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I just read an article that ranked real estate agents as one of the most underpaid professions and I just wanted to vent about it.
Real estate agents are underpaid??? Really?? They are the most overpaid people ever. They are glorified door openers who add no value to real estate transactions. When we were shopping for a home almost every single agent sitting at the open houses knew next to nothing about the home they were "selling". We found the home we're living in, on our own and only used a buyer's agent to close the deal because he offered a rebate. Otherwise, that full 6% would have went to the seller's agent. My buyer's agent didn't know anything about any of the homes either and we basically paid him $6500 to unlock doors for us. If that isn't overpaid, I don't know what is. On the flip side, we paid a flat fee of $400 to list our home on the MLS exchange and sold it in 3 weeks. The people coming through our home kept telling us how refreshing it was to be able to ask the owners questions because the agents at most open houses were clueless. The young couple that did finally buy our home found our home online on their own too, but because they had an agent, we had to pay another 3% to him to close the deal. I really wish the government would crack down on this whole realtor monopoly.
By the way, I also understand that the individual agents don't necessarily get that full 3% or 6% because they split it with the broker and so forth. However, that doesn't mean the consumer pays less. My point is, as a consumer or seller, I get little to no value proportionate to the amount of money that is being paid out.
I'm in the middle of buying a house right now and I agree with a lot of what you're saying. I did find all of the houses I looked at. And I do mean every single house. He set up the appointments and drove me to most of them. He did all of the paperwork, but it's all computerized so it's not like he sat there and filled out 20 sheets by hand.
I spent 3 days with him and made 2 offers on 2 houses. The first deal fell apart because the inspection revealed sooooo many issues with the house.
Do think he's entitled to 3.5% of the sale price? Not really. I didn't pay him since I'm the one buying. The sellers are paying him, but I have to sell my house and I'll be stuck paying that fee which I do think is high. That fee can make a deal fall apart because a lot of sellers don't want to spend the money and I don't blame them.
I have to disagree with you there. Even though you didn't pay the agent directly, you are paying for it indirectly. It's just like when companies pay out frivolous lawsuits. They pass the cost down the food chain.
I have to disagree with you there. Even though you didn't pay the agent directly, you are paying for it indirectly. It's just like when companies pay out frivolous lawsuits. They pass the cost down the food chain.
To some degree, I am paying him, but not directly. It's really sad what you have to spend to sell a house these days!
Totally... just imagine how much more affordable housing would be without the 6% realtor tax. We are already saddled with enough property taxes but at least we're getting great schools out of it.
Just FYI, the 6% generally breaks down in the following way: half goes to the buyer agent/broker, and the remaining 3% is split in half between the selling agent and the selling broker. So in Rochester, with an average home price around $100k, the selling agent only makes $1,500 in an average of 40-50 days (depending on the market). The majority of the agent's job is advertising and getting business, because most brokers don't provide leads. So I'd have to disagree with you.
If you read my original post, I already stated I know the agent doesn't get the full 6%. However, the consumer still has to pay 6% regardless of who it goes to. What exactly is the consumer getting for 6%? An agent to open doors, sit at open houses, and to type in your home's information into a database (MLS Exchange). On a $100k home that amounts to $6,000 for not a lot of benefit to the seller or buyer.
Feel free to correct me if I'm misunderstanding your statement here too. I think you're saying a majority of the agent's job is advertising and getting business for themselves. Well how exactly does that help the buyer or seller? In Rochester, I see a ton of advertisements for Holly Creek. So I should feel glad to fork over $6,000 for Holly Creek to post her face all over billboards and newspapers? As a buyer, I'm not going to say "I need to buy this house now because Holly Creek is selling it" or as a seller I'm not going to say "I will only sell to a buyer represented by Holly Creek".
And for any real estate agents out there reading this thread, I apologize ahead of time if I am offending you. I more than welcome a logical counter argument as to why 6% of a home transaction should go to brokers/agents.
Quote:
Originally Posted by dtronol
Just FYI, the 6% generally breaks down in the following way: half goes to the buyer agent/broker, and the remaining 3% is split in half between the selling agent and the selling broker. So in Rochester, with an average home price around $100k, the selling agent only makes $1,500 in an average of 40-50 days (depending on the market). The majority of the agent's job is advertising and getting business, because most brokers don't provide leads. So I'd have to disagree with you.
If you read my original post, I already stated I know the agent doesn't get the full 6%. However, the consumer still has to pay 6% regardless of who it goes to. What exactly is the consumer getting for 6%? An agent to open doors, sit at open houses, and to type in your home's information into a database (MLS Exchange). On a $100k home that amounts to $6,000 for not a lot of benefit to the seller or buyer.
Feel free to correct me if I'm misunderstanding your statement here too. I think you're saying a majority of the agent's job is advertising and getting business for themselves. Well how exactly does that help the buyer or seller? In Rochester, I see a ton of advertisements for Holly Creek. So I should feel glad to fork over $6,000 for Holly Creek to post her face all over billboards and newspapers? As a buyer, I'm not going to say "I need to buy this house now because Holly Creek is selling it" or as a seller I'm not going to say "I will only sell to a buyer represented by Holly Creek".
And for any real estate agents out there reading this thread, I apologize ahead of time if I am offending you. I more than welcome a logical counter argument as to why 6% of a home transaction should go to brokers/agents.
So what you are saying is that using a realtor is not a great value, correct? I was responding to the original topic of your post which was that agents are underpaid.
So what you are saying is that using a realtor is not a great value, correct
Correct, they are a terrible value for someone like me that is willing to do the legwork. So I suppose value is subjective and dependent on each person's situation.
Quote:
Originally Posted by dtronol
I was responding to the original topic of your post which was that agents are underpaid.
If a realtor provides terrible value, then aren't they inherently overpaid? So let's remove the subjective parts for arguments sake and look at the example you mentioned. I actually very recently sold my home for close to $100k so this is a great example. I used a flat fee service which only listed my home for me so I basically did all the work a seller's agent would have done. I'm going to break down each item the seller's agent would have done in my case and the amount of time it took.
1. Prep work: Creating a plan to maximize the selling price. Performing a CMA to determine the best list price. - 2 hours
2. Listing: Filling out listing information and property disclosure, taking pictures, and making video. - 4 hours
3. Open house: We did a total of 4 open houses in a 3 week period. This is definitely not something a normal agent would do but I'll include it anyways. - 16 hours
4. Fielding phone calls and setting up appointments: From what I was told we had above average amount of inquiries. We showed the house about 20 times by appointment. I estimate it took about 5 minute per appointment set up. I understand with an agent it would probably take more time to go back and forth since they're the middle man so for argument's sake let's say 15 minutes per appointment. - 5 hours
5. Reviewing offers: We had 3 offers come in within a two day period. It was a no brainer since the offer we accepted was for more than our asking price. - 1 hour
6. Negotiation: I didn't negotiate at all since I had strong offers. However, we did do extensive negotiations when we went to purchase a home. There were a total of 6 offers and counter offers involved in the negotiations. Looking at the initial offer, it probably took my agent about 30 minutes to write it up. I actually wrote some of the counters which took about 5-10 minutes each. Then submitting it to the other agent took maybe another 5 minutes. - 2 hours
Grand total amount of work: 30 hours of actual work
Hourly pay based on 30 hours and $1500 pay check: $50/hr
If you look at the amount of time spent, more than half of it was on the open house where we basically greeted people and then sat down to read a magazine. Now tell me with a straight face that warrants $50/hr.
We certainly went way above and beyond what any normal agent would have done to sell our home and therefore put more time into it. I'm betting a normal agent probably spends half the amount of time we spent which would put them at about $100/hr.
Grand total amount of work: 30 hours of actual work
Hourly pay based on 30 hours and $1500 pay check: $50/hr
If you look at the amount of time spent, more than half of it was on the open house where we basically greeted people and then sat down to read a magazine. Now tell me with a straight face that warrants $50/hr.
We certainly went way above and beyond what any normal agent would have done to sell our home and therefore put more time into it. I'm betting a normal agent probably spends half the amount of time we spent which would put them at about $100/hr.
My agent spent about 10 hours working with me on my purchase. He's the broker of his company as well so he gets 100% of the 3.5% being paid in commission. Not all realtors get 3%. Many get more and some get less. My house was well over $100K. And most realtors don't only sell houses in Rochester for 100K. There's tons of them that are much higher than 100K.
Doing the math on my agent.....10 hours of work and he made well over $500 per hour....close to $600 actually. And I bought what I consider to be a pretty cheap house. It wasn't a house in the burbs that's a quarter mill or more.
So do I think he's overpaid? You've got to be kidding me if you can't figure that answer out!
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