3 ms·

$2M house. 6% commission split 3% to seller's realtor and buyer's realtor. Seller's realtor gets $60K if it sells in 1 month or 1 year, same commission. No sal

$2M house. 6% commission split 3% to seller's realtor and buyer's realtor. Seller's realtor gets $60K if it sells in 1 month or 1 year, same commission. No sale = $0. First week gets a 10% low offer of $1,800,000. If sale completes, that's $54,000 income for the realtor (.03*1800000). Or, could hold out for a better offer after for some months of additional work to hopefully get an offer for the full $2M, and the realtor just gets $6,000 more - or $0 if no sale. Seller holding out would get $200,000 more, or if no sale, still has the house. Realtor's personal interest is to maximize return on invested work - take an early offer and go on to the next sale, even if it is low. Seller's best interest is probably to hold out for a bit better deal.

philwelch 8y ago
I suspect this actually starts to change at the upper end of the market, but only if you have proportional commissions. There aren't that many $10,000,000 houses. You can't just dump a $10,000,000 house ASAP and list another $10,000,000 house next week. And at $10,000,000, every percentage point in sale price is worth a marginal $3000 to the sellers' agent. If someone comes in 10% below listing on a $10MM house, the difference alone is equivalent to the sellers' agent commission on an entire $1,000,000 house.
jessaustin 8y ago
...after for some months of additional work... I'm as suspicious of realtors as anybody, but this scenario here includes a real asshole as a seller. If she doesn't want to sell her house, she shouldn't waste everybody's time by putting it on the market. This sort of "just testing the market" shenanigan raises costs for everyone.
- freewilly1040 8y ago
  In the scenario the seller is gaining $200K by waiting two months. You think she should forgo this money to save everyone else's time looking at her ads? I personally try and be a polite person, but I'm not $200K polite.
- fma 8y ago
  Statistically, per freaknomics, a realtor selling their own home lists their house 10 days longer so they can get a better offer. https://www.bankrate.com/finance/real-estate/real-estate-agents-list-own-homes.aspx https://www.bankrate.com/finance/real-estate/real-estate-age... Levitt and Dubner found that, on average, self-listed homes stay on the market an extra 10 days, prompting the authors to hypothesize that agents might be a little more aggressive about their own homes because a 3 percent fluctuation makes a fair difference on the total sale price, but not that much of a difference when it comes to the commission.
  - jessaustin 8y ago
    ITT we're talking about "some months" (three? eight? more than a couple, anyway), not "10 days". The Freaks are just hypothesizing the price rise anyway; markets don't always go up. Your link identifies the only actual service that realtors provide: objectivity. Houses are worth what buyers will pay for them. The realtor who can predict what price a house will fetch in the near term is providing a service. Permanent realtor's signs indicate failures of objectivity.

philwelch 8y ago

I suspect this actually starts to change at the upper end of the market, but only if you have proportional commissions. There aren't that many $10,000,000 houses. You can't just dump a $10,000,000 house ASAP and list another $10,000,000 house next week. And at $10,000,000, every percentage point in sale price is worth a marginal $3000 to the sellers' agent. If someone comes in 10% below listing on a $10MM house, the difference alone is equivalent to the sellers' agent commission on an entire $1,000,000 house.

jessaustin 8y ago

...after for some months of additional work... I'm as suspicious of realtors as anybody, but this scenario here includes a real asshole as a seller. If she doesn't want to sell her house, she shouldn't waste everybody's time by putting it on the market. This sort of "just testing the market" shenanigan raises costs for everyone.

freewilly1040 8y ago
In the scenario the seller is gaining $200K by waiting two months. You think she should forgo this money to save everyone else's time looking at her ads? I personally try and be a polite person, but I'm not $200K polite.
fma 8y ago
Statistically, per freaknomics, a realtor selling their own home lists their house 10 days longer so they can get a better offer. https://www.bankrate.com/finance/real-estate/real-estate-agents-list-own-homes.aspx https://www.bankrate.com/finance/real-estate/real-estate-age... Levitt and Dubner found that, on average, self-listed homes stay on the market an extra 10 days, prompting the authors to hypothesize that agents might be a little more aggressive about their own homes because a 3 percent fluctuation makes a fair difference on the total sale price, but not that much of a difference when it comes to the commission.
- jessaustin 8y ago
  ITT we're talking about "some months" (three? eight? more than a couple, anyway), not "10 days". The Freaks are just hypothesizing the price rise anyway; markets don't always go up. Your link identifies the only actual service that realtors provide: objectivity. Houses are worth what buyers will pay for them. The realtor who can predict what price a house will fetch in the near term is providing a service. Permanent realtor's signs indicate failures of objectivity.