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I do think that with todays resources, that a realtors job is diminished compared to what it once was, I'm just hoping the rest of the world notices that and some of the % they earn goes down. no offense to any realtors, I know you earn a living as well, but its not like you have to work as hard as you once did with every transaction. Sure there are the occasional ones, but the more people have internet and MLS searches on their own, the less the realtor really has to do.
The reason for the commission is the "all or nothing" aspect of that payment method. It's not about how much work we/they do, its about risk vs. reward. I say this as a flat rate real estate agent. Agents that charge high commissions do so because they take a huge risk of not getting paid. In my market 20% of homes listed sell. Since there is an 80% chance that a home won't sell, I don't see commissions going down anytime soon. Those 20% are paying for the other 80%. I mean commission brokerages are a business and will charge what they need to in order to be profitable.
Now...rates will go down if consumers want to guarantee payment for services. No risk means lower fees. Really that is what the commission model is all about.
Most of my clients do flat rates, but there are those consumers that want to have the option to not pay me anything. They pay more for that choice. It's not about providing more service to consumers, it's about risk and reward. It's that simple.
Can't get much clearer than that! And a lot of consumers (apparently the majority) don't want to pay for the actual work done, they want to pay for results and not pay for the work done if their house doesn't sell no matter HOW much work it is, so I agree that the commission model isn't going away any time soon.
I do think that with todays resources, that a realtors job is diminished compared to what it once was, I'm just hoping the rest of the world notices that and some of the % they earn goes down. no offense to any realtors, I know you earn a living as well, but its not like you have to work as hard as you once did with every transaction. Sure there are the occasional ones, but the more people have internet and MLS searches on their own, the less the realtor really has to do.
The internet has replaced print advertizing, nothing more or less.
People did not buy homes off newspaper ads and they sure do not buy them off internet ads.
Property transfer and recorder of deed information is public information in most states. The internet has made it easier for people to access such information that has been available, all along.
Most buyers I encounter are on information overload and are rarely in a position to make information relative to their objectives.
The value add I deliver to my clients is that I know why a property closed for what it did, when it did.
Buyers who prefer to not have their own representation are always free to work with the listing agent who represents the seller's best interests in those states where dual agency is legal and the listing agent is willing to function in that capacity.
They are also free to make contact with FSBO properties where both parties often times are trying to save the incremental cost of brokerage, on top of their best deal. If this was the best way to get closed, it would be substantially more effective than the 10-15% success rate FSBOs experience.
Agents that charge high commissions do so because they take a huge risk of not getting paid. In my market 20% of homes listed sell. Since there is an 80% chance that a home won't sell, I don't see commissions going down anytime soon. Those 20% are paying for the other 80%. I mean commission brokerages are a business and will charge what they need to in order to be profitable.
Risk versus reward is what it's all about. Best anlalogy is use of attorney....in a situation with no certain outcome. One can pay an hourly rate, usually charged in quarter hour increments or one can secure counsel on a contingency basis and pay a substantial percentage ( typically a minimum of 35&) of the court award, only if the case is won. If the attorny loses the case, the client is still billed for court costs and out of pocket expenses. The attorney is out the value of his/her time.
I do want to make a point of clarification. It's the broker who has the legal and financial relationship with the client. The broker designates the agent. When working with a big box national franchise broker, the broker usually determines the listing commission which is then split between the broker and the listing agent. The client determines the co-op fee that is paid to the buyer's broker and then split with the buyer's agent. For the majority of transactions, the agents are paid a gross commission = about 25% of the total commission.
The average gross agent commission in the U.S., across all transactions, is about $17,000 -$20,000 a year.
I am a personal advocate of fee for service, whereby the agent is paid for their time, regardless of the outcome. It represents the one business model that can reduce the business risk and cost of brokerage. I would embrace this approach, if consumers did not strongly prefer to maintain the status quo and pay the agents out of the proceeds of the sale.
The internet has replaced print advertizing, nothing more or less.
People did not buy homes off newspaper ads and they sure do not buy them off internet ads.
Property transfer and recorder of deed information is public information in most states. The internet has made it easier for people to access such information that has been available, all along.
lol is it me or did you just contradict yourself in the same response?
We found our house on the MLS, the only thing the realtor did was drive us out to the house and let us in. He did forward us some paperwork to sign, but basically all the work he did in man hours was about 8 hours, 1 days worth of work. I understand that selling agents have alot more time dedicated to a sale, but the buyers agent has it easy in my opinion.
I wish I could have over 7k for a days worth of work lol There is a reason most realtors have nice fancy cars lol
lol is it me or did you just contradict yourself in the same response?
We found our house on the MLS, the only thing the realtor did was drive us out to the house and let us in. He did forward us some paperwork to sign, but basically all the work he did in man hours was about 8 hours, 1 days worth of work. I understand that selling agents have alot more time dedicated to a sale, but the buyers agent has it easy in my opinion.
I wish I could have over 7k for a days worth of work lol There is a reason most realtors have nice fancy cars lol
Maybe its just out here but most real estate agents drive normal people cars...
Actually being a buyers agent is more work, at least for me it is. I put in way more man hours on the average buyer transaction than a listing transaction.
I have had transactions that have closed in as little as 20 hours worth of work as a buyer's agent and the most was 320 hours of work (yep...I track my hours). It is still an averages thing. Sometimes we can make easy money and sometimes not. Easy money is a good hourly rate and the hard deals, not such a good hourly rate. The system isn't perfect, but your one situation isn't all scenarios. Some transactions are easy, most medium, and some hard. It's great that your buying experience was fast and easy, but honestly most home purchases don't occur like that. My 20 hours worth of work was on a home purchase where the buyer loved the first house and bought that one. I can't see how any buyer agent could close a deal in 8 hours or work, unless they really don't do anything. You'd have to ask yourself why you were working with that agent then.
I have no complaints about our agent, he did everything we needed, we got into the house on time, with a great deal, so why would you say I should question working with him? Other than questioning the whole realtor %??? I guess i don't understand why we should question it otherwise. lol
So, did that 8 hours include all the time that you didn't have your eye right on him knowing what he was doing for you? If not, how do you know how many hours he spent?
So, did that 8 hours include all the time that you didn't have your eye right on him knowing what he was doing for you? If not, how do you know how many hours he spent?
I don't, you have me there for all its worth.
He let us in the house, he forwarded paperwork over the internet for us to sign, he sent us the contract over the internet, and talked to us on the phone a few times.
What could have added up to more than 8 hours? ok ok I will even give you the benefit of the doubt and double it and say 16 hours lol thats still over 3500 a day for pay purposes lol
You can get as technical on the minutes and hours as you want, but basically "some" not all, not every one, not every time, but "some" buyers agents just get overpaid.
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