9 ms·

I find it strange that for one of the largest transactions most people will ever make, they choose to use an advisor with little or no real education in the sub

• commandlinefan 6y ago
  what choice do they have, though?
  • qeternity 6y ago
    Ah, the hallmark of a functional marketplace.
    • lotsofpulp 6y ago
      In the US, no one is forcing anyone to use a real estate agent.
      • Domenic_S 6y ago
        Before the zillow/redfin days the only way to see houses for sale was to physically observe the for sale sign or look in the newspaper. The NAR keeps a tight fist around the MLS where for-sale homes appear. Even with all the online information there's plenty of "secret" info in the Realtors-Only MLS notes. The information asymmetry is absolutely bonkers in real estate.
        • lotsofpulp 6y ago
          I fully support more transparency and accessibility of information. I think governments should make the details of real estate transactions easily searchable, and most do in the US! But if a group of people want to organize and maintain that info in a certain way, and have their notes, and get paid for doing that, is that not their right?
          • Robotbeat 6y ago
            Is it their right to restrict info by leveraging IP law on other people? They use that IP law to grant themselves information asymmetry to gain 6% commissions whereas many countries have commissions half that. IP law is not a natural right but is instead granted by the government to try to enhance the common good. So therefore whether it is their “right” is somewhat contingent on their use of IP law actually benefitting the nation. If it’s not beneficial and is just increasing fees, then it should be curtailed.
            • lotsofpulp 6y ago
              > Is it their right to restrict info by leveraging IP law on other people? Did they create/curate the info? If so, then yes, just like anyone else is able to use IP laws. > They use that IP law to grant themselves information asymmetry to gain 6% commissions whereas many countries have commissions half that. No, they use supply and demand for their services to collect 6% commission. And it’s very negotiable, also showing that the amount a real estate agent charges is due to supply and demand. I’m only familiar with the way real estate agents work in the US, so I can’t comment on how it works in other countries. But all I can say is, in my experience, the sales history data is all available on the government website, and otherwise, you’re paying for the marketing and whatnot. If you don’t like the price, then negotiate lower, and if that fails, don’t pay it and do the work yourself.
              • lupire 6y ago
                They use a cartel/trust to collect 6%, which is only legal because it is possible to negotiate a discount and it's hard to prove that the cartel is freezing out discount agents.
              • whimsicalism 6y ago
                > No, they use supply and demand for their services to collect 6% commission. And it’s very negotiable, also showing that the amount a real estate agent charges is due to supply and demand. Actually, no. There is extensive evidence that real estate commissions are not tied to supply & demand due to collusion in the marketplace. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3450767 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3450767
        • mattnewton 6y ago
          This, I hired a buyer's agent simply because even sites like Zillow had huge gaps when trying to put together comparable houses on an offer. The information alone was nearly worth the entire commission for me.
          • twiddling 6y ago
            Some neighborhoods have houses listed in the "informal markets" ( community of like minded brokers who wish to maintain the "feel of the place")
        • bena 6y ago
          I think this is often the case where the only real product is information. If you and I have the same information as the agents, then their use goes down a lot.
      • whimsicalism 6y ago
        This is not true - if the other party is using a real estate agent, they might refuse to work with you if you are operating independently. This is how collusion in the real-estate market functions. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3450767 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3450767
        • lotsofpulp 6y ago
          If you're a buyer, no agent is going to refuse you since they're getting paid by the seller. If you're a seller, you might very well get fewer agents bringing their clients to you. You're free to advertise that you will pay a commission to entice agents though. And the buyer is also free to side step the real estate agent or tell their agent they will make up for commissions from non agent represented sellers. It's 2021, using Redfin/Zillow/Trulia/Craigslist/Realtor.com is trivial. I foresee less and less opportunity for collusion as information becomes more and more accessible to everyone.
      • datavirtue 6y ago
        There is all kinds of bullying and strong arming and threatening going on. I have gotten it from many different realtors. They are worse than dentists and lawyers.
        • abdabab 6y ago
          I can understand the comparison with lawyers but why dentists?
      • twiddling 6y ago
        don't get me started on title insurance
  • lotsofpulp 6y ago
    It’s very easy to sell or purchase a home without an agent. You can contact the owner, and get all the paperwork done with a lawyer who deals in real estate transactions. There are usually signs that say “For Sale By Owner”.
    • jandrese 6y ago
      Very easy might be overstating it. Arranging tours with the homeowner individually is a hassle. The reason you hire a realtor is because they have access to the key boxes. A home is a huge purchase, I don't know how many houses a typical person looks at before deciding, but for me it was over a dozen.
      • lotsofpulp 6y ago
        I meant easy as in there’s no artificial hurdle. The example of arranging tours displays that agents do provide some value. People like to complain about agents, but they’re free to stick a sign on their yard, purchase online ads, and otherwise do the leg work.
      • dionidium 6y ago
        It's also easy to forget that first-time buyers won't have any sense for what's normal, expected, or required during the process. Obviously, you can research this yourself, but 1) there's no substitute for experience; and 2) you're paying a professional because they already know this stuff and you presumably have other things to do.
        • datavirtue 6y ago
          You can become an expert in the time it takes to research and plan a vacation.
    • throwaway0a5e 6y ago
      It's very hard to find a home you want to purchase without access to the MLS system It's very hard for potential buyers to become aware of the house you have for sale without it being in the MLS system Realtors control access to the MLS system. See where I'm going with this?
  • throwaway7033 6y ago
    They could buy directly from the seller; that's how I got my condo.
• jandrese 6y ago
  With good realtors you sign a document that states that they work for only you. Of course there can be other issues, like the realtor "helpfully" setting up the appraisal with their own company, the one that just happens not to notice any major issues with the sale. I also think that the convention of the the realtor taking a percentage of the sale as their commission is problematic as it incentivizes them to show you the most expensive houses instead of the ones that are best for you. I'd be happier if they charged a flat fee or a flat hourly rate.
  • joejerryronnie 6y ago
    The realtor isn’t really incentivized to try and make the largest deal, they’re incentivized to bring forward the deal which has the highest degree of successfully closing as quickly as possible.
  • lotsofpulp 6y ago
    > I'd be happier if they charged a flat fee or a flat hourly rate. You can always try to negotiate the agent’s price. I know a few sellers that had agents agree to 3% commission recently. It’s all about supply and demand, and if agents get desperate, they’ll agree to lower prices.
    • toomuchtodo 6y ago
      I just (this weekend) negotiated a 4% commission with a realtor for a property I’m selling. The deal is that they’ll keep it in the brokerage and not have to split the fee with another brokerage (which is the usual arrangement; 6% split half and half between brokerages, with the realtors on both sides getting half of that split). Market is hot enough I’m satisfied I’ll get top dollar even with a smaller pool of potential buyers (cash deals over list market). With that said, my realtor in this market has been doing RE for decades and has a proven record of delivering.
      • RHSeeger 6y ago
        How does that work? Doesn't that mean they're filling the role of both buyer's and seller's agents? Ignoring the moral complexities there (hint: don't), it means they're doing more work to get the money; presumably up to twice as much work. It doesn't see like they're getting a good deal.
• dcolkitt 6y ago
  I second this. Recently purchased a property, and skipped a buyers agent. That usually lets gets you a 1-3% discount on the price. You can find standard contracts and offer letters for free online. Or, in today’s market helps get you to the front of the line in a multi-offer situation. Since the sellers agent automatically becomes the buying agent, the listing realtor is highly incentived to push your offer to the seller. In a standard 3/3% commission, even if you negotiate a 2% discount, the listing agent nets 33% higher commission if your offer wins.
  • bob33212 6y ago
    I did the same thing. The relator told us that she stopped taking calls after our offer. If this isn't a sign that you shouldn't trust realtors I don't know what is.
    • tehwebguy 6y ago
      It's absolutely built into the business model unfortunately -- a done deal is worth 1-3% of the current deal price. But getting 1-3% of the delta on a higher offer that doesn't exist yet is not only a meaningless money difference, if it slows the deal down it costs them money.
      • exclusiv 6y ago
        Well if the parent used the listing agent for the buy side, then they stopped taking calls because they didn't want a higher offer to beat them from representing both sides. THAT is extremely meaningful for them. Now if they could get a stronger offer by still keeping it on market, and they're only the listing agent, then yes a new offer of like 50k more isn't going to mean that much for them. They'd rather get it sold. That is messed up too because that delta is meaningful for the owner. From what the parent said, they stopped taking calls because they wanted to represent both sides. It's fucked up.
  • jp57 6y ago
    But generally (in the US) the seller's commission of 6% (or whatever) is a contractual agreement between the seller and their agent, and then the seller's agent pays out the commission to the buyer's agent (as specified in the purchase contract, which is a different contract than the one between the seller and their agent). If you go in without an agent, you must write into the sale contract that you want part of the seller's commission taken off the price, otherwise the seller's agent gets the whole 6% for herself. But in my experience, most buyers are clueless about how all this works and would never know to do that, and would not get a discount, regardless what the seller's agent might say. (Of course actually it's a bit more complicated, the 6% actually goes to the seller's broker, who pays out both the seller's agent and also the buyer's broker, who then pays out the buyer's agent.)
• ianai 6y ago
  If you’re only going to do something once in your life then it’s probably not going to be something you execute with the same calculation and expertise that you’d something more common like tying your shoe laces up. So people who live in the market get to do all sorts of middleman things.
• hnrodey 6y ago
  I'm currently running a FSBO in a Denver suburb. Listed this past Thursday and with high likelihood I'll be under contract this evening. I can offer a couple interesting stories on how I continue to see the perverse incentives for real estate agents.
  • foobiekr 6y ago
    Please do.
• Lammy 6y ago
  That’s because realtors’ actual job description is rather unmentionable these days: https://depts.washington.edu/civilr/covenants_report.htm https://depts.washington.edu/civilr/covenants_report.htm
• TwoNineFive 6y ago
  Once you realize that the word "realtor" is a contrived cover for "used house salesman", you suddenly have a much better understanding of how things work in the housing market.