patrick.net

since realtors aren't necessary and don't do shit, bypass them if at all possible.

Realtors will steer buyers away from FSBO, the last realtor that stopped by told his buyers the cedar siding on my house was asbestos, I don't say anything, between him and the buyer knowing it all, they can pay more, the realtor makes more, the banks make more, it's all good.

Call it Crazy says

Really, people still pay 6%... that so 1990's.....

Exactly, I've seen realtors offering 2% commissions in my neighborhood. Then again, the homes are all $300k-$500K so that's still a sizeable chunk of change. I think REDFIN's commission is 4.0% with a $5500 minimum... So your house has to be atleast over $150K to start seeing real savings.

But once again, the 6% and 7% cost of selling is a myth that is perpetuated by housing bears.

6% of nothing = "0"

Housing,Autos and pretty much anything optional will have to be reset because Joe/Jane Smith cannot afford to keep them up anymore.

Example A:

2012 Silverado ...Joe see's & Joe likes but he brings home $32K a year and when he looks at the $44K sticker he remembers the home ATM has been shut down since 2008. Silverado sits on lot till paint starts peeling from exposure.

Example B:

2300 SF home...Jane lust after it because #3 is on the way and they have outgrown the 1600 SF , 2 bedroom pad they now own. Jane looks at the flyer and rubs her forehead when she see's the 220K asking price. Jane knows they cannot afford more debt on the 32K Joe makes even if she goes to work making 32K to suppliment Joe's salary... The childcare would eat up her earnings.

Joe & Jane can afford nothing new...NOTHING my friends...and 80% of the American public see Joe & Jane every morning when the look in the mirror.

Time for a reset...

Realtors claim 6% ownership to all property in America for the same reasons that slimy lawyers claim 33% ownership and greedy politicians claim 75% ownership of all property in America (25% Federal tax + 5% State tax + 45% Death tax = 75%)

Realtors are kinda dumb to work for so little.

Patrick, I've been trying to buy a house for my parents, and I've been thinking about this same ridiculousness.

Let's do something about it instead of just complaining. I'm a software developer and entrepreneur. Anyone interested in teaming up with me to develop some kind of application/website/mobile solution to compete with the realtor?

Patrick, you seem to be tech savvy and also have a keen eye for opportunities. Get in touch with me if you are serious about competing with antiquated customs.

E-man says

Another useless post by EconPete. Owners can always, always do a FSBO. No one puts a gun on their head & says they must pay 6%. They chose to engage a realtor for the service.

The point of this post is that the buyer pays the realtor fees in real terms by paying about 6% too much for the home. The buyer has no control over any individual housing sale utilizing a realtor or not. Even if the buyer doesn’t use a buyer’s agent and the home is listed with a seller’s agent, they still pay for the realtor. This is my point! I'm trying to tell sellers to avoid using agents if at all possible to reduce market collusion.

Thanks for not taking the time to understand the post before you deny its validity and make a fool of yourself, again!

I wish it were this easy, but there are two big problems with this.

1) The majority of FSBO sellers are, by all outward observations, greedy as hell. FSBO houses are always overpriced because they have the "make me move' mentality, they'll just sit until you overpay. They are also cranky when you suggest their house in overpriced, sometimes I'd rather talk to a rat realtor over a clueless, angry house owner.

2) People continue to use Realtors to sell houses, because it's just that thing you do. Until it's heavily advertised that not using them is not that difficult and saves you lots of money, that will just continue. Your best bet as a buyer is to work with the seller's realtor to get the best deal; they'll want the double commission and will likely screw over the buyer to make it happen.

EconPete says

More sales would occur if there wasn’t a 6% barrier between the seller and the buyer, and the purchase price would be lower for the buyer as well.

This is a weak distorted argument. I'm the first one to agree that Realtors aren't needed, and in my experience when I bought in '10. I had a hell of a time getting a realtor to even give me the time of day, if you weren't calling him for his fax number to fax over a signed contract before you even saw the house. That 6% did not hold up the deal though, it was their lack of professionalism and constant price fixing strategies, like talking about multi bidders, when I knew damn well the property in question has been on the market for 27 months.

My biggest gripe with them would also be, you call the number listed in the front of a house, then the Realtor acts aloof, like they can't be bothered with you. You have to then dig up a buyers agent to call him.
You call a buyers agent, and they are more interested in selling properties they've been coddling.

Also buyers agents treat you like slimbag recruiters, you get one shot with them. They represent you on one deal, and if that deal falls though for what ever reason. They stop taking your calls, or answering email.

I had to dig up a commercial realtor I knew from the 80's to help me find a house. After I enlisted his help, I had a signed contract on my house with in a week.

But actually in the end, at closing the selling agent and my buyers agent had to split 3%. There wasn't anything in the deal for them.

I privately gave my friend a few extra hundred dollars to make it worth his while, against the advice of my title lawyer.

Honest Abe says

Realtors claim 6% ownership to all property in America for the same reasons that slimy lawyers claim 33% ownership and greedy politicians claim 75% ownership of all property in America (25% Federal tax + 5% State tax + 45% Death tax = 75%)

Realtors are kinda dumb to work for so little.

Honest Abe == Resident Wingnut. As usual for the wingnuts, facts do not matter at all. When the reality is not sufficient, they just make stuff up.

Some remedial facts and questions to ponder for Abe:

The lawyer 33% is just pure fabrication.

Do you understand the difference between property tax and income tax?

Have you fathomed that we all get something back from the taxes we do pay?

Do you know that hardly anyone pays estate taxes, except the very wealthiest, who have, let is face it, made their wealth on the backs of all other taxpayers?

The difference between Realtors and the government is that Realtors do absolutely nothing useful.

StoutFiles says

1) The majority of FSBO sellers are, by all outward observations, greedy as hell. FSBO houses are always overpriced because they have the "make me move' mentality, they'll just sit until you overpay. They are also cranky when you suggest their house in overpriced, sometimes I'd rather talk to a rat realtor over a clueless, angry house owner.

Every seller has a "make me move" mentality. FSBO means that they'll bypass the realtor fee and either pass the savings on to the buyer, or not. It's their choice.

Even if you use a realtor, you still have to deal with the seller. You're crazy if you think that it's worth 6% of the sale of a home in order to not speak with someone. But then again, it's a free world.

If you can find a realtor that can have a reasonable conversation without trying to push you into a sale because they desperately need the commission, more power to you. It's a useless profession that does nothing more than sucks the $ out of people who can't read the newspaper, use the internet, or read FSBO magazines.

StoutFiles says

Your best bet as a buyer is to work with the seller's realtor to get the best deal; they'll want the double commission and will likely screw over the buyer to make it happen.

Your best bet as a buyer is to use a realtor that will likely screw you over to make the sale? Makes absolutely no sense - your best bet is to buy a fsbo.

I have a friend who's a realtor, although she hasn't sold anything in a couple of years. She thinks she's necessary to a sale, and constantly complains about people who look & don't buy or don't want to spend any money. Now is the time to buy - because she desperately needs the commission dollars now.

She brags about ethics and disclosures and all that other shit they taught her in the mail-order school she took 15 years ago... but they're shysters. The only goal of a realtor is to list as many houses as possible so that they can sell some of them. they don't give a shit what the buyer wants and snipe about them behind their backs.

Like printers, realtors aren't even relevent anymore.

So, many just focus on the 6% and argue that it is only 4% and try to put this issue to rest. Nonsense. The fact that someone, who does the same amount of work regardless of the value of the place, gets paid as a percentage of the sale is absurd. Realtors should get paid a fixed amount. Period. I carry around a large wooden percent sign when I go to open houses, and at the mere sight of a realtor I chase them with it. If I ever catch one of them, I'll shove it as far as I can get. :)

I think another reason may be that they have a monopoly on the market. They act like it too.

Justme says: A realtor does nothing useful but the government does". Hahahaha. The government? Hahaha.

If realtors committed half the financial fraud that government participates in every day, they'd all be in jail.

You whiney libs still haven't figured out the secret. Rather than trying to FORCE an entire industry to change, beat those slick realtors at their own game. Go get your own realtors license and save the 6% yourself - on every deal!!!

Problem solved, now you can go whine about something else.

Call it Crazy says

RentingForHalfTheCost says

The fact that someone, who does the same amount of work regardless of the value of the place, gets paid as a percentage of the sale is absurd. Realtors should get paid a fixed amount.

There you go, a smart answer!!

That's what I always think... does a realtor that sells a $600K house deserve DOUBLE commission of a $300K house?? Don't they have to perform the same services regardless of the actual cost??

Perhaps it does cost twice as much ($30K vs. $15K) to sell a $600K house as a $300K house. Maybe there's twice as much marketing and it takes twice as long. I can almost accept that.

But why is the BUYER'S agent's commission also a percentage of the purchase price?

I know that "it's always been done that way", but does it really cost twice as much to help someone BUY a $600K house as a $300K house?

Aren't most of the buyer's agent's costs fixed, regardless of the size of the deal?