4 ms·

That commission is huge. I just bought a 280k house which means the agent gets ~7,800 $. Sure they maybe keep some fraction of that but that is such a crazy big

That commission is huge. I just bought a 280k house which means the agent gets ~7,800 $. Sure they maybe keep some fraction of that but that is such a crazy big dollar amount. That's several month salary for me and they did it in a few hours of work. Plus, because this is paid through what eventually becomes my mortgage I'm paying that inflated price for decades. With those kinds of numbers I see why it is such a guarded industry.

gist 9y ago
You are comparing a case where it only took them 'a few hours' for your particular transaction with all the time they had to spend either showing that house and getting nothing or showing other houses and getting nothing. Do you honesty believe the majority of transactions they do are so quick and easy? What do you think they are doing a transaction like that per week? There is an overhead cost to dealing with people and with sales. I would take a wild guess that in a year of work the agent that you dealt with (or a typical agent that sells $280k houses) is making less than $100k per year. That's not a crazy amount of money, even in a lower cost community.
- bhandziuk 9y ago
  They were very rarely available to show us homes and instead just gave us the lock box codes to we could walk through on our own. It was also suspicious they felt the need to justify their existence saying the hard part is drawing up the contracts. But as far as we could tell the loan company did all that work. The realtor just showed up to the signing and let the loan officers answer any questions we had. Sure, most transactions are not as fast and easy for them but it seems with these numbers if they are with one client for 2 weeks straight and sell a house at the end they are still way ahead. Even if they sell 1 house a month at that rate it's still a killing.
  - gist 9y ago
    I take it this is your first transaction buying a house. You are basing what you think on that and what people are saying online. I can assure you as someone that buys real estate (as investments) it typically isn't that easy, at least in a typical market and for most transactions. And I have been doing this since the 1980's fwiw.
    - bhandziuk 9y ago
      You're right it was my first house. I do believe it is sometimes more complicated. But is the value of a realtor's time to me, as a buyer or seller, really several hundred dollars per hour? Is buying a 600k house really twice as difficult a transaction than a 300k house? Why are they not paid a flat fee?
      - dragonwriter 9y ago
        Seller's agents aren't paid a flat fee to align their interest with that of the seller; they want the deal to close at the highest price possible. Why buyer's agents are paid on sale-price-commission is, OTOH, a real question.
        gist 9y ago
        > Why buyer's agents are paid on sale-price-commission is Once again buyer's agents are a large part of the equation. They have to drive around the actual buyers and waste time showing properties with nothing to show for it often. So the way it works is the people who actually buy (or sell) make more money to compensate for people that do not buy.
        dragonwriter 9y ago
        But a sales price commission, of all possible completion-based pay structures, makes the interest of the agent misaligned with (opposed to, in some respect) that of the principal.
        jrs235 9y ago
        Have you read Freakanomics? They find that agents are more interested in closing add getting paid rather than the extra couple hundred dollars of commission a $10000 swing in price gets them. I'd gladly fight to save a buyer I represent $10000 on price even if it "costs" me $200-$300 of less commission.

gist 9y ago

You are comparing a case where it only took them 'a few hours' for your particular transaction with all the time they had to spend either showing that house and getting nothing or showing other houses and getting nothing. Do you honesty believe the majority of transactions they do are so quick and easy? What do you think they are doing a transaction like that per week? There is an overhead cost to dealing with people and with sales. I would take a wild guess that in a year of work the agent that you dealt with (or a typical agent that sells $280k houses) is making less than $100k per year. That's not a crazy amount of money, even in a lower cost community.

bhandziuk 9y ago
They were very rarely available to show us homes and instead just gave us the lock box codes to we could walk through on our own. It was also suspicious they felt the need to justify their existence saying the hard part is drawing up the contracts. But as far as we could tell the loan company did all that work. The realtor just showed up to the signing and let the loan officers answer any questions we had. Sure, most transactions are not as fast and easy for them but it seems with these numbers if they are with one client for 2 weeks straight and sell a house at the end they are still way ahead. Even if they sell 1 house a month at that rate it's still a killing.
- gist 9y ago
  I take it this is your first transaction buying a house. You are basing what you think on that and what people are saying online. I can assure you as someone that buys real estate (as investments) it typically isn't that easy, at least in a typical market and for most transactions. And I have been doing this since the 1980's fwiw.
  - bhandziuk 9y ago
    You're right it was my first house. I do believe it is sometimes more complicated. But is the value of a realtor's time to me, as a buyer or seller, really several hundred dollars per hour? Is buying a 600k house really twice as difficult a transaction than a 300k house? Why are they not paid a flat fee?
    - dragonwriter 9y ago
      Seller's agents aren't paid a flat fee to align their interest with that of the seller; they want the deal to close at the highest price possible. Why buyer's agents are paid on sale-price-commission is, OTOH, a real question.
      - gist 9y ago
        > Why buyer's agents are paid on sale-price-commission is Once again buyer's agents are a large part of the equation. They have to drive around the actual buyers and waste time showing properties with nothing to show for it often. So the way it works is the people who actually buy (or sell) make more money to compensate for people that do not buy.
        dragonwriter 9y ago
        But a sales price commission, of all possible completion-based pay structures, makes the interest of the agent misaligned with (opposed to, in some respect) that of the principal.
        jrs235 9y ago
        Have you read Freakanomics? They find that agents are more interested in closing add getting paid rather than the extra couple hundred dollars of commission a $10000 swing in price gets them. I'd gladly fight to save a buyer I represent $10000 on price even if it "costs" me $200-$300 of less commission.