patrick.net

ChrisKolmar says

For example, I don't pay attention to car salesman when I buy a car or eye glass salesman when I get new glasses.

You should "pay attention" to the auto snake oil salesman. If you don't, you're screwing yourself. But then again, look at the job you do. Like a car salesman, you wait for subjects, pounce, fill out a bit of paperwork and wait to collect money you didn't earn. I'm not trying to attack you personally - just an observation about realtors in general.

Realtors are useless. Their "knowledge base" is an outdated system called the MLS, which used to hold and corner on the market for listings.

all realtors do is put up a sign and wait for people to buy. They take a commission for this - and attempt to use fear & intimidation to keep or gain customers. For example, telling people that they complete all of the notifications necessary for a sale.

they do a fraction of what a re attorney (a real professional with education) does for alot more, with crappy results much of the time. They complete forms that anyone can get off the internet and the "referrals" they give for inspectors, etc are laughable.

Realtors are leeches whose "profession" is waning and, sadly, require no education, experience or service/product.

EastCoastBubbleBoy says

suddenly a few short years later, the $180k home is now worth $350k (or more).

"Worth" has NOTHING to do with asking prices.

I largely agree with the general sentiments about realtors, but my realtor is actually quite honest and listens to my wants and needs. She lets me look at my own pace (I've been renting in the DC area for 5 years and looking at RE occasionally with her for 2) and never complains.

The key is to find a good realtor through referrals or keep trying new ones until you're satisfied. You can tell after the first ride along if you've found gold imo.

Fast food employees work harder than real estate agents. So it's reasonable to expect unskilled labor like real estate agents should earn less than a fast food employee.

elliemae says

But then again, look at the job you do.

I don't get it, I'm a product manager for a website...

killerhertz says

The key is to find a good realtor through referrals or keep trying new ones until you're satisfied. You can tell after the first ride along if you've found gold imo.

Pretty sure that's the answer. It's just hard to test drive agents.

killerhertz says

but my realtor is actually quite honest and listens to my wants and needs.

There are certain people who when one on one "actually appear quite honest" and listen to "wants and needs" ...for money.

I don't think people here hate all real estate agents. It's the system that is so rotten that it is despised by many.

Just read patricks book. If you are not already aware of, you will read a lot about the kinds of fraud that goes on there. How brokers hide offers, fake offers, lie about offers. How they screw both buyers and sellers to make themselves or their flipper friends lots of money.

Commission isn't where the problem is, it's the lies and abuses that are not spoken about. Now I've heard that some places try to make it more transparent as a selling point, like redfin, but I can't confirm, could be all the same for all I know.

But reality is that in real estate you are dealing with a system that is rotten and corrupt through the core. And I think this site teaches both buyers and sellers to be aware of it, detect it, and now to deal with it.

FortWayne says

I don't think people here hate all real estate agents. It's the system that is so rotten that it is despised by many.

Best answer yet. Thanks FW!

RE agents in my experience in 2010, I had hard time finding one that wasn't cherry picking the most optimal potential buyer. Don't forget that in 2010, right up to buyer tax credit expiration and for a short time there after, Realtors were still optimistic that the RE market was going to rebound back to peak values any day now.
So when I told them I my price range was between $120K to $175K they weren't interested in that deal at all. Sure there houses out there going for that, but those houses were for THEM(the investor class with cash), not ME the lowly would be domestic home buyer.

I had to dig up a retired RE agent I did carpet for back in the late 80's to actually be my buyers agent, after I found the place I'm in now.

Real estate agents' financial interest (higher sales price for a higher commission) are in direct conflict with the buyer's financial interest (lower sales price).

For the seller, the interests are aligned but I think a 6% commission is steep, especially for a more expensive home. Imagine a home that sells for $500,000. At 6%, the seller pays $30,000 in commission. The buyer and seller agents each pocket $15,000. For what? Putting it on a listing service and taking a dozen digital photos?

Sellers should negotiate a better deal with their agent. Say, a flat fee of $1000 for listing, a monthly retainer of $100, and a 10% commission on any amount above a mutually agreed fair market value. Example: Seller and seller's agent agree FMV is $500,000. Home sells for $550,000 after 6 months. Seller's agent gets $1000 flat fee + $600 (6 months) + $5000 (10% commission on above FMV) for a total of $6600.

As for the buyer's agent? Sellers should simply state they aren't paying his commission and that he'll have to get it from his buyer. When buyers are on the hook for the bill, they'll wise up and pay their agent in a way that doesn't increase with sales price.

Until APOCALYPSEFUCK comments on this thread, it is incomplete.

People are just frustrated because ideally the process to purchase a house should be as seamless as purchasing jeans in a department store. However, that's not what we have, instead we haggle and hassle like in the middle east farmers market and obviously people are scared that realtors are not looking out for their best interest and may fleece them.

CaptainShuddup says

RE agents in my experience in 2010, I had hard time finding one that wasn't cherry picking the most optimal potential buyer. Don't forget that in 2010, right up to buyer tax credit expiration and for a short time there after, Realtors were still optimistic that the RE market was going to rebound back to peak values any day now.

So when I told them I my price range was between $120K to $175K they weren't interested in that deal at all. Sure there houses out there going for that, but those houses were for THEM(the investor class with cash), not ME the lowly would be domestic home buyer.

I had to dig up a retired RE agent I did carpet for back in the late 80's to actually be my buyers agent, after I found the place I'm in now.

I've experienced that too. When I told an agent I was looking for properties sub-$100K, he politely told me that I wasn't worth his time. I found another agent who was more hungry/eager and understood I was approaching this from the perspective of an investor. We moved aggressively and fast and I didn't waste his time - I found what I wanted in a couple weeks, spent another couple weeks on due diligence, and shortly thereafter closed all-cash.

With the internet and online listings, these days a buyer's agent simply acts as the guy to let you in the homes you are interested in and handles the administrative work to close the deal. Nobody is going to scour listings and go through past sales and tax assessments with as much detail as YOU. It's your money on the line, not your agent's money. Use him and drive him like a horse - you are in command and your horse doesn't care about the mission at hand. He only cares about the bag of apples that you are dangling in front of him. Tame the beast and he will serve you well.

And obviously guys, this is just an analogy. Don't whip your agent like a horse. :)

http://www.youtube.com/embed/UlXMboPnETU&feature=related

ChrisKolmar says

Why do you guys hate real estate agents so much?

Same reason people hate used car salesman. Whenever there is a big purchase that happens rarely and the customer isn't going to repeat business, salesman take a very adversary role and try to screw the customer as much as possible. After all, the salesman isn't going to get repeat business from the customer one way or another, so it makes sense for him to fleece the customer the one time he can. This is why all short-term relationships are less healthy and mutually beneficial than long-term relationships.

I wasn't going to comment, but, my friend called a listing agent on a Burbank house and was blown off for whatever Realtor reason. She is ok. 'F*ck them' she said.

In a booming market, agents are in strong demand and have leverage to make the rules for buyers and sellers alike. In a weak market like what we have now, agents are hungry. The leverage has shifted back to the client. Negotiate - the worst thing that will happen is that the agent will say no and you can find another one (there are tons of them begging for your business).

Common theme I am seeing is that the incentives are completely backwards and that the commission split is illogical. Both make sense to me.

I like Sky's concept as a potential substitute as I think there is a need for some sort of RE agent/adviser in the transaction.

I'm looking at FSBO as a real world substitute for a no agent concept. A very high percentage of FSBO turn into MLS listings eventually (I'm going to pull a number of like >75% out of my a$$ right now, but I'm pretty sure it is that high.) So there is some kind of need for agents, either in 1) helping do all the mind numbing paperwork or 2)marketing.

Transactions happen so infrequently for any individual (with the exception for investors and people that move very frequently), sellers would pay for guidance in the process past just "taking pictures and putting the listing on the mls".

I think the biggest problem with FSBO is that they are often very deluded about the market value of their property. Their asking price is so high that often times I wonder if that's the reason why they aren't represented by an agent - the home will never sell.

I think if Craigslist came up with a more refined way to post FSBO listings, it could be very successful and revolutionize the real estate market.

IMO, experienced buyers would be happy to negotiate directly with the seller, and financially it benefits the seller for saving on agent commissions.

The only thing that is truly needed in the entire transaction is the closing attorney. I imagine a Craigslist program that works as follows: Buyers would submit their financial info to a Craigslist closing attorney to show proof-of-funds (whether cash offer or pre-approved for a loan). Craigslist would then "certify" them as a buyer that has shown proof of funds when his offer is submitted (behind the scenes the buyer may be have shown proof of even higher funds, but it won't reveal this). The seller can then entertain negotiations with that buyer with greater confidence that he's good for whatever he's offering and he's not wasting his time.

Craigslist could charge the seller $50 to list and charge the buyer $50 for certifying proof of funds.

When they are ready to close, Craigslist would do it for a published flat-fee.

ChrisKolmar says

FortWayne says

I don't think people here hate all real estate agents. It's the system that is so rotten that it is despised by many.

Best answer yet. Thanks FW!

Actually I don't think it is the system. No system can make me lie.

If you are a realtor who does not lie and does not tell me anything about the state of the market, I would have no problem with you. About 99.999% of them all read from the same script. They all say that it's urgent to buy right now, whenever now is.

And I don't listen to them. I do take responsibility for my actions in a deal. But I don't like them. I don't like liars and people who abuse others for personal gain.

Biff

The NAR is a criminal cartel, similar in many ways (and linked) to the big banks/wall street etc... they have become obscenely outsized compared to actual value they bring to our society, like a giant tumor sucking blood from more important areas of our economy.

Due its grotesque size the NAR has the financial means to buy and bribe our political process thus perpetuate its corrosive presence. Realtors are the foot soldiers, carrying out and benefiting from this organizations fraudulent activities.

Realtors are parasites on normal people, exploiting the built in conflict of interest in their "profession" to extract maximum profit from their "clients".

ChrisKolmar says

Shouldn't buyers take more responsibility for their own actions and not blindly follow a salesman?

Some of the blindness is knowingly held over the buyer. The agent knows the buyer won't have access to some of the information the agent uses in everyday work. The agent then uses that information to get the buyer to buy and buy at a higher price.

So if there were any sense that the process were transparent, it would be different. Instead, with so much money to be gained, the agents knowingly use their information advantage so that the buyer buys quickly and for more money.

Once you see the process that way, I don't know how you will be convinced to participate.

Its really lie anything else in any profession: There are good and bad professionals working in the industry. I'll be honest. I had a very low opinion of RE agents for years. When we started looking we in fact met probably 8-9 different agents. Almost all of them were slimy and clearly looking out for themselves. A few tried to use scare tactics on me. We did get lucky and the one we wound up using was fantastic, didn't push us to buy anything and was always spot-on when it came to the type of homes we we liked. This agent busted their ass for us and went above and beyond what was called for. It was an overall positive experience. I'm sure others have had bad experiences.

I'd say part of the gripe comes from the fact that buying a house is probably about the most stressful thing you'll ever do. So of course a lot of people are probably going to have some angst towards RE agents.

FunTime says

So if there were any sense that the process were transparent

Seattle is the home of redfin, and they are all about the transparency of the Real Estate transaction. I'm always more than happy to give any one all the data they want, but the nuance is in the interpretation.

I'm a lousy Real Estate agent, because I don't lie, and lack some of the people skills most associate with a sales person. I know what I know, and have bought, and sold more than a couple of properties.

Real Estate is a lot of money to pay for a place to live. There are all kinds of housing units, and more coming on the market every day. You want some one, especially now, who knows the market, and the value of property.

When some one starts telling me what they want, I shut down. I may not be able to get you what you want, but I can get you what you need.

Let me clarify that with the upper end market place, where it is all cash you can dictate your market.

With a bank loan, you are trapped. Banksters are the enemy, and you want to be done with them as quickly as possible. That is what you need. You need cash, and equity. You need a deal, and park the dream house at the door until you can pay cash for it.

Grow up, get with the program, be brutal, and get a deal.

How's that for warm and fuzzy?

SkyPirate says

With the internet and online listings, these days a buyer's agent simply acts as the guy to let you in the homes you are interested in and handles the administrative work to close the deal.

I just needed his name on a few pieces of paper.

E-man says

Jealousy???

The word is "envy".

SkyPirate says

these days a buyer's agent simply acts as the guy to let you in the homes you are interested in

I left this thread sit here to see if any one would pick up my trolling on this topic.

The thing about Real Estate blogs is that no one who is active in the Real Estate business ever comments. People talk about how things should, or could be, but no one ever tells the truth.

We are in the Real Estate business to make money. If you are looking at something else, rent. There are plenty of great properties to rent.

If you are buying a property you should be buying the property with the idea that you are going to make a profit. If you are looking for a nice place to raise the kids, or some excuse like everybody has to live somewhere, rent.

I especially love all these nickle, and dime players telling me they are cash flowing properties. What is this, 1980?

We are in the business of Real Estate to make cash.

We buy low, and sell high, and we trade in cash, or get to cash as soon as possible.

There is no top, or bottom to the Real Estate Industrial Complex, there are only good deals, and bad deals.

You are getting to cash, and grinding out the rest.

I went looking for this thread on the Real Estate forums, and couldn't find it.

Anyway, what you hire a Real Estate agent for is to know the market place.

You hire a Real Estate agent to know what a good deal is.

Anybody can tell you what market conditions are, or look up tax records, but an agent knows the market by experience.

I've seen good deals in every market there ever was since 1972. That's what people pay for, but the only reason that I have time to be here today is there isn't a deal to do.

This Real Estate market place is driven by idiots, and every Real Estate agent who knows anything knows that.

An idiot comes in, loaded with data, and wants to buy something, anything, just cause it seems like we are at the bottom of the Real Estate market place. What a bunch of morons.

I lost this thread in the forum too.

Thanks for the insight David. I don't think the average person has any idea about the market and has very little data on the subject. Real estate agents *should* be the one to show and decode that data in a digestible way and xperince would play into that.

On the flip side, the incentive structure prevents most agents from making unbiased recommendations (just by human nature). So it might be better if they just look up tax records for you and don't give recommendations on market conditions.

ChrisKolmar says

the incentive structure

A Real Estate agent is in the business of Real Estate. Every Real Estate agent I know is buying, or selling property for themselves.

My area of expertise is called don't wanter properties. If you don't want it I might take it to fix, and resell. Other agents buy for cash flow, others work with new construction, and some finance projects.

Every agent I know has a hand in the game, and has skin in the game.

You, the buyer, and seller are an add on. I'm looking for property, and not every property will suit me, but it might suit you. I list property that looks like a good deal, and in most cases it's a challenge. My company has brought thousands of properties to market at the direction of other Real Estate agents.

In other words, an agent needs to be involved in the Real Estate business, and know the other agents in the area. You can collect all the data in the world, but it doesn't tell you what is or isn't a good deal.

The very idea that Real Estate is a commissioned sales position is ridiculous, because there is no money in that.

The incentive in the Real Estate business is to create wealth.

Best of Luck

ChrisKolmar says

I lost this thread in the forum too.

I'm glad tis is back. You ask good questions.

Some agents, they can't spell, can't form a sentence, you can tell they barely graduated H.S. some have bad personal etiquette, pushy, they lie to get a listing, often they fill the paperwork out wrong. Since buying RE is such a red-tape kind of transaction with all these different parties involved, buyer, seller, two realtors, appraiser, tax assesor, banker, title company

It's a flippin circus.

ChrisKolmar says

Common theme I am seeing is that the incentives are completely backwards and that the commission split is illogical. Both make sense to me.

I like Sky's concept as a potential substitute as I think there is a need for some sort of RE agent/adviser in the transaction.

I'm looking at FSBO as a real world substitute for a no agent concept. A very high percentage of FSBO turn into MLS listings eventually (I'm going to pull a number of like >75% out of my a$$ right now, but I'm pretty sure it is that high.) So there is some kind of need for agents, either in 1) helping do all the mind numbing paperwork or 2)marketing.

Not necessarily.

1. I can and have paid real-estate lawyers flat fees to deal with real-estate contracts and paper work and doing so cost me hundreds of dollars instead of thousands.

2. Homes that are affordable to a large percentage of buyers, in move-in condition, and priced right pretty much sell themselves where there's traffic on foot or via the web.

HOWEVER

1. Most buyers are convinced that they need an agent to buy. My wife told a prospective buyer "We don't care whether we pay a selling agent or knock 3% off the asking price. Hire a real estate lawyer for a few hundred dollars to protect your interests and you can pay thousands less" and he came back with an agent that earned a few thousand dollars an hour (as little as 40 hours of training) versus the lawyer's few hundred (four year under graduate degree plus three years of law school) to hold his hand. Most of those have the agent drive them around to listings and steer them away from FSBOs which won't bribe at least the selling ("buyer's") agent.

2. The places buyers search on the web are all fed by the MLS.

So to make a fast sale likely (you have carrying costs if you're not living there) you need to pay to get a property on the MLS and offer a big enough bribe that selling agents don't steer their "clients" away from your property too strongly.

Transactions happen so infrequently for any individual (with the exception for investors and people that move very frequently), sellers would pay for guidance in the process past just "taking pictures and putting the listing on the mls".

Sure. I've paid lawyers $400 to deal with up to 3 contracts and $300 for an appraiser for pricing advice where coming up with comparables was not entirely straight forward which aren't too far out-of-line with what other trained professionals billing hourly net for similar training requirement/work combinations. $6000, $12000, or $24000 (at $200K, $400K, and $800K for comparable properties in various markets) would have been ludicrous for the same work even when the package price included amateur photos and staging (which is easy enough - get rid of your junk and create scenes where buyers can imagine living with their junk).

I think you and I are on the same page. You just replaced the word agent with lawyer, which is fine.

For what its worth those that think they are going to save 3% by not bringing in their own agent are almost always disappointed. That's usually already spelled out in the contract with the seller and the buyers commission goes to the selling agent. We almost always do dual and only once did the selling agent give up some commission to make the deal go through, but only when it became apparent that the deal wasn't going to happen otherwise.

everything says

It's a flippin circus.

A Real Estate transaction is a circus, and you need to know how to navigate that.

In order to use a lawyer you need to know what questions to ask. It's the same with all legal matters. The lawyer only advises about the law, and what the law says. The lawyer does not negotiate for you, they can only relay what you say.

Sure all you need is a high school diploma because you never know who will be good. The best Real Estate agent I have ever known drove around in a pick up truck with a dog. He made a ton of money, and bought properties, but he kept the truck.

Of course he retired, and managed his portfolio, and a couple of others, but he still helped people who were referred to him.

What some people say is that Real Estate is a ham fisted industry, of people who work in order to know what is best.

I know that the intellectual elitists, or I should say educational eleitists want Real Estate to be more sophisticated, but it's not.

David Losh says

We are in the business of Real Estate to make cash.
We buy low, and sell high, and we trade in cash, or get to cash as soon as possible.
There is no top, or bottom to the Real Estate Industrial Complex, there are only good deals, and bad deals.

Obviously you get it. A real estate agent is either throwing a life-line or an anchor line to me, and that's how I think of them. It's about money and nothing else. There ARE some very sharp and savvy agents/brokers, but most people end up getting the bored housewife or beginner agent that the company sold training and testing to, and just became an agent. Those kinds of agents give everybody a bad rap. I don't have the time or patience to deal with those two types and they hurt themselves more than anything. Unfortunately those make up a large percentage ofthe agents in most offices of any given company.

A few more reasons...

It takes very little time and education to get started. Hence, it's not very respected among professionals in general. The really good agents out there hate this.

Their primary objective is to move property. The details and the benefits to the party they are representing aren't as critical to them as long as the property moves. Of course some of the more experienced ones understand that customer satisfaction means repeated business so they are teetering on a fine line.

Because it is a relatively easy occupation to get into, there are simply too many of them.

Their success depends on how consistently they can get property to move. Unfortunately, this often involves tactics that aren't in my best interest.

If I am a buyer or seller, my agent's interests are misaligned with my interests causing me to be careful and suspicious.

There's too many bored house-wife types in the industry with limited experience. There are many agents out there that work hard and have plenty of experience to be fair. But most do not fit into that category from my experience.

Back in the 2000's there were alot of real estate companies teaching classes on how to become an agent with the testing too. Any given big company had about a third of the agents that never moved any property at all. The few that did sell a couple of properties made the whole process a living nightmare for everybody involved, and in my opinion those companies shot themselves in the foot. But, those same companies are big and have control over the whole system because of the total numbers that they sell in an area. The banks walked all over those inexperienced agents really bad also, and that hurt a lot of buyers. Most experienced agents and people in the real estate industry saw some fall-out coming, but maybe not to the extent that it went.

If you have free time and are interested in buying I suggest you make looking at properties a hobby. Real estate agents are part of the entertainment. After reading Patrick, looking on line for a few years, and visiting a hundred or more properties you will know the score. Also, if you have no friends, are lonely, or want to meet people, real estate agents are always available. They are very friendly if they imagine you might buy when the action is slow. But like waitresses who work for tips, don't expect them to be totally genuine. If you are perceptive you will learn who is who. Don't expect them to know the whole story. Some don't know much at all but will happily provide a supply of lollipops and sunshine. Don't expect them to tell you the whole story, ever. Don't expect them to school a fool. When you know more than they do consider buying.