patrick.net

Best advise came from Porky.....
Take the steps necessary to get your RE license and work a transaction or two.

Not only will this site have a deeper dimension based on knowledge, but you'll have first crack at that house you've been waiting for, for how long?

Oh, you'll even be the one receiving the commission, after you've paid your national dues, state license, city license, board dues, franchise fee, errors and emissions insurance, brokers split, desk fee, federal income tax and state income tax.

Indeed, 6% does not happen much. I closed escrow a couple of weeks ago. Took 1.5% to make the deal happen. It was a multiple offer situation. The buyer was an out of towner, so extra work to take care of stuff for them. Current escrow is 2.5% on a total headache short sale with a 169K contract price. Making some money, but no big windfall.

I am not complaining. If I did not want the business, I can turn it down. Just saying for the time and effort that goes in, I would not call it easy money. I am a part timer and have a regular job so I try to provide the same level of service and take the deals that fall into my lap--easy or tough. What I have learned is there are very few easy deals. And more where after many hours put in, they blow up.

ptiemann says

the 6% commission is indeed outdated.

Especially in the higher priced areas like San Francisco Bay Area many properties get a total of 4.5% or 5%.

There are brokerages that advertise 'full service' for 1%. Here is one of them:

http://www.asanterealestate.com/

I dealt with them one time and I won't do it again. You get what you pay for. I would not give them a listing if they would work for 0.001%. Buy maybe other people are more lucky than me.

A few years ago the big banks tried to 'walmartize' the RE agents.

Currenty bofa,wells,etc are not legally allowed to own a RE brokerage directly. They could make a whole lot more selling all their foreclosures themselves, and everyone visits the bank often and that cute teller girl could ALSO help u sell or buy. It would destroy re agency the way it has been.

Guess what happened? The NAR lobby won by pumping millions into DC and getting the 100 million agents to contact thier representatives. You see this is democracy it means the organzied people with $ will always win. The people buying one house every 10 years have no lobby.

Google the campaign they did to 'keep the big banks out of real estate'. They won and so RE is still like it was 500 years ago - you to have contact someones bored trophy wife who is selling her kosher buthers house for him. (Consider RE industry part of the 'buy local' movement - those commissions stay local - if BofA sold them all it would be like going to best buy to buy or sell a house.

Its probably better this way, how else could savy locals game thier clueless neighbors into letting them double dip a pocket listing to an investor who will flip the house using the same agent (its a triple dip and totally common!). But that money goes to Mercedes dealer and the nail salon workers - all local.

Whose still paying a 6% commission to a realtor anymore in high-priced areas? I just got a flyer the other day with a realtor offering only a 2% commission in his sales pitch.

Real estate agents are in competition for very little business now.. (sales volume is still low). If i were selling, I would never take on an agent wanting more than 2% commission... They would have to get me a higher price than market value for me to consider 3%.

Everyone keeps warning out your automatically underwater when you buy because of 6% commissions during resale... Patrick has it is his calculator that way also... I think it's set to 7% actually.

But in reality, everything is negotiable... Now more than ever!

they advertise 2% but also they dont tell you you HAVE TO PAY 2.5% min to buyers agent or no one will chaufuer their buyer to your house.

2+2.5= 4.5%- pretty normal.

Obligatory:

wthrfrk80 says

Soylent Green is Realtors!!

Processing Realtors

http://www.youtube.com/embed/U-m4k6S-rKY

It is very simple, just DO NOT USE THEM. It isn't brain surgery.

And btw, this phrase "Being a developer, I would like to develop a platform to help out the little guys." gives me the creeps. If you mean computer developer I stand corrected, if you mean real estate developer it stands. You aren't clear.

I also wanted to mention off topic, this crap about "Insult Another User" Patrick you better review your map of NJ.

The answer is a graduated commission rate. On the first amount of X$ sale price is the 6% to cover brokers'actual cost and then it decreases, espiecally if it is a double dip and there is only one broker. A bonus is given, say of $500.00 or even 1% of the sale price if a full price (or percentage of sale price)offer comes in or what ever the seller can negotiate with the broker's agent(s).

Although now a days the realtors roll is even more important the commissions have got to come down.

Who agrees to 6% in this day and age? Seriously? 5% max; lower if you're much over $1mm.

The entire reason you can't disrupt this business model with a clever web site is the MLS. If you want to slurp MLS listings and repeat them on your site you have to play by their rules. There's a reason Craigslist doesn't have MLS listings on it.

The business model will continue to evolve. The commission rate is only going to come down because the internet has already dramatically reduced search costs from where they were 15-20 years ago.

Finally, you already don't have to use an agent as a BUYER if you don't want to. Rather than waste your time thinking some slick Ruby Duby is going to get you a better deal, brush up on your negotiating skills, find any half decent lawyer who knows RE transactions (I've found most who do small biz legal work have done a good amount of real estate), and go negotiate yourself. In CA this is easy to do.

There are really only 2 hard parts, both of which will require you be willing to sharpen your sales skill mojo: (1) the listing agent will be difficult to the point where you'll very likely have to figure out how to directly communicate with the seller to force them to put pressure back on their agent. (2) you have to sell-the-seller on a transaction where they lower their selling price to a level that cuts half the 5% (or apparently 6% from reading this thread) out of the agency fee in terms of total dollars, but leaves more gross $ in the pockets of the buyer & seller. Just solve the math backwards and you can get to the sweet spot. Again, you're proposing a deal that's better for the Seller, better for the Buyer, but worst for the agent. And it's only worse for the listing agent because they will be indignant about the fact half the potential commission will go back to buyer & seller ... odd given that normally they wouldn't be getting that anyway unless they worked both sides of the deal. But they will be losing face in the biz, so they won't like it.

I did this twice and ultimately decided I was simply tired of the intensity and drama required. I still use a RE lawyer to double check everything though. Always a good idea. You'd be surprised at what "oopsies" the agents leave in/out.

My husband wrote and owns a complete listing program and it is for sale. With it you can completely avoid the mls and the realtors.

APOCALYPSEFUCK is Shostakovich says

The NAR should be indicted under the Continuing Criminal Enterprise Act for advancing an enterprise based on fraud.

Broker fees should be limited to $25 per transaction, maybe a tip or a handjob if the seller or buyer is pleased and wants to bother.

The ones who got the short end of the stick were the workers who appraised the homes. Lots of them got the axe if they didn't comply by increasing the price of the homes. Maybe they should work with the banks and skip the middle-man (realtors). Association of Appraisers? How's that. Where's my 20%? teehee

How about a business that uses appraisers *and* someone to check the home for potential problems to alert future homeowners (bugs, roofs, appliances, walls, electrical wiring, etc.) so people won't buy so called "money pits". The financing can be done after the first two jobs are completed. The mortgage companies should have the same fees so homeowners don't have to shop around for the best interest rates (and avoid rip-offs). The company should also have CLEAR information so the fine-print information is spelled out more clearly. Former realtors can do the yard work. :)

Randy H

Well said, thanks

You can buy a house with one click from ebay buy it now.

A house sold to a corporation whose only asset is the house can then be purchased as a single share of stock on etrade with a $25 commission.

- in my perfect world

jan says

My husband wrote and owns a complete listing program and it is for sale. With it you can completely avoid the mls and the realtors.

Sight unseen I can tell you this is worth zero dollars. Sorry. MLS is a legal barrier, not a technical one.

The other part of this the Supra Key system. I hate paying dues to NAR, but plain MLS access with out Supra Key access makes working as an agent very difficult.

If we really want to change the system, lets force the use of an open exchange that RE agents must use for the submission of offers. If it is required that the sellers could login at any time and see all of the offers that have been submitted, it would remove a lot of the "shade" from the current situation of agents "loosing" offers until that nice double ender comes in and they tell the seller it is the best offer on the table.

Reader says

I also wanted to mention off topic, this crap about "Insult Another User" Patrick you better review your map of NJ.

I'm pretty sure Patrick didn't create that map.

All this fascination with the MLS makes me wonder if what causes a lot of the scum in the RE industry is understood.

The read side of the MLS is all over this Internet. Surly we know how to go to Redfin and look at listings. The write side can be had for cheap. Check out 4salemls.com.

But until you deal with the dirty issue of places like California allowing dual agency, scumbags will still have it easy. And just outlawing dual agency will not do much. Agents will still "lose" offers until that double ender comes in and just have another agent in the office write it up.

We need an open offer submission system so sellers are guaranteed to be able to see all the offers.

Fannie Mae knows about this problem and has built an offer submission system to try and deal with it. With this system in place, the agent is reduced to marketing the property and pushing the transaction through. No more f&*king with the offers and cherry picking the double ender or the one that offers up the kickback. The seller can now get the best price for the property and the buyer is able to buy in an open marketplace. Slime ball agents can now go and sell used cars at a pay here yard.

realestateinsidernews.com/foreclosure/fannie-mae-homepath-offer-system-update

I am all for getting ride of NAR. They have ruined enough lives with their "always a great time to buy" bulls(*t.

But I am all for keeping the minimal state licensing requirements in place for write access to the MLS or deal in RE for a fee. Take that away and the slime could be even thicker.

There are lazy people in all aspects of industry, you can't blame the entire industry because one guy wanted you to do some drive bys. Being a real estate agent is one of the toughest jobs you can have. Imagine going 6 months plus without making a single dollar, and then when someone cries about a 3% commission being too high, you'll just look at them and say, how much money have you made the past 6 months? How much stress have you dealt with? How many times have your customers called you at 9pm, and you realize that you NEVER HAVE A DAY OFF, and you NEVER HAVE A BREAK FROM WORK? We make big chunks at a time, because normally we make nothing, and we work 24/7 throughout the year, with the hope of having a vacation thrown in there somewhere, where maybe we're not answering the phone all day. Don't misunderstand me, I love my job. But, you clearly do not understand what this job entails, or you would not be so concerned about a measly 3%.

People just simply do not understand. That number that was derived for the commission we earn factors in all of the hours that we work for zero dollars. The majority of real estate agents are not rich, wealthy, snobs that just drive around in a beamer waiting for money to come in. The majority of real estate agents are not these slimy salesmen that fool people into buying houses that they cannot afford. The majority of real estate agents are making enough to just barely scrape by. So you may say, why should I pay more because everybody else fails to close a house? Because that's the nature of the business. You pay our salary, because the reality of the situation is that you need us. Yes, you can PAY for a real estate attorney, but they will cost you more than I will as a buyer, and as a seller they will not help you sell your home, they will not help you understand how the market works, or run comps, or deal with the assholes that put in stupid low ball offers, or deal with all the problems that arise with trying to sell your house.

Opening a few doors and telling people what a great time it is to buy a house is working?

noshow says

Being a developer, I would like to develop a platform to help out the little guys.

So, if anyone here on patrick.net has any great ideas,I would like to hear them.

I would be open to give the person with the best idea 20% of company. Let get rid of NAR and their realtors..

Sir,

Realtors have a fault in that they would have you buy a house when its overprices.

American Lawyers on the other hand, have lobbied to create CRA, Subprime, and gamed the system. They have done such a good job that housing is overvalued while US jobs fleed our shores.

The Legal Industry also collects > $860B/year from its cumulative fees.

So you should be mad at those who shredded the middle class, and figured out the ponzi scheme to run up housing prices.

And Lawyers are so clever that they will say its not them who did it, even when the factual data is clear.

Be well my friend - and think about why we are here.

The NAR registry should be a cookbook.

Not completely true:

Bill Clinton had a 0.6 of a mea culpa:

https://www.youtube.com/embed/BMPPGlOpUiM

http://www.businessweek.com/the_thread/hotproperty/archives/2008/02/clintons_drive.html

https://www.youtube.com/embed/cMnSp4qEXNM

stoni23 says

How many times have your customers called you at 9pm, and you realize that you NEVER HAVE A DAY OFF, and you NEVER HAVE A BREAK FROM WORK?

I bet you'd like the job even less if the marketplace decided the commission.

This reminds me of my car dealer friends, who think they add value but don't realize the value they add is to the dealers' bottom line. Realtors, car dealers, mortgage brokers aren't working on behalf of their clients, otherwise they'd be working to get you the lowest interest rates or warn you that the (insert product here) is about to collapse or at least be cheaper next month. They have no fiduciary duty.

There was a house by my old one that was 1.1 Million in 2007. By 2011 it was on the market for 900k. I dropped by to take a look around, and the Realtor was telling the visitors to buy now! Of course, it dropped another 200K after that. Was that her real estimation of the market? Was she driven by the commission? Either way, why does one have to pay for that crappy advice?

I haven't even met too many that understand how financing really works, or what a MBS is exactly.

Entitlemented says

Not completely true:

Bill Clinton had a 0.6 of a mea culpa:

https://www.youtube.com/embed/GkAtUq0OJ68
http://georgewbush-whitehouse.archives.gov/news/releases/2002/06/20020617-2.html

Redfin business model is kind of like that isn't it?

I was listening to Patrick M. Byrne on a podcast today, he was saying that there is a sea change going on in all centralized authorities. This was because centralized authority was necessary in the past to authenticate transactions. But with today's technology that is totally possible on a pier to pier basis.

Besides the centralized authorities have proven themselves to be less than bona fide.