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To a real estate agent, it's always the perfect time to buy. Market is up? "Buy before prices rise!" Market is down? "Buy while prices are low!" There are tr

by chiph 4y ago

To a real estate agent, it's always the perfect time to buy. Market is up? "Buy before prices rise!" Market is down? "Buy while prices are low!" There are training classes you can take to get your agent's license, so entering the field is pretty straightforward. There are usually a lot of part-time agents who make enough off each sale to justify staying in the field. And a very few who have worked their way up to selling high-dollar properties and make quite a lot of money. It's customary for a sale to have 6% realtor fees, split between the selling and buying agents. So the more a house sells for, the more they make. A falling market will drive some agents out of the field.

jaclaz 4y ago
>So the more a house sells for, the more they make. A falling market will drive some agents out of the field. Yes and no. This was a chapter in Freakonomics which showed how since their fee is a small fraction of the value, changes in prices would not affect them so much (within limits), i.e. the 3% fee on - say - 1,000,000 is 30,000, if the house price gets to 900,000 the 3% fee is still 27,000, but in order to be able to sell at the full price, they would need more time and have more expenses, so the real incentive for the agent is to sell quickly and find a new house to sell. If you prefer, selling 5 houses at 850,000 is still better than selling 4 at 1,000,000 for the agent. If number of sales go down then the agents will suffer.
- Waterluvian 4y ago
  Aka. “volume.”
  - jaclaz 4y ago
    Yep, and "time" the original Freakonomics chapter was about comparing prices between houses owned by the realtors against those owned by their customers and it came out that houses owned by realtors took more time to sell but were sold at a higher price, whilst in case of a slow sale the incentive was to convince the customers to lower the asking price: http://pricetheory.uchicago.edu/levitt/Papers/LevittSyverson2004.pdf http://pricetheory.uchicago.edu/levitt/Papers/LevittSyverson...

by chiph 4y ago

jaclaz 4y ago

>So the more a house sells for, the more they make. A falling market will drive some agents out of the field. Yes and no. This was a chapter in Freakonomics which showed how since their fee is a small fraction of the value, changes in prices would not affect them so much (within limits), i.e. the 3% fee on - say - 1,000,000 is 30,000, if the house price gets to 900,000 the 3% fee is still 27,000, but in order to be able to sell at the full price, they would need more time and have more expenses, so the real incentive for the agent is to sell quickly and find a new house to sell. If you prefer, selling 5 houses at 850,000 is still better than selling 4 at 1,000,000 for the agent. If number of sales go down then the agents will suffer.

Waterluvian 4y ago
Aka. “volume.”
- jaclaz 4y ago
  Yep, and "time" the original Freakonomics chapter was about comparing prices between houses owned by the realtors against those owned by their customers and it came out that houses owned by realtors took more time to sell but were sold at a higher price, whilst in case of a slow sale the incentive was to convince the customers to lower the asking price: http://pricetheory.uchicago.edu/levitt/Papers/LevittSyverson2004.pdf http://pricetheory.uchicago.edu/levitt/Papers/LevittSyverson...