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I really don't get this.... How much would it cost to drive someone around and open lock boxes? $40/hour seems very high. My option eliminates some of the "risk" by getting paid for your time in the event the buyer backs out.
Anyone working for "cost" will soon go broke. Have to have a gross and net profit.
That isn't limited to real estate. That is Business 101.
I pay a young lady just about $35/hour to clean my office.
I have more training and investment and overhead than she does for cleaning. I'm actually considering bumping that to $40. I want more than that, and she is going to school to make more than that.
Not completely accurate. I had my real estate license and sold homes part time in the past. I understand the process and even more so how ridiculous the fees are that the seller is stuck with.
The last house I sold myself was exactly the way I described it. I paid a 2% buyers fee that was after the client wanted to formally write an offer
Were you listed in MLS and offering a 2% co-broke? When I list a home there has to be a cobroke in MLS. I can't list "Negotiable" there, it must be a number. It can be $1.00 but I have to list something. Those are the parameters set by MLS, not by me.
I understand this issue quite clearly. A buyer should be able to go see a house they want - by themselves - and not have to pay a buyers agent - simple as that. Even if they have a buyers agency agreement with an agent - that should be an option. If they want to call in the agent to help on the deal - fine. I understand this flies in the face of an agents desired buyers agency contract - but that is my opinion.
To the agents on the board, would you do a model where the buyer (I'm assuming they back out more often) can look up their own property on the MLS and schedule to see houses at a rate of $30/hour (or some other rate) but only be charged 1.5% of the buyers commission? This seems like this would limit the downside risk of not being compensated for your tim as it was said that most of the work comes after you enter escrow.
...
Yes, but my cost is actually $250/hr and is billed in 30 minute increments. I offer that on my a la cart services. Buyers hire me to help protect their investment. They are paying for my knowledge, not to be their chauffeur for the day. Any clown can access a home and there is minimal value in that. There is much value in protecting someone through the most expensive and complex purchase they'll likely ever make.
Yes, but my cost is actually $250/hr and is billed in 30 minute increments. I offer that on my a la cart services. Buyers hire me to help protect their investment. They are paying for my knowledge, not to be their chauffeur for the day. Any clown can access a home and there is minimal value in that. There is much value in protecting someone through the most expensive and complex purchase they'll likely ever make.
Yes, but my cost is actually $250/hr and is billed in 30 minute increments. I offer that on my a la cart services. Buyers hire me to help protect their investment. They are paying for my knowledge, not to be their chauffeur for the day. Any clown can access a home and there is minimal value in that. There is much value in protecting someone through the most expensive and complex purchase they'll likely ever make.
At $250/hr, the licensing and entry requirements into your profession should be far, far, far higher. You're billing out at lawyer rates and yet do not have anywhere near the same requirements with respect to entry and licensing.
Economists are confused because in a normal market excessive competition leads to lower costs not higher ones. The market doesn't care how much agents "need" to stay in the game or hedge their risks or cover their expenses. With excessive competition the prices should go down until there are a stable number of agents. If the job can be done for less money using an employee-based model where agents handle more home, economists find it strange that this hasn't happened yet. There's a reason WalMart came and wiped out small businesses. They competed on price with low-paid employees and drove out their less efficient (i.e. smaller) competitors.
Economists are "confused" why this hasn't happened in the real estate industry, although if you ask them off the record they'll say that it's because agents collude to keep their business model viable by excluding those who would significantly reduce costs. There's a lot of talk about how those non-traditional selling methods are frustrating for consumers, just like there was talk about how WalMart shopping isn't nearly as pleasant as at a small local company (both likely true), but WalMart still drove out the little guy. All WalMart really has to compete on is price; if that were suddenly not an avenue open to them I'm pretty sure they would not have succeeded in disrupting retail sales.
I guess the part that is most confusing to me, as a consumer, is that a great agent will generally charge the same rate amount as an OK agent. This is not the case for most other professions. Lots of agents have chimed in on how they are flexible on price, but it's one of the few industries out there that doesn't actively compete on price. I suspect that it is a bit of a percolation problem, so there might not need to be entirely active collusion to keep commission rates high.
NAR and the 850 MLS using the lobby system to protect their existing market.
They do it by nudging local, state and national laws in directions that prevent any new entrants that can not be absorbed into an MLS and thus forced to comply with member rules that limit competition.
As to service levels, there are many many examples of service industries that have many service levels and are priced accordingly.
Just take the investment market. You can go for the no frills super cheap or the family office.. both are extremes both work well.
With housing the market has been very carefully crafted to ensure ALL competition is internal. Members compete with members, much like a family or the motto "stretch of starve" used at a casual family dining table.
All of the MLS members feast at one big table and MOST agents and agencies work to ensure that only family members get food and actively contrive regulations to keep it that way.
Just look at the efforts and monies spent to block true large scale competitors over the decades. Banks even with all their monies and power were unable to break through, if they can't break the hold who could?
Meanwhile
Almost every single country in the EU charges half or less than our standard 6% and they have managed to buy and sell property for at least 500-1000 years.
If a 10 million dollar home in central London can fetch top market prices for just 1-2% why cant we do that here?
Are we to believe that Europeans are just so much better at handling home sales ? Are our agents and agencies so grossly inefficient that almost every other country in the world has agents that are hugely more competitive and able?
Or are our agents and agencies misleading the public and using systems of fee division to hide the massive margin collected amongst many agents and thus allow each one to claim they are not over paid.
It is my belief that many agents just pretend not to understand that the current system intentionally milks the clients through the repeated division of labor/fees . A 1 million dollar home sold in Dublin might have a fee as low as 0.5% plus costs!!! that means the seller pays only $5,000 in actual commissions. Now many pay 1% some even opt for 1.5% but that is about it. Meanwhile selling 1 Million dollar home in Seattle will cost you 5-6% plus costs.
At $250/hr, the licensing and entry requirements into your profession should be far, far, far higher. You're billing out at lawyer rates and yet do not have anywhere near the same requirements with respect to entry and licensing.
So, negotiate. Or, find a vendor who will provide what you want at an agreeable fee.
So ...I am a realtor for 25 years. Let me clue you into why I think I earn every penny I make. First off how much commission a realtor charges is set by her office. A large national company has little leeway. But my small company will offer to take less, I don't have TV commercials and such.
So lets assume I say 5 percent. First off, half of that is going to the other agent who brings the buyer. I may maybe get both half's but its rare. So when I put your house on the multiple listing service, I have to offer a percentage to other agents. So now out of the fictional 2.5 percent my office is getting, I get a percentage of that. Anywhere from 50 percent to 80 percent of that 2.5 percent. The rest goes to my office who carries insurance on us and office help and overhead. So If I was selling your $ 200 K house my share before splitting with my office is $ 5K.
Out of that I have to pay to advertise your home, pay a photographer, conduct open houses, and a thousand other little expenses.
I pay to put your house on the sites you mentioned. To get all those sweet pictures on realtor.com it costs me money. Otherwise you will get 3.
So after I meet with you a bunch of times, show you a marketing plan, list your house , do all the work I hope to get you a buyer. Then I help negotiate the offer, home inspections, work with Attorneys and banks, all to help you sell the house.
This may take months or a day but its all work I do. Closing is typically 45 days later. During this time we probably speak daily. People call me at 7 AM and 7 PM 7 days a week.
So at a average of 60 days ( depending on your market ) I actually make $ 41 a day selling your house.
That's before taxes.
Yes I deserve it, and much more
At $250/hr, the licensing and entry requirements into your profession should be far, far, far higher. You're billing out at lawyer rates and yet do not have anywhere near the same requirements with respect to entry and licensing.
The thing is, it's not the licensing and entry requirements which are the key--it's the amount of subsequent education and experience. I have more relevant education and experience than most lawyers (and I'm not knocking lawyers because I work with many good real estate attorneys in most of my transactions).
But, being highly competitive, I would probably agree to work for less than Brandon--depending on the circumstances, of course.
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Oh My
