8 ms·

I'm a software engineer, and I started my career at a well known mortgage company in Detroit. Views are my own, BTW. I bought a house a couple years after I st

by om3n 8y ago

I'm a software engineer, and I started my career at a well known mortgage company in Detroit. Views are my own, BTW. I bought a house a couple years after I started working there, and I wanted the full home-purchaser experience. I used my company's services for everything, and as an employee they hooked me up with a real estate agent (among other things). I was honestly appalled at what little my real estate agent did for me through the whole process. I had what seemed like simple requirements: I wanted to live west of the city, I wanted at least 1 acre, and an outbuilding. The outbuilding is what threw off the search tool the agent was using to find houses for me; he rarely found good ones in my price range that had outbuildings. I ended up finding the house I purchased. I'm honestly not sure what he did at all. When it came time to sell my house, I did it by owner. It was super easy to do everything, including getting my home on the MLS with a service called Reozom, for a couple hundred bucks. I used several sources to come up with comps for pricing. However, the purchasing agent who represented the buyers of my home was an absolute MONSTER to me; extremely rude in nearly every email or phone call. I think she was so horrible because I was proving how absolutely unnecessary she was in the whole process. I sold the house for a little under asking price, plus I paid her a 2% commission instead of 3%, and of course not 6% as if she represented me as well. The funny thing- she didn't notice the 2% in the purchasing contract until after it was already signed. What I've anecdotally learned is this: real estate agents don't provide enough useful benefit for me to use them, and can be hostile as their industry is increasingly proven to be built on little or nothing.

Justin_K 8y ago
She was hostile because a real estate agent's approach is to black ball any for sale by owner listing, or any for sale by Redfin / Zillow, etc. Agents around my area always blackball these listings and will NOT tell buyers about these listings unless buyers specifically ask. This is nonsense and not in favor of buyers and is an attempt to bring failure to reform. Fortunately, more and more buyers are realizing they can do the research themselves online.
- mrtweetyhack 8y ago
  Then they've failed their principal/agent fudicary duty and should be sued.
- scarface74 8y ago
  Why wouldn’t they unless you agreed to pay the buyer’s agent commission? It’s how they make their living. Edit: oops meant buyers agent - corrected.
  - ska 8y ago
    There was no sellers agent, why would that commission be paid? They did pay the buyers agent commission (albeit at a lower rate).
  - ska 8y ago
    You've corrected the buyer vs. seller agent thing, but I still can't make sense of this. The seller was always going to pay the buying agents commission (they hoped to negotiate a lower rate) - so why is that agent hostile to the sale and/or blackballing the listing? The only reason seems to be to protect the system they benefit from, at the expense of the buyers and sellers. In such a situation the embedded interests (agents) may well be antagonistic to change, but it doesn't mean that change isn't globally a good idea....
  - kbutler 8y ago
    Realtors have a fiduciary responsibility to act in the interest of their principal, even when it is against the interest of the agent. "This duty obligates a real estate broker to act at all times solely in the best interests of his principal to the exclusion of all other interests, including the broker’s own self-interest." https://www.nar.realtor/sites/default/files/handouts-and-brochures/2014/nar-fiduciary-duty-032213.pdf https://www.nar.realtor/sites/default/files/handouts-and-bro...
    - scarface74 8y ago
      Yeah and people are completely honest when they swear to tell the truth in court too... Good luck proving that the real estate agent just didn’t know about the house they didn’t show you.
chrisco255 8y ago
Former real estate agent, now software engineer. Doing a FSBO (for sale by owner) is as old as time. There's nothing wrong with this approach, but you are limiting your market (and you might therefore be selling at a lower price anyways) and it's highly dependent on your: patience, financial situation, free time, marketing skills, general sales skills, local housing market, tricky property situations, ability to assist buyers with locating financing, handling any objections or mortgage exceptions that come up (including zoning and inspections requirements), etc. Buyer's agents deserve their 3% perhaps even more than listing agents and it's unfortunate you screwed this agent out of that. It's sort of like stiffing a server on a tip. Buyers are fickle, time consuming, and sometimes demanding. It can take many showings and offers to find a good fit for someone. Sometimes I would work with a client for weeks or months. Many clients would fall through and you'd get $0 for those clients. So you have to average out your earnings with the successes. There's other things you have to do, too sometimes. Like once I had an FHA financed client and there were certain restrictions about the distance a well could be from the septic tank at the Federal level but they didn't match the requirements at the county level (which were looser). So I had to coordinate with local zoning and the FHA to get an exception for this loan. That was a bigger ordeal than I can explain here. These online MLS listing services have been around since 2004-2005. They're nothing new. Are there crappy agents? Yeah. Just like any profession. But the profession itself is not going anywhere.
- brightball 8y ago
  Yea, I find the fees for buyers agents to be entirely worth it just based on the time investment in showings with no promise of sale. Listings themselves...not so much. But fee wise, those are always negotiable.
- jacquesm 8y ago
  > Buyer's agents deserve their 3% perhaps even more than listing agents and it's unfortunate you screwed this agent out of that. 3% of the value of a house is hardly 'a tip', a common fee in Europe for selling a house is around 1.5 to 2%, a typical buyer will not use a realtor at all. Oh, and it is illegal here for a realtor to charge both the buyer and the seller because there is a clear conflict of interest there, you can only work for one party. The real estate market in North America is ridiculous.
BrentOzar 8y ago
> plus I paid her a 2% commission instead of 3%, and of course not 6% as if she represented me as well. I tried selling my home twice: first with the “normal” approach, using a real estate agent and paying everybody full commission. My agent just didn’t do enough to move the process along. After my contract with her expired, I bid her goodbye. On attempt #2, I listed it myself (for sale by owner) but put in the listing notes, “FSBO, but the buyer’s agent will get 4% commission.” Agents kicked my door down bringing buyers in, and we sold it for full asking price in under a week.
- marpstar 8y ago
  Thanks for sharing this. My first (and only) home purchase was a FSBO and I also did not have an agent. I didn't see what the point of it was from the buyer side. I'm hoping to sell soon and your 4% buyer agent commission technique is very intriguing. I made contact with an agent last year in my search for a new home and she's since practically forgotten about me. Never sends me any homes that match my criteria. Looks like I'll be going alone, again.
- asdf333 8y ago
  very nice. way to hack the system
- novaleaf 8y ago
  awesome tactic. thank you for sharing. in my life I did a "normal" buy, did a FSBO, and latest did a buy via Redfin. I can see a place for buying agents, as they can/should do a lot of the legwork scoping out potential homes for their buyers. I did that myself when I did Redfin, which is what I wanted, but I can see how most people wouldn't have the time (basically house shopping was my fulltime job for 3 months) I only did my FSBO sale at the peak of the last housing boom, so with that caveat in mind, I don't really see a place for normal selling agents.
asciident 8y ago
I and almost everyone I know have had the exact same experience. Buyer agents seems to basically set you up on some auto-email service for a search filter (which you can do yourself on many real estate websites), and occasionally take you to see some homes. They use all sorts of fear tactics to keep themselves from getting cut, and everyone is starting to realize it. I ended up buying a house via private sale (FSBO) and I had no agent, and everyone won BIG TIME. The closing costs, including the lawyer, title search, and court documents were $650. With an agent, the costs besides the home purchase would have been about $25,000. It's a prisoner's dilemma, where either of you has an agent, then both buyer and seller are worse off.
- dragonwriter 8y ago
  > Buyer agents seems to basically set you up on some auto-email service for a search filter There are better agents, but finding them is challenging.
  - mreome 8y ago
    If there is a challenge to finding a good agent, and a challenge to doing it yourself, doesn't the option that saves you a ton of money just make more sense?
    - dragonwriter 8y ago
      In some cases, yes, in some, no. It really depends on your situation, including what your opportunity cost for the marginal time commitment of doing it yourself is and if your transaction is special in a way which changes the expected value of an agent and/or the expected cost of doing it yourself, and if you've found solutions that put you in a better than average position with either of the two opposing challenges.
DesiLurker 8y ago
I see many (likely realtors) defending the fees & the larger model. Here is some back of envelop math I once did to put it in perspective: according to Bob Shiller (of case/shiller fame) it has historically taken about 30 years of work to own a house in steady markets. now on an average people move houses once every 7 years due to labor mobility/family/etc reasons. so roughly 4 housing buy/sell transactions in an average persons life. assuming 7% commisions (~9% if you include both buyer and seller plus origination as you are often both when you move). so essentially you end up with .93^4 or ~75%. which means you've worked 25% of your life for your realtor(s). Now do you think the commissions are worth it? IM[NSH]O its total BS, at best their work is fixed commission especially in the booming & super expensive markets like sf bayarea.
- TallGuyShort 8y ago
  Very good point with the math. However with super expensive markets, doesn't their commission then match their increased cost of living to be working there?
  - DesiLurker 8y ago
    that can be used to justify almost any level of commission including fixed fee rate. ultimately its modulated by increase number of realtors coming into the market. the core amount of work needed to buy/sell a house is not that much and can be effectively segmented to specialized (low-cost) individuals like Redfin is trying to do. you could also argue that in hot markets like sf-bayarea homes sell themselves so the workload on realtors is not so much, which means they can sell more houses to make up for 'lost' commission like rest of america. the problem is that even if a realtor wants to reduce his commission, he has no control over the other party and they'll want to have full 3%. this minimizes the incentive to disrupt the process though in super expensive markets it may still make sense.
- ralph84 8y ago
  Math isn't correct because most of that 30 years of work is interest on the mortgage, which the realtor doesn't get a cut of.
asdf333 8y ago
this is exactly correct. i used a redfin agent and felt like he was discriminated against by the seller agents at every turn.
rayiner 8y ago
I’ll offer the alternate viewpoint. My parents sold a house last year in northern Virginia. During the market peak it was around 60% above what they bought it for in 2002, but by 2018, objective market price was 25% above purchase price. My parents—having experienced the 1990-2000s housing boom—could not believe it should be on the market for less than 50% above. A good seller’s agent absolutely helped them come to a proper asking price and made the sale happen. Most buyers and sellers are not completely rational about houses, because they’re not repeat players. There is a good argument that agents help the market stay liquid and facilitate transactions happening.
akvadrako 8y ago
Why would you pay an agent hired by another party anything at all? If the buyer wanted an agent, surely it's something they should cover.
- stjohnswarts 8y ago
  That's why you get a buyer's agent who has fiduciary responsibility to -you-. They split the typical 6% between themselves and the seller's agent.

by om3n 8y ago

Justin_K 8y ago

She was hostile because a real estate agent's approach is to black ball any for sale by owner listing, or any for sale by Redfin / Zillow, etc. Agents around my area always blackball these listings and will NOT tell buyers about these listings unless buyers specifically ask. This is nonsense and not in favor of buyers and is an attempt to bring failure to reform. Fortunately, more and more buyers are realizing they can do the research themselves online.

mrtweetyhack 8y ago
Then they've failed their principal/agent fudicary duty and should be sued.
scarface74 8y ago
Why wouldn’t they unless you agreed to pay the buyer’s agent commission? It’s how they make their living. Edit: oops meant buyers agent - corrected.
- ska 8y ago
  There was no sellers agent, why would that commission be paid? They did pay the buyers agent commission (albeit at a lower rate).
- ska 8y ago
  You've corrected the buyer vs. seller agent thing, but I still can't make sense of this. The seller was always going to pay the buying agents commission (they hoped to negotiate a lower rate) - so why is that agent hostile to the sale and/or blackballing the listing? The only reason seems to be to protect the system they benefit from, at the expense of the buyers and sellers. In such a situation the embedded interests (agents) may well be antagonistic to change, but it doesn't mean that change isn't globally a good idea....
- kbutler 8y ago
  Realtors have a fiduciary responsibility to act in the interest of their principal, even when it is against the interest of the agent. "This duty obligates a real estate broker to act at all times solely in the best interests of his principal to the exclusion of all other interests, including the broker’s own self-interest." https://www.nar.realtor/sites/default/files/handouts-and-brochures/2014/nar-fiduciary-duty-032213.pdf https://www.nar.realtor/sites/default/files/handouts-and-bro...
  - scarface74 8y ago
    Yeah and people are completely honest when they swear to tell the truth in court too... Good luck proving that the real estate agent just didn’t know about the house they didn’t show you.

chrisco255 8y ago

Former real estate agent, now software engineer. Doing a FSBO (for sale by owner) is as old as time. There's nothing wrong with this approach, but you are limiting your market (and you might therefore be selling at a lower price anyways) and it's highly dependent on your: patience, financial situation, free time, marketing skills, general sales skills, local housing market, tricky property situations, ability to assist buyers with locating financing, handling any objections or mortgage exceptions that come up (including zoning and inspections requirements), etc. Buyer's agents deserve their 3% perhaps even more than listing agents and it's unfortunate you screwed this agent out of that. It's sort of like stiffing a server on a tip. Buyers are fickle, time consuming, and sometimes demanding. It can take many showings and offers to find a good fit for someone. Sometimes I would work with a client for weeks or months. Many clients would fall through and you'd get $0 for those clients. So you have to average out your earnings with the successes. There's other things you have to do, too sometimes. Like once I had an FHA financed client and there were certain restrictions about the distance a well could be from the septic tank at the Federal level but they didn't match the requirements at the county level (which were looser). So I had to coordinate with local zoning and the FHA to get an exception for this loan. That was a bigger ordeal than I can explain here. These online MLS listing services have been around since 2004-2005. They're nothing new. Are there crappy agents? Yeah. Just like any profession. But the profession itself is not going anywhere.

brightball 8y ago
Yea, I find the fees for buyers agents to be entirely worth it just based on the time investment in showings with no promise of sale. Listings themselves...not so much. But fee wise, those are always negotiable.
jacquesm 8y ago
> Buyer's agents deserve their 3% perhaps even more than listing agents and it's unfortunate you screwed this agent out of that. 3% of the value of a house is hardly 'a tip', a common fee in Europe for selling a house is around 1.5 to 2%, a typical buyer will not use a realtor at all. Oh, and it is illegal here for a realtor to charge both the buyer and the seller because there is a clear conflict of interest there, you can only work for one party. The real estate market in North America is ridiculous.

BrentOzar 8y ago

> plus I paid her a 2% commission instead of 3%, and of course not 6% as if she represented me as well. I tried selling my home twice: first with the “normal” approach, using a real estate agent and paying everybody full commission. My agent just didn’t do enough to move the process along. After my contract with her expired, I bid her goodbye. On attempt #2, I listed it myself (for sale by owner) but put in the listing notes, “FSBO, but the buyer’s agent will get 4% commission.” Agents kicked my door down bringing buyers in, and we sold it for full asking price in under a week.

marpstar 8y ago
Thanks for sharing this. My first (and only) home purchase was a FSBO and I also did not have an agent. I didn't see what the point of it was from the buyer side. I'm hoping to sell soon and your 4% buyer agent commission technique is very intriguing. I made contact with an agent last year in my search for a new home and she's since practically forgotten about me. Never sends me any homes that match my criteria. Looks like I'll be going alone, again.
asdf333 8y ago
very nice. way to hack the system
novaleaf 8y ago
awesome tactic. thank you for sharing. in my life I did a "normal" buy, did a FSBO, and latest did a buy via Redfin. I can see a place for buying agents, as they can/should do a lot of the legwork scoping out potential homes for their buyers. I did that myself when I did Redfin, which is what I wanted, but I can see how most people wouldn't have the time (basically house shopping was my fulltime job for 3 months) I only did my FSBO sale at the peak of the last housing boom, so with that caveat in mind, I don't really see a place for normal selling agents.

asciident 8y ago

I and almost everyone I know have had the exact same experience. Buyer agents seems to basically set you up on some auto-email service for a search filter (which you can do yourself on many real estate websites), and occasionally take you to see some homes. They use all sorts of fear tactics to keep themselves from getting cut, and everyone is starting to realize it. I ended up buying a house via private sale (FSBO) and I had no agent, and everyone won BIG TIME. The closing costs, including the lawyer, title search, and court documents were $650. With an agent, the costs besides the home purchase would have been about $25,000. It's a prisoner's dilemma, where either of you has an agent, then both buyer and seller are worse off.

dragonwriter 8y ago
> Buyer agents seems to basically set you up on some auto-email service for a search filter There are better agents, but finding them is challenging.
- mreome 8y ago
  If there is a challenge to finding a good agent, and a challenge to doing it yourself, doesn't the option that saves you a ton of money just make more sense?
  - dragonwriter 8y ago
    In some cases, yes, in some, no. It really depends on your situation, including what your opportunity cost for the marginal time commitment of doing it yourself is and if your transaction is special in a way which changes the expected value of an agent and/or the expected cost of doing it yourself, and if you've found solutions that put you in a better than average position with either of the two opposing challenges.

DesiLurker 8y ago

I see many (likely realtors) defending the fees & the larger model. Here is some back of envelop math I once did to put it in perspective: according to Bob Shiller (of case/shiller fame) it has historically taken about 30 years of work to own a house in steady markets. now on an average people move houses once every 7 years due to labor mobility/family/etc reasons. so roughly 4 housing buy/sell transactions in an average persons life. assuming 7% commisions (~9% if you include both buyer and seller plus origination as you are often both when you move). so essentially you end up with .93^4 or ~75%. which means you've worked 25% of your life for your realtor(s). Now do you think the commissions are worth it? IM[NSH]O its total BS, at best their work is fixed commission especially in the booming & super expensive markets like sf bayarea.

TallGuyShort 8y ago
Very good point with the math. However with super expensive markets, doesn't their commission then match their increased cost of living to be working there?
- DesiLurker 8y ago
  that can be used to justify almost any level of commission including fixed fee rate. ultimately its modulated by increase number of realtors coming into the market. the core amount of work needed to buy/sell a house is not that much and can be effectively segmented to specialized (low-cost) individuals like Redfin is trying to do. you could also argue that in hot markets like sf-bayarea homes sell themselves so the workload on realtors is not so much, which means they can sell more houses to make up for 'lost' commission like rest of america. the problem is that even if a realtor wants to reduce his commission, he has no control over the other party and they'll want to have full 3%. this minimizes the incentive to disrupt the process though in super expensive markets it may still make sense.
ralph84 8y ago
Math isn't correct because most of that 30 years of work is interest on the mortgage, which the realtor doesn't get a cut of.

asdf333 8y ago

this is exactly correct. i used a redfin agent and felt like he was discriminated against by the seller agents at every turn.

rayiner 8y ago

I’ll offer the alternate viewpoint. My parents sold a house last year in northern Virginia. During the market peak it was around 60% above what they bought it for in 2002, but by 2018, objective market price was 25% above purchase price. My parents—having experienced the 1990-2000s housing boom—could not believe it should be on the market for less than 50% above. A good seller’s agent absolutely helped them come to a proper asking price and made the sale happen. Most buyers and sellers are not completely rational about houses, because they’re not repeat players. There is a good argument that agents help the market stay liquid and facilitate transactions happening.

akvadrako 8y ago

Why would you pay an agent hired by another party anything at all? If the buyer wanted an agent, surely it's something they should cover.

stjohnswarts 8y ago
That's why you get a buyer's agent who has fiduciary responsibility to -you-. They split the typical 6% between themselves and the seller's agent.