9 ms·

It blows my mind that the fees are percentage based. The amount of work required for an agent on a 100K house is very similar to that of a 2 Mill house. Presuma

It blows my mind that the fees are percentage based. The amount of work required for an agent on a 100K house is very similar to that of a 2 Mill house. Presumably the seller agent wishes to get compensation for increasing the value of the house, but for both the seller and buyer agents, the number of deals done far outweighs slight incremental selling prices. In which case, both would prefer to settle on a lower price and move to the next deal. So frustrating. I wish the lawyers all the best!

nrclark 8y ago
Agreed 100%. Realtors do legitimate work, and deserve to be compensated for sure. But I think the pay is grossly disproportionate to the amount of value provided, and it's propped up by Realtor-sponsored laws and kickbacks. A lot of Realtors won't even deal with non-Realtor(tm) real-estate agents, which promotes their monopoly stranglehold on the real-estate market. I'm not sure where I fall on what a real-estate agent's cut should be for selling a house. But for the buyer's agent, it's really over-valued IMO. And why should a buyer's agent in San Jose make 4x more than somebody in Des Moines for the exact same value-add? When I bought my house, my Realtor found some good listings, arranged viewings, did the paperwork, and set everything up for me. All useful services, and worth paying for. But was it worth $12k for less than 40 hours of total work? I don't think so. That's a higher hourly rate than I'd be charged by a good doctor. And my house was a pretty cheap one by modern standards. Those are monopoly prices charged by people who know they've got you over a barrel.
- pmoriarty 8y ago
  "When I bought my house, my Realtor found some good listings, arranged viewings, did the paperwork, and set everything up for me. All useful services, and worth paying for. But was it worth $12k for less than 40 hours of total work? I don't think so." A lot depends on the realtor. One realtor I know not only does everything you mention, but also gives their clients lots of advice (based on many decades of experience in the industry) -- for instance, telling them if the prices they're setting on their home or bidding for are likely too high or too low, or what to do with a house in order to make it more likely to be sold. How much is such advice worth -- advice that could get them the house they're dreaming of or sell the house they desperately need to sell? They also explain everything related to real-estate in great detail, tell them about the neighborhoods they're considering, drive them around all over the place (paying for their own gas, car, maintenance and insurance), sit in with them during the closing to go over the entire contract with them and explain everything and make sure they're not getting screwed. For sellers, the agent provides free advertising, spends a ton of time sitting at open houses waiting for people to show up and then showing them around, and trying to sell them the home, etc, etc. They negotiate deals and are the buyer's or seller's representative to the other party. All this work is done for free unless the house is sold. Again and again, I've heard how clients take months and months of this work done for free and then switch to go to another agent, paying the agent not a single dime for all the time they spent working for them. Or they'll just change their mind and no longer want to buy or sell. I've heard so many horror stories from them: clients are often incredibly inconsiderate, calling at all hours of the night and on weekends (this is not a 9-5 job), expecting them to work when sick, or just being super abrasive assholes or liars. Personally, I would never put up with any of that, but agents have to make ends meet, so are often forced to work with those kinds of people or starve. Watch the movie Glengarry Glen Ross sometime. The life of a typical real estate agent really is that bad, or worse. Real estate agents also risk their own lives doing their jobs: they routinely go alone in to empty houses with complete strangers. It's not common, but real estate agents have been assaulted, raped, or killed while showing homes. How many people think of that: that being a real estate agent is actually a dangerous profession? I didn't until I got to know an agent well and they started telling me the horror stories of what they have to go through and put up with.
  - koolba 8y ago
    > Watch the movie Glengarry Glen Ross sometime. The life of a typical real estate agent really is that bad, or worse. You do realize that all the salesman in that movie were scammers right?
    - pmoriarty 8y ago
      It's been a really long time since I saw that movie, but to my memory only one of them (the successful one) was a scammer. One scene that stuck in my memory -- SPOILER ALERT -- was when one of the agents, who desperately needed to sell because he hadn't been able to sell in a long time and his job depended on it, finally thought he sold a home to a couple he had spent all this time and effort on, only to find out they have no money and just like talking to agents. That actually happens. People will just waste a ton of real estate agents' time, with absolutely no intention to buy. Real estate agents just get constantly jerked around, lied to, and cheated. That's just a fact of life for a real estate agent. I would never in a million years want to be one because of how constantly you get screwed -- and don't even get paid for your effort.
      - nrclark 8y ago
        Isn't it kind of a self-inflicted problem though? As an organization, Realtors guard listings jealously, control access to house viewings, and bind themselves to clients with exclusivity contracts. It shouldn't be surprising their time gets wasted by people who are just window-shopping, because they're essentially standing in front of all the windows.
        pmoriarty 8y ago
        Maybe it is their fault. In my opinion the entire business model is fucked up. If it was up to me, I'd charge for every single hour of my time, charge for advertising and any other money I spend towards selling the home (or build it in to my hourly fee), and charge a commission on top of that. But from what I understand an agent can't do that because it's against the law. As for exclusivity contracts: agents don't just impose those on clients. The client can sell the home themselves if they want, it's called "for sale by owner". But if they want an agent to represent them, then yeah, the agent will act as their representative. Why shouldn't an agent get paid for their time when they act as the seller's representative -- even if the house doesn't sell? It just boggles my mind how much free work agents do.
- jdpedrie 8y ago
  > But was it worth $12k for less than 40 hours of total work? I don't think so. First, I agree that the fees charged are exorbitant. However, for many smaller realtors, they may not have much inventory at any given time. So, just like a freelance programmer, the buyer is paying for their work and for their downtime between jobs.
  - Mindless2112 8y ago
    Sure, but a real estate agent who has a "seller" client has a pretty easy time finding "buyer" clients -- run an open house on a property you're selling and prospective buyers (specifically the ones that decide they don't want to buy the property being shown) come to you without even knowing that you exist.
    - atwebb 8y ago
      Really, really depends on the specific house.
  - ska 8y ago
    Isn't this a bit circular though? If the fees are high enough, it allows for an oversupply of realtors ... which only gets worse in a rising market because fees are % based and entry-to-market (for a realtor) is fairly easy. NB: easy to enter doesn't mean easy to succeed, which is borne out by the longevity statistics, I believe.
- dgudkov 8y ago
  >But was it worth $12k for less than 40 hours of total work? That's $300/hr. Similar to what lawyers ask. Although, I suspect that a lot more education is required to become a lawyer than a real estate agent.
  - linsomniac 8y ago
    Note they said "less than 40 hours", so that's "at least $300/hour". I feel like my buyers agent, who I really liked, worked more like 10-20 hours for $9K, for $450-$900/hour. Don't get me wrong, I really liked her and she did a great job, but I'm not sure she did $9K great...
    - ninkendo 8y ago
      I feel you. I just bout a $715k house largely because I found it online, and went through an agent to show me the house and, I guess, do some paperwork for me? Her company made $21k off of the seller, and I'm sure she took at least half of it. Probably 10-20 hours of work in total.
    - sokoloff 8y ago
      It’s at least that figure for engagements that result in a transaction. That doesn’t take into account the people they spend 40 hours with and don’t end in a transaction.
  - deleted 8y ago
    [deleted]
  - opportune 8y ago
    1. Lawyers are also a cartel 2. Realtors don't do much complicated stuff. If you take a "becoming a real estate agent" seminar they will probably walk you through the entire buy and sell side process for 90+% of transactions in a few hours.
  - tomp 8y ago
    > That's $300/hr. Similar to what lawyers ask. Do agents carry the same (legal) responsibility as lawyers / doctors though?
- OrgNet 8y ago
  If you had a non-profit that would list all for-sale homes with a good search engine, it might make real estate agents useless
- dd36 8y ago
  It’s also hit or miss as offers fall through at every stage. A good agent is worth it just like a good lawyer or doctor.
- pkaye 8y ago
  I think though the average Realtor doesn't sell many houses in a year. I hear it is something like 12 sales/year. According to the Realtor website, the average gross income is around $40k.
  - fma 8y ago
    Also, if the realtor is part of a bigger company, they don't keep all 3%.
s_dev 8y ago
It being % based means the incentives of the agent are more aligned with the seller than buyer. If the agent charged a flat fee -- the agent doesn't have incentive to negotiate a higher price.
- bootlooped 8y ago
  There was a Freakanomics podcast episode or book section (I don't remember) where they asserted that the data showed realtors left their own homes on the market longer, ultimately yielding a higher sale price, when compared to homes they were selling for their clients. The reasoning they gave was that the difference in the realtor's percentage between a lower total price and a higher total price was not meaningful enough for them to do extra work or take extra time to get it. It is better for them to sell more houses for less, rather than fewer houses for more. So yeah, the percent means the incentives are more aligned, but maybe not aligned enough.
  - dragonwriter 8y ago
    > There was a Freakanomics podcast episode or book section (I don't remember) where they asserted that the data showed realtors left their own homes on the market longer, ultimately yielding a higher sale price, when compared to homes they were selling for their clients. Real estate agents are more likely to plan sufficient time to maximize sale value; most people make plans with timelines where sale (or purchase; I bet you’ll find a similar issue on the other side, too) of the house is a blocker for other things before talking to an agent, so the disruption of not completing the transaction timely is significant.
    - rch 8y ago
      My impression is that realtors who have their own investments in a market in which they operate sometimes err on the side of overpricing even when they know listings will remain on the market longer than the seller might want. In smaller, growing markets like Colorado it even looks like cartel behavior to me, since multiple brokers follow the same strategy.
  - 8y ago
tathougies 8y ago
I mean, the risk a realtor takes on 2million/100k times the risk in selling a $2mil house versus a 100k house. If the realtor makes false statements on accident, etc, they can be sued up to the total amount in consideration -- which is the price of the house. Moreover, it is likely more work to sell a $2mil home, because there are proportionately fewer buyers, which means more work in sourcing buyers, more work in retaining interest, etc. This comment is written by someone who's never sold a home. In general, it's very easy to look at someone else's job and say 'that person basically does nothing!'. I mean, half the time I look at software engineers sitting their typing and I think to myself "I could do that!". Plus, if you're selling a $2million home, you can afford $120k.
- windexh8er 8y ago
  The reality is realtors are well protected in the sale of the home for many reasons that are defined in the legal documentation required and not in the closing process. Given the point I'm curious now of how many individual realtors take the blame in a sale after the fact? It is generally the seller who's on the hook and is directly sued from what I've seen. Maybe this is incorrect but it's rarely the middle man stepping in to take the bullet. In fact I have a personal example where an agency did not do due diligence on behalf of me and shifted the blame to me leaving me holding the bag of potentially being out 5 figures in a botched purchase. Not until I threatened to take legal action against both agencies (never sign arbitration BTW) did both of then come to the plate to decide on how to avoid that as both agencies had points of blame. Regardless, even though the realtors were to blame neither of them seemed concerned and ultimately the claim was handled by the agencies at a higher level than the individuals to blame. There is an argument of diminishing return on the value of realtors however I wouldn't paint it with such a broad stroke. That being said I do believe it's s scam that realtors in a legacy mindset are offended when negotiating their rate comes up - regardless of their work put into the sale of the home. Many flat out will not even hear the argument and seem entitled to it while being unable to defend the rationalization of.
  - tathougies 8y ago
    > Maybe this is incorrect but it's rarely the middle man stepping in to take the bullet. Yes, the seller is the party responsible. However, if he hired an agent and was relying on the agent's advice, the seller can sue the agent. That is the difference between hiring an agent and doing it yourself. You are basically paying the brokerage to insure you against sticking your foot in your mouth, and the brokerage -- to limit their liability in the first place -- gives you an agent who tells you how not to screw yourself. As you yourself said, once you threatened to sue, the agencies started getting stuff done. That's the point. If you didn't use them, you would have no one to shift the blame to. > That being said I do believe it's s scam that realtors in a legacy mindset are offended when negotiating their rate comes up - regardless of their work put into the sale of the home As someone who believes in the free market, I of course do not object to wanting to negotiate rates, but if no agent is willing to do it, well then, they're just charging what the market will bear. You are, of course, free to sell your home and take on the liability yourself.
cladari 8y ago
You can get breakfast at the Breakers for 50 bucks or the Waffle House down the street for 10 dollars. The Breakers waitstaff will get a 10 dollar tip and the Waffle house staff will get 2 dollars for the exact same meal and the exact same amount of work. It's a messed up system.
- deleted 8y ago
  [deleted]
philwelch 8y ago
(Disclaimer: I work for a tech company in the real estate industry. Opinions are my own.) > It blows my mind that the fees are percentage based. The amount of work required for an agent on a 100K house is very similar to that of a 2 Mill house. Negotiating a $100,000 purchase or sale is an order of magnitude less lower stakes than negotiating a $2,000,000 purchase or sale. If you're a real estate agent and you're able to negotiate 5% up or down on the final sale price on a $2,000,000 house, that's equivalent to the entire value of the $100,000 house. It's not the same job. You could make the exact same argument about salesmen who are paid commission (which is almost exactly the same job as a seller's agent). > but for both the seller and buyer agents, the number of deals done far outweighs slight incremental selling prices There's definitely a bias for getting a deal done from the agent's perspective--moreso than for other sales or procurement agents because closing deals unblocks deal flow. I think this gets balanced out by the principals (buyers and sellers themselves) having final say on whether to extend or accept an offer.
- jedberg 8y ago
  The commission shouldn't be based on the full price though. When a car salesman sells a car, their commission is based on the profit, not the total price. Selling a Honda can get you more commission than a BMW if you are good at what you do. To make the same for a house, the seller should say "this is how much I want" and then the agent gets to keep say 50% of whatever they get over that price. Then the incentives are aligned.
  - scarface74 8y ago
    So does the real estate do less work based on how much a house has appreciated since it was bought?
    - jedberg 8y ago
      I didn’t say base it on profit for a house. I said base it on a price the seller wants. Like consignment.
ericd 8y ago
The way the market seems to compensate for this is that more agents flood into that job market for a given number of houses, and then they spend proportionally more time trying to find clients. They spend a relatively small fraction of their time actually helping existing clients in very hot markets, since they just don't have many (except the few top agents/brokers, who do very well for themselves). But spending all your time finding clients isn't actually useful work in helping transactions happen, so it's less and less efficient as the home values go up. At least that's what I've observed from a distance.
one_creed 8y ago
I agree. But what most consumers don't know is that there are other models[1] to consider when buying or selling. Some brokerages now charge a flat fee, some do trade ins and so on. Plug: a friend and I created listingrates, a way for consumers to learn about these new models and compare fees. [1] https://www.listingrates.com/blog/selling-your-home-in-the-21st-century https://www.listingrates.com/blog/selling-your-home-in-the-2... https://www.listingrates.com/search?q=Flat%20fee https://www.listingrates.com/search?q=Flat%20fee
- antisthenes 8y ago
  Since you're promoting your service, what's your affiliate cut for those online brokerages?
  - one_creed 8y ago
    $0. The links are direct links.
JumpCrisscross 8y ago
> The amount of work required for an agent on a 100K house is very similar to that of a 2 Mill house Liability, and the odds of litigation, are vastly higher are bigger dollar amounts. My personal experience with realtors has been pretty much useless. But a bigger asset takes more resources to present and has a lower hit rate given the smaller pool of buyers. There are also unique lending problems that expensive assets run into.
8ytecoder 8y ago
Basically, http://freakonomics.com/2008/02/26/real-estate-agents-revisited/ http://freakonomics.com/2008/02/26/real-estate-agents-revisi...

nrclark 8y ago

Agreed 100%. Realtors do legitimate work, and deserve to be compensated for sure. But I think the pay is grossly disproportionate to the amount of value provided, and it's propped up by Realtor-sponsored laws and kickbacks. A lot of Realtors won't even deal with non-Realtor(tm) real-estate agents, which promotes their monopoly stranglehold on the real-estate market. I'm not sure where I fall on what a real-estate agent's cut should be for selling a house. But for the buyer's agent, it's really over-valued IMO. And why should a buyer's agent in San Jose make 4x more than somebody in Des Moines for the exact same value-add? When I bought my house, my Realtor found some good listings, arranged viewings, did the paperwork, and set everything up for me. All useful services, and worth paying for. But was it worth $12k for less than 40 hours of total work? I don't think so. That's a higher hourly rate than I'd be charged by a good doctor. And my house was a pretty cheap one by modern standards. Those are monopoly prices charged by people who know they've got you over a barrel.

pmoriarty 8y ago
"When I bought my house, my Realtor found some good listings, arranged viewings, did the paperwork, and set everything up for me. All useful services, and worth paying for. But was it worth $12k for less than 40 hours of total work? I don't think so." A lot depends on the realtor. One realtor I know not only does everything you mention, but also gives their clients lots of advice (based on many decades of experience in the industry) -- for instance, telling them if the prices they're setting on their home or bidding for are likely too high or too low, or what to do with a house in order to make it more likely to be sold. How much is such advice worth -- advice that could get them the house they're dreaming of or sell the house they desperately need to sell? They also explain everything related to real-estate in great detail, tell them about the neighborhoods they're considering, drive them around all over the place (paying for their own gas, car, maintenance and insurance), sit in with them during the closing to go over the entire contract with them and explain everything and make sure they're not getting screwed. For sellers, the agent provides free advertising, spends a ton of time sitting at open houses waiting for people to show up and then showing them around, and trying to sell them the home, etc, etc. They negotiate deals and are the buyer's or seller's representative to the other party. All this work is done for free unless the house is sold. Again and again, I've heard how clients take months and months of this work done for free and then switch to go to another agent, paying the agent not a single dime for all the time they spent working for them. Or they'll just change their mind and no longer want to buy or sell. I've heard so many horror stories from them: clients are often incredibly inconsiderate, calling at all hours of the night and on weekends (this is not a 9-5 job), expecting them to work when sick, or just being super abrasive assholes or liars. Personally, I would never put up with any of that, but agents have to make ends meet, so are often forced to work with those kinds of people or starve. Watch the movie Glengarry Glen Ross sometime. The life of a typical real estate agent really is that bad, or worse. Real estate agents also risk their own lives doing their jobs: they routinely go alone in to empty houses with complete strangers. It's not common, but real estate agents have been assaulted, raped, or killed while showing homes. How many people think of that: that being a real estate agent is actually a dangerous profession? I didn't until I got to know an agent well and they started telling me the horror stories of what they have to go through and put up with.
- koolba 8y ago
  > Watch the movie Glengarry Glen Ross sometime. The life of a typical real estate agent really is that bad, or worse. You do realize that all the salesman in that movie were scammers right?
  - pmoriarty 8y ago
    It's been a really long time since I saw that movie, but to my memory only one of them (the successful one) was a scammer. One scene that stuck in my memory -- SPOILER ALERT -- was when one of the agents, who desperately needed to sell because he hadn't been able to sell in a long time and his job depended on it, finally thought he sold a home to a couple he had spent all this time and effort on, only to find out they have no money and just like talking to agents. That actually happens. People will just waste a ton of real estate agents' time, with absolutely no intention to buy. Real estate agents just get constantly jerked around, lied to, and cheated. That's just a fact of life for a real estate agent. I would never in a million years want to be one because of how constantly you get screwed -- and don't even get paid for your effort.
    - nrclark 8y ago
      Isn't it kind of a self-inflicted problem though? As an organization, Realtors guard listings jealously, control access to house viewings, and bind themselves to clients with exclusivity contracts. It shouldn't be surprising their time gets wasted by people who are just window-shopping, because they're essentially standing in front of all the windows.
      - pmoriarty 8y ago
        Maybe it is their fault. In my opinion the entire business model is fucked up. If it was up to me, I'd charge for every single hour of my time, charge for advertising and any other money I spend towards selling the home (or build it in to my hourly fee), and charge a commission on top of that. But from what I understand an agent can't do that because it's against the law. As for exclusivity contracts: agents don't just impose those on clients. The client can sell the home themselves if they want, it's called "for sale by owner". But if they want an agent to represent them, then yeah, the agent will act as their representative. Why shouldn't an agent get paid for their time when they act as the seller's representative -- even if the house doesn't sell? It just boggles my mind how much free work agents do.
jdpedrie 8y ago
> But was it worth $12k for less than 40 hours of total work? I don't think so. First, I agree that the fees charged are exorbitant. However, for many smaller realtors, they may not have much inventory at any given time. So, just like a freelance programmer, the buyer is paying for their work and for their downtime between jobs.
- Mindless2112 8y ago
  Sure, but a real estate agent who has a "seller" client has a pretty easy time finding "buyer" clients -- run an open house on a property you're selling and prospective buyers (specifically the ones that decide they don't want to buy the property being shown) come to you without even knowing that you exist.
  - atwebb 8y ago
    Really, really depends on the specific house.
- ska 8y ago
  Isn't this a bit circular though? If the fees are high enough, it allows for an oversupply of realtors ... which only gets worse in a rising market because fees are % based and entry-to-market (for a realtor) is fairly easy. NB: easy to enter doesn't mean easy to succeed, which is borne out by the longevity statistics, I believe.
dgudkov 8y ago
>But was it worth $12k for less than 40 hours of total work? That's $300/hr. Similar to what lawyers ask. Although, I suspect that a lot more education is required to become a lawyer than a real estate agent.
- linsomniac 8y ago
  Note they said "less than 40 hours", so that's "at least $300/hour". I feel like my buyers agent, who I really liked, worked more like 10-20 hours for $9K, for $450-$900/hour. Don't get me wrong, I really liked her and she did a great job, but I'm not sure she did $9K great...
  - ninkendo 8y ago
    I feel you. I just bout a $715k house largely because I found it online, and went through an agent to show me the house and, I guess, do some paperwork for me? Her company made $21k off of the seller, and I'm sure she took at least half of it. Probably 10-20 hours of work in total.
  - sokoloff 8y ago
    It’s at least that figure for engagements that result in a transaction. That doesn’t take into account the people they spend 40 hours with and don’t end in a transaction.
- deleted 8y ago
  [deleted]
- opportune 8y ago
  1. Lawyers are also a cartel 2. Realtors don't do much complicated stuff. If you take a "becoming a real estate agent" seminar they will probably walk you through the entire buy and sell side process for 90+% of transactions in a few hours.
- tomp 8y ago
  > That's $300/hr. Similar to what lawyers ask. Do agents carry the same (legal) responsibility as lawyers / doctors though?
OrgNet 8y ago
If you had a non-profit that would list all for-sale homes with a good search engine, it might make real estate agents useless
dd36 8y ago
It’s also hit or miss as offers fall through at every stage. A good agent is worth it just like a good lawyer or doctor.
pkaye 8y ago
I think though the average Realtor doesn't sell many houses in a year. I hear it is something like 12 sales/year. According to the Realtor website, the average gross income is around $40k.
- fma 8y ago
  Also, if the realtor is part of a bigger company, they don't keep all 3%.

s_dev 8y ago

It being % based means the incentives of the agent are more aligned with the seller than buyer. If the agent charged a flat fee -- the agent doesn't have incentive to negotiate a higher price.

bootlooped 8y ago
There was a Freakanomics podcast episode or book section (I don't remember) where they asserted that the data showed realtors left their own homes on the market longer, ultimately yielding a higher sale price, when compared to homes they were selling for their clients. The reasoning they gave was that the difference in the realtor's percentage between a lower total price and a higher total price was not meaningful enough for them to do extra work or take extra time to get it. It is better for them to sell more houses for less, rather than fewer houses for more. So yeah, the percent means the incentives are more aligned, but maybe not aligned enough.
- dragonwriter 8y ago
  > There was a Freakanomics podcast episode or book section (I don't remember) where they asserted that the data showed realtors left their own homes on the market longer, ultimately yielding a higher sale price, when compared to homes they were selling for their clients. Real estate agents are more likely to plan sufficient time to maximize sale value; most people make plans with timelines where sale (or purchase; I bet you’ll find a similar issue on the other side, too) of the house is a blocker for other things before talking to an agent, so the disruption of not completing the transaction timely is significant.
  - rch 8y ago
    My impression is that realtors who have their own investments in a market in which they operate sometimes err on the side of overpricing even when they know listings will remain on the market longer than the seller might want. In smaller, growing markets like Colorado it even looks like cartel behavior to me, since multiple brokers follow the same strategy.
- 8y ago

tathougies 8y ago

I mean, the risk a realtor takes on 2million/100k times the risk in selling a $2mil house versus a 100k house. If the realtor makes false statements on accident, etc, they can be sued up to the total amount in consideration -- which is the price of the house. Moreover, it is likely more work to sell a $2mil home, because there are proportionately fewer buyers, which means more work in sourcing buyers, more work in retaining interest, etc. This comment is written by someone who's never sold a home. In general, it's very easy to look at someone else's job and say 'that person basically does nothing!'. I mean, half the time I look at software engineers sitting their typing and I think to myself "I could do that!". Plus, if you're selling a $2million home, you can afford $120k.

windexh8er 8y ago
The reality is realtors are well protected in the sale of the home for many reasons that are defined in the legal documentation required and not in the closing process. Given the point I'm curious now of how many individual realtors take the blame in a sale after the fact? It is generally the seller who's on the hook and is directly sued from what I've seen. Maybe this is incorrect but it's rarely the middle man stepping in to take the bullet. In fact I have a personal example where an agency did not do due diligence on behalf of me and shifted the blame to me leaving me holding the bag of potentially being out 5 figures in a botched purchase. Not until I threatened to take legal action against both agencies (never sign arbitration BTW) did both of then come to the plate to decide on how to avoid that as both agencies had points of blame. Regardless, even though the realtors were to blame neither of them seemed concerned and ultimately the claim was handled by the agencies at a higher level than the individuals to blame. There is an argument of diminishing return on the value of realtors however I wouldn't paint it with such a broad stroke. That being said I do believe it's s scam that realtors in a legacy mindset are offended when negotiating their rate comes up - regardless of their work put into the sale of the home. Many flat out will not even hear the argument and seem entitled to it while being unable to defend the rationalization of.
- tathougies 8y ago
  > Maybe this is incorrect but it's rarely the middle man stepping in to take the bullet. Yes, the seller is the party responsible. However, if he hired an agent and was relying on the agent's advice, the seller can sue the agent. That is the difference between hiring an agent and doing it yourself. You are basically paying the brokerage to insure you against sticking your foot in your mouth, and the brokerage -- to limit their liability in the first place -- gives you an agent who tells you how not to screw yourself. As you yourself said, once you threatened to sue, the agencies started getting stuff done. That's the point. If you didn't use them, you would have no one to shift the blame to. > That being said I do believe it's s scam that realtors in a legacy mindset are offended when negotiating their rate comes up - regardless of their work put into the sale of the home As someone who believes in the free market, I of course do not object to wanting to negotiate rates, but if no agent is willing to do it, well then, they're just charging what the market will bear. You are, of course, free to sell your home and take on the liability yourself.

cladari 8y ago

You can get breakfast at the Breakers for 50 bucks or the Waffle House down the street for 10 dollars. The Breakers waitstaff will get a 10 dollar tip and the Waffle house staff will get 2 dollars for the exact same meal and the exact same amount of work. It's a messed up system.

deleted 8y ago
[deleted]

philwelch 8y ago

(Disclaimer: I work for a tech company in the real estate industry. Opinions are my own.) > It blows my mind that the fees are percentage based. The amount of work required for an agent on a 100K house is very similar to that of a 2 Mill house. Negotiating a $100,000 purchase or sale is an order of magnitude less lower stakes than negotiating a $2,000,000 purchase or sale. If you're a real estate agent and you're able to negotiate 5% up or down on the final sale price on a $2,000,000 house, that's equivalent to the entire value of the $100,000 house. It's not the same job. You could make the exact same argument about salesmen who are paid commission (which is almost exactly the same job as a seller's agent). > but for both the seller and buyer agents, the number of deals done far outweighs slight incremental selling prices There's definitely a bias for getting a deal done from the agent's perspective--moreso than for other sales or procurement agents because closing deals unblocks deal flow. I think this gets balanced out by the principals (buyers and sellers themselves) having final say on whether to extend or accept an offer.

jedberg 8y ago
The commission shouldn't be based on the full price though. When a car salesman sells a car, their commission is based on the profit, not the total price. Selling a Honda can get you more commission than a BMW if you are good at what you do. To make the same for a house, the seller should say "this is how much I want" and then the agent gets to keep say 50% of whatever they get over that price. Then the incentives are aligned.
- scarface74 8y ago
  So does the real estate do less work based on how much a house has appreciated since it was bought?
  - jedberg 8y ago
    I didn’t say base it on profit for a house. I said base it on a price the seller wants. Like consignment.

ericd 8y ago

The way the market seems to compensate for this is that more agents flood into that job market for a given number of houses, and then they spend proportionally more time trying to find clients. They spend a relatively small fraction of their time actually helping existing clients in very hot markets, since they just don't have many (except the few top agents/brokers, who do very well for themselves). But spending all your time finding clients isn't actually useful work in helping transactions happen, so it's less and less efficient as the home values go up. At least that's what I've observed from a distance.

one_creed 8y ago

I agree. But what most consumers don't know is that there are other models[1] to consider when buying or selling. Some brokerages now charge a flat fee, some do trade ins and so on. Plug: a friend and I created listingrates, a way for consumers to learn about these new models and compare fees. [1] https://www.listingrates.com/blog/selling-your-home-in-the-21st-century https://www.listingrates.com/blog/selling-your-home-in-the-2... https://www.listingrates.com/search?q=Flat%20fee https://www.listingrates.com/search?q=Flat%20fee

antisthenes 8y ago
Since you're promoting your service, what's your affiliate cut for those online brokerages?
- one_creed 8y ago
  $0. The links are direct links.

JumpCrisscross 8y ago

> The amount of work required for an agent on a 100K house is very similar to that of a 2 Mill house Liability, and the odds of litigation, are vastly higher are bigger dollar amounts. My personal experience with realtors has been pretty much useless. But a bigger asset takes more resources to present and has a lower hit rate given the smaller pool of buyers. There are also unique lending problems that expensive assets run into.

8ytecoder 8y ago

Basically, http://freakonomics.com/2008/02/26/real-estate-agents-revisited/ http://freakonomics.com/2008/02/26/real-estate-agents-revisi...