9 ms·

Realtors Face an Antitrust Reckoning

113 points by lxm 3y ago

Brian_K_White 3y ago
[flagged]
anm89 3y ago
Realtors And especially real estate brokers, have ripped apart our society with cartel like tactics so they can grab a few percent on each bit of the destruction. I hope the book is thrown at them as harshly as possible. Claw back those earnings and put it into funds to clean up the mess that has been made
- gigatexal 3y ago
  I’m a home owner and a landlord (we rent out Condo while we are living in Germany) and I despise all the hustle porn millionaires on social media flaunting their real-estate empires. Speculating and amassing homes to what? To become slumlords doing the absolute minimum only to raise rents to the maximum possible? There’s no evidence that these “investors” spur the creation of new homes if anything they speculate up the price of homes for would be buyers. I also learned recently that the realtor lobby has fought hard to keep the mortgage interest tax deduction which helps home owning persons but hurts everyone else. Why am I able to use my single rental as a tax shelter? Because of decades of tax lobbying that has made real estate a fantastic investment. But has it helped the average family looking to get a home? To stop being beholden to the whims of the rental market? Has it spurred on builders to build homes? Have these lobbies lobbied local governments against NIMBY policies? F no. By keeping supply high and benefiting from high interest rates they bank — myself included — on renters without the means to buy a home or come up with the down payment to stay renters for even longer. And don’t get me started on the BS and corruption in the title industry. Why the f does it cost 1500 to 2000 to do a damn title search? And related to that why the f is the seller paying the buyer’s agent a commission? Wtf did the buyers agent do? Abolish the mortgage interest tax deduction and scale back all the tax breaks that make real estate so speculation friendly. Get rid of 1031 exchanges. Disallow real estate trusts all these tax haven things must go.
  - BenFranklin100 3y ago
    As an aside, a big reason existing residential homes are often profitable speculative investments is because of bans on new homes. The lack of competition from new home construction drives up the price of older homes.
    - bluGill 3y ago
      It isn't just new homes, it is also replacing old homes. If I cannot tear down a house next to downtown because it is "historical" (because it is old, not because anything historically important happened there), then I can't replace it with an apartment and in turn that forces more people to move out to suburbs.
  - ta1243 3y ago
    US realtors seem crazy -- charging tens of thousands for doing what exactly? The UK system is pretty bad, but you can choose to spend somewhere between about £1500 and £5000 to sell a £500k home, about about £1-2k to buy one (including conveyancing fees) The US seems to be an order of magnitude more?
    - FrustratedMonky 3y ago
      Generally, they help with Sales, Marketing, Negotiating, Psychologist, Logistics, etc... There are a lot of home owners that try to sell their home themselves. It can be done. So if you don't want to pay a realtor, then don't use them. Why complain about using a service you aren't being forced to use.
      - ta1243 3y ago
        Yes, we call them "Estate Agents" in the UK. Even the most expensive ones (with brick and mortar shop fronts) charge about 1.5%. Legal fees are typically fixed, and another 0.5% for the average house. The US seem to charge an average 5.4% - over twice the price.
      - a2tech 3y ago
- cmrdporcupine 3y ago
  If you think it's bad in the US, you should see Canada. Every level of gov't and society is corrupted by the real estate industry. Worst housing price to income ratio in the G7. Feeding on the young.
ojp 3y ago
https://archive.ph/9NFgk https://archive.ph/9NFgk
- GnarfGnarf 3y ago
  Link no longer seems to work.
  - kaycebasques 3y ago
    It works for me but I've noticed that site has got much less reliable over last few months
DueDilligence 3y ago
[dead]
Simulacra 3y ago
The use of the word cartel seems inappropriate here, it's pretty loaded and biased. The trial just started, perhaps the media should wait until the verdict before pushing their opinion.
- prepend 3y ago
  Seems like a cartel to me. In my state commissions are 6% almost universally. Id expect 99.9% of listings and sales with agents charge the same amount. I think that’s only possible due to cartel behavior. Of course, we’ll see how the trial goes but it seems like a valid opinion to me.
  - sgc 3y ago
    It is mainly internal to the companies. I have my license and did not use it for a long time because the hypermarketing in the brokerages I was affiliated with was unbearable. I decided to hop back into it because I had the opportunity to start my own brokerage, an important part of which is I am no longer forced to have a minimum commission. My first decision starting back up was to offer all clients 25%+ off, something I could not do because of agent-broker agreements in my past affiliations. I have to say it is very expensive to be an agent, mainly because you need a huge marketing budget and most people are wasting your time - either because they can't afford a house and don't realize it until you sit down and walk them through the numbers, or are intentionally just using you with no intention to have you even potentially represent them. There is also a lot more work involved in listing a house or representing a buyer than people give credit to, which is often discounted as almost nothing (as I see in this thread as "just do X or Y" - exactly like people do with devs thinking they should have an advanced website for $200. BTW, 90% of FSBO wind up being sold with an agent. It is not as straightforward as it seems.) I would not be able to operate offering 50% off. So yes, I think fair trade is a bit lower than the typical 5% (2.5% per side) charged in northern California, but it is not 2-3% either. My personal lowest commission is 1.5% for one side, and that is for extremely high value property. I am without a doubt one of the poorer Americans on this site, and have a family to feed, so I cannot be convinced my work has no value but everybody else's work here is worth 10x. There is no doubt a real problem in the industry and I refused to work in it for many, many years until I found a way to sidestep it. But purely monetarily, it is not of the magnitude that is naively assumed. For me, the far bigger problem is in attitude; in marketing at all costs.
say_it_as_it_is 3y ago
It's not just realtors but regulations that need to be changed. State regulators are partners who protect and serve the interests of the industry.
infecto 3y ago
The whole process is broken in the US. I was really rooting for a company like Redfin to come in and shake things up by treating it like it is for the vast majority of inventory, a commodity. Especially on the sellers side I feel like most of the process is the same. Clean the house up, maybe stage it, bring in your photographer and take pictures. List the property on MLS and then handle the offers/paperwork. Most homes are not $2mln showpieces that require a special touch, they are a commodity item.
- jasode 3y ago
  >Most homes are not $2mln showpieces that require a special touch, they are a commodity item. But buyers do not treat the much cheaper homes as undifferentiated commodity items (like paperclips and crude oil) because each house is situationally different. E.g. One house may be listed for $250k and is on a desirable corner lot but also needs a new roof and kitchen remodel. Another house is $280k and already has a new roof and updated kitchen appliances and is also 10 miles closer to the office to cut down commute times but costs +$30k more. The combination of tradeoffs (location, condition of home, price, etc) to be matched to each buyer's priorities is what makes homes -- even the low end homes -- resist becoming commodities like paperclips. In a box of paperclips, you can randomly pick any one and you don't care. Picking a house doesn't work like that. Part of the real estate agent's job is to downplay the negatives and highlight the positives of each house they sell. I don't think that work is worth the 6% commission but regardless, houses are not commodities to the point where most buyers & sellers are comfortable with no intermediaries in the transaction.
  - ethbr1 3y ago
    IMHO, the biggest problem with the US housing transaction market is... home inspectors. No other required party to a transaction has structural expertise, which by far dominates the cost of owning a home. And their liability is typically limited to "what would be obvious without detailed inspection." Which is a pretty low bar for diligence. Afaict, they're all ex-contractors who realized it was easier to fill forms than build (fair!). But which is terrifying when you realize they're the only check against construction-ignorant people (read: the vast majority of home buyers) buying a nightmare property. "What about building codes?" Well, you'd better hope the code inspector was doing his or her job the day your potential house was built. Flip a coin. The mortgage company generally doesn't care, other than the inspection checkbox being checked, because if your home falls down you still owe the loan amount (albeit now unsecured). Things I've had home inspectors flat out miss, that I caught with a tape measure and flashlight: - Undersized joist systems - Misframed houses - Serious termite damage If you want a chuckle, ask a realtor what the appropriate joist size for a given span is. Hell, ask your next home inspector. (Hint: the table for common woods is a 5 minute web search away)
cjg 3y ago
For contrast, in the UK we typically don't use buyer brokers at all. Normally the seller pays about 1% to their agent.
- naveen99 3y ago
  Probably because you pay the state the other 6% as stamp duty who is the true broker.
  - sharemywin 3y ago
    there are bunch off settlement fees that go to the government in the US also.
    - hiatus 3y ago
      Nothing close to 6% of the purchase price though.
  - twic 3y ago
    In what sense is the state "the true broker"?
naveen99 3y ago
Sellers agent paying the buyers agent is a kickback. Kickbacks aren’t allowed for referring Medicare patients. They aren’t allowed in bribing government agents. They aren’t allowed in corporate contracting. Somehow in real estate, they are required.
- voisin 3y ago
  I can’t stand realtors, but even I find this argument disingenuous. The difference is that the “kickbacks” in real estate are all publicly known upfront and offered to any buyer agent, rather than used privately for one agent to get ahead of others like in your other examples.
  - pxeboot 3y ago
    It is my understanding the buyers agent commission is a line item on the MLS entry. So only agents can see it, not the public. Too low? Now your buyers agent will refuse to show that house.
    - voisin 3y ago
      I agree with you, but every agent does know the offer up front.
    - joshstrange 3y ago
      > Now your buyers agent will refuse to show that house. By the same token should developers be required to work with clients that pay well below the market rate? Often on this website we talk about telling a client to pound sand when they want to pay next to nothing and they want the moon, how is this any different? The work an agent does is not always constant (sometimes you show a person literally over a hundred houses, sometimes they find their dream house after 2 showings) but there is a baseline of work they have to do. I don't find it so crazy that if another agent doesn't want to pay me for that work that I don't engage with that agent.
      - deleted 3y ago
        [deleted]
cyberlurker 3y ago
There are some shady incentives for realtors when buying a home in the US. The seller and buyer agents often know each other and talk to each other in particular areas. They do favors for one another. Sometimes it helps you, sometimes it hurts you. I consider them very similar to car dealers, but slightly better because good ones have a network to help buyers out. The commission they get is too high though.
- ethbr1 3y ago
  The biggest counter-incentive for realtors is that they make more money on volume than added-value-over-replacement. Both sides are incentivized to move each house ASAP, rather than for the best price, as they make 3% of any marginal price difference, but 3% of the total price of an additional sale. Consequently, you're really only getting value from a realtor if "getting the deal done ASAP" is your priority.
  - jncfhnb 3y ago
    Perhaps this perspective varies depending on the market but I don’t really expect the agent to do any negotiating on the price? So long as they’re not actively working with the other side to abuse an elevator or something, I think it’s fine. I just want them to help me get the house. Or sell the house. Do I think that’s worth 3% if my home value? Probably not. It’s strange there’s not flat fee agents.
    - bunchman 3y ago
      [dead]
    - runako 3y ago
      > It’s strange there’s not flat fee agents. Essentially the cartel prevents this. If you started a flat-fee agency, you would not be allowed access to MLS listings to show your buyers. Homes you represented to sell would not be allowed into MLS, and Realtors would not bring buyers to your home (because you're not prepared to give them 3% of the deal). This is not an accident of the free market.
WarOnPrivacy 3y ago
Before the internet, we were paying realtors for access to the MLS. Not just for sales but for rental properties. My first single-family rental was via a realtor (friend). It was unfindable otherwise. Beautiful property, near the mountains. Birthed my first son there.
Brian_K_White 3y ago
I don't understand why my comment "pls.com for sale" was flagged? The article mentions pls.com complaining they are being prevented from competing, and I went to check them out, and the domaon is for sale. You don't find that interesting or topical?
- hiatus 3y ago
  The name of the actual company is The PLS.com (as it appears in court documents), and thepls.com is working. https://casetext.com/case/the-plscom-v-the-natl-assn-of-realtors https://casetext.com/case/the-plscom-v-the-natl-assn-of-real...
  - Brian_K_White 3y ago
    doh! thank you
joshstrange 3y ago
Another discussion on HN about realtors that is full of people thinking agents do nothing but skim off the top. Particularly ironic for a group a of people who talk so much about how much their time is worth. Yes, if your time is worth $0 then maybe a realtor isn't worth it but even then I disagree. If you go the FISBO route then you should know that other agents /hate/ working with you. Not because of anything relating to money but relating to competence. If they work with a real agent (and not a 1-2 houses a year, "I got my license on the weekends but it's a part-time job", agent), especially one they have worked with before, they know they aren't going to have to hold the other person's hand every step of the way. That or deal with gross incompetence in writing/submitting/etc documents. My parents are real estate agents and I've heard them talk about (and seen firsthand) the pain of dealing with bad agents and it gets 10x worse dealing with someone who is not an agent. They make mistakes constantly, my parents have to do way more work since the other party doesn't know what they are doing, and it's frustrating for the buyer/seller they are representing as well. Let me put this in terms more of you will understand: You know how the low paying clients are always the biggest headache? They want the moon but want to pay pennies for your work? Yep, that's what's it like working with someone who is not an agent (or is a bad one). See also "cheaper" agents, you get what you pay for. Furthermore real estate can get very emotional. Maybe you built the house (aka, paid for it to be build and picked all the finishings/etc), maybe you remodeled it all, maybe you've just lived there for 10+ years and it's "home", maybe one of the spouses doesn't want to sell and is going to dig their heels in, maybe neither spouse wants to downsize but are being forced to since they can't justify the bigger house after all the kids have left, maybe medical bills are forcing them to sell, and the list goes on. In situations like this I _promise_ you that you want an intermediate. You also want someone that can do a little "backchanneling" to see where the other party is, are they just on the edge of accepting the offer? Are you way off in left field? Would they be fine with the offer if you waive your right to remedy?All of these things are made way better by having someone who does this day in and day out in your corner and does not have an emotional attachment to the house. Even with an agent I've seen deals on $1M+ houses fall through over <$5K because someone felt like they didn't "win" the negotiating, I've seen even more deals go through because my parents could smooth things over with the other agent and/or calm down their clients. That brings us to the article talking about how real estate agents: > That means there’s little incentive for buyer brokers to negotiate better deals for clients, especially since they earn bigger commissions on higher-priced homes. Are there unscrupulous, fly-by-night, agents out there? Of course, I challenge you to find any industry without these kinds of vultures, programming is no exception. But you have to understand that if you want to be a successful, long-term real estate agent then you are slitting your throat with this move. The _vast_ majority of your business is going to come from repeat and referral business. That's friends/family of your clients or the same clients again when they want to move 3, 5, 10 years down the line. Just within my friend group we all used the same agent over the span of over a decade since she was great to work with and we liked her (I don't live near my parents or I would have used them). This is where the money is. You don't get repeat business from people you piss off, from people you put in a house outside what they can afford, etc. Lastly, not only do real estate agents know the market/area better than you (again, excluding scummy/bad agents) and can warn you of things not readily apparent about a house you are interested in but they can have a huge impact on how much your house sells for. They bring in a stager (if they are good agents) to tell you what you should move/remove/change to help your house sell, they can recommend easy/cheap things you can do to improve the value, and all around they know what people are looking for better than you do. Trust me, you are too emotional about your house to make the right decisions when it comes to things like this. I don't care that you like the couch there or that you don't don't use the dining room as a dining room, buyers _do_ care and it can be a turn off. Things like this are very difficult to do on your own and we haven't even gotten into taking good pictures. I'm going to stop here but I always just laugh at people that want something like Redfin or Zillow to succeed here. 6% is worth it IMHO and as someone who worked for my parents and probably could have bought my house on my own (or with their remote help) I was all too happy to pay an agent to do it, I've seen the work a good agent puts in firsthand and I have no desire to take on a second job.
linuxftw 3y ago
Typical commission is 5% many places. Buyer's agent stipulate they're taking 2.5% to be paid by the seller, you have to come up with any difference (eg, for sale by owner that's not paying agent). Many agents will negotiate their listing fees, they don't want to, but they will, because they know the name of the game is volume, and in many markets the homes sell themselves. The real scam is the brokers. They are the invisible middle-men taking large chunks of commissions.
- sharemywin 3y ago
  there are a lot of brokers that offer desk fees. instead of %. and keeping complainant is no joke. unless your talking about mortgage brokers in which case you could go to a bank and pay more unless your buying a $1M house and have access to relationship manager.
Ccecil 3y ago
In my town realtors are getting over 4x the average salary. (Coeur d'Alene, ID) There is a job fair this week where 65 local businesses are looking to fill 1600 jobs...just in my county. Hyping the 12.5% average wage increase (most jobs they are talking about were in the $10/hr range). Everyone is a realtor. Businesses are fleeing. Workers have already left. Commercial vacancies everywhere (but of course the price does not drop, but they are largely shifting from for lease to for sale). Although..We do have 3 hatchet throwing bars currently and a new brewpub every week. Not sure how long this house of cards will stand...but it in no way seems sustainable. Even at $20/hr I cannot pay workers a living wage. Edit: for clarity
- pierat 3y ago
  > We do have 3 hatchet throwing bars currently and a new brewpub every week. Im seriously not getting the financial metrics of these axe throwing bars. Insurance liability of throwing sharp chunks of metal must be stupid high, and really, how many people are actually interested in this? There's 2 that popped up locally here. I just dont get it. Now, alcohol... that's another story. Decent beer is easy to brew, and has good markups. And having a pub is basically printing money. If you have a good location, it's a moneyprinter. At least the metrics for these make sense. And, well, alcohol does better when the economy is worse. People can drink their sorrows away, for a time.
  - Ccecil 3y ago
    One of the hatchet throwing bars moved into a $3200/mo unit that had been vacant for almost a year. I guess there is more to it than I understand.
    - jareklupinski 3y ago
      i'd get into the logistics of axe throwing operations, but it's a bit of a hatchet job :P
antisthenes 3y ago
I think Americans are finally beginning to wake up to how much of their lives are absolutely sucked dry by rent-seeking middlemen. Any consumer surplus must be meticulously optimized away, eliminated, and recorded on quarterly profits. Hopefully the anti-trust pendulum will swing back in a big way in the 21st century.
whoopsie 3y ago
Useless as car salesmen. Hire an engineer or lawyer to protect your rights. Do you really need a 6% consultant? No, you very likely don’t.

113 points by lxm 3y ago

[flagged]

Realtors And especially real estate brokers, have ripped apart our society with cartel like tactics so they can grab a few percent on each bit of the destruction. I hope the book is thrown at them as harshly as possible. Claw back those earnings and put it into funds to clean up the mess that has been made

gigatexal 3y ago
I’m a home owner and a landlord (we rent out Condo while we are living in Germany) and I despise all the hustle porn millionaires on social media flaunting their real-estate empires. Speculating and amassing homes to what? To become slumlords doing the absolute minimum only to raise rents to the maximum possible? There’s no evidence that these “investors” spur the creation of new homes if anything they speculate up the price of homes for would be buyers. I also learned recently that the realtor lobby has fought hard to keep the mortgage interest tax deduction which helps home owning persons but hurts everyone else. Why am I able to use my single rental as a tax shelter? Because of decades of tax lobbying that has made real estate a fantastic investment. But has it helped the average family looking to get a home? To stop being beholden to the whims of the rental market? Has it spurred on builders to build homes? Have these lobbies lobbied local governments against NIMBY policies? F no. By keeping supply high and benefiting from high interest rates they bank — myself included — on renters without the means to buy a home or come up with the down payment to stay renters for even longer. And don’t get me started on the BS and corruption in the title industry. Why the f does it cost 1500 to 2000 to do a damn title search? And related to that why the f is the seller paying the buyer’s agent a commission? Wtf did the buyers agent do? Abolish the mortgage interest tax deduction and scale back all the tax breaks that make real estate so speculation friendly. Get rid of 1031 exchanges. Disallow real estate trusts all these tax haven things must go.
- BenFranklin100 3y ago
  As an aside, a big reason existing residential homes are often profitable speculative investments is because of bans on new homes. The lack of competition from new home construction drives up the price of older homes.
  - bluGill 3y ago
    It isn't just new homes, it is also replacing old homes. If I cannot tear down a house next to downtown because it is "historical" (because it is old, not because anything historically important happened there), then I can't replace it with an apartment and in turn that forces more people to move out to suburbs.
- ta1243 3y ago
  US realtors seem crazy -- charging tens of thousands for doing what exactly? The UK system is pretty bad, but you can choose to spend somewhere between about £1500 and £5000 to sell a £500k home, about about £1-2k to buy one (including conveyancing fees) The US seems to be an order of magnitude more?
  - FrustratedMonky 3y ago
    Generally, they help with Sales, Marketing, Negotiating, Psychologist, Logistics, etc... There are a lot of home owners that try to sell their home themselves. It can be done. So if you don't want to pay a realtor, then don't use them. Why complain about using a service you aren't being forced to use.
    - ta1243 3y ago
      Yes, we call them "Estate Agents" in the UK. Even the most expensive ones (with brick and mortar shop fronts) charge about 1.5%. Legal fees are typically fixed, and another 0.5% for the average house. The US seem to charge an average 5.4% - over twice the price.
    - a2tech 3y ago
cmrdporcupine 3y ago
If you think it's bad in the US, you should see Canada. Every level of gov't and society is corrupted by the real estate industry. Worst housing price to income ratio in the G7. Feeding on the young.

ojp 3y ago

https://archive.ph/9NFgk https://archive.ph/9NFgk

GnarfGnarf 3y ago
Link no longer seems to work.
- kaycebasques 3y ago
  It works for me but I've noticed that site has got much less reliable over last few months

DueDilligence 3y ago

[dead]

Simulacra 3y ago

The use of the word cartel seems inappropriate here, it's pretty loaded and biased. The trial just started, perhaps the media should wait until the verdict before pushing their opinion.

prepend 3y ago
Seems like a cartel to me. In my state commissions are 6% almost universally. Id expect 99.9% of listings and sales with agents charge the same amount. I think that’s only possible due to cartel behavior. Of course, we’ll see how the trial goes but it seems like a valid opinion to me.
- sgc 3y ago
  It is mainly internal to the companies. I have my license and did not use it for a long time because the hypermarketing in the brokerages I was affiliated with was unbearable. I decided to hop back into it because I had the opportunity to start my own brokerage, an important part of which is I am no longer forced to have a minimum commission. My first decision starting back up was to offer all clients 25%+ off, something I could not do because of agent-broker agreements in my past affiliations. I have to say it is very expensive to be an agent, mainly because you need a huge marketing budget and most people are wasting your time - either because they can't afford a house and don't realize it until you sit down and walk them through the numbers, or are intentionally just using you with no intention to have you even potentially represent them. There is also a lot more work involved in listing a house or representing a buyer than people give credit to, which is often discounted as almost nothing (as I see in this thread as "just do X or Y" - exactly like people do with devs thinking they should have an advanced website for $200. BTW, 90% of FSBO wind up being sold with an agent. It is not as straightforward as it seems.) I would not be able to operate offering 50% off. So yes, I think fair trade is a bit lower than the typical 5% (2.5% per side) charged in northern California, but it is not 2-3% either. My personal lowest commission is 1.5% for one side, and that is for extremely high value property. I am without a doubt one of the poorer Americans on this site, and have a family to feed, so I cannot be convinced my work has no value but everybody else's work here is worth 10x. There is no doubt a real problem in the industry and I refused to work in it for many, many years until I found a way to sidestep it. But purely monetarily, it is not of the magnitude that is naively assumed. For me, the far bigger problem is in attitude; in marketing at all costs.

say_it_as_it_is 3y ago

It's not just realtors but regulations that need to be changed. State regulators are partners who protect and serve the interests of the industry.

infecto 3y ago

The whole process is broken in the US. I was really rooting for a company like Redfin to come in and shake things up by treating it like it is for the vast majority of inventory, a commodity. Especially on the sellers side I feel like most of the process is the same. Clean the house up, maybe stage it, bring in your photographer and take pictures. List the property on MLS and then handle the offers/paperwork. Most homes are not $2mln showpieces that require a special touch, they are a commodity item.

jasode 3y ago
>Most homes are not $2mln showpieces that require a special touch, they are a commodity item. But buyers do not treat the much cheaper homes as undifferentiated commodity items (like paperclips and crude oil) because each house is situationally different. E.g. One house may be listed for $250k and is on a desirable corner lot but also needs a new roof and kitchen remodel. Another house is $280k and already has a new roof and updated kitchen appliances and is also 10 miles closer to the office to cut down commute times but costs +$30k more. The combination of tradeoffs (location, condition of home, price, etc) to be matched to each buyer's priorities is what makes homes -- even the low end homes -- resist becoming commodities like paperclips. In a box of paperclips, you can randomly pick any one and you don't care. Picking a house doesn't work like that. Part of the real estate agent's job is to downplay the negatives and highlight the positives of each house they sell. I don't think that work is worth the 6% commission but regardless, houses are not commodities to the point where most buyers & sellers are comfortable with no intermediaries in the transaction.
- ethbr1 3y ago
  IMHO, the biggest problem with the US housing transaction market is... home inspectors. No other required party to a transaction has structural expertise, which by far dominates the cost of owning a home. And their liability is typically limited to "what would be obvious without detailed inspection." Which is a pretty low bar for diligence. Afaict, they're all ex-contractors who realized it was easier to fill forms than build (fair!). But which is terrifying when you realize they're the only check against construction-ignorant people (read: the vast majority of home buyers) buying a nightmare property. "What about building codes?" Well, you'd better hope the code inspector was doing his or her job the day your potential house was built. Flip a coin. The mortgage company generally doesn't care, other than the inspection checkbox being checked, because if your home falls down you still owe the loan amount (albeit now unsecured). Things I've had home inspectors flat out miss, that I caught with a tape measure and flashlight: - Undersized joist systems - Misframed houses - Serious termite damage If you want a chuckle, ask a realtor what the appropriate joist size for a given span is. Hell, ask your next home inspector. (Hint: the table for common woods is a 5 minute web search away)

cjg 3y ago

For contrast, in the UK we typically don't use buyer brokers at all. Normally the seller pays about 1% to their agent.

naveen99 3y ago
Probably because you pay the state the other 6% as stamp duty who is the true broker.
- sharemywin 3y ago
  there are bunch off settlement fees that go to the government in the US also.
  - hiatus 3y ago
    Nothing close to 6% of the purchase price though.
- twic 3y ago
  In what sense is the state "the true broker"?

naveen99 3y ago

Sellers agent paying the buyers agent is a kickback. Kickbacks aren’t allowed for referring Medicare patients. They aren’t allowed in bribing government agents. They aren’t allowed in corporate contracting. Somehow in real estate, they are required.

voisin 3y ago
I can’t stand realtors, but even I find this argument disingenuous. The difference is that the “kickbacks” in real estate are all publicly known upfront and offered to any buyer agent, rather than used privately for one agent to get ahead of others like in your other examples.
- pxeboot 3y ago
  It is my understanding the buyers agent commission is a line item on the MLS entry. So only agents can see it, not the public. Too low? Now your buyers agent will refuse to show that house.
  - voisin 3y ago
    I agree with you, but every agent does know the offer up front.
  - joshstrange 3y ago
    > Now your buyers agent will refuse to show that house. By the same token should developers be required to work with clients that pay well below the market rate? Often on this website we talk about telling a client to pound sand when they want to pay next to nothing and they want the moon, how is this any different? The work an agent does is not always constant (sometimes you show a person literally over a hundred houses, sometimes they find their dream house after 2 showings) but there is a baseline of work they have to do. I don't find it so crazy that if another agent doesn't want to pay me for that work that I don't engage with that agent.
    - deleted 3y ago
      [deleted]

cyberlurker 3y ago

There are some shady incentives for realtors when buying a home in the US. The seller and buyer agents often know each other and talk to each other in particular areas. They do favors for one another. Sometimes it helps you, sometimes it hurts you. I consider them very similar to car dealers, but slightly better because good ones have a network to help buyers out. The commission they get is too high though.

ethbr1 3y ago
The biggest counter-incentive for realtors is that they make more money on volume than added-value-over-replacement. Both sides are incentivized to move each house ASAP, rather than for the best price, as they make 3% of any marginal price difference, but 3% of the total price of an additional sale. Consequently, you're really only getting value from a realtor if "getting the deal done ASAP" is your priority.
- jncfhnb 3y ago
  Perhaps this perspective varies depending on the market but I don’t really expect the agent to do any negotiating on the price? So long as they’re not actively working with the other side to abuse an elevator or something, I think it’s fine. I just want them to help me get the house. Or sell the house. Do I think that’s worth 3% if my home value? Probably not. It’s strange there’s not flat fee agents.
  - bunchman 3y ago
    [dead]
  - runako 3y ago
    > It’s strange there’s not flat fee agents. Essentially the cartel prevents this. If you started a flat-fee agency, you would not be allowed access to MLS listings to show your buyers. Homes you represented to sell would not be allowed into MLS, and Realtors would not bring buyers to your home (because you're not prepared to give them 3% of the deal). This is not an accident of the free market.

WarOnPrivacy 3y ago

Before the internet, we were paying realtors for access to the MLS. Not just for sales but for rental properties. My first single-family rental was via a realtor (friend). It was unfindable otherwise. Beautiful property, near the mountains. Birthed my first son there.

Brian_K_White 3y ago

I don't understand why my comment "pls.com for sale" was flagged? The article mentions pls.com complaining they are being prevented from competing, and I went to check them out, and the domaon is for sale. You don't find that interesting or topical?

hiatus 3y ago
The name of the actual company is The PLS.com (as it appears in court documents), and thepls.com is working. https://casetext.com/case/the-plscom-v-the-natl-assn-of-realtors https://casetext.com/case/the-plscom-v-the-natl-assn-of-real...
- Brian_K_White 3y ago
  doh! thank you

joshstrange 3y ago

Another discussion on HN about realtors that is full of people thinking agents do nothing but skim off the top. Particularly ironic for a group a of people who talk so much about how much their time is worth. Yes, if your time is worth $0 then maybe a realtor isn't worth it but even then I disagree. If you go the FISBO route then you should know that other agents /hate/ working with you. Not because of anything relating to money but relating to competence. If they work with a real agent (and not a 1-2 houses a year, "I got my license on the weekends but it's a part-time job", agent), especially one they have worked with before, they know they aren't going to have to hold the other person's hand every step of the way. That or deal with gross incompetence in writing/submitting/etc documents. My parents are real estate agents and I've heard them talk about (and seen firsthand) the pain of dealing with bad agents and it gets 10x worse dealing with someone who is not an agent. They make mistakes constantly, my parents have to do way more work since the other party doesn't know what they are doing, and it's frustrating for the buyer/seller they are representing as well. Let me put this in terms more of you will understand: You know how the low paying clients are always the biggest headache? They want the moon but want to pay pennies for your work? Yep, that's what's it like working with someone who is not an agent (or is a bad one). See also "cheaper" agents, you get what you pay for. Furthermore real estate can get very emotional. Maybe you built the house (aka, paid for it to be build and picked all the finishings/etc), maybe you remodeled it all, maybe you've just lived there for 10+ years and it's "home", maybe one of the spouses doesn't want to sell and is going to dig their heels in, maybe neither spouse wants to downsize but are being forced to since they can't justify the bigger house after all the kids have left, maybe medical bills are forcing them to sell, and the list goes on. In situations like this I _promise_ you that you want an intermediate. You also want someone that can do a little "backchanneling" to see where the other party is, are they just on the edge of accepting the offer? Are you way off in left field? Would they be fine with the offer if you waive your right to remedy?All of these things are made way better by having someone who does this day in and day out in your corner and does not have an emotional attachment to the house. Even with an agent I've seen deals on $1M+ houses fall through over <$5K because someone felt like they didn't "win" the negotiating, I've seen even more deals go through because my parents could smooth things over with the other agent and/or calm down their clients. That brings us to the article talking about how real estate agents: > That means there’s little incentive for buyer brokers to negotiate better deals for clients, especially since they earn bigger commissions on higher-priced homes. Are there unscrupulous, fly-by-night, agents out there? Of course, I challenge you to find any industry without these kinds of vultures, programming is no exception. But you have to understand that if you want to be a successful, long-term real estate agent then you are slitting your throat with this move. The _vast_ majority of your business is going to come from repeat and referral business. That's friends/family of your clients or the same clients again when they want to move 3, 5, 10 years down the line. Just within my friend group we all used the same agent over the span of over a decade since she was great to work with and we liked her (I don't live near my parents or I would have used them). This is where the money is. You don't get repeat business from people you piss off, from people you put in a house outside what they can afford, etc. Lastly, not only do real estate agents know the market/area better than you (again, excluding scummy/bad agents) and can warn you of things not readily apparent about a house you are interested in but they can have a huge impact on how much your house sells for. They bring in a stager (if they are good agents) to tell you what you should move/remove/change to help your house sell, they can recommend easy/cheap things you can do to improve the value, and all around they know what people are looking for better than you do. Trust me, you are too emotional about your house to make the right decisions when it comes to things like this. I don't care that you like the couch there or that you don't don't use the dining room as a dining room, buyers _do_ care and it can be a turn off. Things like this are very difficult to do on your own and we haven't even gotten into taking good pictures. I'm going to stop here but I always just laugh at people that want something like Redfin or Zillow to succeed here. 6% is worth it IMHO and as someone who worked for my parents and probably could have bought my house on my own (or with their remote help) I was all too happy to pay an agent to do it, I've seen the work a good agent puts in firsthand and I have no desire to take on a second job.

linuxftw 3y ago

Typical commission is 5% many places. Buyer's agent stipulate they're taking 2.5% to be paid by the seller, you have to come up with any difference (eg, for sale by owner that's not paying agent). Many agents will negotiate their listing fees, they don't want to, but they will, because they know the name of the game is volume, and in many markets the homes sell themselves. The real scam is the brokers. They are the invisible middle-men taking large chunks of commissions.

sharemywin 3y ago
there are a lot of brokers that offer desk fees. instead of %. and keeping complainant is no joke. unless your talking about mortgage brokers in which case you could go to a bank and pay more unless your buying a $1M house and have access to relationship manager.

Ccecil 3y ago

In my town realtors are getting over 4x the average salary. (Coeur d'Alene, ID) There is a job fair this week where 65 local businesses are looking to fill 1600 jobs...just in my county. Hyping the 12.5% average wage increase (most jobs they are talking about were in the $10/hr range). Everyone is a realtor. Businesses are fleeing. Workers have already left. Commercial vacancies everywhere (but of course the price does not drop, but they are largely shifting from for lease to for sale). Although..We do have 3 hatchet throwing bars currently and a new brewpub every week. Not sure how long this house of cards will stand...but it in no way seems sustainable. Even at $20/hr I cannot pay workers a living wage. Edit: for clarity

pierat 3y ago
> We do have 3 hatchet throwing bars currently and a new brewpub every week. Im seriously not getting the financial metrics of these axe throwing bars. Insurance liability of throwing sharp chunks of metal must be stupid high, and really, how many people are actually interested in this? There's 2 that popped up locally here. I just dont get it. Now, alcohol... that's another story. Decent beer is easy to brew, and has good markups. And having a pub is basically printing money. If you have a good location, it's a moneyprinter. At least the metrics for these make sense. And, well, alcohol does better when the economy is worse. People can drink their sorrows away, for a time.
- Ccecil 3y ago
  One of the hatchet throwing bars moved into a $3200/mo unit that had been vacant for almost a year. I guess there is more to it than I understand.
  - jareklupinski 3y ago
    i'd get into the logistics of axe throwing operations, but it's a bit of a hatchet job :P

antisthenes 3y ago

I think Americans are finally beginning to wake up to how much of their lives are absolutely sucked dry by rent-seeking middlemen. Any consumer surplus must be meticulously optimized away, eliminated, and recorded on quarterly profits. Hopefully the anti-trust pendulum will swing back in a big way in the 21st century.

whoopsie 3y ago

Useless as car salesmen. Hire an engineer or lawyer to protect your rights. Do you really need a 6% consultant? No, you very likely don’t.