Why are we still paying realtors 6%?

[rcpratt]

I just signed a contract with a Buyer for the sale of my home. I've always wondered this, but now after actually doing it I understand it even less. I got almost exactly what I asked for in less than a week. Admittedly, now is a great time to be a seller, but the price just seems so steep.

6% on my home is about $16k. Instead, I spent about $1.5k for an attorney and title company. I can think of a LOT of things I would be willing to do for $15k. Scheduling a few showings and handling a few documents took some time, but for $15k...no brainer. Such a scam.

Subtle brag thread but also /fingerscrossed for no issues through closing.

 

[soulcougher73]

Yeah seems a bit much to me as well. Could you imagine if you were a baller like the rest of us on ATOT and lived in Beverly Hills or some place like that and were a realtor getting 6% of say 20 million dollar home.

 

[tynopik]

I got almost exactly what I asked for in less than a week.

which basically says you underpriced it

a realtor would have helped you set a proper value

 

[rcpratt]

which basically says you underpriced it

a realtor would have helped you set a proper value

Except I didn't. No home in my neighborhood has ever sold for more.

 

[JulesMaximus]

The sellers agent gets half of that, and the buyers agent gets the other half, not the whole 6%. And around here it's more like 5%. My wife is a Realtor and typically she gets 2.5% of every sale. Her broker takes about 15% of that and she has licensing fees and insurance fees which cost thousands of dollars a year plus all her marketing is on her. Lawyers don't enter into the deal on the west coast. The agent handles the entire transaction. She works pretty hard for her clients and knows her stuff. A good Realtor is worth the money IMO... but I'm admittedly a little biased.

 

[Malogeek]

As someone who has worked in the real estate industry for the last 10 years, in most cases they earn their 6%. There's a lot of crap they have to deal with for a lot of deals, and the kind of hours they have to do isn't easy. They're contractors, there's no stable income so for many Realtors, that 6% may have to last them awhile. It's potentially unlimited income but 15% of agents do 85% of the transactions.

There's the simple deals which they cash in on but they're relatively rare.

 

[JulesMaximus]

As someone who has worked in the real estate industry for the last 10 years, in most cases they earn their 6%. There's a lot of crap they have to deal with for a lot of deals, and the kind of hours they have to do isn't easy. They're contractors, there's no stable income so for many Realtors, that 6% may have to last them awhile. It's potentially unlimited income but 15% of agents do 85% of the transactions.

There's the simple deals which they cash in on but they're relatively rare.

True. My wife spent a couple hours working while we were in Maui last month. She is busy and has been consistently busy the past 10 years. She works weekends, evenings, whenever she gets a call really. I think her worst year in the past 10 years she made around $75k. Typically, she sells 8-10 homes per year... sometimes more.

She has a lot of happy clients though who refer her to friends and relatives and some she has represented on more than one occasion. Plus, she markets herself around our area, which really pays off. She's a bit of a celebrity, seems like we can't go anywhere without running into someone she knows.

It's a tough business and you have to work hard at it and be consistent if you want to make any money.

 

[Malogeek]

The worst is when they nourish a deal from the very start getting the lead, go through months of ordeals with their clients for the countless reasons that can happen, finally find a buyer for their house, deal with crappy realtor and agent on the other side, finally get to settlement and BOOM, the deal blows up with everyone walking away. They've spent a good deal of their time on getting it done and they get nothing in the end.

Or your clients settlement relies on a chain of settlements all happening one after the other on the same day, sometimes 5 properties later and the first one fails with nothing to do with yours and they're all contingent on sale.

 

[iroast]

From a buyer who decides after a few houses, yes, 6% is a lot. But from the realtor's perspective, I'm sure there are lots of buyers who look at many houses and then back out. Time wasted.

 

[monkeydelmagico]

Congrats. In a sellers market and desirable area FSBO isn't too bad. Particularly if you still live local to the property being sold. I live in a state that requires court documentation though. I would never even consider trying to do a deal without a lawyer. Haven't seen the need for a real estate agent yet though. If I ever need to leave the state and vacate the house it would require listing with an agent so I see the value.

 

[cbrunny]

4% is steep, imo. 6% is thievery, around here anyway. But most buyers wont touch a FSBO around here, so you have to pay to play.

 

[Malogeek]

4% is steep, imo. 6% is thievery, around here anyway. But most buyers wont touch a FSBO around here, so you have to pay to play.

Are you talking per side or for both sides? It's somewhat dependent on area so on large value transactions it's often a bit lower.

 

[SearchMaster]

Sometimes there are alternatives but obviously the realtor is going to be less engaged in selling your house if the commission is much lower. For example, Duffy Realty in my area (North GA) will get your house on MLS, Zillow, etc. for less than 1% (on average). They'll answer calls, negotiate contracts, etc. but are not going to take prospective buyers to your house and give them a tour.

If I were to sell my house, I'd almost certainly use a traditional realtor. It's a somewhat unique house - it's older, lakefront, and in a neighborhood where there aren't many houses sold and the comps aren't that comparable. But if you're in a fairly hot area, in a traditional neighborhood where the houses are similar enough to establish a true market value, you are probably better off not paying that 6%.

 

[KB]

As a buyer getting a buying agent is a no brainer. They help you write an offer, they communicate with the seller on your behalf etc. Buying agents want to show you houses that have been listed by selling agents for several reasons. One they know they will get a commission, two they are a known quantity and will respond to offers as expected and three they want to perpetuate the need for realtors.

 

[K1052]

True. My wife spent a couple hours working while we were in Maui last month. She is busy and has been consistently busy the past 10 years. She works weekends, evenings, whenever she gets a call really. I think her worst year in the past 10 years she made around $75k. Typically, she sells 8-10 homes per year... sometimes more.

She has a lot of happy clients though who refer her to friends and relatives and some she has represented on more than one occasion. Plus, she markets herself around our area, which really pays off. She's a bit of a celebrity, seems like we can't go anywhere without running into someone she knows.

It's a tough business and you have to work hard at it and be consistent if you want to make any money.

If you're still in the SD area I may inquire for her services some day.

 

[Malogeek]

They'll answer calls, negotiate contracts, etc. but are not going to take prospective buyers to your house and give them a tour.

Well they wouldn't be doing that irrespective unless that buyer signs an exclusive agreement meaning they're the agent representing the buyer and would get their 3% from that side.

 

[SearchMaster]

Well they wouldn't be doing that irrespective unless that buyer signs an exclusive agreement meaning they're the agent representing the buyer and would get their 3% from that side.

Which is a bigger pile of b.s. than the 6% seller's commission IMO. Your job is to sell the house, not to only sell the house to someone who is going to pay you additional monies.

 

[Malogeek]

Which is a bigger pile of b.s. than the 6% seller's commission IMO. Your job is to sell the house, not to only sell the house to someone who is going to pay you additional monies.

I think some people are confused as to what the 6% is. That percentage is not for selling the house. It is 3% on the sale value of the house you're selling, coming from your proceeds on your house, and then 3% of the sale value of the house you're buying, coming from the sellers of that house. You're not giving them 6% just from your side.

 

[cbrunny]

Are you talking per side or for both sides? It's somewhat dependent on area so on large value transactions it's often a bit lower.

Both.

 

[Thump553]

You did realize that the commission rate is negotiable, didn't you? As a real estate attorney I don't think I've seen a six percent commission in any closing I've handled in a decade or more. Five percent is pretty much the norm in my area, although the larger brokers add in BS additional fees, like charging a couple hundred dollars for keeping copies of a half dozen pages from the closing that the state board requires them to keep.

 

[boomerang]

I just signed a contract with a Buyer for the sale of my home. I've always wondered this, but now after actually doing it I understand it even less. I got almost exactly what I asked for in less than a week. Admittedly, now is a great time to be a seller, but the price just seems so steep.

6% on my home is about $16k. Instead, I spent about $1.5k for an attorney and title company. I can think of a LOT of things I would be willing to do for $15k. Scheduling a few showings and handling a few documents took some time, but for $15k...no brainer. Such a scam.

Subtle brag thread but also /fingerscrossed for no issues through closing.

I'm curious, how did you qualify your buyer?

 

[JulesMaximus]

If you're still in the SD area I may inquire for her services some day.

Yes, we are. She focuses on north county coastal San Diego.

 

[JulesMaximus]

I think some people are confused as to what the 6% is. That percentage is not for selling the house. It is 3% on the sale value of the house you're selling, coming from your proceeds on your house, and then 3% of the sale value of the house you're buying, coming from the sellers of that house. You're not giving them 6% just from your side.

No, it works like this. I want to sell my home, I contract with a seller's agent to list my house, hold it open, show it, market it and ultimately bring me a buyer and handle the transaction from start to finish. They contract at 6% (or 5% in some areas) and the seller pays the commission out of the proceeds of the sale. The commission is to be split between the buyers agent and the sellers agent respectively. This is just for the sale of the one home. If the seller is buying another home and uses the same agent this would be a separate transaction and the seller of the other home pays a commission on that sale.

 

[dr150]

The sellers agent gets half of that, and the buyers agent gets the other half, not the whole 6%. And around here it's more like 5%. My wife is a Realtor and typically she gets 2.5% of every sale. Her broker takes about 15% of that and she has licensing fees and insurance fees which cost thousands of dollars a year plus all her marketing is on her. Lawyers don't enter into the deal on the west coast. The agent handles the entire transaction. She works pretty hard for her clients and knows her stuff. A good Realtor is worth the money IMO... but I'm admittedly a little biased.

You are biased.

Here in Silicon Valley, most of YOU PEOPLE (i.e. your wife's colleagues) just sit around on your Facebook phones like a hump during Open Houses.

Lots of times, it's just their young kid assistant who know jack sh*t about the house and who'd rather be home fapping.

....All this for posting a weekend open house on MLS?!

F*ck that! I can do the WHOLE job better--easily. The only person you really need is the Title Guy b/c of all the purposely convoluted legalese paperwork.

....Realtor contacts needed?.....Yeah riiiight. This ain't an old days soft market where you have speculative leads that Mr. Baldwin held over his employees heads as rewards.

(P.S. I've successfully bought and sold duplexes by the sweat of my brow using other sales process "services" as little as possible)

 

[Exterous]

which basically says you underpriced it

a realtor would have helped you set a proper value

You're wrong for the market around here. I live in a similar area as the OP and here is a page from the monthly sales report we get from a local realty office. Days on market is the last column

Appraisals are by far the biggest barrier to higher prices (and longer time on market). It seems like some real Real Estate Bubble shit going on right now. Contingencies are dropping left and right and we're starting to see people making up appraisal differences by dipping into other funding sources