Real Estate Agents Underpaid?

Quote from bigpimpatl : Back to topic, I think we're asking the wrong question. The question we should be asking is, do we need real estate agents in the first place? Realtors used to operate on a monopoly of information. That barrier is now gone thanks to the internet. And, what incentive do Realtors have to be patient and wait for better offers? A few hundred bucks maybe? It's more profitable for the agent to sell quickly and move on to the next person..

I think of them as the next travel agent. Sure, they have useful tips, they may have some insider info, but as a huge generation of people start seeing the benefits of doing business without them, then there will be no job market for them. It's going to be a process, and I can only hope that some are feeling underpaid (as compared to back in the market-crazy days) and they drop out of the agent job market on their own.

Quote from onenanana : I think of them as the next travel agent. Sure, they have useful tips, they may have some insider info, but as a huge generation of people start seeing the benefits of doing business without them, then there will be no job market for them. It's going to be a process, and I can only hope that some are feeling underpaid (as compared to back in the market-crazy days) and they drop out of the agent job market on their own.

Almost all corporate and wealthy people use travel agents because time > money.

Quote from kyotuosa : Almost all corporate and wealthy people use travel agents because time > money.

I totally agree! Which is why there are still travel agents around; just not as many as 10+ years ago. I foresee the same thing for RE agents. Some people will still want to use them. Great!
But for the vast majority of RE agents, they'll be making money some other way.

Quote from onenanana : I totally agree! Which is why there are still travel agents around; just not as many as 10+ years ago. I foresee the same thing for RE agents. Some people will still want to use them. Great! But for the vast majority of RE agents, they'll be making money some other way.

I really think real estate is much different than travel deals. As there are only a few airline to compare to and with sites like Kayak & priceline for tickets and hotels you could spend as little as 20-30 min. to get everything done for the same price, if not better than the travel agent's price. I personally still use agents for international flights because they do get better deals and have more control over the seating.

As housing you are looking at 1000+ unique information (school zone, pricing range, layout, views, neighborhood, etc) and agents would most likely to get you a better deal. As even students/relo employees who are renting apartments find agents more useful than spending time to do so on their own.

When a seller is trying to sell their houses bypassing agent they are trying to get more value by bypassing agents, same for the buyer who bypass the agents to make purchase. Don't you find it odd that both parties are trying to get a slicker deal out of other ends while in fact you're getting less traffic on the houses you see and the potential buyers you meet.

Quote from kyotuosa : I really think real estate is much different than travel deals. As there are only a few airline to compare to and with sites like Kayak & priceline for tickets and hotels you could spend as little as 20-30 min. to get everything done for the same price, if not better than the travel agent's price. I personally still use agents for international flights because they do get better deals and have more control over the seating. As housing you are looking at 1000+ unique information (school zone, pricing range, layout, views, neighborhood, etc) and agents would most likely to get you a better deal. As even students/relo employees who are renting apartments find agents more useful than spending time to do so on their own. When a seller is trying to sell their houses bypassing agent they are trying to get more value by bypassing agents, same for the buyer who bypass the agents to make purchase. Don't you find it odd that both parties are trying to get a slicker deal out of other ends while in fact you're getting less traffic on the houses you see and the potential buyers you meet.

Real estate agents and travel agents are very similar: they operate under an "illusion" of information. I put the illusuion part under quotes because they both want you to think they know more about the market than you do. But the reality is now you have access to the same information as they do. And you can advertise/list your house using the same methods they use. So, what is left for the agent to do? When you have all this information in front of you, why risk thousands of dollars to someone who would probably accept the first offer? Unless you're making millions (which is, like, none of us) you will see positive returns on a time vs cost relationship.

However you touched on a point that is relevant. Real estate agents will leave the market and the ones that stay will have to differentiate themselves. That means one Realtor catering exclusively to one demographic or occupation or some other niche. Maybe then Realtors will have a reason to charge for their services.

One thing that needs to be taken into account is that sometimes real estate agents do all the work and get nothing. They can drive someone around and show them houses all week, and then that person decides not to buy a house.

Quote from bigpimpatl : Real estate agents and travel agents are very similar: they operate under an "illusion" of information. I put the illusuion part under quotes because they both want you to think they know more about the market than you do. But the reality is now you have access to the same information as they do. And you can advertise/list your house using the same methods they use. So, what is left for the agent to do? When you have all this information in front of you, why risk thousands of dollars to someone who would probably accept the first offer? Unless you're making millions (which is, like, none of us) you will see positive returns on a time vs cost relationship. You are

So I am under the impression that one of RE agent's job is to see bunch of the houses. Which would save you time to find you the exact right house as you have to see the actual product.

Do you really need to know how AA, UA, SW, etc are differ from each other?
I reckon they are the same, except the price. So I don't even need to see the plane before I make the purchase.

In conclusion -
Airline - similar products with one varaible - price
Houses - Different products with multiple variables and you can negotiate for the right price.

I would assume you would know the time difference to compare these 2 products.
Unless you have more information on how these differences are "illusion" then I have to disagree with you.

Quote from kyotuosa : So I am under the impression that one of RE agent's job is to see bunch of the houses. Which would save you time to find you the exact right house as you have to see the actual product. Do you really need to know how AA, UA, SW, etc are differ from each other? I reckon they are the same, except the price. So I don't even need to see the plane before I make the purchase. In conclusion - Airline - similar products with one varaible - price Houses - Different products with multiple variables and you can negotiate for the right price. I would assume you would know the time difference to compare these 2 products. Unless you have more information on how these differences are "illusion" then I have to disagree with you.

you completely missed the point but that's fine.

I never once said that all houses are similar or that houses=airlines.

Quote from bigpimpatl : you completely missed the point but that's fine. I never once said that all houses are similar or that houses=airlines.

No, you said RE & travel agents are very similar and used "illusion" to group their products are similar

It's like saying Investment banking sales and insurance sales are very similar they are all trying to create an "illusion" that they know more than you. OK? But in fact, they are very different profession.
So you hold the same info as they do? OK, what are you going to do about it? They are still very different positions.

A good real estate agent offers much more than simply access to locked houses and the MLS. A good real estate agent knows the nuances of the particular market that the potential to-be home is in. They'll know the subtle trends of the overall area and even of the particular streets and individual houses in that area. They'll know whether or not a railroad or airport is or is slated to be nearby. They'll know about issues that are hidden to most people with the home. They'll know why a home hasn't sold in X amount of months. They'll know much of the local real estate law. In short, they know the "story" behind the area, neighborhood, street, and home someone is interested in. In short, they know what the rest of us don't know we don't know.

Concerning buying a home, a good real estate agent knows tips and methods that sell homes faster for more money. Some of this can be found online (such as how to stage a home), but not many people actually know how to do it effectively and of those who do, even fewer are willing to get it done. A good agent helps make it happen. Another area a good agent is very helpful in is pricing strategies. A home owner will make more money if they price their home realistically from the beginning than if they started their home at a higher price and had to lower the price over time. A good agent knows this as well as many other pricing strategies that will get the seller more money in the end.

Coupled with long-term vision, this paradigm brings perspective to the agent's commission in that the money we pay them could pale in comparison to the money saved at closing as well as, and especially, long-term. All of this is compounded when it comes to investment properties since we'd be talking about not only money saved, but money made.

If someone is interested only in buying a functional shelter while disregarding getting the most for their money now and long-term, or in selling their home without concern of selling for the most money and as fast as possible, then a real estate agent is certainly not needed. However, if someone is interested in making a financially and practically wise and sound long-term decision, they may want to strongly consider a real estate agent.

Quote from kyotuosa : No, you said RE & travel agents are very similar and used "illusion" to group their products are similar It's like saying Investment banking sales and insurance sales are very similar they are all trying to create an "illusion" that they know more than you. OK? But in fact, they are very different profession. So you hold the same info as they do? OK, what are you going to do about it? They are still very different positions.

I have no idea what you're argument is.

I never said real estate agents=travel agents, I made this distinction already. But they are very similar, indeed all professions are similar in that they require some specific knowledge to become skilled in that profession. Maybe you misread the "illusion" part or I didn't explain it properly. What I meant was, it used to be you had to go to those people because you didn't know anything (nor did you have the means to know) the same information that they do. Real estate agents and travel agents acted as a sort of gatekeeper. Now we simply don't need as many because we have easy access to the same information.

http://www.youtube.com/watch?v=17jO_w6f8Ck

Quote from bigpimpatl : I have no idea what you're argument is. I never said real estate agents=travel agents, I made this distinction already. But they are very similar, indeed all professions are similar in that they require some specific knowledge to become skilled in that profession.

Well, if that 's how you feel. All professions are similar then there's really no point in writing it.

Quote from bigpimpatl : Maybe you misread the "illusion" part or I didn't explain it properly. What I meant was, it used to be you had to go to those people because you didn't know anything (nor did you have the means to know) the same information that they do. Real estate agents and travel agents acted as a sort of gatekeeper. Now we simply don't need as many because we have easy access to the same information.

As I said, so with these information. What are you going to do with it?
Are you going to spend 30 minutes VS travel agent 2 minutes and paid premium?

Or are you wanting to spend 1 month to master the information and maybe get it wrong VS 1 week + premium to find the right house?

So, the fact is when you feel all professions are similar in certain way, it really should be left out in an argument. Because it's the difference that counts and my point is RE agents should saved you time and allow you to find better product at better price. Hence their service would still exists.

Quote from bigpimpatl : I have no idea what you're argument is. I never said real estate agents=travel agents, I made this distinction already. But they are very similar, indeed all professions are similar in that they require some specific knowledge to become skilled in that profession. Maybe you misread the "illusion" part or I didn't explain it properly. What I meant was, it used to be you had to go to those people because you didn't know anything (nor did you have the means to know) the same information that they do. Real estate agents and travel agents acted as a sort of gatekeeper. Now we simply don't need as many because we have easy access to the same information.

Just curious as how you get the same info as RE agents. How do you find out the meloroos, how long the house has been on the market, (Zillow and others are slow and at times not accurate), if the home has been on the market multiple times with different realtors, if someone got shot at the house, pot grow house, the neighborhood is going to shit with increase of renters vs owners, if the HOA is full of assholes or not? A good real estate agent that specialized in a neighborhood can tell you all that and more. BTW, did the home builder use the wrong (kitec) pipe fittings and Chinese dry wall (those that rot) on the house? Is that also listed on the redfin/zilliow sites?
What you fail to realize is that saving a few thousand bucks on the sale price by not using an agent can cost you way more if youend up buying a home that's got damage and the owner/REO didn't list that and your home inspector had no way of knowing that. Grow house is a good example, since there's so much moisture/humidity in the house, mold can grow and fester and you might end up needing to pay for clean up as well as all new drywall in the house. Cost = upwards of $3-8/sq feet or more. Also at that point, you have to disclose to the next buyer since there will be record of you having done the repairs in the system. Your home is now possible much less valuable since it's been affected by mold and I would not want to live in that house and your buyer pool just decreased.