Economist : The great realtor rip-off (Why is it so expensive to buy or sell a house in America?) (disclosure, fee)
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They already know this and are taking these fat commissions and investing in off the market forclosures and other smoking deals to pad their own retirements. These agents are not idiots they know they have a cartel and they know they are making a killing if they put even a modest amount of work into it, none of them want the gravy train to end, that is why FSBO are treated with contempt and some realtors wont even show them, even if it is the clients dream home because the seller may play hard ball with the agents grotesq pay day.
It does take a certain skill set to be a master networker/sales person, but as you said, is the client really getting a 30k value out of that (for a 500k home)? Is the agent showing FSBO to their clients knowing the seller might be a hard liner (why else would a seller use FSBO)?
you make a lot of assumptions, and paint with a very broad brush.
I would be defined, by the quantity of clients assisted, as very successful. I have never bought a foreclosure to make money, I've never even invested in real estate beyond my personal home (though this could change in the future) - I diversify OUT of real estate into the stock market.
Very few Realtors I know are big into investing in real estate, for the same income diversification reasons. A rental or 2, here or there? Sure.
I also have never refused to show a FSBO. Nor do I know more than 10 agents who wouldn't. But we have to find/see you, and in my experience, the VAST majority of FSBO's think the sign in the yard is all it takes. Maybe a Craigslist ad. If you can't be bothered to list it on Zillow, or pay an entry-only firm $500 to get n the MLS ... how serious are you about getting the house sold? That would be my question.
you make a lot of assumptions, and paint with a very broad brush.
I would be defined, by the quantity of clients assisted, as very successful. I have never bought a foreclosure to make money, I've never even invested in real estate beyond my personal home (though this could change in the future) - I diversify OUT of real estate into the stock market.
Very few Realtors I know are big into investing in real estate, for the same income diversification reasons. A rental or 2, here or there? Sure.
I also have never refused to show a FSBO. Nor do I know more than 10 agents who wouldn't. But we have to find/see you, and in my experience, the VAST majority of FSBO's think the sign in the yard is all it takes. Maybe a Craigslist ad. If you can't be bothered to list it on Zillow, or pay an entry-only firm $500 to get n the MLS ... how serious are you about getting the house sold? That would be my question.
A lot of them do pay entry level mls and if a client finds it the realtor may show it but if the buyer wants to make an offer it’s going to get messy because now the agent will be looking to the buyer to write a 15k check .... I know I would not write that check.
How many realtors would show an Fsbo that the client had not first found on their own?
Then if the realtor had convinced the buyer to sign s contract it gets even worse ....
In my market, your "a lot of them" is ~ 4%. And I am in avery busy, very seller-advantaged market.
I don't know many agents who datamine for listings based upon the agency listing the house, or the compensation rate.
Given the beauty of the internet, clients find homes as readily as we do - as I tell them "I am not personally searching for homes at midnight, you probably will be" - when new listings get posted late at night.
But yes, we should have written agreements of representation that include how we will get compensated early in the process. And those agreements will state how we get paid, if the Seller is unwilling to compensate us. And yes, I know very few Buyers who are very interested in a home where the Seller isn't willing to pay my compensation. It happens VERY rarely anyway, but it seems to be usually a sign that the Seller isn't someone they want to deal with anyway - or so they tell me. I mean, I wonder why a Seller wouldn't at least say "Add your compensation to the offer, and then I'll pay it." But I have told someone "the price is so good, it's still worth it after you pay me".
I was saying that the dollar amount spent on an average commission is equivalent to the wages of the average full time employee. And I was saying it's hard to believe the total work (done by all parties) for the sale of 4 houses is the equivalent of a year's worth of work. Sorry I didn't make that clear.
Also sorry I didn't factor in self-employment expenses and lack of benefits. I've been self-employed, so I should have thought of all that.
Your first sentence is still disjointed (one house = 1 job), but what I think you're trying to say is ... it's hard to believe that if someone sold 4 median houses in their lifetime, that amount paid would be the equivalent of 1 median annual salary.
Although you're still "employing" 2. So, are you saying it's hard to believe that for every 9 median houses a consumer sells in a lifetime, they've paid 1 person 1 year of the median wage?
By the way, you're not the only 1 who didn't include benefits, self-employment taxes, etc etc. I was merely figuring straight business expenses (license, phone, gas) at a minimum level.
It used to make sense when homes were $50,000. 6% wasn't all that big a deal.
But not now.
Now it doesn't make sense.
We won't do it. Our home is paid for. In fact, we have 3 homes that are paid for, and someday we are going to downsize into home #2. When we do we will sell this one ourselves. Fortunately, we have time and are not moving far. But I know everyone is not in that position.
make a mistake selecting a $3,000 vacation, and it's over in a week. Maybe a month if REALLY awful stuff happens.
make a mistake on a $300,000 house, and the problem lasts a lot longer, and is a heckuva lot more than $3,000.
provide the flight schedules, costs, and a system of rating hotels, and travel agents lost all their perceived benefit (though a travel agent can still do all the legwork, and probably wrap their fee/expertise into the same cost we get as consumers).
The thing is (and which is reflected by the thinly veiled contempt in my mineral rights threads) is that when things do go awry, real estate agents quickly remind clients that they are not lawyers and the fine print in their contracts indemnify them of any real financial responsibility and making you the buyer whole again.
If the law does not specifically hold their feet to the fire you better believe that a real estate firm is not going to write you a 300k check to get out of your house when there is suddenly a drilling rig in your yard because they never disclosed it (or never disclosed what not having mineral rights can mean, just as an example).
When the really bad stuff happens (like stuff that would require the agency to buy you out of your house, or otherwise have to write 5 or 6 figure checks) the only way you will get that money is through a fierce legal battle.
It used to make sense when homes were $50,000. 6% wasn't all that big a deal.
But not now.
Now it doesn't make sense.
We won't do it. Our home is paid for. In fact, we have 3 homes that are paid for, and someday we are going to downsize into home #2. When we do we will sell this one ourselves. Fortunately, we have time and are not moving far. But I know everyone is not in that position.
Alot of times, the scenario is that a company has dealt treacherously with a mass of people in a mass lay off and now the market is flooded with motivated sellers because they all just got canned (some may have families, kids in school, etc) and need to get out of the area. Some will simply go into forclosure and the families may end up looking at jail time by the IRS if there is a deficency or get sued by the banks, etc, etc.
y I also have never refused to show a FSBO. Nor do I know more than 10 agents who wouldn't. But we have to find/see you, and in my experience, the VAST majority of FSBO's think the sign in the yard is all it takes. Maybe a Craigslist ad. If you can't be bothered to list it on Zillow, or pay an entry-only firm $500 to get n the MLS ... how serious are you about getting the house sold? That would be my question.
First of all, I don't know what comfort it gives people to say that you never REFUSED to show a FSBO. I'm surprised that ANYONE would REFUSE to show a FSBO, never mind around 10 agents that you happen to know. That's kind of blatant and IF there is a problem with agents and FSBOs, it's going to be handled in a much more subtle way. We hear thing like never REFUSING to show a FSBO if the client insists. Or never putting a gun to a client's head to FORCE them to make a higher offer, etc. Without even getting into whether there is anything wrong here, you need to recognize that these explanations sound really silly and should not be used any longer. It makes you look out of touch and like you don't even understand what people are saying.
Like with all of these sexual harassment and coercion scandals. If a guy's defense was "well i never put a gun to her head and forced her...." You'd say "that guy just doesn't get it". Even if he did nothing wrong, it just sounds like he's out of touch and doesn't even remotely "get it".
Also, from feedback on this board, it appears that FSBOs are having no trouble being "found/seen" by realtors. From what people say, when they go FSBO, they are assaulted by dozens of agents trying to get them to list with them. Seems like there is no problem being seen. I have no idea...just repeating what everyone says here. Again, not suggesting anything is or is not wrong, just think about your explanations and how silly they can sound.
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