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A good real estate agent does add value. A good sellers agent will know better than you how to prep your home for sale, how to market it, where to find qualifi

A good real estate agent does add value. A good sellers agent will know better than you how to prep your home for sale, how to market it, where to find qualified leads, what price to set it to, where to get contractors to make repairs, what kind of repairs are worth making, and when you get to the deal phase, how to negotiate and what paperwork is necessary, and how to deal with contingencies. A good buyers agent will have deep knowledge of the neighborhood you're looking at (or can take your requirements and find you a good one), will have strong knowledge of the local schools, local demographics, local issues that can affect homeowners, what to look for in a home that could be a problem after purchase, red flags, and can help you negotiate the best deal and extract the most concessions from a seller. But in both cases, I don't see why the value they provide changes based on the value of the home. Some of them might change based on the size of the home or property, but not the home value. I don't see why we don't push for fixed fee based services, perhaps with an adjustment for local cost of living and size of the home/property? I know the Realtor cartel doesn't want that, but how can we citizens make that change happen?

onlyrealcuzzo 3y ago
> But in both cases, I don't see why the value they provide changes based on the value of the home. In both cases, the value they provide is relative to the value of the house being transacted. A seller's agent definitely makes sense to take some percentage of the purchase. The services they render - for say a $20M home in the Beverly Hills - are completely different than when selling a $1M house in San Jose or a $200k condo in Chicago. I disagree in how valuable buyer's agents are, though. The value they provide is mainly for people who are completely clueless about real estate - which I guess could be a lot of buyers.
- vladgur 3y ago
  what are those differences in services and what prevents them from being itemized?
  - onlyrealcuzzo 3y ago
    They could be itemized. The itemizations would be charged at much higher rates - the same way rich people pay 10x more for a lawyer than average people. If you're selling a $20M home, and you think a good seller's agent is going to get you $20M instead of $15M - most people don't really have a problem paying 3% for the services - otherwise we would've never gotten into this common deal structure. It's only people on HN who think realtors sit around doing nothing and make $100k selling an expensive home - and then generalize that to all realtors. SOME realtors are definitely doing that. So are some people in every industry.
- jedberg 3y ago
  > In both cases, the value they provide is relative to the value of the house being transacted. No, they do more for more expensive homes because they are harder to sell, but there is no reason "renting staging furniture" and "an extra open house with champagne and cookies" can't be itemized.
- com2kid 3y ago
  > I disagree in how valuable buyer's agents are, though. The value they provide is mainly for people who are completely clueless about real estate - which I guess could be a lot of buyers. When buying a house, I viewed around 100 houses with my agent, and he called in multiple specialists to answer various questions we had on different houses we took a look at. When it came time to buy he demonstrated excellent negotiating ability and after we had purchased he helped us prep our house for move in by recommending trusted people to do the work we wanted done. He worked with us for over a year and he earned his commission.
jwjohnson314 3y ago
But where do you find a good agent? My experiences have been of sellers agents dramatically undervaluing my property hoping for a quick sale and buyers agents with none of the qualities you mention, just a desire to push me to buy at any price asap regardless of whether the property they are showing me is a decent fit or not. I have yet to experience any value added from an agent on either side of the transaction.
- foobarian 3y ago
  It's worse than that, how do you know it's a good agent without completing the transaction? It seems you pretty much need trusted word of mouth referral.
  - dsr_ 3y ago
    See, there's this education and licensing process, with a Trademarked(TM) name and everything: REALTOR(TM). Unfortunately, this process is what we have now.
  - ohyes 3y ago
    Yes, you need a trusted word of mouth referral, good agents live on them.
  - bjacokes 3y ago
    It's just like any hiring process: get referrals from people you trust, look at prior work (previous purchases/sales in this case), learn the right questions to ask when interviewing.
  - simonsarris 3y ago
    It's even worse! Even after you have completed the transaction, you don't have the counter-factual and never will: Could someone else have done it better/faster/for more? I would think a referral is only really excellent if from a person who had to do many transactions recently, and sampled at least 2+ realtors. And that's something that's quite hard to come by.
- jedberg 3y ago
marstall 3y ago
paying a percentage based fee gives me confidence that my agent's interests are aligned with mine. And I have two interests only. One, close a deal. Two, get the highest price. One of the key things a realtor do is set the asking price. the higher they set it, the more work for them. of course i want it high, so i want them incented to make it as high as possible, and to push me to stage it properly, have knowledge of WHEN to sell and then CRUCIALLY help me evaluate competing offers. Because often the highest offer is a scam. Its a wild world out there you absolutely need a seasoned professional in your corner, who knows your market, fighting for you.
- ryandvm 3y ago
  Actually, do the math and you'll realize that a selling agent is incentivized to quickly take lower offers rather than hold out for higher offers. They more than make up the difference by increasing the volume of closings.
  - MichaelZuo 3y ago
    This depends on local market conditions? If supply outstrips demand the agent will be incentivized to wait as long as needed, or perhaps even too long.
- dalyons 3y ago
  but with the run up in house prices, the percentage doesnt really do that anymore. For many areas in cali with a median > 1mil... The agent is getting 30k on your 1mil sale. If they push REALLY hard and get it to 1.1 mil, they get 3k extra, which is something, but not much extra incentive compared to the 30k. What they are actually incentivized to do in expensive housing markets, is do the minimal possible effort per house, but sell more volume. You could of course design a better incentive structure (fixed fee for median sale, tiered incentives for every % over that), and thats what i hope happens from these changes.
- jedberg 3y ago
  When people have done studies, they have found real estate agents on average sell their own homes for 10% more than anyone else. Because think about it. If their commission is 3%, are they really gonna fight to sell for $350,000 in a week if they can sell it for $300,000 today and get a new client, when the difference to them is $1,500? If they can get even one extra client per year for the other $9,000, it's much more worth it to do that than to hold out for a better offer.
tempsy 3y ago
paying the seller's agent a percentage of the home sale makes sense still. it is more difficult to sell a very expensive home vs a cheaper one, so i wouldn't say at all the value they provide selling a $400k house vs a $4m one is the same. it didn't make sense to pay the buyer's agent a percent of the home value which is what these lawsuits focused on. buyer's agent fees will most likely move to a fixed fee model.
- khazhoux 3y ago
  > it is more difficult to sell a very expensive home vs a cheaper one I don't know where you are, but in Bay Area this is not true. And even for mega-expensive homes that don't sell as fast, the agent can't really accelerate this much -- certainly not commensurate to the giant commission they receive.
  - tempsy 3y ago
    I'm in the bay area. I'm not concerned about arguing over edge cases I'm speaking generally that very expensive homes are inherently more difficult to sell than cheaper ones. You're just pointing out in certain areas homes that are "expensive" in other cities are just average to a relatively large pool of high income buyers. With expensive luxury homes you have a smaller buyer pool and more discerning buyers and they will sit on the market longer than cheaper homes. So I still stand by the fact that they are going to be more difficult to sell than a cheaper one for fairly straightforward reasons.
- bluGill 3y ago
  How is a $100k house different from a $600k house. 4m is a different class of customer.
bradley13 3y ago
I absolutely agree that a good agent adds value. They are worth their commission. The problem is: the vast majority of agents are useless. As seller agents, they cannot put together a decent portfolio, they know little or nothing about house construction and repair, and they will show the house to literally anyone - not just qualified and suitable buyers. As buyers agents, they don't listen to your requirements. They show you what they want to sell, not what you want to buy. Plus the lack of knowledge mentioned above. If commissions fall, maybe at least some of the incompetents will find something else to do...
- voisin 3y ago
  > They are worth their commission. It is really a big jump from “they add value” to “worth their commission”. When you see the amount of time and effort that goes into them adding value and compare to other parties that add value to a house, like trades building a new washroom or kitchen or garage for ballpark the same dollar values, and the effort required there, it shows how absurd the agent commission really is.
abeppu 3y ago
> red flags, can help you negotiate the best deal and extract the most concessions from a seller ... but under the current system, the buyer's agent is also incentivized to get the buyer to pay as much as possible, to maximize their commission. I agree we should push for a fixed fee model, including if no sale occurs, because while the buyer agent _could_ add value in a lot of these ways, there is not always reason for them to do so today.
ohyes 3y ago
> But in both cases, I don't see why the value they provide changes based on the value of the home. Some of them might change based on the size of the home or property, but not the home value. It’s pretty simple, more expensive homes are less liquid and take significantly longer to sell, because there are fewer people with deep enough pockets to buy them. This equates to more effort in actually finding a buyer. A $20 million dollar home may be on the market for years before it gets sold. I’m guessing that if just one side of the deal was getting a % of the value, there would be a significant imbalance between the sellers and buyers agents, in terms of effort, which is something that you don’t want as a buyer.
nojvek 3y ago
Seller’s agent sure. Buyer’s agent no so much. So far I have yet to find a buyer’s agent that is worth the price they are charging. Happy to pay them a few $100 for offer writing. But most have little ideas about neighborhoods, builds etc. you have to do soooooo much of your own diligence.

onlyrealcuzzo 3y ago

> But in both cases, I don't see why the value they provide changes based on the value of the home. In both cases, the value they provide is relative to the value of the house being transacted. A seller's agent definitely makes sense to take some percentage of the purchase. The services they render - for say a $20M home in the Beverly Hills - are completely different than when selling a $1M house in San Jose or a $200k condo in Chicago. I disagree in how valuable buyer's agents are, though. The value they provide is mainly for people who are completely clueless about real estate - which I guess could be a lot of buyers.

vladgur 3y ago
what are those differences in services and what prevents them from being itemized?
- onlyrealcuzzo 3y ago
  They could be itemized. The itemizations would be charged at much higher rates - the same way rich people pay 10x more for a lawyer than average people. If you're selling a $20M home, and you think a good seller's agent is going to get you $20M instead of $15M - most people don't really have a problem paying 3% for the services - otherwise we would've never gotten into this common deal structure. It's only people on HN who think realtors sit around doing nothing and make $100k selling an expensive home - and then generalize that to all realtors. SOME realtors are definitely doing that. So are some people in every industry.
jedberg 3y ago
> In both cases, the value they provide is relative to the value of the house being transacted. No, they do more for more expensive homes because they are harder to sell, but there is no reason "renting staging furniture" and "an extra open house with champagne and cookies" can't be itemized.
com2kid 3y ago
> I disagree in how valuable buyer's agents are, though. The value they provide is mainly for people who are completely clueless about real estate - which I guess could be a lot of buyers. When buying a house, I viewed around 100 houses with my agent, and he called in multiple specialists to answer various questions we had on different houses we took a look at. When it came time to buy he demonstrated excellent negotiating ability and after we had purchased he helped us prep our house for move in by recommending trusted people to do the work we wanted done. He worked with us for over a year and he earned his commission.

jwjohnson314 3y ago

But where do you find a good agent? My experiences have been of sellers agents dramatically undervaluing my property hoping for a quick sale and buyers agents with none of the qualities you mention, just a desire to push me to buy at any price asap regardless of whether the property they are showing me is a decent fit or not. I have yet to experience any value added from an agent on either side of the transaction.

foobarian 3y ago
It's worse than that, how do you know it's a good agent without completing the transaction? It seems you pretty much need trusted word of mouth referral.
- dsr_ 3y ago
  See, there's this education and licensing process, with a Trademarked(TM) name and everything: REALTOR(TM). Unfortunately, this process is what we have now.
- ohyes 3y ago
  Yes, you need a trusted word of mouth referral, good agents live on them.
- bjacokes 3y ago
  It's just like any hiring process: get referrals from people you trust, look at prior work (previous purchases/sales in this case), learn the right questions to ask when interviewing.
- simonsarris 3y ago
  It's even worse! Even after you have completed the transaction, you don't have the counter-factual and never will: Could someone else have done it better/faster/for more? I would think a referral is only really excellent if from a person who had to do many transactions recently, and sampled at least 2+ realtors. And that's something that's quite hard to come by.
jedberg 3y ago

marstall 3y ago

paying a percentage based fee gives me confidence that my agent's interests are aligned with mine. And I have two interests only. One, close a deal. Two, get the highest price. One of the key things a realtor do is set the asking price. the higher they set it, the more work for them. of course i want it high, so i want them incented to make it as high as possible, and to push me to stage it properly, have knowledge of WHEN to sell and then CRUCIALLY help me evaluate competing offers. Because often the highest offer is a scam. Its a wild world out there you absolutely need a seasoned professional in your corner, who knows your market, fighting for you.

ryandvm 3y ago
Actually, do the math and you'll realize that a selling agent is incentivized to quickly take lower offers rather than hold out for higher offers. They more than make up the difference by increasing the volume of closings.
- MichaelZuo 3y ago
  This depends on local market conditions? If supply outstrips demand the agent will be incentivized to wait as long as needed, or perhaps even too long.
dalyons 3y ago
but with the run up in house prices, the percentage doesnt really do that anymore. For many areas in cali with a median > 1mil... The agent is getting 30k on your 1mil sale. If they push REALLY hard and get it to 1.1 mil, they get 3k extra, which is something, but not much extra incentive compared to the 30k. What they are actually incentivized to do in expensive housing markets, is do the minimal possible effort per house, but sell more volume. You could of course design a better incentive structure (fixed fee for median sale, tiered incentives for every % over that), and thats what i hope happens from these changes.
jedberg 3y ago
When people have done studies, they have found real estate agents on average sell their own homes for 10% more than anyone else. Because think about it. If their commission is 3%, are they really gonna fight to sell for $350,000 in a week if they can sell it for $300,000 today and get a new client, when the difference to them is $1,500? If they can get even one extra client per year for the other $9,000, it's much more worth it to do that than to hold out for a better offer.

tempsy 3y ago

paying the seller's agent a percentage of the home sale makes sense still. it is more difficult to sell a very expensive home vs a cheaper one, so i wouldn't say at all the value they provide selling a $400k house vs a $4m one is the same. it didn't make sense to pay the buyer's agent a percent of the home value which is what these lawsuits focused on. buyer's agent fees will most likely move to a fixed fee model.

khazhoux 3y ago
> it is more difficult to sell a very expensive home vs a cheaper one I don't know where you are, but in Bay Area this is not true. And even for mega-expensive homes that don't sell as fast, the agent can't really accelerate this much -- certainly not commensurate to the giant commission they receive.
- tempsy 3y ago
  I'm in the bay area. I'm not concerned about arguing over edge cases I'm speaking generally that very expensive homes are inherently more difficult to sell than cheaper ones. You're just pointing out in certain areas homes that are "expensive" in other cities are just average to a relatively large pool of high income buyers. With expensive luxury homes you have a smaller buyer pool and more discerning buyers and they will sit on the market longer than cheaper homes. So I still stand by the fact that they are going to be more difficult to sell than a cheaper one for fairly straightforward reasons.
bluGill 3y ago
How is a $100k house different from a $600k house. 4m is a different class of customer.

bradley13 3y ago

I absolutely agree that a good agent adds value. They are worth their commission. The problem is: the vast majority of agents are useless. As seller agents, they cannot put together a decent portfolio, they know little or nothing about house construction and repair, and they will show the house to literally anyone - not just qualified and suitable buyers. As buyers agents, they don't listen to your requirements. They show you what they want to sell, not what you want to buy. Plus the lack of knowledge mentioned above. If commissions fall, maybe at least some of the incompetents will find something else to do...

voisin 3y ago
> They are worth their commission. It is really a big jump from “they add value” to “worth their commission”. When you see the amount of time and effort that goes into them adding value and compare to other parties that add value to a house, like trades building a new washroom or kitchen or garage for ballpark the same dollar values, and the effort required there, it shows how absurd the agent commission really is.

abeppu 3y ago

> red flags, can help you negotiate the best deal and extract the most concessions from a seller ... but under the current system, the buyer's agent is also incentivized to get the buyer to pay as much as possible, to maximize their commission. I agree we should push for a fixed fee model, including if no sale occurs, because while the buyer agent _could_ add value in a lot of these ways, there is not always reason for them to do so today.

ohyes 3y ago

> But in both cases, I don't see why the value they provide changes based on the value of the home. Some of them might change based on the size of the home or property, but not the home value. It’s pretty simple, more expensive homes are less liquid and take significantly longer to sell, because there are fewer people with deep enough pockets to buy them. This equates to more effort in actually finding a buyer. A $20 million dollar home may be on the market for years before it gets sold. I’m guessing that if just one side of the deal was getting a % of the value, there would be a significant imbalance between the sellers and buyers agents, in terms of effort, which is something that you don’t want as a buyer.

nojvek 3y ago

Seller’s agent sure. Buyer’s agent no so much. So far I have yet to find a buyer’s agent that is worth the price they are charging. Happy to pay them a few $100 for offer writing. But most have little ideas about neighborhoods, builds etc. you have to do soooooo much of your own diligence.