Real Estate Agents Underpaid?

Quote from laier19usa : It just infuriates me when I consider how much more affordable housing prices could be without these leeches who basically have a monopoly on the industry.

Thats like saying fast food chains have a monopoly on burgers.

Realtors are independent contractors and their brokerages compete against each other. You might want to look up what a monopoly is.

Quote from laier19usa : Funny you should mention that. I said the same thing to my wife after we sold our home on our own through a flat fee listing service. However, it probably wouldn't be worth it for me because their average annual salary is quite low. Yes, I know that sounds counterintuitive to what I've been saying this whole thread, but it really isn't when you think about it. I think the reason their median salaries are so low is because there is such a low barrier of entry into the profession which results in a whole lot of realtors for a limited number of homes. I still stand by my original statement though that they are overpaid. When you look at the actual work involved and the actual hours worked to buy/sell a home, then I just can't see how anyone would think they're underpaid. Just because there aren't enough homes and buyers to go around for every realtor to make over $100k/yr doesn't mean they are underpaid.

But you are only factoring in the times people actually buy and close on something.

If you worked 100 hours, got paid $100 an hour for 20 hours and nothing for 80, did you make $100 a hour?

And if McDonalds sold $1000 of burgers, did they make $1000? There is also a difference in revenue and profit.

Quote from laier19usa : I don't think I agree with that. Based on my own experience and my buyer's agents comments, we really made him work and that still only came out to about 40 hours worth of work which mostly involved driving around and unlocking doors. At 40 hours, that's still $15/hr for pretty easy work.

What about their gas and overheads?

Quote from hcazualcc : by the way, have you ever asked a real estate agent what they think of buyers? the phrase at my dad's office is "buyers are liars" meaning they're impossible to figure out, husband says they want this, wife says they want that, in the end they were just too ashamed to say what they really want. try walking a mile in their shoes first.

buyers are liars, and sellers are too.

Thats how the saying goes

Quote from samurai03 : What your dad does to generate business is not the same as what the op is trying to point out.

Sure it is, its part of the business. You can't just focus on one part of the job and complain they get overpaid, you have to look at the whole picture.

Quote from 8mpg : I think they make too much money.. if I sell my place, Im doing FSBO with a paid MLS listing. I can show my own house for the $24000 commission I would fork out

And every time you are not home, your house is off the market.

ok, i've stopped reading after page 4, so if i am repeating something you'll have to excuse me.

I use to be a Realtor, and i still hold a real estate license as i plan on purchasing real estate for myself over the next few years. I'm not an "active" agent, so i'm not trying to defend "my profession" as its not my profession.

Just like every job, there are good people and bad people. Most of the Realtors i interacted with were complete idiots. That being said, i have also interacted with my fair share of idiot buyers and sellers.

Realtors do bring value to a transaction. The stats show that a home sold by a Realtor sells for more than a FSBO. Realtors are familiar with the law, and have contracts, addendums etc that the general public may not have access to. These contracts are written by a group of people who have been in the business a long time, and not just some lawyer. I've seen some 3rd party contracts, and i was in shock at what was in it. Our contract was 9 pages of small print plus addendums, this one i saw was from a title company and was 1 page long and did not cover many things.

If you want to go the FSBO route, fair enough. But what if you are out? Do you think a prospective buyer is going to come back next week when you are home? Possibly, but in many cases they are going to go look at several homes that day and may see something they like. They may not be available when you are available. If its a sellers market, then thats not too much of a problem and FSBO could be the route for you.

Realtors also act as a buffer. Buying and selling a home can be an emotional process and the Realtors act as buffers which can save the transaction. I've heard a client say many times things like "You can tell them that if ........ they can go f themselves". Imagine if that client had direct access to the other party.

And then there is the buyers side. An agent can pull up comps and see what is a fair price. If the listing price is too high, they can even try and talk down the seller and their agent armed with the right info.

There are also timelines that need to be followed in the contract like inspections, notices etc. If you are doing the transaction yourself, are you always going to be available for those? If not, it can get very expensive very quickly. I had maybe a couple of hundred hours in extra education on top of what was needed to get my license. I had several designations to my name, do you think they taught us how to rip people off or how to better represent our clients to make sure that they were protected and in turn we were protected as Realtors can be liable.

What if it is a shortsale? Think you can handle that one on your own? I know several realtors who did not want to touch those because they are major headaches.

What if there is an out of town buyer? Think they can handle it on their own? Or will they go with an agent who knows the area and can handle things for them.

And keep in mind all the time spent running around, money spent on advertising, gas, fees, commission splits, and other overheads. Sure, some Realtors are overpaid, but you can say that about most professions. One thing i think is messed up with the system is that commissions are for the most part a %. Does a $300k house take twice as much work as a $150k house? It might take longer to sell, but its not enough work to justify double the commission. I would have loved to have been an agent in California selling $1/2m-$1m homes. Instead, i was selling $50k-$120k homes for the most part. And there were times i would work my ass off all month only for transactions to fall apart because a lender pulled the financing at the day of closing, or the buyer pulled out at the last moment (thats what she said) etc. I had a month where i worked all month and not only earned $0 but lost money as i still had overheads. I think a fairer system would be something like $X000 + 1% commission instead of 5-6%

When working with an Realtor, you don't need a Realtor, you need a good Realtor. If you are looking for one, try and see if you can get one with a GRI designation.

As for being overpaid and buyers/sellers doing the work themselves, sure you can. You can also fix your own car/truck, fix your own home. But if you f**k it up, its going to cost you a hell of a lot more than what you would have paid a professional to do it in the first place.

And for the person who mentioned a MLS listing service, don't forget to factor in the commission for the buyers agent in your calculations. If your home is expensive and you have some experience, the MLS service may be the best route for you, but be sure to offer a decent co-broke to the buyers agent or you are not going to be reaping the full benefit of the MLS.

Oh, and i just thought i would add that when i purchased my home last year, it was 200 miles from where i was living and used a Realtor for the transaction even thou i had a license. If i had not, i wouldn't have the house i have right now.

Quote from BargainSnatcher : Realtors are independent contractors and their brokerages compete against each other. You might want to look up what a monopoly is.

It may not be a true monopoly, but you'd be a fool to think it is a fair market. The real estate lobby is huge, well funded, and will do anything to keep their power. I loved that in the middle of the housing crash the real estate lobby dickheads were playing these commercials about how you can trust an agent, and how great it is to have an agent, that an agent is looking out for you, etc. Truly human filth who will say and do anything for money.

Quote from travathian : It may not be a true monopoly, but you'd be a fool to think it is a fair market. The real estate lobby is huge, well funded, and will do anything to keep their power. I loved that in the middle of the housing crash the real estate lobby dickheads were playing these commercials about how you can trust an agent, and how great it is to have an agent, that an agent is looking out for you, etc. Truly human filth who will say and do anything for money.

There you go, painting an entire profession based on the actions of a few.

While you are at it, why not call all cops corrupt. Why not call all teachers pedos who have sex with their students. Sure, there are Realtors out there who should be in jail, but to paint the entire profession that way is small minded. Thats why i said in a previous post that people don't need a Realtor, they need a good Realtor.

Its not all about the commission check for all Realtors. I had a client one time that was ready to buy a condo and i talked him out of it and in doing so talked myself out of the commission. Why? Because i have morals and can sleep at night knowing my clients had the best representation possible.

And there is nothing stopping you from negotiating the commission with a Realtor or structuring it any way you want. If you think your agent won't get you the highest price, motivate them. If you were happy paying the 3% for the sellers side, make it 1.5% with a 1.5% bonus if you get a full price offer within X days. If the Realtor says they think they can sell it in X days and that they priced the house right, they shouldn't have a problem accepting this type of arrangement.

Quote from BargainSnatcher : Thats like saying fast food chains have a monopoly on burgers. Realtors are independent contractors and their brokerages compete against each other. You might want to look up what a monopoly is.

more of a cartel than a monopoly http://www.consumerismcommentary....te-cartel/

Quote from hmd123 : more of a cartel than a monopoly http://www.consumerismcommentary....te-cartel/

That article is about 7 years old. As someone who has worked for 2 agencies, i can tell you the majority of that stuff is BS. We were never pushed to sell our own brokers listings, never told to avoid certain brokers listings or anything of that nature.

I'm not saying that sort of stuff doesn't happen in some firms, but again you can't put everyone from that industry into 1 slot.

Quote from laier19usa : How many hours would you estimate your buyer's agent spent actually working on finding you a home and closing the deal? Also, how much in commission is he getting for his work? I just bought a home and at the time it did feel like we were just abusing the crap out of our agent. We had him take us to see at least 25 houses which we found online on our own over a two week period . However, when I look back at how much time he spent doing that plus how much time he spent helping us negotiate several counter offers, it came out to a maximum of maybe 40 hours of actual "work". I am including the drive between homes when we went on the tours and the time he spent reading a magazine during the inspection. Since he is also the broker he actually gets to keep the full 3%. This translated into about $6500 commission net after rebate on a $272k purchase. Keeping in mind, a majority of the time he spent actually "working" consisted of driving from house to house and unlocking doors. All in all, the agent made about $163/hr (half that if he weren't the broker too). How many people do you know get paid $163/hr to drive around in a car and unlock doors? Probably a lot since there are way too many realtors in the world.

You forget that this is not what the realtor actually gets to take home to his/her family. There are many costs of owning a business, taxes, licensing fees, subscription services, etc.

There are good realtors and there are bad realtors, some earn their money some don't. I don't see how this is any different than any other profession.

You know all those fees are negotiable. If you get a low ball offer, just lower the commission that is passed to the buyers agent. My agent gives a rebate. On my current primary residence, he talked to selling agent into lowering her %, as he would lower his, thus no rebate, but we got the house for a couple of grand cheaper.

There are some really stupid agents out there. I just purchased an investment property, and the selling agent told my agent all kinds of good information about the seller, how many contracts fell thru, why they fell, what sellers position was on house and why he was selling...Helped me craft a really low offer which they accepted without a counter. That's the problem with RA, just about any idiot can be one.