5 ms·

Part of the problem is that most realtors want it that way. I live in Austin, and the push for a few years now has been to have a "silent market" where a buyer

Part of the problem is that most realtors want it that way. I live in Austin, and the push for a few years now has been to have a "silent market" where a buyer picks a "full service" realtor (AKA full commission), and gets a week or so jump on properties being listed in the MLS. This gives them a better chance to get the property before the MLS hordes descend and start bidding it up. The part I've never understood is, as a seller, why wouldn't I want my property to have the largest exposure and the most interested buyers. Presumably, having people getting into bidding wars for something i'm selling is a benefit.

zaroth 8y ago
Perhaps a pocket listing isn’t paying the Buyers Agent half of the fee, so saving 3% right there. Depending on the market that may be worth it versus going to the broad market and having to pay both sides of the commission.
- MertsA 8y ago
  Pocket listings still pay both halves but are often discounted down to e.g. 5% instead of 6%. The agent tries to spin the situation as a discount to the buyer and seller as they "save" 1% on commission. One of the main justifications for why the agent "deserves" a 3% cut of the deal is that they are working to represent you and safeguard your interests. That can't happen when they're representing both sides. It's as perverse as a plaintiff and a defendant using the same lawyer to save 1% on legal fees. In a given market area there are literally thousands of real estate agents. Even with a 1% discount off the top, what do you think the odds are that the best offer on the market just so happens to be a listing that your real estate agent just so happens to be the listing agent for? Real estate is a racket.
  - StillBored 8y ago
    I get the impression the austin market is more formalized and is run more like a mini private MLS... (might be wrong), but part of the goal seems to be to keep out the discount realtors/redfin/etc.
clairity 8y ago
> "Part of the problem is that most realtors want it that way." absolutely. the cartel doesn't help the top 2% of agents, because they're good enough to earn the 6% (or higher) anyway, but the monopoly works because the overwhelming majority of interested stakeholders benefit. (that's not to imply that most agents are lazy though. a stat i dimly recall is that only about 10% of agents make enough to be full time.)
- StillBored 8y ago
  Well its a pyramid scheme like many of the state licensed businesses. The low level agents have to work for a broker who soaks up the majority of the commission. Only after being an indentured slave for a few years do they get the "privilege" of themselves becoming a broker. The problem is that once that happens no one will hire you, so your on your own for finding clients/advertising/etc. That takes capital most low level agents haven't managed to accumulate working for someone else. So its likely they need a significant other/whatever to support them while they build the business while competing with the larger agencies that have the money to plaster signs down the freeway and run advertisements. Given some luck/skill and a lot of hard work, maybe they become large enough to start hiring agents themselves, and the cycle repeats.
  - Stryder 8y ago
    Sounds like software engineering today.
    - AYBABTME 8y ago
      Where most engineering interns are probably paid more than the median national household income? Where starting salaries are in the 6 digits?
      - lgregg 8y ago
        Only in Tech Hubs like NYC or SV...
gnopgnip 8y ago
Why would someone sell their home without listing it if they are still paying for a commission?
lotsofpulp 8y ago
One of the key functions of a broker is to provide plausible deniability, such as screening potential buyers who you think might waste your time or to avoid accusations of discrimination.
- dd36 8y ago
  Brokers have to present all offers.
  - tim333 8y ago
    But at least they can waste the brokers time rather than yours.
  - firebird84 8y ago
    They may have to present all offers, but they don't have to present them in the same light. When I've been presented offers they DEFINITELY tell me about the strength of the buyer, what kind of financing, and what the deal terms are signalling. This stuff definitely matters to me because I've had to hassle with cash-poor buyers before and it just isn't worth the time, even in a buyers market.
    - dd36 8y ago
      The information about the strength of the buyer comes from their proof of funds or pre approval.
  - paulie_a 8y ago
    Legally the broker is presenting an off utilizing an agent. An extension of them essentially.

zaroth 8y ago

Perhaps a pocket listing isn’t paying the Buyers Agent half of the fee, so saving 3% right there. Depending on the market that may be worth it versus going to the broad market and having to pay both sides of the commission.

MertsA 8y ago
Pocket listings still pay both halves but are often discounted down to e.g. 5% instead of 6%. The agent tries to spin the situation as a discount to the buyer and seller as they "save" 1% on commission. One of the main justifications for why the agent "deserves" a 3% cut of the deal is that they are working to represent you and safeguard your interests. That can't happen when they're representing both sides. It's as perverse as a plaintiff and a defendant using the same lawyer to save 1% on legal fees. In a given market area there are literally thousands of real estate agents. Even with a 1% discount off the top, what do you think the odds are that the best offer on the market just so happens to be a listing that your real estate agent just so happens to be the listing agent for? Real estate is a racket.
- StillBored 8y ago
  I get the impression the austin market is more formalized and is run more like a mini private MLS... (might be wrong), but part of the goal seems to be to keep out the discount realtors/redfin/etc.

clairity 8y ago

> "Part of the problem is that most realtors want it that way." absolutely. the cartel doesn't help the top 2% of agents, because they're good enough to earn the 6% (or higher) anyway, but the monopoly works because the overwhelming majority of interested stakeholders benefit. (that's not to imply that most agents are lazy though. a stat i dimly recall is that only about 10% of agents make enough to be full time.)

StillBored 8y ago
Well its a pyramid scheme like many of the state licensed businesses. The low level agents have to work for a broker who soaks up the majority of the commission. Only after being an indentured slave for a few years do they get the "privilege" of themselves becoming a broker. The problem is that once that happens no one will hire you, so your on your own for finding clients/advertising/etc. That takes capital most low level agents haven't managed to accumulate working for someone else. So its likely they need a significant other/whatever to support them while they build the business while competing with the larger agencies that have the money to plaster signs down the freeway and run advertisements. Given some luck/skill and a lot of hard work, maybe they become large enough to start hiring agents themselves, and the cycle repeats.
- Stryder 8y ago
  Sounds like software engineering today.
  - AYBABTME 8y ago
    Where most engineering interns are probably paid more than the median national household income? Where starting salaries are in the 6 digits?
    - lgregg 8y ago
      Only in Tech Hubs like NYC or SV...

gnopgnip 8y ago

Why would someone sell their home without listing it if they are still paying for a commission?

lotsofpulp 8y ago

One of the key functions of a broker is to provide plausible deniability, such as screening potential buyers who you think might waste your time or to avoid accusations of discrimination.

dd36 8y ago
Brokers have to present all offers.
- tim333 8y ago
  But at least they can waste the brokers time rather than yours.
- firebird84 8y ago
  They may have to present all offers, but they don't have to present them in the same light. When I've been presented offers they DEFINITELY tell me about the strength of the buyer, what kind of financing, and what the deal terms are signalling. This stuff definitely matters to me because I've had to hassle with cash-poor buyers before and it just isn't worth the time, even in a buyers market.
  - dd36 8y ago
    The information about the strength of the buyer comes from their proof of funds or pre approval.
- paulie_a 8y ago
  Legally the broker is presenting an off utilizing an agent. An extension of them essentially.