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Are you a realtor? Some of these costs seem excessive. My realtor has an expensive camera and takes her own beautiful photos. Doesn’t the agency pay for the listing on the MLS, at least in part? After all, most agencies receive half of the fee paid by the seller. The sales person doesn’t receive the full amount.
Think about what it costs you for anyone to come out to your home (plumber, lawn service, cleaning service...) A simple lawn service is going to run $50 for a residential yard, cleaning services start there and go up, and a licensed professional like a plumber or HVAC? Probably looking at $100 to get him in your doorway. So the fees she listed, when you get into the costs involved in keeping and maintaining a vehicle, etc, don't seem that high...
Quote:
Originally Posted by staywarm2
Sales people in fields other than real estate make many sales calls that don’t result in sales and/or commissions. That’s the nature of sales, in any field.
But the consumer never questions their commission percentage. They never see it. The life insurance salesman might get 80% of GAP for the first year, residuals off of that for the life of the policy; Property and Casualty insurance agents might make 12% and get a renewal bump yoy for the life of the policy. None of that is ever showed the consumer. I can think of no other transaction where the commission is spelled out for everyone to see as it is in Real Estate. Some states require them to disclose IF ASKED, but never is it shown on the paperwork you typically sign.
And, in any other field, sales compensation breaks down into three categories: 100% Commission, ie an Independent contractor (Real Estate, many insurance agents, etc...); Base Salary + Commission; or Hourly, sometimes with commissions or production bonuses but sometimes not.
None of this foot stamping and pouting about the commission percentage conveniently ignores that Consumers have the option of FSBO and they have the option of a flat fee service or an alternative model like Redfin when they list their home.
Buyers, especially first time buyers, are unlikely to go in for a fee-for-service model. Why would they? Consumers are shortsighted to begin with, and add to that the fact that people abhor uncertainty; the last thing they want is to pay for each showing not knowing if they want to buy the first house or the 19th house or the 40th house. And that creates another bunch of sour grapes: "I have to keep paying him to show me these houses, and my offer keeps getting beat. He's supposed to represent my interests but keeps encouraging me to offer more than I think I should. I've made 6 offers already and paid him for his time on each one." And all of the above totally ignores the fact that many first time home buyers are throwing nickels around like manhole covers anyway...
Then you go to a base+commission structure, which again will lead to the broker (or sales manager or whoever the boss is that is responsible for ensuring continued production) pressuring his agents to stop spending time with clients that he's deemed are unvaluable due to their long term plan, inability to close quickly enough for him to justify the time and expense, etc...
People keep talking about something disrupting the market; What? What will you, as a consumer, allow when it comes time to list the place where you eat, where your children sleep? Some unholy trinity of Uber, Air BNB, and Redfin/Zillow? You get a push notification, "Pennywise is coming to tour your house in 45 minutes, no need to unlock the door, his temporary code will grant him unfettered access to your home." Or, you pay for them to have their agent escort the looky-loo on a fee for service basis; but how many times are you willing to pay before your anxiety ramps up? Its a Saturday, five showings are scheduled, $500. OR, its a flat-fee-market-disrupting-app that has a somewhat short expiration before you have to again pay them to come unlock your house and show the looky-loo around.
I think the only real solution would be to make licensure a much higher barrier, closer to the broker's license, to dry up the supply of what is derisively referred to as the "bored housewife" cadre, to hopefully elevate the consumer's opinion of the profession. I say that because in my limited experience, the successful, career minded folks are very competent and worthwhile. Talking to friends that hired their friend's sister or whatever, there are a lot of folks that don't feel that way. But, I think that would be a tough hill to climb.
JONOV,
In most states, that Broker's license is nearly as easy as the initial license.
You really didn't raise the bar very much.
I'm OK with easy licensing, albeit making it more difficult to become a supervising broker, BIC, etc .
I'm more interested in the ease of retention of license.
And, I am greatly in favor of more Commission auditing of supervision of newer agents.
Last edited by MikeJaquish; 01-11-2018 at 06:12 PM..
My guess is that it was a long time ago, they just got a bad deal, or it was in an area with very little or no competition. Or maybe it was some kind of fee based service or it was in exchange for a lower than market rate commission. Or, most likely, confusion that certain reports required by the government (the former Home Information Pack or the Energy Performance Certificate) are paid for by the seller at the time that the home is put on the market. Those are fees directly to an engineer rather than upfront fees that reduce the risk of the agent. I bet that this was what they were talking about. There is no equivalent that I'm aware of in the US market so you can't compare or say that the risk for these reports is born by the agent in the US but not in the UK. Simply not the case.
I can assure you that this is not the way it works today. Trust me, I've seen all the games that they try to play and I've never seen the pay ahead one. Anyway, let's step back...the original assertion was that (real) estate agent fees in England were low because agents take no risk as clients pay upfront retainers. This is simply not correct. Typical in the market today is about 1% commission and no retainers or upfront fees to the agent.
My knowing nothing about the process over there.. how many transactions (either side) have you completed?
Those realtors have a strong financial incentive not to have any detailed knowledge about the house.
Which is one of the things wrong with the RE profession. Should know at least a bit about houses, their systems and how they work and about the environment in which they are embedded. But the standard RE book is to point the client at someone else. You pay all that money to get pointed elsewhere.
And of course supervision of agents is simply non existent. Given 6 weeks of the legality and then turn them loose. And most of the ones who survive are good salesmen...not good RE Agents.
Those realtors have a strong financial incentive not to have any detailed knowledge about the house.
This statement shows your lack of knowledge of Realtors.
A good and experienced Realtor, will point out problems, and tell a buyer why they should not buy certain homes, and the visible problems they may spot that a buyer will not. They want satisfied buyers, and sellers, that spread the word to their friends how good they took care of the buyer or the seller so they will send their friends to become buyers or sellers from this agent.
I've bought and sold without brokerage... even sold a home on Craigslist.
That said... some of my best buys never would have happened without a dedicated local Realtor with decades in my area... she would give me a call if a fixer would come up because many buyers are dependent on conventional financing and fixers don't fit that model...
Several of my friends were transferred for work... they simply had no time to market their homes... or wade through listings looking for a new home...
There are many things you can do yourself... like building your own home...
The key is finding a Realtor that brings value to the table and here is one of the most overlooked aspects.
A professional keeps the deal on track and avoids the many pitfalls along the way... also has insurance as in when a client was injured while showing a property... the Realtor's Insurance settled the claim...
As with most things... professionals make the complex look easy and that is the value they bring.
If your house is located in a desirable town, it makes no sense to use a realtor to sell your home. In Massachusetts, the typical realtor fee is between 5-6%. For example, the town in which we live is so "hot"--due to its safety, good schools, and proximity to Boston--that few houses stay on the market more than a couple of weeks (in fact, at the moment, there are only 4 single-family homes on the market, and only one of them is below $1 million). Our house is not worth $1 million, more like $600,000 (still ridiculously over-priced in any "normal" market). Why in the world would I hand over $36,000 to a realtor to sell a home I can sell by myself in a week? All I'd need to do is hire a real estate attorney to guide me through the process.
I had professional signs, published in the Open House Sections, held Open House... had a local Mortgage Broker provide up to date Rate Sheets... etc.
Prior, I had also done my research and knew local market well...
Interest was immediate... many Realtors approached me with clients asking if I was open to paying a commission... my reply... I was accepting offers and all offers would be evaluated 10 days from the first showing...
Had 9 REAL offers... 3 from those represented and the best offer was submitted by a Broker and part of that offer was 2.5% commission for that Broker which I gladly paid because it still was 17k higher net over the next and of the 9 offers, 7 were over price offers.
When it was all said and done, escrow closed in 26 days and selling price was 54k over my list price...
Had I just put the home on the market and not "Marketed" it I would have left 34k on the table after commission...
The Broker was fantastic... her clients were well qualified, she had just sold their high end condo and they were putting down 1/3...
On my side... had all my inspections done... buyer paid for an additional Pest Control and Home Inspection... the total their inspector found was under $300... code had changed requiring a second Seismic Water Heater Brace and the side garage door needed a threshold replaced.
Their Realtor paid for a Home Warranty which was a nice touch...
I'm guessing the reason people eliminate Brokerage is to have more money in their pocket in the end.
In my case, Brokerage maximized my net even after paying the 2.5% commission.
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