiable.
Please post links of the firms that advertise 6% commissions - they can't be Realtors, cuz that is against the rules.
Overhead exceeds out of pocket to list.
Time far exceeds out of pocket to list, negotiate, sell.
I spend about $400 out of pocket on a listing. No per listing MLS fee.
$200 for photos and matterport tour, 2D and 3D floorplan.
Print flyers.
Email blasts.
Single Property domain and sign rider.
If you are out of town and I have to overnight documents or a check to you, another $35--$40.
So, if I put 75-100 hours into listing and selling, you only see the $400.
And, you don't see the hours put into licensing, education, learning, networking.
You don't see E&O costs.
You don't see dues and fees.
Overhead, and the value of my time dwarf the small cost of a listing.
Most every real estate sites mention 6% as the standard rate and I bet it is the starting point for most. The average commission rate in 2018 was around 5.2% according to realtrends.com which means many people are still paying too much commission. Granted you cant expect someone to work for free but $25k+ in commissions on an average home sale is highway robbery.
The total commission rate is built into the sellers contract with the agent so the seller is stuck paying for both sides of the deal. In the event your realtor is both the buying and selling agent they will cut you a break on the rate as they should if there were no buying agent at all. Its best to sell it yourself and use the saved realtor fees as negotiating power should you need it. It would be the perfect storm if you had a qualified buyer with no agent as well.
At the end of the day how have prices increased dramatically, information and marketing become a lot easier, but the commission rate has not adjusted ? paying 5.2% wouldn't be a big deal if the median home price was $100k. But this isn't 1980 any more.
$25,000 / 0.052 = $480k
I already made my remark earlier about newly minted realtors, but good ones will keep both a buyer and seller in check, prevent too many counteroffers / nickel-and-diming, and believe it or not - it's actually beneficial having a party interested in working the transaction to completion. Either party can walk away at any time, but a stalemate just frustrates everyone. Otherwise you have two bull-headed people in a bluffing war and not wanting to retreat from their pride, even to get the house that one wants and the money the other wants.
What are hard costs for a teaching job? $50 for a white board and $10 for a ream of paper?
Hard cost for cabinets? That wood to build them probably cost less than a $100 to purchase.
Hard cost for an engineer? $1,000 for laptop and software.
Hard cost for a dentist? Probably less than $5 for the equipment and the free toothbrush, but it sure does cost me $100 for the trip.
Hard cost of a cleaning company? $10 worth of cleaning materials?
An attorney? Close to nothing.
You get the idea. What are the "hard cost" for your job familyman?
Real estate is a service industry. I do have costs, but at the end of the day I am primarily compensated for my time and knowledge.
I sell a product and I make a commission based off the margin of that product. I don’t sell, I don’t get paid. Same rate every time and my commissions are not coming out of someones personal pocketbook. Unlike the lopsided sales commission structure of real estate. You put the same effort and resources into each home. For example if you sell 2 homes and one of them sells for 200k more because it’s nicer,bigger, whatever- what more have you done to justify the addition commissions? Most likely nothing but you made significantly more.
Last edited by Familyman6; 01-04-2019 at 09:17 PM..
Not 20 years, spent over a year and did over 20 transactions from escrow perspective. I’m only 30 years old. So I’m trying to figure out what I want to do with my life.
20 transactions from an escrow perspective -- what was that, a slow month?
You looked at the commissions and said, "Hey, I'd like to get a piece of THAT action!" without any knowledge of the amount of work that goes into being a good REALTOR®. So many people think agents open a door to a pretty house, wave a hand, and snatch a check out of thin air. If only.
Stick to your $20 an hour, kid. In the long run, you'd probably be more successful as an escrow worker than an agent, with that attitude. If YOU aren't sure of the value you bring to a transaction, no one you work with will ever be, either.
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