Why cant we solve the real estate agent 6% ripoff?

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Markbnj

Elite Member <br>Moderator Emeritus
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Sep 16, 2005
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This is a key point. They aren't actually trained to do anything of value.

You could say that about any sales person, and in fact non sales people often do say exactly that. Most often the topic comes up in conjunction with commissions, because obviously the sales persons couldn't be doing anything to earn those rewards. People have been saying the same things about sales people for many, many years, and yet the market continues to place a relatively high value on them. I wonder why that is?
 

z1ggy

Lifer
May 17, 2008
10,004
63
91
I think I got lucky and got a good realtor. She was available from 7am-7pm, 7 days a week. I felt like she actually cared about me and wasn't just shoving a million properties down my throat. There were times when she said, "I showed you this house jus to give you some perspective, I don't really think you should buy it."

I think it really depends on the level of the person you get... Which is up to you. If you pay some idiot 6% to do nothing for you, that's your fault.
 

BoberFett

Lifer
Oct 9, 1999
37,563
9
81
I don't think you've done this recently because none of what you said is accurate. I've bought and sold FSBOs several times in the last few years and it was definitely not low traffic on either side of the situation. When I listed my house on MLS through fsbo.com, I had over 20 showings in the first two weeks, four of which made offers.

I bought my last two houses FSBO also and they were available on every major search site (Zillow, Trulia, etc.) as they all mine MLS anyway. I've even bought a few investment properties as FSBO and I had no trouble finding them.

Edit: I forgot to say that the empty lot I just purchased (FSBO) is in a gated community. All I had to do was call the owner and arrange a time to meet him at the property. It's easier than using a realtor, actually, because there's less people to coordinate.

20 showings in two weeks?

Ah, so your being able to sell your home without a realtor depends on everybody else having a realtor.

How does that change if everybody does it your way and nobody has a realtor? You take a month off work to show your home?

Let us know how that goes, chief.
 

WelshBloke

Lifer
Jan 12, 2005
30,974
8,692
136
There were times when she said, "I showed you this house jus to give you some perspective, I don't really think you should buy it."

That was code for "You're a pain in the arse with unrealistic expectations and I've run out of other properties to show you that fit your unreasonable demands."
 

BikeJunkie

Golden Member
Oct 21, 2013
1,391
0
0
You could say that about any sales person

You could, but no one has... so... yeah?

Real estate agents aren't your typical sales people... and not remotely analogous to corporate sales, etc. Not even in the same ballpark (if it were, that's what they'd be doing).
 

BikeJunkie

Golden Member
Oct 21, 2013
1,391
0
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20 showings in two weeks?

Ah, so your being able to sell your home without a realtor depends on everybody else having a realtor.

Why do you keep resorting to putting words in people's mouths? That's not what he said. And you're not stupid: clearly you know that buyers have access to the Internet, too, right?

I'll ask again: what is/are your relationship(s) to realtors? Time for some disclosure here. We take the time to refute your points, you offer no counter argument of any substance, and just move on to the next platitude. Come on man, you're better than this.
 

z1ggy

Lifer
May 17, 2008
10,004
63
91
That was code for "You're a pain in the arse with unrealistic expectations and I've run out of other properties to show you that fit your unreasonable demands."

It was only the 3rd home she showed me after she had been my realtor for 2 weeks.. soo0o0o no probably not
 

VoteQuimby

Senior member
Jan 27, 2005
900
0
71
My wife and I used a realtor to buy our first home. She was ok. We were a young naive couple and were ripe for the picking. IMO she pressured us into the sale, even when we raised a concern about having the funds available for the closing. She asked us if we could borrow from our parents? The was the first red flag. We did an inspection (built in 1943) and the home came back up some slightly major things, but she didn't make any recommendations on getting any of it fixed by the current owner. Red flag #2.

So we end up buying the house in late 2008 just before the real estate bubble burst, paid way too much and the house was way to small (950sq/ft 1.5 bedroom - no closet in 2nd bedroom and it was like 7x10 room - 1 bath). What drew us in was the fact that everything in the house has been updated and we could move right in and not have to do anything.

Fast forward 6 years and we have a 4 y/o son and one on the way. So its time to move.
The market has since picked up but if we were to sell with a realtor, we'd be in the red like 8-10k easy. I researched FSBO and we hired a broker to list it locally on MLS and I posted it everywhere else. I handled all showings (that didn't have a realtor) too. The broker cost us about $300 and our appraisal cost about $300. So we're out $600 but we're hoping to save 4k 3% in commissions.

The catch with the broker is, your basically advertising to other agents that you'll pay them their 3%. The $300 to the broker is literately for him to enter the MLS info that YOU fill out and click send. He's basically pimping out his MLS license. Otherwise an agent will not encourage a buyer to even look at your listing. They have no guarantee of commission.

So we did end up selling FSBO and came out even after closing. So many lessons learned. I put put in a ton of time staging and showing the home (probably close to 20 showings I personally did in a 4 month span), but I think it was worth the 4k savings in the end. We're currently renting for 1-2 years until we save up enough for a down payment on the next place. I'm going to be the buyer from hell on our next one.

Somethings to consider if you're thinking FSBO
-Do you have time to show the home? (Staging, cleaning, kicking out the family)
-Paper work (if you go mls-broker you'll have a lot of paper work to go over)
-Know the process (Offers, counter offers, inspection, appraisal, etc)
*This one is especially important because if you're working with a buying agent, they'll get pissy if you don't know protocol.
-Get a lawyer for closing (my wife is well versed in reviewing legal docs and we had a friend who is a real estate attorney review our docs as well.)
 

NetWareHead

THAT guy
Aug 10, 2002
5,854
154
106
It was only the 3rd home she showed me after she had been my realtor for 2 weeks.. soo0o0o no probably not

Realtors also educate their clients about the market. You get alot of people who enter the market with intention to buy with completely unrealistic expectation or knowledge of the market. "I want a 5 bedroom 3 bathroom house with a den, finished basement, 3 acres of land in a prime school district for 225K next to public transportation in Northern NJ" Clueless buyers like this really do exist. I know realtors that will show houses to clients that are out of their price range to make an example of what their budget will actually purchase.
 

BikeJunkie

Golden Member
Oct 21, 2013
1,391
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-Do you have time to show the home? (Staging, cleaning, kicking out the family)

FWIW, this doesn't change one way or the other if you're FSBO or if you have an agent. Agents don't stage homes, they don't clean, and you're still tied up for the time that it's being shown (only difference is whether you're there doing the showing yourself, or trying to find a way to kill an hour).

With or without an agent, you have to prep the home to be shown, and that's the biggest time sink of the whole process.
 

Markbnj

Elite Member <br>Moderator Emeritus
Moderator
Sep 16, 2005
15,682
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www.markbetz.net
Real estate agents aren't your typical sales people... and not remotely analogous to corporate sales, etc. Not even in the same ballpark (if it were, that's what they'd be doing).

I'm not sure which part of this make less sense: the idea that there is a typical sales person, the idea that there is some category called "corporate sales" that is homogeneous enough to be meaningful, or the idea that real estate sales is nothing like any of them.
 

BikeJunkie

Golden Member
Oct 21, 2013
1,391
0
0
I'm not sure which part of this make less sense: the idea that there is a typical sales person, the idea that there is some category called "corporate sales" that is homogeneous enough to be meaningful, or the idea that real estate sales is nothing like any of them.

So many words, so little substance. If you have an issue with what I said, by all means, articulate it. Otherwise all you're really saying is "I disagree... you'll have to guess why." Blah blah blah.
 

z1ggy

Lifer
May 17, 2008
10,004
63
91
Realtors also educate their clients about the market. You get alot of people who enter the market with intention to buy with completely unrealistic expectation or knowledge of the market. "I want a 5 bedroom 3 bathroom house with a den, finished basement, 3 acres of land in a prime school district for 225K next to public transportation in Northern NJ" Clueless buyers like this really do exist. I know realtors that will show houses to clients that are out of their price range to make an example of what their budget will actually purchase.

I agree, except I wasn't an idiot. I had a set budget and certain things in mind that I knew I could get, and others that I knew I couldn't.

The house she showed me was just of questionable build quality and over priced. She didn't think it would be a good fit for me. She also showed me other homes that may have been nice to somebody with some risk appetite for a fixer upper, but that's not really what I wanted.

I ended up with a nice 2 bed 1 bath, 20 mins away from work that was move in ready, for $156k.
 

MrDudeMan

Lifer
Jan 15, 2001
15,069
92
91
Actually they will... not that the sales process is a huge fucking mystery like you seem to think it is. You know what makes the sales process complicated? Real estate agents. You know what simplifies it? The ability to speak directly to the prospective buyer, and an attorney who will look after you when it comes to formulating contingencies outside of the typical contract framework. I've done it 3 times now, and it's a stupidly simple process. You should try it before getting so riled up over it.

The rest of your post was good, but I feel compelled to respond to this point in particular.

The few deals I've done where there was an agent involved were actually more stressful in my opinion. The agent has multiple clients and that makes everything take longer than it otherwise would if I was doing it myself. Also, even the agents I dealt with who seemed fairly intelligent misinterpreted a lot of what was said by either the buyer or the seller. I don't necessarily fault them for it because they're trying to make everything go smoothly enough to get to closing, which means trying to tone everything down to some degree, but they also pissed everyone off because actual resolution was never reached.

I'm positive not every deal with a realtor goes that way, but I'm also positive that in all of my realtor experiences things went smoother and faster when I worked around them instead of through them. The last time I purchased a property with a realtor involved was a about 4 years ago. I ended up going to the house, knocking on the door, and speaking to the sellers directly because their agent was simply slowing things down and making the whole process unnecessarily stressful. She (the realtor) also relayed the wrong information to the sellers regarding inspection items, so they fixed things I didn't care about and didn't fix things I did care about. Pure idiocy.


20 showings in two weeks?

Ah, so your being able to sell your home without a realtor depends on everybody else having a realtor.

How does that change if everybody does it your way and nobody has a realtor? You take a month off work to show your home?

Let us know how that goes, chief.

Your sarcasm is totally unjustified because you don't actually have a valid underlying point.

17 showings were people either local or within an hour - 2 with realtors/15 without
2 were from a neighboring state - 1 with a realtor / 1 without
1 was from Florida (the house was in Colorado) - no realtor

Only a handful of those people had realtors as I enumerated above, so you're way off base, again, chief. These people found the house on Zillow just like I did when I was looking for the property I recently purchased. Real estate agent not required. The family from Florida made an offer before they even saw the house. Call that a special circumstance maybe, but still.

Regarding showing the house, it's not hard to say "Please come by any time after work or all day on the weekend." Not a single person resisted that time frame, so I have no idea what value a realtor would have added. Most people work during the day anyway, which is why my availability was never an issue at all.

You could say that about any sales person, and in fact non sales people often do say exactly that. Most often the topic comes up in conjunction with commissions, because obviously the sales persons couldn't be doing anything to earn those rewards. People have been saying the same things about sales people for many, many years, and yet the market continues to place a relatively high value on them. I wonder why that is?

I actually don't think you could say that about most sales people. Even if you did, their value to commission ratio isn't incredibly skewed like it is for a realtor. I do think your point is valid and I don't really have a great answer, but I know the fee for a realtor isn't justified regardless of their service or time commitment. That's also why more people are doing FSBO and/or pushing for lower commissions with the advent of the internet. There's a realtor in Denver who contacted me about listing my house and selling it for 1.8%. I would have used him if I wanted to use a realtor, but even 1.8% wasn't worth it to me. I had a long, honest conversation with him about the money and he really sold me on him being a good, hard working guy, but that didn't change anything from my POV. I do know he's getting a ton of business, though, because 1.2% less than the typical fee is very attractive and he supposedly does a good job (whatever that really means).

I think I got lucky and got a good realtor. She was available from 7am-7pm, 7 days a week. I felt like she actually cared about me and wasn't just shoving a million properties down my throat. There were times when she said, "I showed you this house jus to give you some perspective, I don't really think you should buy it."

I think it really depends on the level of the person you get... Which is up to you. If you pay some idiot 6% to do nothing for you, that's your fault.

Even though you supposedly had a good experience, I still don't know what this person did that you couldn't have done yourself. Before the information was so readily available, finding the houses would have been much more difficult, but that's not how it is anymore. You can query MLS the same way they can. They have no inside information unless they know another realtor who is getting ready to list a house - that's one of the only benefits I can think of at the moment. That's still not worth 6% to me, though, because there's always another house and always another buyer.

Agents want to make you think you need to act NOW otherwise you're making a mistake. Barring a circumstance that calls for an expedited decision, (which you still don't need a realtor) you have time and there will be other bites.
 

MrDudeMan

Lifer
Jan 15, 2001
15,069
92
91
Realtors also educate their clients about the market. You get alot of people who enter the market with intention to buy with completely unrealistic expectation or knowledge of the market. "I want a 5 bedroom 3 bathroom house with a den, finished basement, 3 acres of land in a prime school district for 225K next to public transportation in Northern NJ" Clueless buyers like this really do exist. I know realtors that will show houses to clients that are out of their price range to make an example of what their budget will actually purchase.

That's true and I have no argument against it other than that's the price people will pay for being out of touch with reality. There's absolutely NOTHING precluding that person from doing the research on their own. All you have to do is go to a few open houses or walk around and actually look at the houses to see what a certain dollar amount will buy. Again, there's absolutely nothing magical about this process. You should be doing that kind of legwork anyway considering the price of a house to make sure you're getting what you want.
 

Markbnj

Elite Member <br>Moderator Emeritus
Moderator
Sep 16, 2005
15,682
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www.markbetz.net
I do think your point is valid and I don't really have a great answer, but I know the fee for a realtor isn't justified regardless of their service or time commitment.

The background on my comment is that many years ago, before I started writing software for money, I sold capital equipment. Specifically chemical wet processing lines. Our commission was 2%, which due to the sometimes multi-million $ price tag of such installations could be pretty significant. Pretty much every exec who was privy to the cost structure and wasn't in sales bitched about it. The truth, however, is that getting a PO for such a specialized sale was a months-long, and sometimes years-long process, and was something fairly few people were equipped to pull off. The big fish came along a couple of times a year if you were lucky, and you filled in with smaller orders. I think the lives of most people who sell expensive stuff are probably similar.
 

z1ggy

Lifer
May 17, 2008
10,004
63
91
Even though you supposedly had a good experience, I still don't know what this person did that you couldn't have done yourself. Before the information was so readily available, finding the houses would have been much more difficult, but that's not how it is anymore. You can query MLS the same way they can. They have no inside information unless they know another realtor who is getting ready to list a house - that's one of the only benefits I can think of at the moment. That's still not worth 6% to me, though, because there's always another house and always another buyer.

Agents want to make you think you need to act NOW otherwise you're making a mistake. Barring a circumstance that calls for an expedited decision, (which you still don't need a realtor) you have time and there will be other bites.

I think for a first time buyer, having a realtor can help you get acclimated to the process, the roles of every person and the steps it takes to go from searching, to finally getting the keys.

As a 23 year old buying my first house, there was no way I could trust myself going in it alone. Next time, I'll know how to do everything on my own, and can go the route some of the folks like you have suggested.
 

alkemyst

No Lifer
Feb 13, 2001
83,967
19
81
In regards to the part in bold above, the reason many agents don't move much real estate is because there is a glut of them looking for listings. The bottom line is that real estate is for the most part very easy money, and plenty of it. If I was selling my home right now, I would take the time off work to do it because it would work out to around a thousand bucks an hour. Thats pretty good wages even by AT standards.
That 6% number made sense when a new home cost $50k, in the market today it's hugely inflated and for the most part unjustified.

It's delusional to think most agents are making $1000's / hour. Many homes are sitting on MLS for 100's of days. There would be a lot of time put in over that time period.

If one has the time to burn, so be it. There are agents out there struggling to make ends meet.
 

MrDudeMan

Lifer
Jan 15, 2001
15,069
92
91
The background on my comment is that many years ago, before I started writing software for money, I sold capital equipment. Specifically chemical wet processing lines. Our commission was 2%, which due to the sometimes multi-million $ price tag of such installations could be pretty significant. Pretty much every exec who was privy to the cost structure and wasn't in sales bitched about it. The truth, however, is that getting a PO for such a specialized sale was a months-long, and sometimes years-long process, and was something fairly few people were equipped to pull off. The big fish came along a couple of times a year if you were lucky, and you filled in with smaller orders. I think the lives of most people who sell expensive stuff are probably similar.

I see. That's interesting to hear, actually, because I wouldn't have understood the length of time required to make a deal in that scenario. I do understand that realtors sometimes spend a lot of time on a client, but I don't think their value add is worthwhile regardless of their time commitment. That's really my point.

The difference is that you said the sale of chemical wet processing lines was specialized whereas selling a house, at least as a realtor, is not specialized at all. Contract law is specialized, but that's why I use an attorney instead of a realtor. Finding the other party with which to complete a transaction is the only thing they can really facilitate anymore and that's not hard to do without them.
 

Markbnj

Elite Member <br>Moderator Emeritus
Moderator
Sep 16, 2005
15,682
13
81
www.markbetz.net
The difference is that you said the sale of chemical wet processing lines was specialized whereas selling a house, at least as a realtor, is not specialized at all. Contract law is specialized, but that's why I use an attorney instead of a realtor. Finding the other party with which to complete a transaction is the only thing they can really facilitate anymore and that's not hard to do without them.

I understand your point, and I think it probably is true that selling real estate does not require the same level of specialized knowledge. But it does require some, and for the average person who buys or sells a home maybe once or twice in a lifetime it can be a confusing experience. I agree that a good attorney can do wonders, but they aren't cheap either.
 

MrDudeMan

Lifer
Jan 15, 2001
15,069
92
91
I understand your point, and I think it probably is true that selling real estate does not require the same level of specialized knowledge. But it does require some, and for the average person who buys or sells a home maybe once or twice in a lifetime it can be a confusing experience. I agree that a good attorney can do wonders, but they aren't cheap either.

Yeah, those are certainly valid points as well. One of my original comments was that I think people should be more willing to invest time and effort into such large purchases, which is all that's required to remove most of the mystery of buying a house.

In my experience, an attorney costs between 300 and 500 when it comes to writing a contract. I've used the same attorney multiple times and he'll use the same contract with minor changes, so it costs a little less. I think a brand new contract was 500 or so. I'm sure the cost would quickly rise if a lot of customized wording was added to the contract.
 

MrDudeMan

Lifer
Jan 15, 2001
15,069
92
91
It's delusional to think most agents are making $1000's / hour. Many homes are sitting on MLS for 100's of days. There would be a lot of time put in over that time period.

If one has the time to burn, so be it. There are agents out there struggling to make ends meet.

No one said they're making thousands per hour. You're confused.

If I list my house with a realtor, it COSTS me thousands per hour compared to if I would have listed it myself. An agent selling a house doesn't have a ton of time committed to the sale even if it's on the market for hundreds of days. They spend some time doing paperwork and helping you get the house ready to sell, but then they do very little especially as a seller's agent. The amount they collect as commission is spread among various other parties, so while they aren't making thousands per hour, it's still costing me that much. Buyer's agents are more invested in terms of time, so that's different in concept, but not in practice imo.

Maybe I spent relatively little time selling my house (approximately 30 hours not including the services I purchased (stager, cleaners, etc.)), but it didn't feel that way. The house I sold before that moved in a similar amount of time, but it cost less so the savings wasn't quite as high (still over 700/hour, though).

I have almost no free time to burn. I can make time for the this, though.
 

Markbnj

Elite Member <br>Moderator Emeritus
Moderator
Sep 16, 2005
15,682
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In my experience, an attorney costs between 300 and 500 when it comes to writing a contract. I've used the same attorney multiple times and he'll use the same contract with minor changes, so it costs a little less. I think a brand new contract was 500 or so. I'm sure the cost would quickly rise if a lot of customized wording was added to the contract.

Yes, but for that money they generally expect to stamp out some boilerplate, not consult on your specific situation. In any case I definitely agree that if you have the wherewithal to handle it yourself you are going to be better off.
 
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