Real Estate Agents Underpaid?
 

I just read an article that ranked real estate agents as one of the most underpaid professions and I just wanted to vent about it.

Real estate agents are underpaid??? Really?? They are the most overpaid people ever. They are glorified door openers who add no value to real estate transactions. When we were shopping for a home almost every single agent sitting at the open houses knew next to nothing about the home they were "selling". We found the home we're living in, on our own and only used a buyer's agent to close the deal because he offered a rebate. Otherwise, that full 6% would have went to the seller's agent. My buyer's agent didn't know anything about any of the homes either and we basically paid him $6500 to unlock doors for us. If that isn't overpaid, I don't know what is. On the flip side, we paid a flat fee of $400 to list our home on the MLS exchange and sold it in 3 weeks. The people coming through our home kept telling us how refreshing it was to be able to ask the owners questions because the agents at most open houses were clueless. The young couple that did finally buy our home found our home online on their own too, but because they had an agent, we had to pay another 3% to him to close the deal. I really wish the government would crack down on this whole realtor monopoly.

By the way, I also understand that the individual agents don't necessarily get that full 3% or 6% because they split it with the broker and so forth. However, that doesn't mean the consumer pays less. My point is, as a consumer or seller, I get little to no value proportionate to the amount of money that is being paid out. They certainly aren't a slickdeal when it comes to home purchasing.

Are you familiar with the housin market bein in a crisis mode?

Yes but what does that have to do with being underpaid?

Some agents are overpaid, some may be underpaid. I was very happy with my agent. Did he get a shitload of money from my sell and buy? You betcha! Did he earn $38k (his 3%)? Almost certainly not! But it is what it is.

The MLS is a criminal organization. It has a lot of influence. The MLS isn't going anywhere so nothing will change.

We just bought our house in Texas less than a month ago. I will tell you, I feel our agent was greatly underpaid. He worked with us a solid 2 months, we saw 28 houses in one weekend, and spent weeks negotiating the pricing and repairs. After all of his expenses, his gas driving us around, the unlocking subscription service he has to pay for, an his rent at his brokers office.. I think he came out below what he deserved. We plan to make this up to him by buying him drinks, and referring everyone we can to him.

On the other hand, the sellers agent we used to sell the house in Ohio was WAY WAY overpaid for what he did. He never showed the house, he never did any advertising, and he did not help us with any negotiations. His answer for everything was... well that seems fair sign this. He got paid quite a bit for what he had to do.

So dealgate was right, some are underpaid and some are overpaid.

I think it depends the market. In my area most all houses are 180k and up. You can make a decent living off selling just a few houses a month.

However, in other markets where houses can be had for 40-50k all day, theres not much to get in terms of profit. Granted the cost of living is also lower down there, but I don't think its proportionate.

I suppose it depends on the agent, but considering how much buyers usually jerk around the agents, I can certainly understand the view that they are underpaid. If you drove all over creation, spending day after day carting someone around (or even meeting them), spending hundreds in gas and racking up the miles on your car, only to have them never purchase a home, I'm sure you'd feel you were underpaid as well.

If both parties willingly agreed to the transaction knowing how much the agent's commission would be, the agent is neither underpaid or overpaid - they were paid exactly what both parties willingly agreed to. However, if force or fraud were involved, then being underpaid or overpaid is certainly a possibility.

This sums up the "MLS".

Real estate agents are grossly overpaid. A McDonalds employee works much harder.

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.

Interesting perspective as I haven't thought of it like that. What are your thoughts on the Kardashians making millions for being trashy in front of TV camera? As long as someone is willing to pay them the millions then by your logic they are not overpaid?

Does anti-competitive policies enforced by the NAR count?

http://www.cbsnews.com/2100-18560...ontentBody

As part of my job in IT, I am constantly working with people who are less technical which can be quite frustrating at times. If I made $200/hr, should I consider myself underpaid because there are unpleasant or unenjoyable parts of my job?

The average home price is not $40k - $50k. The vast majority of the homes sold in the US are well above $100k.

http://www.trulia.com/home_prices/

But let's use your example anyways. We recently sold our home on our own using a flat fee listing service and put in roughly 30 hours worth of work acting as our own seller's agent. More than half of that was spent hosting 4 open houses. We obviously went way above and beyond and spent more time on selling our home than a normal seller's agent would have. So in my extreme example, let's pretend we had a super ambitious agent that spent a total of 30 hours selling a $40k home. If he were a broker/agent, he would have made $40/hr and half that if he was just an agent. Since when is $20/hr or $40/hr at the LOW end of a pay scale for a profession considered underpaid?

Seriously, you seem to have a real problem with Realtors from the way you talk..

In our case, our Realtor got 1.5% of the selling price (Less than 200k). His company got 1.5% and the sellers agent got 3% (not sure how that broke down between what his company took).

As for how much work he put into our purchase, we gave him a list of 5 houses we wanted to see and he provided us a list of 25 more he thought we might like and were in our price range. He then spent 8 hours a day with us for 3 days straight looking at houses. He ended up writing the purchase agreement and then we had about 12 revisions to it over the next month (due to the sellers agent). He spent time getting our home inspection taken care of, and was here with the inspector. He got the exterminator taken care of, worked with our mortgage broker getting financing taken care of, and even stopped by on our move in day to lend a hand.

But what makes me think he was underpaid was that in the end he took care of everything, we got the house we dreamed about, and he still calls me checking in to see if we need anything.

But like I mentioned before... the agent we used to sell our house... way over paid for what he had to do.

Perhaps time to quit your IT job and get in on the easy door opener game? ;)

There will be a huge variance in required time that a buyers agent spends to call other agents, verify stuff, call you, drive around to open up houses, prepares offers, picks up paperwork, makes sure all the t's are crossed and so on.

I bought an investment property last year, and the buyers agent was also the sellers agent. She showed me one house, it was nice, put in offer, got it. Was she grossly overpaid? In that instance, yes.

This year I am looking into buying a house as a primary residence. My buying agent has been working with me for probably, well, 3 months. Contacting selling agents, showing houses, preparing offers, etc etc. All without a single cent compensation, and perhaps, it will stay like that if nothing suitable pops up. Grossly underpaid? Sure.

I do have a real problem with realtors because so much money is spent on them and they add no real value to the transaction. 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. What's amazing to me is there are still people out there that don't mind having an extra 6% built into the cost of selling/buying a home just so someone can schedule appointments, drive them around, and unlock doors for them.

:iagree: that's lots of lettuce they make you guys wash everyday

If they bring no value to the transaction, why would you hire one? You can write up the offer yourself. Can you go through the whole transaction without help?

The buyer is not paying the agent anything at all. The seller is. You say that extra 3% going to the buyer's agent can reduce the purchase price. Not all seller will agree to that since they care about maximizing their net.

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.

Good question. We decided to use a buyer's agent that provided a buyer's rebate because what we found was that you couldn't negotiate with seller's agent on their commission. When we first started out looking at homes on our own without an agent, we found a home we liked and wanted to put an offer in. I could almost see the $$$ signs in the seller's agent's eyes when he found out we had no buyer's agent. We were hoping that because the seller's agent didn't have to split the commission with a buyer's agent he would be open to giving us some sort of buyer's rebate. WRONG! The greedy SOB refused to even rebate us back 1% of the commission even if it meant he got to pocket 5% instead of 3%. He gave me some crock about buyer's rebates being illegal until I pointed out the law in our state stating they were perfectly legal. In the end, we still went forward with putting in an offer through the seller's agent, but got into a bidding war with another buyer and backed out. The next home we wanted to put an offer in was same situation. The seller's agent would not back down from their 6% commission so this time we went out and found a buyer's agent that offered a rebate. We figured a little something was better than nothing. I would have loved to have bought a home that was for sale by owner, but sadly most people think they need realtors to sell their home.

And yes I can certainly do the whole transaction on my own. I'm perfectly capable of filling out a form. It's not like realtors write up the contracts from scratch. They use templates published by the local BAR association.

This is the kind of mindset that I would love to help change. Just because you don't pay the agent doesn't mean you don't pay. So what if one day car manufacturers decided to start paying Company X to put in a useless feature into all their cars and increased costs by 3% to offset their cost. Would be ok with that because you didn't send your check directly to Company X?

When you are buying houses in towns and off beat paths, sure agents are underpaid for the work they do..

But for agents to be in the city, where they deal with apts and condos... those are the biggest scum and leeches if there ever was one. Those are just over glorified doorman/women

yes of course, its a criminal organization that you can join if you want to.

3% of 40k is $1200. Of that 3% he gets what, 1-1.5% tops. The rest goes to his broker fees. So lets say he gets on the high side 1.5% of it. Thats only $600. $600 for 30 hours of work is $20/hour...................i see your point. :D

But lets be fair for most homes they are selling you, they spend much more time + gas than that driving around showing you the 20-40 houses you looked at.

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. When I first started out in IT, I was doing equipment installations which was real tiring and sometimes dangerous for less than $15/hr.

I think the big question is, If it's that easy why didn't you do it?

tiring & sometimes dangerous for < reward VS easy work > reward.
If agents have connection, it would be sick. 3% out of million dollars listings. Just need to sell 1 house/quarter lol

I already covered that in a few posts above.

http://slickdeals.net/forums/show...stcount=20

Tiring and dangerous was when I first started out. I've moved into an engineering role now that is intrinsically and financially more rewarding but with different challenges. Besides I don't think I would find much satisfaction from taking thousands of dollars from hard working people for just driving them around and opening doors.

Well, then that's not much of a comparison. At least shouldn't be written as the way you made it sound to be.

My point was not made to make you look dumb to choose IT as profession, rather to point out that there's limited advancement, uncertain salary, risk of meeting weird people, etc in real estate business.

Same goes to Insurance sales agent (wtf do they do to deserve 6-7 figure?), car sales, basically any types of sales really....
If you made it, the reward is great. If not, then not so much.

Great question. Let's take the example you gave of the Kardashians making money on being trashy. Here's my take on it: I am a big believer in, since I am not the one paying nor the one getting paid (in other words, I don't have a financial dog in the hunt), then it's none of my business whatsoever what someone else does with their money and it's none of my business whatsoever what someone else requires or will accept for payment for their product or service. That's between the two willing parties involved.

The Kardashians provide a service. Someone wanted their service. The two parties sat down and willingly agreed that if the Kardashians trade Service X, then the payer/employer will trade Payment X. The trade only involved the two parties: the Kardashians and the employer. Both parties entered into an agreement willingly and without force or fraud. I, therefore, don't have a problem with it.

Now, can someone please tell me who the Kardashians are?

There are realtors here but AFAIK the actual AGENT only gets, typically, 1.5% (half of half of the 5-6%). so in a $400k sale, that's $6k.

Now, what I will say is that I think that the 6% convention (e.g. commission rate) is inaccurate. Commission should be commensurate with the effort involved in selling a home (or buying). Like a waiter, a $200 table bill doesn't require 4 times the work as a $50 table bill, so using the 15% rule of thumb would leave a horribly inaccurate (too much) tip. the same goes for real estate. A $400k house doesn't take 2x the effort, time, etc, to sell, generally, so rather than 1.5% commission it should be more like 0.75-1%.

Even in states where it's illegal there are ways around this: Seller's Agent reduces fee to Seller (buyer is not involved), and Seller pays closing costs/gives cash back to buyer at closing. Since this is between the Seller and Buyer, the Agent is not technically doing anything wrong.

I personally used the Seller's Agent on our last home and did something similar to what I stated above. My lawyer wrote up everything a buyer's agent would have for much less than a buyer's agent. I don't feel I lost anything not using an agent, and honestly I'm glad I didn't since it saved me cash.

I have nothing against Real Estate agents and pretty much view them exactly the same as any other Service Provider: if I put the time and effort into then they probably aren't needed. If I don't want to put any time or effort in, then their worth the 6% or whatever you agree to.

So you are one of those people... I'm going to guess that you go to a chili's with a few friends and tip 2 bucks on a $50 ticket. Then you go somewhere nice and get a $200 bill and still tip $2. You know, as being someone who did it getting through school, the problem is that your server is making $2.13/ hour. Sure on good nights I could work 5 hours and make ~$150. Most nights though were nothing like that at all. Do you know what $2.13/ hour gets you? The ability to pay income taxes on money you made or didn't make that you still had to claim. At the end of the day your waiter most likely has to claim ~10-12% tips vs sales for tax reasons. So really when you come in and tip someone 1% you are really taking money out of your waiters pocket. Oh, thats not even mentioning that they share tips with the bartender too.

I'm sorry for this big rant... People like this just burn me up. I realize we are here for deals, but when you get one for gods sake don't be the guy that that tips $2 on any size ticket when you go eat. It really makes people hate you lol.

(P.S. All but 2 people I worked there with were putting theirself through college and most the time had 2 jobs to make ends meet)

my father is an agent and that man worked harder as an agent than i've ever seen. was he out there inspecting the houses every nook and cranny? not really. but he was constantly on the phone with perspective buyers and drumming up business. he spent 3 straight weeks cold calling people. didn't matter. impossible business to prosper in unless you know people who own expensive real estate. i wouldn't call them overpaid, i think the real estate agent process should be redefined though because it doesn't seem fair to either party.

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.

New flash. The realtor doesnt sell your house.
MLS does. They are just the gatekeeper

I can see either side. This doesn't fit for the "finance" forum, this should be in the lounge or something.

People that think they are overpaid are ones that found a house and did everything without much time. This results in around $1000 per hour of work involved. Hence they are apparently overpaid.

People that think they are underpaid are ones that have relatives in the business (because uncle tommy the real estate agent works 100 hours a week) or they have bought a house after wasting the agent's time looking at 1000 other homes without researching anything on your own. This results in around $1 per hour of work involved. Hence they are apparently underpaid.



Personally I think they should get less commission and earn profits by other means. For instance if they charged $50 to show a house to you then you are less likely to waste their time on 999 homes and would make the practice more efficient. However as with all jobs, if they get paid less then you will end up with crappier agents as time goes on. So in the end more money isn't a bad thing.

I wish people would stop ranting about tipping waiters, no one gives a shit about how much waiters make an hour and no one forced them to take that job. The good waiters will get tipped, but if you are bad then eventually you won't want to be one since you won't be making enough. Think of it like darwin's theory being applied to employment.

I think it varies where you sell and who you work with. I believe some Real Estate Agents get bang bucks (especially around 05 to 08 scandal). If you live in higher end place with how prices 250,000 and up your talking big money as someone that lives in a town where its cheaper say $80,000 etc. Personal experience is some real estate agents are assholes as some arent. With one all she cared was about to sell didn't try to help out in giving us a better deal or talking to the owner and only mentioned the upsides (which werent really any since condos overall arent worth much). Another agent was actually more sincere and helpful telling us that condos arent worth it and didn't want us to see those instead look at homes.

I used to pull the same scam on buyers when I sold real estate. It's a lot easier to get them to fall in love with a house than with a condo. and, of course, the former tends to sell for a lot more than the latter, generating a much juicer commission for the agent.

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

YOu can buy a home off a person who's selling FSBO And not pay one cent to an agent. NObody is forcing you right? Same with car dealers, I wish I could have bought a GM Silverado during the meltdown for half price but the damn dealers wont let GM sell it on ebay or directly to a person.

A good agent is supposed to do more than just open doors for you. If that's all that your agent is doing or you think being an agent has to it, then you are mistaken.

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

I think my argument coincides perfectly with what the OP was saying but I'm looking at it from the opposite side of the spectrum. It's called market pricing, and when you look at it from the real estate agent's perspective they are being underpaid. The OP wants the service they provide and would also like most real estate agents to live below the poverty line.

Why aren't we first complaining about politicians and wall street bankers making too much money first before we talk about lousy RE agents?
If you are selling FSBO, get ready for the house to sit for a while and/or get ready for tons of I've got a buyer interested, would you pay me a commission for it type of calls. In this market if you price it right, there's no problem selling it fsbo. Might even get an investor to buy it. However, the retail buyers pool who are working with agents will not come to view your house as the agents want the commission from the other homes.

cause either they worked hard 100+ hrs/week to get there or they have God like connection and then worked hard to stay on there.

+1

I delivered pizza all through college and if you didn't tip the customary 15%, your order went to the bottom of the pile at the very least. On a Friday/Saturday night, that might make you 7th or 8th in my delivery order. If someone else got your ticket, then we would make sure they also knew that you were a s**t tipper. If you were a really awful tipper, the driver might spit in your food, drop some Ex Lax into it, eat food out of your order (even cutting the middle out of your pizza), or simply disappear your ticket and pretend you never ordered at all. Some of the guys would even key cars on their way back down the driveway, pour deer urine down the cowl vents, and so forth. Don't underestimate how much you piss someone off by screwing with their income. They have rent, bills, and families to support just like you do. And if you insist on being an a**hole, then you deserve whatever comes your way.

How classy. Sounds like you were a part of a very respectable organization!

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..

:iagree:
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.

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.

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.

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.

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.

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.

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

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.

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.

The video is 100% correct. I thought it's common sense actually.
Seller's agent will always try to get ur house sold quickly and get seller to reduce their price so they could get the commission
Buyer's agent will always to get you to buy the house.

However, the magic word is volume and relationship. Also, you seem to view that video is bad news for seller. So logically it's good news for buyer? Buyer would get the incentive to use agents?
It's gonna be Nash's Equilibrium. that's why the system works and why most people use agents.

if that's all your agent cares about (buyer or seller) you picked poorly. a good realtor wants to develop a good relationship/reputation so you recommend them to your home buying/selling friends. for example, after 30+ years living in one state my mom recently moved to another one. She did a lot of research on her own online, asked her new coworkers, etc, but at the end of the day (and after over a year of looking) her realtor got her into the perfect home, even going so far as to recommend that she NOT buy in specific neighborhoods (or even some of the houses they saw in "good" neighborhoods) that had obvious major flaws, etc.

the same characteristics were true of the realtor in her longterm home she used as a seller's agent (twice). could she have sold on her own? probably, but the high quality videography/staging advice and the convenience of not having to stage the open houses or interact with potential buyers (until an agreeable offer was made) was worth it.

I donno how did you miss the sentence right below the boldfaced sentences

You must be in a fantasy land. Most realtors around here have no idea about the house, or the neighborhoods much less what will be build in the projected future. They dont know how to inspect a house.

They do know...how long its been listed, the comps, etc... Even then, my realtor pulled comps on my property and the comps didnt even come close to what I think would be proper as my property is on a much more desirable street, better neighborhood, etc.

The next time you're in the market for a real estate agent, drive around the area you're looking to buy or sell in and note the names of the three or four agents whose signs you keep seeing over and over - the high-volume agents. Sit down with each of those agents to see if your personalities fit and what and how much they know about the individual homes. What you're looking for is an agent who does what's called "farms" the area or neighborhood. "Farming" means an agent specializes in a particular area or neighborhood. An agent who "farms" a particular area or neighborhood will know even the interior layout of almost every home in that neighborhood off the top of their head.

Another way to find them is to ask successful real estate investors who they use and recommend. But, again, you're looking for agents who "farm" that particular area. Agents who "farm" particular areas are very valuable and helpful to those of us who invest in real estate.

Agents still make sense and work for their money on the buyers side. But the comment that the modern market tools makes a selling agent nearly useless is spot on. This is why I pay 1.5-2% to the selling agent and 4% to the buyers agent. Pretty much every buyers agent then shows my property to their customer, even if its nothing like what they want.

Further, I'd suggest that this is more a function of there being too many real estate agents fighting over a shrinking pie rather than that they're underpaid in general. Reminds me of a WSJ story about people in Greece losing their jobs selling cell phones and having to go back to working their land for food. The problem there isn't the economy turning bad, resulting in a reduced quality of life...its that they pumped up the quality of life on credit and there's an end to that at some point. We also pumped up the real estate market during the run-up, and everyone on earth wanted to be a realtor to get some of that free pie.

So basically, you can't take a false credit pumped economic model and look at it as the standard or 'normal'. We don't need to evaluate the value of a real estate agent or pay them more, we just need less of them.

Can't agree agents are necessary in general sales.

Similar to bank tellers & travel agents - the need for hand holding for the real estate process with all the electronic opportunity is minimize. Think EBAY sells cars.

E.g. IF you eliminate the restrictions on MLS - a seller could list his house, offer up comps, get pictures taken by local services, get their own appraisal done (on behalf of bank) and get a company/consultant to show the unit and set up open-houses.

The buyer, would find listings and contact the consultant/company for the open house/tour and use an online portal or request help of someone to submit their bid electronically. And paperwork would simply result in a series of overnight packages without the need for an agent.

I can't comprehend what is the value add of an agent for 6% of a $400-500k townhouse or apartment.

Similar to travel agents - there are new buyers or first timer who want the specialize attention and should pay for it directly but in general travel agents no longer are paid by the airline but paid by their buyer.

I purchased properties FSBO without problem.
I purchased properties by agents and had bidding wars, contract issues, etc. etc. and realize there is no different between the two except for the agents.

No can do Kimosabe. I feel the same way as the OP. I just bought a condo 4 months ago and I tried my best to not use an agent. Unfortunately I financed the transaction and the way the financing was setup, (at least this is what I was told) the 3% commission was built into the loan and if the commission wasn't going to my agent, it would go as an additional 3% to the seller's agent. It wasn't going to make any difference whether or not I used an agent so I went ahead and used one.

I called many different lawyers to try to get them on as a consultant, have them draw up a contract that I would be able to have the seller sign. It was extremely difficult. Real Estate transactions in Seattle are not done in this way and it is very atypical. The system here simply isn't setup to not have a buyer's agent.

The internet has certainly changed a lot of things in real estate world. It's no longer necessary to have an agent when you have good sites like Redfin that have all the informations you need to find a good home. I should note that having a buyer's agent who goes out of his way to show you 28 homes in one weekend, helps you out with your move, and calls you afterward is simply a hungry agent with no clients. The top agents have at least a half dozen or more clients they are helping to buy or sell and simply would not have time to stop by and help their client move or see 28 homes in one weekend.

:lmao:

Do you negotiate this commission split with your selling agent? How receptive were they to this?

Perhaps I just have a receptive agent, but she takes the low selling commission without question. I'm a good seller, the house is usually clean and empty, I'm reasonable about requests and paperwork, and I let the home be shown at any time without a prior appointment.

Want your house to sell fast and don't mind it being shown a lot? Pay the 4% to the buyers agent. I've literally had buyers get dragged to my house saying "But this isn't the kind of house we want..." by the agents drooling over that large commission. Sure, most of them aren't going to be interested but its all about getting eyeballs and activity on the property.

Even if you go with one of those cut-rate sellers agent services that just drops an MLS listing and the minimum stuff @<2% coupled with the 4% buyers agent fee works fine. Sometimes a buyers agent will avoid the cut rate sellers, but not when they're getting paid extra for it.

Some agents know comps. Some don't know jack. A lot of it depends on if they work in your neighborhood/town or if they're from a neighboring town. Unless they have personal experience, they just use a computer program to feed them comps based on square ft, #rooms, etc. The computer doesn't "understand" that a nice condition ranch/split will usually be more attractive than a crappy condition colonial/modern even though the latter is the "more desirable" type of house because the computer can't handle un-quantifiable intangibles. When we sold our last house, one agent we interviewed comped it at 10-15% less than the selling price. We laughed her out the door.

As slickdealers, we pride ourselves on knowing the market (whether electronics, goods or real estate) and thoroughly research our own purchases. I encourage all my buddies to do what I did regarding purchasing property.

Do your own research, get licensed and represent yourself in the deal to save/earn money back towards closing =D

And when you get the hang of it, help your friends save money =D

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.

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.

What about their gas and overheads?

buyers are liars, and sellers are too.

Thats how the saying goes :)

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.

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.

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.

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.

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.

Real Estate Agents generally get overpaid for any sale. There is no way they earn 3-6% of a sale under normal circumstances based on time put in. Of course, in fairness, you are not really paying for the one sale. You are paying a. for the expertise on the market and contacts and b. for the work they put in on other properties that may never sell or take forever to sell for various reasons. You are also paying for any overhead (office, travel, etc.) they incur.

That said, I would "for sale by owner" at this point. It is not that hard to do and why would you pay someone that type of money when you can do it yourself with a little bit of work and the help of your attorney? Yeah a few buyers agent's may give you a hard time, but so what? They will either strike a deal with the buyer or be SOL.