OT: Adios 6% Realtor Commission

[LordMcBuckethead]

The problem has always been that for every good agent that actually works hard for you, there are 10 **** agents that do nothing but collect a check and string you along.

The problem is, realtors really have zero liability in the entire transaction. The lawyers handle all the legal part, the mortgage loan officer handles the financial part, the home inspection handles the kick the tires part. The realtor does jack **** except call the seller to make tell them when to be there.
News flash, hire the lawyer yourself and don’t hire the realtor. The lawyer is about 2k and they literally handle it all. They make those 3 phone calls on your behalf.
People wonder why house prices go up so fast? Well it’s because starter homes are sold every 4-6 years and realtors just add 6% every time it sells.

 

[LordMcBuckethead]

I've sold 2 in the last 8 years and only paid the same agent for a listing basically. Paid her a flat $1000 to take still and movie shots with her fancy panoramic camera and put it on MLS and Zillow. That was her only involvement, no questions, no showing, no negotiating with buyers. Both of those buyers agreed to use the same attorney I've always used for closings and it was smooth sailing on both transactions. I felt like both of us benefitted, basically an advertised FSBO with an attorney taking care of legalities.

There it is. I believe this is exactly how it should be done, but the pictures should only cost 500.

 

[LordMcBuckethead]

You may have a good point here. A lot of people may just say screw it, I don't need a buyer's agent at all.

Current selling prices include a 6% commission paid by seller. If buyer now pays buyer agent & seller is only paying 3%, the price will be about 3% less than if seller was paying full 6%. Everyone winds up same as they were in the old system. Seller, buyer & both agents.

I think this will lead to a total fee percentage of maybe 1% total. Which actually matches the work the realtor does.

 

[The Peeper]

There it is. I believe this is exactly how it should be done, but the pictures should only cost 500.

You're probably right because I think she had her young assistant do most if all not all of it for her. I could have done the Zillow listing if I had the pictures, which I also could have done if I had the time and want to. But, I called her one day and told her about it and she met me there, 2 days later she had it done. The best thing she did that I couldn't was get in on the MLS site

 

[johnson86-1]

I know almost nothing about this other than what you wrote. But it sounds to me this will be the end of buyers agents as we know them. You'll wind up with the seller paying his agent 3% and the buyer paying his agent a flat fee (roughly 3%). Sales prices will decline by about 3% and we'll essentially be right back where we've been for years.

I don't think you'll see many buyers agents get anywhere near 3%. And they shouldn't. Most of them don't add anywhere near that much value. For a $300k house, you're talking about paying $9k. Unless you have zero knowledge about the area and don't have anybody you can trust to guide you on which neighborhood to invest in, there's just not much of a way they can add that much value. Even then, most realtors are **** so even if you know nothing about the area, you don't have much of a guarantee that you're going to get any value from a realtor.

I do wonder whether you will see buyer's agents making as many in person visits. When they are getting a 3% cut, going with the buyer to look at 24 different houses still works out fine and the seller's agent can be justifiably pissed if they have to go to a showing but then give 3% to a buyers agent. But with each negotiating their own, I don't think the seller's agent can be pissed if they have to show the house.

 

[johnson86-1]

The problem has always been that for every good agent that actually works hard for you, there are 10 **** agents that do nothing but collect a check and string you along.

You have a very optimistic view of realtors. I'd say for every one that works for you, there are five that provide no real value and just skim a check and there are five that are actively working to close a deal, any deal, even if it means working against their client's interest.

 

[patdog]

I don't think you'll see many buyers agents get anywhere near 3%. And they shouldn't. Most of them don't add anywhere near that much value. For a $300k house, you're talking about paying $9k. Unless you have zero knowledge about the area and don't have anybody you can trust to guide you on which neighborhood to invest in, there's just not much of a way they can add that much value. Even then, most realtors are **** so even if you know nothing about the area, you don't have much of a guarantee that you're going to get any value from a realtor.

I do wonder whether you will see buyer's agents making as many in person visits. When they are getting a 3% cut, going with the buyer to look at 24 different houses still works out fine and the seller's agent can be justifiably pissed if they have to go to a showing but then give 3% to a buyers agent. But with each negotiating their own, I don't think the seller's agent can be pissed if they have to show the house.

I think buyers agents will have to move to a flat fee arrangement. Which they should. Makes no sense at all for a buyers agent to be paid commission. The agent has a financial incentive to screw his client by not negotiating the lowest price.

 

[onewoof]

Pro tip: pay a hungry sellers agent $400 to post it on MLS and do nothing. They can and will. Then let them sell the house and get their negotiated cut. If they won't do it, find someone who will. Easy money for a house that will sell easily. You do not need a sellers agent to list on MLS and get paid for doing nothing. That is how agents get filthy rich.

 

[dog12]

You are correct. It's just a talking point for people who fancy themselves RE investors. It's always a negotiating point. Not once have I done a deal that needed a commission reduction to get it to closing and declined to do it.

I'm getting ready to sell my house. If I offered you $20k to take photos and put together the description in the listing, would you agree to take it and list my house?

 

[dog12]

We are planning to sell our primary home sometime within the next 2-4 months. Thus, we've been following this story.

Questions: do you have any advice on what sort of sales commission we should negotiate with a potential sales agent? 2% to the seller's agent, zero to the buyer's? 2%, 1%?

We live in Northern Virginia (about 30 miles west of DC), so the real estate market is fairly healthy. (Not sure whether that makes any difference, but I think it might.)

On second thought, any sort of percentage is too much. I'd much rather pay a flat fee to take photos, put together my listing and list my house. What's that . . . maybe 4-6 hours total work?

Maybe I can offer an agent a $10k or $15k flat fee to do that work for me. I wonder whether the agent would agree to that? Surely there's a seller's agent out there that would agree, right?

 

[aTotal360]

I'm getting ready to sell my house. If I offered you $20k to take photos and put together the description in the listing, would you agree to take it and list my house?

This is like saying I shouldn’t have to pay $500 for software because the CD it comes on costs $0.10.

 

[Perd Hapley]

On second thought, any sort of percentage is too much. I'd much rather pay a flat fee to take photos, put together my listing and list my house. What's that . . . maybe 4-6 hours total work?

Maybe I can offer an agent a $10k or $15k flat fee to do that work for me. I wonder whether the agent would agree to that? Surely there's a seller's agent out there that would agree, right?

I’ve never had a realtor actually take photos. Is this a thing? I know they can recommend real estate photographers in the area, then choose the ones that are best for the listing.

Regarding commissions and such, it all depends on the market. Seller’s agent is being paid by you to market your property and bring buyers to see it. That’s it, pretty much. In 2020-2022, nobody needed a seller’s agent. Buyers were crawling all over the place to buy what they could with dirt cheap rates and COVID relief money. That is not so much the case anymore. If you’ve got a good home in a desirable area, you still probably don’t need one now, if you don’t mind dealing directly with potential buyers, trying to sift through who’s legit vs. who’s an investor that’s going to try and lowball you, doing the listing yourself and coordinating photos, etc.

How much you need a seller’s agent also depends on your timetable. If you are content to let the property sit for 2-3 months or more, and you’re also fine with doing all the above legwork yourself, go ahead and list as for sale by owner. But understand that buyer’s agents HATE dealing with FSBO listings, and in general are not going to recommend them to clients, so its going to cut your buyer pool down significantly. This is in spite of the fact that most will still pay the going rate for buyer’s agent commissions.

 

[ETK99]

I bet the downturn in real estate markets right now thins the agent herd some. Places like Austin are getting smoked.

 

[BoDawg.sixpack]

Seems like there should be an app for both the buyer and the seller. AI should have real estate agents on the chopping block.

 

[aTotal360]

I’ve never had a realtor actually take photos. Is this a thing? I know they can recommend real estate photographers in the area, then choose the ones that are best for the listing.

Regarding commissions and such, it all depends on the market. Seller’s agent is being paid by you to market your property and bring buyers to see it. That’s it, pretty much. In 2020-2022, nobody needed a seller’s agent. Buyers were crawling all over the place to buy what they could with dirt cheap rates and COVID relief money. That is not so much the case anymore. If you’ve got a good home in a desirable area, you still probably don’t need one now, if you don’t mind dealing directly with potential buyers, trying to sift through who’s legit vs. who’s an investor that’s going to try and lowball you, doing the listing yourself and coordinating photos, etc.

How much you need a seller’s agent also depends on your timetable. If you are content to let the property sit for 2-3 months or more, and you’re also fine with doing all the above legwork yourself, go ahead and list as for sale by owner. But understand that buyer’s agents HATE dealing with FSBO listings, and in general are not going to recommend them to clients, so its going to cut your buyer pool down significantly. This is in spite of the fact that most will still pay the going rate for buyer’s agent commissions.

I've never taken photos myself. I pay a professional to do it. Most people think agents are the scallywags of this industry. I firmly believe it's the lenders. So few of them will tell a buyer "no" or "that's not a good idea". They will drag someone along to the 11th hour and put a buyer's earnest money in jeopardy. I hate that.

Being an agent isn't some sort of get-rich-quick scam. 90% of them cannot do the job longer than 24 months because they suck and begin to starve. You pay 2-3% per side, then take out brokerage fees, MLS fees, association fees, transaction coordinator cost, photographer cost, team split, and finally Uncle Sam...the agent isn't nearly making the money you think. Most people judge the industry on the extreme examples. The bad ones and the gaudy ones. There are tons of great agents in the middle making an honest living.

 

[ZombieKissinger]

I’m supposed to list my house next month. How do I use this new information

 

[johnson86-1]

I bet the downturn in real estate markets right now thins the agent herd some. Places like Austin are getting smoked.

I would assume there are a lot of realtors, appraisers, mortgage brokers, and closing attorneys that are having to tighten their belt right now. I'm really curious how appraisers are handling this. Every other market turmoil we've had in my adult life has had low interest rates driving a lot of refinances. I feel like the non-moron realtors and mortgage brokers have to remember the last downturn and keep a lot of liquidity to be prepared. Not sure appraisers have had to deal with this in the last 20 years. I could see a lot them being unprepared.

 

[OG Goat Holder]

I would assume there are a lot of realtors, appraisers, mortgage brokers, and closing attorneys that are having to tighten their belt right now. I'm really curious how appraisers are handling this. Every other market turmoil we've had in my adult life has had low interest rates driving a lot of refinances. I feel like the non-moron realtors and mortgage brokers have to remember the last downturn and keep a lot of liquidity to be prepared. Not sure appraisers have had to deal with this in the last 20 years. I could see a lot them being unprepared.

What downturn are ya'll speaking of? Because prices don't seem to be going down. The market isn't as hot, mainly because of interest rates, but over time, that will ease too as people accept that reality, OR....they actually get lowered some, which will spark a firestorm of activity.

Inventory still isn't near what it needs to be. And no, I don't feel sorry for realtors because houses are now taking a month to sell rather than 3 days.

 

[aTotal360]

What downturn are ya'll speaking of? Because prices don't seem to be going down. The market isn't as hot, mainly because of interest rates, but over time, that will ease too as people accept that reality, OR....they actually get lowered some, which will spark a firestorm of activity.

Inventory still isn't near what it needs to be. And no, I don't feel sorry for realtors because houses are now taking a month to sell rather than 3 days.

I agree. Message Board Real Estate Gurus are making a big deal out of historically average interests. The problem isn't the current rates. The real problem was having rates in the 2-3% range for several years. Now all the wannabe investors want to sound smart by complaining about the rates in the 6-7% range. That's actually normal.

 

[johnson86-1]

Being an agent isn't some sort of get-rich-quick scam. 90% of them cannot do the job longer than 24 months because they suck and begin to starve. You pay 2-3% per side, then take out brokerage fees, MLS fees, association fees, transaction coordinator cost, photographer cost, team split, and finally Uncle Sam...the agent isn't nearly making the money you think.

Most agents flame out in 24 months because they can't get the business, not because the pay for the work isn't good. 1.5% of the median sales price in Mississippi is ~$3,450. So if they spend 17 hours on a deal, they are making about $200 an hour. That's good money. Certainly you will have some buyers that are just not realistic and you might spend several full days showing them houses, but that's not going to be the norm. The first house I bought the agent actually worked for and he showed us houses for two mornings and the house we bought was a low priced house, but he still made over $2,200 and probably made over $150 an hour. The second house I bought he probably made about $1,500 an hour. He was actually a good agent and knowledgeable about the market so he could easily have been worth that to prevent overpaying (can't remember if he had to help us on that or not) and would have told us if the offer was unnecessarily strong. But I feel certain I could have gotten that advice for a $300 an hour fee.

 

[johnson86-1]

What downturn are ya'll speaking of? Because prices don't seem to be going down. The market isn't as hot, mainly because of interest rates, but over time, that will ease too as people accept that reality, OR....they actually get lowered some, which will spark a firestorm of activity.

Inventory still isn't near what it needs to be. And no, I don't feel sorry for realtors because houses are now taking a month to sell rather than 3 days.

Prices don't matter nearly as much as deal flow. The number of home sales dropped by 18% last year compared to the year before. That's a big drop by itself but you also have to think about the fact that things like office rent, utilities, professional dues, compensation for office staff, E&O, etc. likely either didn't drop or went up. So it's a bigger than an 18% drop in net income. Most people and businesses don't arrange their operations/life where an 18% drop in revenue is no big deal.

 

[aTotal360]

Most agents flame out in 24 months because they can't get the business, not because the pay for the work isn't good. 1.5% of the median sales price in Mississippi is ~$3,450. So if they spend 17 hours on a deal, they are making about $200 an hour. That's good money. Certainly you will have some buyers that are just not realistic and you might spend several full days showing them houses, but that's not going to be the norm. The first house I bought the agent actually worked for and he showed us houses for two mornings and the house we bought was a low priced house, but he still made over $2,200 and probably made over $150 an hour. The second house I bought he probably made about $1,500 an hour. He was actually a good agent and knowledgeable about the market so he could easily have been worth that to prevent overpaying (can't remember if he had to help us on that or not) and would have told us if the offer was unnecessarily strong. But I feel certain I could have gotten that advice for a $300 an hour fee.

You also have to consider that you are paying someone to do custom work on your timeframe. I work weekends and late into the evenings. I miss out on a lot of my kids stuff because someone needs me.

With any sort of service-oriented product, you aren't just paying for time spent driving or filling out a form. You are also paying for their Intellectual Property. Again, that's like telling a surgeon he's not worth it because your cousin has a sharp knife, thread and a needle.

I'm lucky enough that only about 10% of my business is "normal" residential stuff. I hate walking into a house and hearing someone say the house is perfect and then complain about the color of the walls. You can paint.

90% of my business is with investors buying rental properties and training them how to run their own mini rental empire. Hell, 95% of that business is from out-of-staters who never walk into the property. They are trusting me to be their eyes and ears.

 

[johnson86-1]

You also have to consider that you are paying someone to do custom work on your timeframe. I work weekends and late into the evenings. I miss out on a lot of my kids stuff because someone needs me.

Lots of people are in industries like that and they don't make $1,000 an hour. I have attorneys working on insurance defense that make less than $200 an hour and are on the clock pretty much non-stop. Even direct pay ones are still only making $300-$400 an hour. And those people are paying all of their costs out of that rate (do agents have to pay for office space, administrative staff, utilities, insurance, etc. out of their cut?).

With any sort of service-oriented product, you aren't just paying for time spent driving or filling out a form. You are also paying for their Intellectual Property. Again, that's like telling a surgeon he's not worth it because your cousin has a sharp knife, thread and a needle.

As I mentioned, the guy I used to buy my second house was knowledgeable and easily could have saved me $4k by providing market intelligence. But I feel pretty confident I could have gotten that for a lower rate than $1,500 an hour if it wasn't wrapped up with the seller's agreement. I can tell you his expert witness fee at the time was less than $200 an hour.

I'm lucky enough that only about 10% of my business is "normal" residential stuff. I hate walking into a house and hearing someone say the house is perfect and then complain about the color of the walls. You can paint.

90% of my business is with investors buying rental properties and training them how to run their own mini rental empire. Hell, 95% of that business is from out-of-staters who never walk into the property. They are trusting me to be their eyes and ears.

The same agent I am discussing does that for investors also and has done that for me even locally for a couple of properties and he's probably underpaid for that, simply because of the trust factor. But I would guess less than 5% of realtors (probably less than .5% if you count all the licensed ones that aren't really doing it as a full time job) are knowledgeable enough and trustworthy enough to do that. One of the most successful residential real estate agents I know and like a lot would be completely incapable of that. If you want a house in a particular neighborhood with tight inventory and it's a house you want to stay in for 20 years where price isn't the most important thing, that's your agent. You'd get to look at houses not even on the market and with owners that didn't even realize they wanted to sell. But if you are buying something that you might need to move on from in 5-7 years, you would not be able to trust any advice from them on pricing. And that's not an integrity issue; just not wired that way.

 

[dog12]

This is like saying I shouldn’t have to pay $500 for software because the CD it comes on costs $0.10.

I don't follow what you're saying. Can you explain that in more detail so I can understand your line of thinking?

Here's a hypothetical scenario: I hire a real estate agent to list my house for sale and agree to pay the agent 6%, of which 3% will go to the buyer's agent. My real estate agent does all the typical normal stuff that seller's agents do, and my house is listed. Continuing with my hypo, I have two offers within a 4 days. A few days later, I agree with one of the buyers on a final price of $1.4MM. 6% of $1.4MM is $84k.

Question: did the agents do $84k worth of work?

 

[patdog]

I don't follow what you're saying. Can you explain that in more detail so I can understand your line of thinking?

Here's a hypothetical scenario: I hire a real estate agent to list my house for sale and agree to pay the agent 6%, of which 3% will go to the buyer's agent. My real estate agent does all the typical normal stuff that seller's agents do, and my house is listed. Continuing with my hypo, I have two offers within a 4 days. A few days later, I agree with one of the buyers on a final price of $1.4MM. 6% of $1.4MM is $84k.

Question: did the agents do $84k worth of work?

The real question is, did the agent provide $84,000 worth of value. It depends. But if the best you could have done on your own was $1.3MM, the agent made you $16,000 plus did a lot of the work you would have had to do.

 

[dog12]

I’ve never had a realtor actually take photos. Is this a thing? I know they can recommend real estate photographers in the area, then choose the ones that are best for the listing.

Regarding commissions and such, it all depends on the market. Seller’s agent is being paid by you to market your property and bring buyers to see it. That’s it, pretty much. In 2020-2022, nobody needed a seller’s agent. Buyers were crawling all over the place to buy what they could with dirt cheap rates and COVID relief money. That is not so much the case anymore. If you’ve got a good home in a desirable area, you still probably don’t need one now, if you don’t mind dealing directly with potential buyers, trying to sift through who’s legit vs. who’s an investor that’s going to try and lowball you, doing the listing yourself and coordinating photos, etc.

How much you need a seller’s agent also depends on your timetable. If you are content to let the property sit for 2-3 months or more, and you’re also fine with doing all the above legwork yourself, go ahead and list as for sale by owner. But understand that buyer’s agents HATE dealing with FSBO listings, and in general are not going to recommend them to clients, so its going to cut your buyer pool down significantly. This is in spite of the fact that most will still pay the going rate for buyer’s agent commissions.

The actual realtor doesn't take the photos, but my agent has a photographer that she always uses. So, I just lumped the realtor and the photographer together.

The sale of our house will be an adventure. We'll see what happens.

 

[The Cooterpoot]

it is a shame this just didn't end real estate agents all together. 80% of them are worse than used car salesmen.. If it does end up with less fees being paid the cocaine market might drop as well.

 

[dog12]

I've never taken photos myself. I pay a professional to do it. Most people think agents are the scallywags of this industry. I firmly believe it's the lenders. So few of them will tell a buyer "no" or "that's not a good idea". They will drag someone along to the 11th hour and put a buyer's earnest money in jeopardy. I hate that.

Being an agent isn't some sort of get-rich-quick scam. 90% of them cannot do the job longer than 24 months because they suck and begin to starve. You pay 2-3% per side, then take out brokerage fees, MLS fees, association fees, transaction coordinator cost, photographer cost, team split, and finally Uncle Sam...the agent isn't nearly making the money you think. Most people judge the industry on the extreme examples. The bad ones and the gaudy ones. There are tons of great agents in the middle making an honest living.

"Brokerage fees?"

What exactly does a "broker" do . . . except collect money from his or her agents? Sounds very much like a pyramid scheme.

The real estate market is a big-time money-making scheme, and lots of people have their hands in the pot. Just my opinion. If I'm wrong, then please explain it to me and tell me how I'm wrong.

 

[HWY51dog]

The problem is, realtors really have zero liability in the entire transaction. The lawyers handle all the legal part, the mortgage loan officer handles the financial part, the home inspection handles the kick the tires part. The realtor does jack **** except call the seller to make tell them when to be there.
News flash, hire the lawyer yourself and don’t hire the realtor. The lawyer is about 2k and they literally handle it all. They make those 3 phone calls on your behalf.
People wonder why house prices go up so fast? Well it’s because starter homes are sold every 4-6 years and realtors just add 6% every time it sells.

No liability…then why do agents have to carry E and O Insurance? Why do agents have to attend Contract Law and ethics every 2 years to maintain a license.

You must believe the sh*t CNN tells you. Hedge fund investors are the ones that drive up the prices on first time home buyers homes. Paying 20-30 grand over asking price, homebuyers can’t compete. Hedge funds are the real problem but blame agents. You don’t know what the 17 you are talking about but carry on.

 

[HWY51dog]

I bet the downturn in real estate markets right now thins the agent herd some. Places like Austin are getting smoked.

Yes the agents that jumped in the last couple years and rely on buyers will be going away.

 

[aTotal360]

I don't follow what you're saying. Can you explain that in more detail so I can understand your line of thinking?

Here's a hypothetical scenario: I hire a real estate agent to list my house for sale and agree to pay the agent 6%, of which 3% will go to the buyer's agent. My real estate agent does all the typical normal stuff that seller's agents do, and my house is listed. Continuing with my hypo, I have two offers within a 4 days. A few days later, I agree with one of the buyers on a final price of $1.4MM. 6% of $1.4MM is $84k.

Question: did the agents do $84k worth of work?

Yes, because that is what the sellers agreed would be $84k worth of work. The seller negotiated the deal. It's a mutually agreed-upon rate.

Go FSBO if you think you can do a better job.

The problem with good realtors is they make everything look easy. Same with a good landlord. Or a good attorney.

 

[aTotal360]

"Brokerage fees?"

What exactly does a "broker" do . . . except collect money from his or her agents? Sounds very much like a pyramid scheme.

The real estate market is a big-time money-making scheme, and lots of people have their hands in the pot. Just my opinion. If I'm wrong, then please explain it to me and tell me how I'm wrong.

If an agent works for Century 21 or Coldwell Banker (brokerages), they have to pay them a percentage of the sale.

 

[Perd Hapley]

If an agent works for Century 21 or Coldwell Banker (brokerages), they have to pay them a percentage of the sale.

I think his question was why that’s the case?

I heard this past weekend of some high end brokerages taking 40% of commissions. That’s just insane.

 

[goindhoo]

I think his question was why that’s the case?

I heard this past weekend of some high end brokerages taking 40% of commissions. That’s just insane.

They provide some overhead. Most don’t charge that much. I would say 25% and less if more customary.

 

[dog12]

If an agent works for Century 21 or Coldwell Banker (brokerages), they have to pay them a percentage of the sale.

Is there such a thing as an independent agent? Or, must every agent be a part of a brokerage?

 

[Perd Hapley]

Is there such a thing as an independent agent? Or, must every agent be a part of a brokerage?

Sure. I used one in 2019. She was pretty good all things considered. Her “brokerage” is small family business with just her and her mom.

 

[HWY51dog]

New agents usually pay a broker 30% when they start. After taxes you get about half the check not counting expenses for marketing, signs etc. They move up to a lesser percentage the more they sell.

Zillow and other sites make a killing. The agents you think are “preferred” or “best” are just paying Zillow an insane monthly fee for leads. Depending on zip code it’s can be a couple thousand a month. They usually do 10 agents per zip code. Zillow is raking it in and most people think they are getting the best agent, not necessarily true.

 

[HWY51dog]

Is there such a thing as an independent agent? Or, must every agent be a part of a brokerage?

Per MS law you have to work under a Broker unless you have a Broker license. Then you can be independent. It’s in place to protect people especially disputes over earnest money and other matters to help control fraud.

 

[PooPopsBaldHead]

How this thread is going in gifs...

 

[patdog]

How this thread is going in gifs...

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Where’s my stapler???!!!