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It's an unfortunate reality that you seek logical and rational answers from a group of "professionals" whose biggest task to perform is to justify the value of their services to their clientele.
Much of what a licensed agent does is not "rocket science" and doesn't require a huge amount of technical competency. It's really more about salesmanship and applying the marketing tools of the trade, such as the MLS. The proof of this is that so many people without degrees, agent/broker licenses, or specialized training can and do buy/sell real estate successfully without legal problems and dire adverse consequences.
Your legal training is more than adequate to be able to negotiate a price, properly fill out paperwork, and know where to obtain reasonably priced information and supporting services for the little areas you may not fully know about. But there's no hocus-pocus about a simple real estate transaction. The only mystery is how agents manage to make it sound like they're endowed with special powers to negotiate with people, navigate though the landmines of a deal, and bring the process to a good conclusion.
As you've observed, the likely savings in a deal can represent a good return on your time.
The shrill voices of a few agents on this site is proof to me of how desperate they are to establish some credibility with you about the unique value of their services. It's a pretty unfounded position, especially in light of the candid (rare) admission by many pro agents that they do invest for themselves to an advantage because of their position ... but will counsel you not to do so for various vague reasons.
Go for it. If an average guy like me can successfully invest in residential, farm, ranch, commercial, and resort properties without using realtors any more than minimally needed (and sometimes, not at all) .... so can you.
i guess if i were an attorney, and it was that easy to get licensed, id think of doing it also,,especially on such a sizable purchase price,
as a broker, i probly wouldnt fear any new "competition" because as your time is money, big money, you wouldnt be driving many prospects around looking at 24 houses, and still not make an offer on any of them,,,lol
Go for it Hendog! You'll never know if this will work for you unless you try. Don't let all the naysayers stop you. It's been my experience here in Texas while trying to sell my house and originally offering a 2% commission that all these realtors came out of the woodwork and warned me that "nobody will show your house for a 2% commission". So, whose interests are they looking out for? Certainly not their clients. If my house was exactly what their client was looking for, they would not show the house because they wouldn't get to line their pockets as much with a 2% as they could a 3%!!! They have you by the balls. This is one of the reasons why realtors and brokers have a bad reputation - and I have a CA brokers license!!! I'm almost ashamed to tell anyone!
So, whose interests are they looking out for? Certainly not their clients. If my house was exactly what their client was looking for, they would not show the house because they wouldn't get to line their pockets as much with a 2% as they could a 3%!!! I have a CA brokers license!!! I'm almost ashamed to tell anyone!
I do not understand. If you are offering a 2% commission to the brokerage that brings the buyer and you are representing yourself, why do you think they weren't looking out for their clients? Maybe the contract with the client states that they would be paid a minimum of 3%? So they are instructed not to show any properties for less than that. Maybe they do not have a buyer agency agreement and therefore cannot work in the clients best interests, because there is *no* client.
In Denver we have a large inventory of homes for sale. If there are 20 homes for sale that meet the basic needs, I am going to eliminate the less than full incentive for completion of sale...because I perceive the seller/brokerage company will be hard to work with. I do not need to be fighting with the seller/brokerage on every little thing. There is a better property for my buyers with a better broker to work with for me out there. Life is too short to deal with angry people.
I am not a charity. I find value in what I do to put food on the table. You once did too.
If you offer low income wages for a solid performance, you will attract those that are desperate for a sale. Inexperience and more unknowns await you in dealing with them. If you are tired of the non-performance of bottom feeders, get rid of them, offer them a living wage to better performers.
Understand that this is risk/reward business. The more risk, the better the reward should be. Are there slam dunk transactions? Sure. Are there deals where it's harder than heck to keep the transaction from falling apart daily...you bet
And, there are many so-called clients who "use" Realtors for their own advantage. We mail or email out information out at will, mail literature that we have paid for, advertisements that we have paid for, MLS listings that people take to other agents -- all at our time and expense. We can work for days for no payment, or reward whatsoever. Not many professions that give you service for free, and smile while doing it for you.
Not to mention that we have no problem helping out folks on forums such as this with totally free advice that they can use in their own transactions.
But, we are just dirty rotten scumbags, the whole bunch of us.
You know what though, we are highly trained to discern "who's who" out there and can spot a hateful attitude in a NY minute.
Step back a second and review the real estate market overall for the past few years. Real estate prices have gone through many increases, right?
Each and every time the market increased, the agents working at the same old fixed commission rate got the market increase as a raise.
Agent's costs have not gone up similarly. In fact, "desk fee" type agencies have made it easy for agents to be "in the game" for a very modest cost.
I'm LOTF about this ... in Denver's Sunday paper, a major 5 branch agency advertised a monthly desk fee of $49/month. They state in the ad that you get to keep most of your earned commissions, too.
Oh, and may I quote the deroggatory comment in the post directly above from our highly trained, not retired 23 year career professional? You said it, not me ....
Where else can you get access to a substantial commission on valuable products for the mere sum of $49/month plus your business operating expenses?
I would like to thank everyone on here for taking the time to share their thoughts. Notwithstanding some of the negativity on this thread, I managed to glean a few very decent tips.
As many of you have suggested, I intend to proceed in this venture with honesty and full disclosure and hopefully won't offend too many people along the way.
Thanks!
ps. Peace out to all you haters out there, you know who you are.
Look AA at what I've repeatedly asserted on these threads from the beginning on this site. Read carefully, now ...
The names of the problems you assert are so daunting to being a successful realtor are absolutely no different than the costs and risks of any other small business.
I pay estimated taxes based on last year's earnings just like you do.
I pay all the overhead expenses to have my "storefront".
I pay licensing fees to engage in my business.
I pay for recurring training.
I invest in my own sales career by attending sales seminars and training.
I pay for outside services that support my sales efforts.
I pay for my own marketing expenses.
I pay for my own yellow pages ad.
I pay for my own advertising in other mediums.
I pay for my sales aid samples and literature which I send out on request.
I maintain a fleet of vehicles which I use to transport myself and clients to job sites at my own expense. Many of those clients will use my expertise to then purchase goods and services from others in my trade.
I incurr each and every one of all of the expenses you incurr to provide your service. And, I do it for a relatively nominal fee per billable hour on completed projects only, not for a percentage of the project gross cost. (wow, what a concept, I could get dizzy thinking about 3% of my last project which cost the owners only $28,000,000)
I work a 24/7, 365 day year. I'm available on call out continuously, days, nights, weekends, emergencies, holidays, scheduled outages, or on appointment. I work typically a 65-75 hour week.
I make "cold calls" to sell my products.
I follow up on sales leads that I generate from referrals.
I have not ever had inflation based raises in my hourly billing rate, nor have I enjoyed raises that were tied to a marketplace that well outpaced inflation, as you have. Given the increased costs of overhead and operations, I make little more per hour than I did 25 years ago ... although my net income number is a lot bigger because my product sales volume is much higher today than years ago.
What do I do? I provide products, sales, and consulting services to utilize the products in commercial and industrial markets.
As a business, I'm no different than the majority of small business in the USA.
The overhead, expenses, taxes, and risks that I take to make a living are not markedly different than what you undertake.
I may be self deprecating in a humorous manner about what I do at times, but I certainly wouldn't label myself and everybody in my "profession" a Scumbag, as you have, even sarcastically. How do you perceive your past clients would feel to know that they did business with a self-proclaimed Scumbag who denigrates her whole profession and verbally assaults many potential clients? Do you think you're doing a good service for the rest of the agents out there, being this combative and denigrating to them? Do you believe that this will shame prospective clients into choosing someone in your "profession" when the need for service arises?
I have a better regard for myself, my clients, and fellow travelers in my business, even if they're competitors. I know what good independent agents look and sound like ... and I doubt that you travel in their company based upon your own statements on these pages.
What I find most offensive about AA's responses is that she has totally ignored the numerous times when I responded to OP's with a strong recommendation that they seek the services of a professional realtor because the nature of their questions indicated an inability to do a real estate deal properly for themselves.
There's also been threads where the OP was clearly likely to be able to do this important transaction ... either as an owner/buyer/investor ... and I've offered my advice as to how they could do so. Reliably, however, AA (and other pro's here) come out of the woodwork to assert how difficult, impossible, daunting, overwhelmingly incredibly stupid you'd be to face all the challenges ahead by yourself and how they're worth every penny they charge for their services.
Not to mention all the predictions of the dire legal risks and adverse consequences you're going to have if you don't use an agent. And then proceed to justify the com percentage of a deal because they've got so many absolutely overwhelming expenses to be able to provide their service.
The height of this insanity to justify the value of agent service rendered was when this OP attorney posted on this forum asking if he should/could get a broker's license so that he could do a bit of trading on his own behalf and retain that portion of the commission. Sure enough, the troops rolled out and advised him NOT TO GET A BROKER'S LICENSE because he wasn't specializing in real estate law and didn't have the appropriate (secret? in the trade? mystical?) knowledge to be able to work in the biz, or to have the appropriate people skills (negotiations).
That reaction was such a profound rejection of the main aspect of the pyschology of the successful practice of law as to defy all reasonable thought. A lawyer is first and foremost a negotiator who applies the tools of his trade to an outcome. And it totally ignored an attorney's ability to write contracts with understanding, or to know how to pick up the 'phone and ask about RE contracts in his state with knowledgeable specialists. This OP's reasoning about the value of his time and potential savings was well thought out and justified ... he came out around 44 hours of his billable time dollar valuation for his residential sale.
I didn't come here to bash agents, but I'm not going to sit idly by while they rattle off all of their costs of doing business and risk/reward like they're the only people who have these exceptional expenses as a means of justifying their "billing" rate. They're simply no different than most other independent small businesses. In fact, if there's a significant difference ... it's that they have substantially less capital investment and overhead in their business than many others.
Other threads on this forum have assertions by agents that the housing marketplace increased in dollar value in the last few years at 12 (that's right ... TWELVE) times the rate of inflation. No hourly paid worker I know of got consistent raises to that level. Nor any salaried worker/profession I know of. It's why the middle class is getting squeezed out of the housing market in many places, and another contributing reason we may now be getting a market correction in housing costs.
Please, note, also, that any insulting words I've used about the agents on this site have only been their own quotes about themselves.
AA even had the audacity to PM me and ask me to refrain from quoting her here ... in reference to a post of mine where I AGREED WITH HER advice to the OP to use a pro agent. In my view, nothing you can say or do will sway her from her defensive and negative impression of herself, her fellow agents, or those of us who make up the unwashed heathen masses of ignorance about her worth ... what's tragic here is that she's not alone in this view on this site.
Scumbags? AA, Indeed. You said it. Frankly, I don't agree it applies to agents in general. But I'll make an exception for you, and not with pleasure.
Other threads on this forum have assertions by agents that the housing marketplace increased in dollar value in the last few years at 12 (that's right ... TWELVE) times the rate of inflation.
Not in my market, or anywhere close to me. So how does your theory fit me? Or fit anyone new to the business - who hasn't had a run up in income?
Real Estate professionals do not create the market, nor do we manage it, and we cannot control it. Fact is, the cost of doing business in today's marketplace is relevant. The skills we bring to a transaction are very relevant. The safeguards we add to a transaction could mean the difference between a fair deal, no deal or the nightmare deal.
Shouldn't it be a no-brainer to think that those of us that are professionals, believe in our profession?
I hope the attorney-wanna-save-the-commission-for-her/himself keeps us updated on her/his progress/pitfalls/success/road blocks...but chances are s/he came, s/he posted, s/he ruffled a few feathers, s/he's had a few chuckles and poof....gone.
I feel not only do I offer good service to my clients, I offer my expertise on a trail basis. I offer security, peace of mind, my contingency plans have contingency plans. I reduce risk. I add value. I will help find properties, find affiliates, find repairmen, find information...all so you can make an informed intelligent decision. The secret to my success: "If you are not happy, I am not happy."
My best clients are lawyers and commercial brokers. I enjoy a fine reputation as the broker's broker. I worked hard to get here. I work hard to stay here. I will never be a list 'em and hope it sell kind of broker. My success rate and list price to sold price speak for themselves. My education/designation show my commitment to my clients in this profession. I volunteer my time at the association (local & state) you have to give to get.
I am happy to sell my services a la cart. I just don't get any takers.
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