patrick.net

errc, you would have saved a lot more if you would have gotten a real estate license. You paid too much.

elliemae says

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.

A lot of sellers think their house is worth more than it is. While Realtors want to sell the house for more than its worth, they want to sell the house period. It does them no good to be the realtor for a property so overpriced no one will come look at it, and then be dropped in 6 months. Realtors are usually able to convince the seller they won't sell the house at that price and to price it lower.

elliemae says

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.

As a buyer, the sellers agent will usually pick your lower offer over a higher one with a buyer's agent. 3% of 300k is a lot less than 6% of 280k. $9000 vs $16800. It makes perfect sense to have a realtor who wants your lower offer over all the others.

As for the FSBO in my area, it's practically non-existent. A little more if you include the Zillow "Make Me Move" houses, but those are comically overpriced for anyone dumb enough to make an offer.

Honest Abe says

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%)

Um, try to get your facts right. Lawyers only get 33% on cases they take on contingency. That means they take all of the risk, and you pay NOTHING unless they win.

"Death tax" is only paid if your estate is worth over $5 million, and if your estate is worth $5,000,001 dollars, you pay the tax only on that $1. Federal Estate tax is currently 35%, not 45%. Some states have an additional Estate tax, but there is NO state Estate tax in California.

theRebel says

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?

I was running site to match sellers with buyers for three years to see how its work in real life. We got plenty of inventory searchers but very few posters. We come to conclusion that market is not ready yet. It was easy for stock market brokers, where stock is not treated emotionally, nor invasion in private live. So far 6% commission is implemented to the price regardless who actually pay for it. Often at cost of 2-3 years appreciation or principal paid down.

Realtors are jokes. I only need a minimum wage "fast food" worker to unlock the house to show it to me, otherwise I only need the internet to search for a house.

If real estate brokerage was easy and profitable, 80% of those licensed would not leave the occupation within 1 year and 90% within 5 years. As one of the 1% in the field longer than 20 years, I can say many agents are paid too much and most good agents are not paid enough. The knowledge, skill and expenses expended on behalf of a client where payment is only made if and when the client is 100% satisfied is a small price to pay. Attorney's charge 25-50% for contingent fee cases. Consumer pay waiters 15-20 percent for a simple service where the waiter has a base salary and perhaps benefits. Truly 6% for professional services is a bargain in the context of other services. Try to get a doctor, accountant, engineer to work with no guarantee of payment. Good luck.

Bruce Ailion says

Truly 6% for professional services is a bargain in the context of other services.

Truly professional services? What? What exactly does a Realtor do that is so special?

1) Unlocks doors.
2) Finds houses that are easily found online.
3) Compliments house as you walk through it, attempting to hide flaws with words like cozy.
4) Does paperwork that someone can be hired hourly for.
5) Lies about other offers so you'll pay more money.
6) Takes a % of the house cost instead of a flat fee, regardless of how much work they actually do.
7) Tries to lock you into a contract so you can't escape working with them.

Stout

It appears you shop for REALTORs based on price and get what you pay for. I provide sellers and buyers expert market analysis. I broadly market the property to tens of thousands of agents and hundreds of thousands of buyers, advice clients how to prepare their home for sale, bring the experience of 4000 successful negotiations and the negotiation skill and knowledge and experience as a licensed attorney. My clients save time and money and are happy paying a professional fee. Many buyers pay a fee above the seller offered commission to be represented by me and my firm because they know the value of professional representation. I am happy to work hourly, no buyer or seller is willing to pay the higher amount that would result from that compensation system.

The way I look at it, you calculate what you pay the agent, and then ask if his services provided that much value to you.

In my case, buying a $140k condo, my share of the agent's fee (it's split 50/50 here) was about $5000.

Here's what my agent did for me to earn that $5000:

* Accompanied me to seven or eight banks in search of one that would lend me money (we didn't find one, so I had to purchase with cash)

* Accompanied me again to some of those banks to see if one would lend me money to renovate the place before moving in (we found one, and I borrowed $30k and paid it back well in advance of the scheduled end of the loan)

* Did all the research at city hall to obtain past ownership records for my building

* Pulled up past sales in the same building so that I could both get "comps" and estimate how the value will probably change in the coming years

* Explain any RE terminology unfamiliar to the average person, and also explain irregularities in the building's history (they had sold off part of the land to another builder, who put up a second building which raised the ratio of built land to open land on the plot to a number above what the district normally allows, which makes some banks not want to issue a mortgage on the property).

All in all, even though he couldn't get me the mortgage, I think he earned his money, and I'd be happy to do business with him again.

The problem is that it's a fixed percentage rather than an hourly, or service-by-service (mortgage, deed research, post-purchase renovation loan, etc.), charge. Someone who spends hours in city hall doing research and then buys an expensive house at a high price for cash is paying the same fees as someone who has the agent doing all kinds of things and is buying a cheaper house.

RE lawyers already charge a flat fee, don't they? Already we're seeing flat-fee agents and I think in the future we'll see more of them.

In practice the MLS and Realtors (with all it's faults) still works far better than any FSBO method. That's why most people will always be willing to pay 6% despite advances in internet technology.

I used to work for a FSBO company called BuyOwner.com where the seller could list in the MLS and simultaneously use their extensive FSBO system. They would even refund the ad fee if it ended up selling through the MLS. At least 80% of the listings ended up selling through the MLS, and they sold at a price at least 6% higher since we would always add the commission to the asking price. I saw it happen hundreds of times over with my own eyes.

I started working for BuyOwner after a very bad experience with Realtors selling my home. What attracted me to BuyOwner is the owner told me they hated Realtors and wanted to put them out of business. In reality they were playing both sides. They even paid all the education and agent licensing fees. Doing over 1000 listings taught me what really works. One thing for sure, you are shooting yourself in foot being prejudiced against a system that more than pays for itself.

Do all the FSBO advertising you can and use the MLS, but if the Realtor won't do an open listing send 'em packing. I've found that dealing with Realtors may cost you in terms of grief, but it won't cost you financially in the long run.

You want to bitch about being forced to pay exhorbitant fees for virtually nothing in return, look no further then those scam ass title "insurance" companies. Talk about a goddam racket,,,,,

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.

Many buyers believe this so I tested it. Sometimes listing agents will shaft the seller if they know they can get away with it to double their commissions, but sometimes they really screw the buyer for thinking they would do that. So I came up with a "reverse" screw of the listing agent, and it WORKED. Here goes. Buyer buys cheap cell phone from Walmart and requests an area code known to be high priced -- Beverly Hills or San Francisco. Buyer telephones listing agent using this number. Buyer also uses Seinfeld type bogus name like Dr van Norstrand or Art Vandelay. Buyer MUST know value of area by doing research first. I was able to get the listing agent to concede to a 30% mark down in price in only 30 minutes. I told her I "my plane" was leaving in a few hours and wanted to know is she could show me the property. She cancelled her appointments as soon as she believed that money was no issue and that I did not need to sell a house before I could buy one. The walk through took only 5 minutes and I told her I would call next week. She told me EVERYTHING I needed to know about the sellers, the house and she reminded me that she could "help" me buy it at an even lower price if I selected her as my agent. I asked her how much lower and she gave me a figure. Within hours my wife and her realtor called to look at the house. My wife made an offer at the lowest lowball price over 30% below asking! How? my research found that the house had already had an NOD not disclosed by the listing agent and that it had a date set for auction.

The listing agent knew that she would lose all commissions if the house was sold at auction. The bank accepted my lowball offer because I had NO contingencies compared to other much higher offers. Realtors HATE contingencies because it slows down the closing process and they must work more for the same commish. Also one of the main reasons for a sale to fail escrow are the contingencies.

I forgot, why buy this house? The day it closes I will realize paper equity of about 30% after closing cost expenses. I know that housing prices in this area will drop another 20-30% over the next two years. The price is so low, its difficult to see the price going lower. The cost to build is over three times the selling price. My gain is the rent payments I WILL NOT make over the next two years. BTW my rent = my monthly PITI and the mortgage is a 15 year conventional fixed at 2.7%. In my case, I may have "won", but the sting is still there knowing that Realtors even get one dime for doing nothing more than saying..." and here is the kitchen and here is the living room..." Yeah right.... GET A REAL JOB....!

BTW My offer price was at 1998 values! Watch these prices collapse!

investor90 says

I told her I "my plane" was leaving in a few hours and wanted to know is she could show me the property. She cancelled her appointments as soon as she believed that money was no issue and that I did not need to sell a house before I could buy one. The walk through took only 5 minutes and I told her I would call next week. She told me EVERYTHING I needed to know about the sellers, the house and she reminded me that she could "help" me buy it at an even lower price if I selected her as my agent. I asked her how much lower and she gave me a figure. Within hours my wife and her realtor called to look at the house. My wife made an offer at the lowest lowball price over 30% below asking! How? my research found that the house had already had an NOD not disclosed by the listing agent and that it had a date set for auction.

He does fine work

theRebel says

Anyone interested in teaming up with me to develop some kind of application/website/mobile solution to compete with the realtor?

How would you get around realtors' refusal to share MLS listings?

It has been tried and the public is no interested enough to do it. There are tons of websites for the MILS already or similar ones that download from the MILS. People know they are getting a service and are willing to pay the 6% bc it is worth it. There are many Discount RE service companies
that list for 2-3% but the public doesn't use them. They are almost all out of business. Help U sell, Assist to sell, tons of others bareley make a dent in the market. The Public is willing to pay for great knowledge, service, and the help of a professional. Realtors are neeed and are here to stay...sorry you are so upset that others make a decent living.

Right, then you should do it that way. You have no clue as to what is involved. The public must fee quite different bc they keep the industry going and are willing to pay for the service and expertise of a Realtor despite all the technology around they prefer a Realtor? Technology cost a lot of other jobs but so far the public keeps hiring realtors? Must be a reason that they like.

mike2 says

Technology cost a lot of other jobs but so far the public keeps hiring realtors? Must be a reason that they like.

Maybe the public doesn't like realtors, but also doesn't have any real choice about it.

No one ever asks the buyer if he wants to pay the 6%. Buyers are trapped by the system as soon as the seller signs a listing contract. They agents get in the way and hide information for their own profit, without providing any real value.

Agents prevent buyers and sellers from talking directly to each other.

mike2 says

It has been tried and the public is no interested enough to do it. There are tons of websites for the MILS already or similar ones that download from the MILS.

Doing this on your own seems very confusing and I've not even tried. Just looking for a sales price for a house is extremely difficult. This is done on purpose to keep the power with people who's incomes depend on housing business. If this information was made easily available, for example if the exact sales price of a house was immediately reported to a public website upon sale, the industry would be a lot more comfortable and easy to understand.

The NAR only gets more powerful. Its far far more likely the nar will get laws passed making FSBO illegal (epecially in CA!).

There are already very real reasons to use an agent and not FSBO one being exposure(most all buyers are chauffered around by a soccer mom/agent so they wont see your FSBO). AND the other main reason is LEGAL - I would bet you could make a decent amount of money buying a FSBO then suing the seller for not following the laws on disclosure (If they fail to give you a letter in writing diclosing the lead paint, asbestos, the land fill 2 miles away, etc etc - EZ money for a CA abulance chasing attorney. If you are an agent you know the laws and you WILL ALWAYS DISCLOSE to protect your own ass and the seller.)

KILLERJANE says

Yeah I hate the 6% fee too but I would want someone representing me. I never met anyone I bought from or sold to. I prefer that, keep emotions / conflicts lower. Same goes for people I rent to, except for one time. It's better to not get to personal with $.

So hire a real-estate lawyer to deal with the legal side and optionally negotiation if that's not your thing.

You may be looking at $250/hour or $62.50 per piece of correspondence with a 15 minute billable increment if you don't negotiate a flat fee with some limits (review and negotiate up to 3 contracts for $400 or whatever).

With three years of training in law school to look after your legal interests he should do a _MUCH_ better job than a Realtor(TM) with their 40 hours of training.

Plus $1000 for an MLS listing and lock box you're spending much, much less than the $6000 you're paying a listing agent for a $200K property or $12,000 on a $400K one.

If you're uncomfortable coming up with your own comps for pricing (ex, you live in a state where transfers aren't a matter of public record, there haven't been recent sales) hire an appraiser for $350 for a walk through (c 2006-2008) or $200 for a drive-by.

My wife and I sold two properties that way, using an appraiser to price one and eyeballing sales records the other. We negotiated for flat fees with the lawyers and talked to the buyers ourselves. With a little staging by her and inexpensive replacement of worn surfaces half a notch better than the competitions' rental/sales grade replacement (we also skipped the popular chocolate chip carpet look which we felt looked like rodent droppings) we exceeded competing Realtors(TM) sales prices and undercut their time on market.

I do doubt you'll avoid giving a selling agent their cut. There aren't many buyers who haven't been convinced that they need an agent, even those who initially come without one at which time you tell them that without an agent you'll knock the selling agent's commission off the sales price and that after paying a few hundred dollars for a lawyer's time to look after their interests they'll still save thousands.

"How would you get around realtors' refusal to share MLS listings?" Okay I have done a LOT of research on this. First you have to know IF and how the listing agent is doing this. Here are some tips. We both know that this is done ALL the time ( listing agents to working cooperatively with buyers agents). I contacted the state DRE and spoke to an investigator. The main person who gets screwed over is the seller. You need to look at the original MLS listing agreement, and they won't show it to you. What we have is a failure of the listing agent to aggressively market the property. In response, the listing agent can always say that they listed it, so that's proof they tried to market it . They have a point. But an Broker insider told me that there is NO LAW that says that listing agents must answer the telephone or respond to emails. They acknowledged the practice. Also the MLS systems are DESIGNED to help listing agents get away with this and other frauds against the seller and buyer. if you look carefully at the public MLS websites you might no be aware but the LISTING AGENT IS ALWAYS listed---allegedly so the "Biuyers agent" knows who to contact. This is B.S. because the MLS's have a way to show CONFIDENTIAL information such as name of the seller and other details and disclaimers The MLS's could always input listing agent information only here, but they won't because it enables the listing agent to maintain CONTROL over the listing, and this inhibits "aggressive" buyers agents from getting lower prices. Each MLS uses a database that is published to other Realtor websites automatically (example: Realtor.com, Redfin, Zillow etc) But this database program SUBSTITUTES the name of the other realtors AS THE POINT OF CONTACT for the listing. Many buyers do not know about the public MLS sites and think because Joe Blow realtor has this listing on their website that IT IS THEIR LISTING. We know that is usually not the case. If buyers always went to the public MLS sites including Realtor.com FIRST, they would know who the listing agent REALLY is. Another point, if a listing agent attempts to deceive buyers---and many do this--the MLS systems encourage this by the way they are designed. Example: Many buyers AND buyers agents want to AVOID short sales and/Or bank owned REO's. These can be difficult transactions and delay income if any to the agents on the "buy" side. Many agents REFUSE to take on short sales or REO's. but there are now TWO new tyoes of listings by the sly sneaky listing agents. I call these "Stealth short sales" or Stealth REO's. The listing agent initally lists the property as ACTIVE not short and not REO. This loads the database as a "New" listing. All participants in the MLS agreements get this initial listing. After a few hours to even weeks, the listing agent changes the status to its accurate type. For example "active" to "short". This gets them a lot of traffic until it is listed as a "short" sale. But by then, they have generated a lot of leads to go out and try to scoop up any buyers for a dual agency contract. TO THEIR (not the sellers" advantage. Now the buyer if they REALLY know what they are doing might be able to extract enough information from the listing agent---as a possible buyers agent for the buyer. But there are pitfalls. If the listing agent is willing to screw the seller, why aren't they equally willing to screw the buyers? They WILL--if they can. On Short sales and REO's the banks know what is going on. They keep statistics on each listing agent. If they think the listing agent is not aggressive enough or if they notice the buyer is represented bu the listing agent or someone from their office, they might be curious. So one game of listing agents is to "seduce" buyers into thinking that "the buyer" is getting a deal, when it is not true. I have seen this many times. These sales transactions are NOT transparent and the advantage is always to the buyer who has the most accurate information.

Here are some tips: The listing agent will use different telephone numbers and email addresses for their buyers, sellers and everyone else. Look at all the telephone numbers each agent has! I can also play that game! Listing agents may use a WATS line usually 800 but NOT absolutely required. They see all information about the caller. If they don't pick up immediately, they are sure to check the caller ID to find out if it is a buyers agent. They will not return these calls, unless they have a buyer in their pocket for both sides of the deal. Some listing agents have a "third party" answering service screen all calls. They want BUYERS not other agents.

I have more if you want information, I can provide it.

My strategy is to do this:

NEVER GET EMOTIONAL about ANY property.
LEARN EVERYTHING you can about properties BEFORE they are listed. Think about it---there are many ways.
Carefully monitor the new listings---there are some tricks here. Sometimes other buyers (your actual competition) only look at the latest listings- Big mistake. Some listers are able to make a listing look OLD before it is listed. I saw one listing that was NEW--NEVER been listed (last 5 years), however the property was listed "listed over 30 days", how I don't know, but I KNOW it happened. The seller told me. I never use filters on the MLS. Many excellent listings have the following characteristics: Incorrect decsription. The listing will show LESS or lousy "features" ie NO photos, bad out of focus photos, NO indoor photos. They will show 2 bedroom 1 bath 800 sq ft fixer with no photos, when it is initially listed, but it is really a 3,000 sq ft 5 bed 3 bath custom house less than 5 years old. Once the listing agent gets their buyer they change asking and other data so it looks like they did whatever they tell the bank. On the offer I have now in escrow they did this. It was initially listed 35% higher at only 2 bed 2 bath at small sq footage, when it is really a 5 bed 2 bath larger house with a detached 4 car garage NOT listed initially. Dr van Norstrand / art vandelay asked to see this house within hours. I knew the area very well and was waiting for something like this to come on the market. I had my trusty walmart throw away phone set up for our favorite "actor" , and called as at 8 am. No one answered---NOT a surprise. Two minutes later I called a call... " Dr van Norstrand speaking....blah blah I knew EVERYTHING about the area, house and price information ---LOOK AT THE CLOSED SOLDS less then 90 or 30 days, NEVER contingencies, pendings or asking prices. Appraisers only look at closed SOLD's within 1 - 2 miles same type of house etc less than 30-90 days old. I knew this by my research. I acted VERY stupid about real estate, and she asked me the KEY question. Do you have to sell your house to buy this one? No, I need to buy the house to avoid hotel costs when visiting my sick * (fill in the blanks---be creative here). They will be VERY interested in showing you this property...and SHE WAS. But I had to know "value". I told her that I learned this because my sick* fill in the blanks relative has lived in this area many years and they know many people in the community. I am not at liberty to discuss their illness but they will be sick as long as they are alive...of course you understand many illnesses may make others think badly about one.

That cinched it... she cancelled several meetings and called me back on my cell phone while I was "packing my bags at the bed and breakfast preparing for my flight back to " be creative here-- I said Beverly hills.
"Don't mind the rental car"-- I only need it to get to/from the airport" This what Dr van Norstrand would say. I walked through quickly checking my watch frequently and said fine, I hope my wife likes the kitchen, but it seems too small. What was that price again? She dropped the price to the lowest that she thought the bank would accept ( BTW--the house was NOT listed as a short sale at this time). I asked her if I could close in a month so I could invite some family members without the inconvenience and expense of a renting a hotel or B&B and ts costs. I could buy a car and have it available to anyone who wanted to visit old * be creative here.

It took me seconds to figure out if this was a good deal THATS when I found the Notice of Default AND the date of auction (in two weeks! ). I knew I got a crooked listing agent who wanted to close a deal FAST. The bank is small so who cares if she gives away the property. It's unlikely the bank has more listings available. Other agents saw this also.. I AM NOT AN AGENT. But now she has to HIDE from other agents while trying to get an offer from me. Instead, my wife dropped by with her Buyers agent and MY INSTRUCTIONS. The agent told us he would not insult the seller with out offer. But I said how much work is it anyway. He consented, I made my offer with no contingencies "as is" ...and it was accepted within one day! He said we had no chance since there were "...so many higher offers.." But why did we get the offer accepted ? It's all about the DEAL to realtors. Most are lazy and want the most they can for doing no work.

After we got the bank approval, my Realtor asked me what the hell happened. I reminded him he had a legal obligation to represent us.

He agreed and I told him. BTW I had to advise him HOW I wanted to word the offer. He is a top BROKER and did not have a clue.

He did NOT LIKE what I did...why? If he is supposedly representing us and NOT THE SELLER.

Anyway some more tidbits. I used a 15 yr loan for this one, so I don't want ANYTHING to derail the transaction. NO contigerncies AS-IS EXCEPT loan company appraisal ( price is good), but what if the appraiser sees something " or questionable ? I will have the appraisers report TOMORROW, but next Monday I have MY five inspectors at least checking everything...at my cost. NO reports to the loan company, or escrow, or sellers agent. This is for MY EYES ONLY . I have a statutory 17 day rescission period where I can walk for ANY reason. If the estimates of any repairs, termites etc exceed my predetimined amount -- I am assuming - 2% equity loss over next two years. Now all concerned want me to close the deal, the realtors ONLY want to get paid and the loan company knows I can handle any unknown to them repair costs if any. What i don't understand is that while writing the offer I HAD TO DO ALL THE WORK, Where is my so-called representative-buyers agent in all this. I also added other REQUIREMENTS of the seller--and they agreed. ALL PERSONAL PROPERTY to be removed 15 days before close of escrow---target date in ink. Bank liked this one---the target close date. All person to vacate property 15 DAYS before target date close of escrow. Already the seller is freaking out. They need the "cash for keys" which really comes from my down payment to have the cash to move. Too bad for them, so it's HUSTLE timed for last day of the month...how can they rent in the middle of the month? THEIR problem! But I have more-- I ran a Google check on the names of the sellers with keyword "convicted". Paydirt! Now, I am in control , if the sellers start playing games that they can't afford to leave, someone is sick and other excuses, all I have to do is let them know THAT IS KNOW they ( sellers, listing agent and bank) failed to disclose a material fact about the house covered by state law. Serious business. The house is defined UNDER the CALIFORNIA law as "stigmatized" or "insurmountable". ONLY they don't know that I know ...and it is a legally binding requirement they must disclose this in writing, and they have not and I don't think they ever will...because it is "that bad" about the sellers. But I do not care, I want the best house at the lowest price, in fact if they want to GIVE me the house I will take it. ROFL. I told my agent and he freaked out...he said they were breaking the law. The house is only "stigmatized" if it is known. And this will change when I become the owner. I will never have to disclose this when I sell. I don't know it.

theRebel says

Anyone interested in teaming up with me to develop some kind of application/website/mobile solution to compete with the realtor?

How would you get around realtors' refusal to share MLS listings?

Autodialers! Autodialer can take a phone exchange and dial every number in that exchange. Have it look for sellers. Each line can dial at least 1000 numbers a day.

E-man says

To argue that realtors are trying to claim 6% of ownership to all properties in the U.S. when the ultimate decision belongs to the sellers is weak. You're blaming the realtors because the sellers don't know how to negotiate for themselves?

Again, it's the victim's mindset, or shall I say a loser's mindset. It's always other people's fault for your weak and pathetic negotiation skills.

I agree. The post is all conspiracy theory based on irrational hatred. If a seller was willing to list their house at 10% below market value most Realtors would be willing to take less commission. In practice most sellers think their crap is gold. The Realtor knows an overpriced house is going to be a hard sell and they may lose the listing before it sells. In a perfect world, if every house was reasonably priced and sold before it expired Realtors could charge half the commission and still earn more. Sellers are as screwed up as the foolish Realtors who take their overpriced listings.

I've trained Realtors for the past seven years and I've haven't seen what would be called corruption. Incompetence, hell yes. Believing NAR, sometimes. NAR needs to be investigated rather than idividual Realtors.

Efficient Life Church says

I've trained Realtors for the past seven years and I've haven't seen what would be called corruption. Incompetence, hell yes. Believing NAR, sometimes. NAR needs to be investigated rather than idividual Realtors.

Training? How hard is it to say "it's a great time to buy".

LOL. That's NAR's job. I teach them how to better use the MLS, tax and Virtual Tour programs.

Housing Prices Are Cratering says

Efficient Life Church says

I've trained Realtors for the past seven years and I've haven't seen what would be called corruption. Incompetence, hell yes. Believing NAR, sometimes. NAR needs to be investigated rather than individual Realtors.

I hope you're training them in basic economic fundamentals, ethics and honesty.

It's a different class of Realtor who's willing to pay for training. The ones I interact with are usually top producers. They already figured it out. The dishonest ones are the ones who are struggling. This still is a business based on referrals and reputation. It's highly counterproductive to work unethically.

Believe it or not many buyers and sellers are highly unethical as well and they usually wind up with the unethical Realtors. For example take the way investor90 conducts himself and recommends others conduct themselves. He rationalizes that Realtors are crooks so it's OK for him to deal dishonestly. If he didn't have someone to demonize he would have to grow a conscience. "Birds of a feather (usually) flock together..."

Most people are honest most of the time. Those who keep running across unethical people need to take a look at themselves.

After 9.5 years quite purposely renting, we've decided to dig roots in the North Bay area and buy in Marin Co.

Prices are at ~ late-2004 range now....it's almost certain to be going down from here over time...but, we have assets and 7 year ARM's (our preferred, as we have good assets) are now 3%. Indeed, assuming one has 20% down payment, the combination of 2004 prices and unheard-of low mortgage rates for those qualified, make for a more compelling 'equation' to buy in this area than in 15 years. I'm a bit dismayed that the sale prices haven't come down more than they have - after all, in CA, one's taxes are based on sale price and not assessed values...so a lower sales price is more meaningful in CA than most other places around the US.

I'm now seeing firsthand the work that goes into buying and selling agents on a transaction.....and I'm not feeling that 6% overall commissions is onerous. Mind you, I'm a person that pays all credit card fees in full, has a 790 FICO score, 'banks' with Fidelity Investments and Vanguard as they have no commission paid agents, buy pre-owned vehicles at significant discount to new, etc. I'm not one to give up money for nothing...yet, I still think 6% is not onerous.

I'm in the Import/Export business (consumer durables). We have our specialty areas, but we essentially buy something made in China at X and try to sell for X times 25%. 25% is our hoped-for gross profit. We've been doing this awhile, have deep ties to major retailers in many countries now and have had a good few hits the past 11 years (you might well know or own our products). Because we keep overheads very low, when we find a product that both retail buyers and consumers covet, we make our 25% and keep about half of that as net profit. Those items that are not as embraced as strongly by the market, we don't make as much.

The difference here is that our retail buyers don't know what we mark our products up for (20-25%). Many of them ask for a better price as negotiating tactic, we have to judge the market and respond appropriately. We've been doing this awhile, so we usually go in strong and simply say no to their counteroffer. Most of the times we accurately call their bluff, and some of the time (I remember specifically a BIG deal with CVS some years ago) the buyer walks. But mostly, we get the deal we want at the price we want to them to pay because we did our homework well in advance - as a good Real Estate Agent would be.

Frankly, we and our staff pay little more time to transact a deal at 25% markup than RE agents pay to similar deals at 6% commish.

The difference in RE is that we KNOW the parasitic add-on is 6% and it's tempting to claw that amount of money back. But, each agent doesn't get 3%....1/3 to 1/2 of that is shared with their agency. Further, they are independent - car expenses including all gas and upkeep, tolls, and advertising, phone calls, cell phones, health insurance, etc. and all 1040 basis. No one is paying them a salary - they risk everything everyday to do what they do EVERY DAY and many fail because of this. It does take a special person, and perhaps a bit of good real estate market timing, to make a successful career at real estate. I wouldn't likely make it in that biz - I like business to business sales - as I don't want to have any personal involvement with people other than my friends and family. B2B is more impersonal way to make income via sales.

So, I'm a lifelong successful salesperson that hates to pay any excess parasitic fees for anything...but, 6% in total real estate fees is not in any way exorbitant to me. The good RE agents have earned it and the bad ones don't as they wither away and die.

Welcome to capitalism, folks; it's the unequal distribution of wealth for the successful rather than socialism's equal distribution of misery. Choose which path makes sense/cents to and for you and stay true to yourself in that choice. I choose capitalism.

Nice story...but as you mentioned above, you were the BUYER in the transaction... come back later and tell us when you become the SELLER and tell us if you like the 6% taken out of YOUR column on the HUD-1!!

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I agree...it remains to be seen what my view of the 6% may be when we sell and I have to pay it.

But, I do have precedent. We sold in late 2002 back east (the last time we owned a home), it sold in a weekend at over asking price and although that agent put very little time in selling it to reap her commission....what she did do was pretty spectacular in our opinion.

As the general market in Washington DC at that time was a sellers market, she underpriced the home to to draw in offers (boy, were we ever skeptical of that, but she assured us it is the right strategy and we let her guide us with some reluctance). Indeed, she was dead on - 3 offers a day after the first and only Sunday Open House. She went back to the 3 and said they were all in the same range (they were, + or - 2%) and to make the final offer at a preset time at her office on Tuesday @ 5PM.

The three buying agents came in with their final offers from their clients, we reviewed them and chose the best of the lot. The best offer was one for 10% over asking price...about 8% higher than even our giddy estimates were for the house.

Her efforts, tho brief in time, were herculean in scope and despite both the wife and I being in sales and or marketing...was something we simply could not have done on our own. Frankly, this agent was directly responsible for making us another $40,000 more than our most outlandish expectations could've expected.

In that light, the 6% was an easy amount to pay her - she demonstrated exceptional abilities that we could not have approximated. The next time, with uncertainty that underpins any home selling period in the future, I simply won't know until we get there.

I am preparing for the worst and hoping for the best. If it's 6% we are to pay, I'm going to use the very best agent we can find out there (my current buying agent is very good, but may not be the one we chose for that in 5-10-15 years forward). The great thing about this 6% is that it's pretty much fixed....you can pay a pro or a dog the same 6%. We're gonna' choose a pro and I strongly suspect to again find 6% rather cheap for their level of expertise.

We have that choice - another wonderful byproduct of capitalism we intend to make use of.

jsmarket says

Welcome to capitalism, folks; it's the unequal distribution of wealth for the successful rather than socialism's equal distribution of misery. Choose which path makes sense/cents to and for you and stay true to yourself in that choice. I choose capitalism.

This is very true!

For what it's worth, if anyone is in the Washington DC/Montgomery County, MD suburbs and needs a good agent...in Julie Roberts we found one.

Dunno' if her skills have declined in the ensuing 9.5 years, but she sure called it right in our case.

http://julieroberts.lnfre.com/AgentFeaturedListings.aspx

jsmarket,

Trying to understand your selling story.

Your asking price was less than your original expectations, so you were skeptical.
The final offer was 10% over asking, which was 8% higher than your giddy expectations.

So there was a 2% difference between your giddy estimates and the lowball skeptical price?

In general, is 6% too much?

Between tax payments on transfers, title costs, loan origination costs, and Realtor fees, there is a 10% cost to buy & sell a house.

Is that too much? If your down payment is 20% and you sell within 1 yr, you are looking at a 50% loss for a flat market. Let's say you are in a market with 2% inflation, you put 20% down and keep your house 7 years. Your house appreciates 15% (2% compounded annually). If your house was 100K, your $20K investment turned into $35K for a profit of $15K. You pay back 10% on transaction costs, which is $10K or 2/3 of your profit.

Now, your return on $20K is $5K over 7 years. That is about 3% annual appreciation.

So, 10% on the transaction of a leveraged investment over 7 years turns into 66% of your profits. The Realtor portion is 40%.

The question is, if you know the neighborhood, can drive around and see places that you would like to buy, and can see inventory and purchase prices for free over the internet. Would you give up 2/3 of your profit to have help picking a place?

If houses were cheap trinkets that you bought, 6% would be fine. If they are overpriced things that you can only buy with 4% borrowing costs, then a 6% transaction cost seems like a rip-off to me.

YesYNot says

jsmarket,

Trying to understand your selling story.

Your asking price was less than your original expectations, so you were skeptical.

The final offer was 10% over asking, which was 8% higher than your giddy expectations.

So there was a 2% difference between your giddy estimates and the lowball skeptical price?

Hi,

I'll be specific as it's probably easier to follow that way.

We thought the house was worth $500-$510K; Julie Roberts had us price it at $495K.

The three offers all came in at $490-$500K as I remember it.

It was then she went back to the buyers agents and told them they were all within 2% of one another (absolutely true) and to have your best offer available on Tuesday @ 5PM at her office.

On Tuesday, the 3 agents showed up with their offers and stories regarding their clients. Each buyer was very motivated to buy our home - it showed like a model with a lot of great touches - and one of them went to $550K to make sure they secured the home. my flicking memory of things had one other at $500K and another at $520 or $525K or so.

It happened to be the 'winning' couple had offered and lost a similarly constructed, old home just three doors down from us (we didn't know at the time) just a few weeks earlier. Our home was, frankly, nicer and they offered higher in recognition of that.

Julie Roberts, sales professional, was in our minds the reason we got an extra $40K for our home. Her acumen more than paid the 6% commissions involved off.

The couple that bought the house is still there according to an old neighbor...they put some real money into the house since (maybe $100K), but last time I looked it up Zillow had it at $775K. So, they may do okay on the sell, as well, as it turns out.

"...come back later and tell us when you become the SELLER ?"

Excellent Question!

A real estate developer/Realtor friend told me. Money is made in Real estate WHEN YOU BUY , not when you sell.!

For the most part this is true. Sellers are always selling for a reason. Donald trump calls these reasons the 5 D's of Real estate:

DEBT, DIVORCE, DISEASE, DISASTER, DEATH

These are the reasons most people sell. THESE reasons are MOTIVATIONS TO SELL NOW

When you as a buyers find a seller with EQUITY and ANY ONE of the reasons above are motives for the sale. You "may" have a BUYING opportunity...IF AND ONLY IF insiders such as Realtors don't beat you to the punch. One reason that many people get their real estate license is to get a discount on the sales transaction fees AND/OR to get inside BUYING information ONLY available to agents.

You see, most buyers ARE ALWAYS competing with REALTORS for the best buys. If a Realtor see a correctly priced property it is NOT illegal for them to buy it, even if they are representing YOU as a buyer on the same property. I call this INSIDER trading. In these cases the agent KNOWS everything about the competition: You as buyer! And they are NOT legally required to disclose the fact they are making an offer that will prevent YOU from having a winning offer.

investor90 says

You see, most buyers ARE ALWAYS competing with REALTORS for the best buys. If a Realtor see a correctly priced property it is NOT illegal for them to buy it, even if they are representing YOU as a buyer on the same property. I call this INSIDER trading. In these cases the agent KNOWS everything about the competition: You as buyer! And they are NOT legally required to disclose the fact they are making an offer that will prevent YOU from having a winning offer.

According to NAR which means it's probably inflated, the gross personal income for Realtors by hours worked: $49,000 (median for 40-59 hrs.) I bet they're just buying properties out from under everyone hand over fist. LOL.

What's the difference between a Realtor and a large pizza? The pizza can feed a family of three.

For those of you who believe the value of a REALTOR is opening doors and shuffling paper and lament about the payment, you lack a clue about the value a REALTOR brings to the transaction.
Consumers benefit from a brokerage fee system where it doesn't cost any more to hire the very best. Most consumers do not evaluate and chose an outstanding REALTOR that can and does add value to the transaction exceeding the cost.
Think of it as a wedding, you can to select having it at a Ritz Carlton or a McDonalds. They use similar ingredients; butter, sugar, flower are the same at both. If the cost was the same which would you choose. The service, presentation, experience and taste will be different. In brokerage services the cost is almost the same, but most consumers do not choose the Ritz Carlton service for the same price as McDonalds, who is at fault, is that most posting here blame the REALTOR.
As a REALTOR none of my clients object to my service all refer me to their friends, co-workers and associates. All understand the value I provide to their side of the transaction. I suppose most of you would complain about an $18 charge for a burger at the Ritz or Mc Donalds. It appears the majority of those posting would object to a $3 dollar burger charge at the Ritz while still eating the burger.
Next time you need heart surgery, brain surgery, a root canal, or are charged with a serious crime try to save money find the cheapest, least experienced professional, or go on line and figure out how to do it yourself or have your unemployed brother/sister/cousin assist you then go on line and complain about your outcome and cost.
Clearly experienced professional representation has a value and that value is greater than its cost. If that were not the case and you could sell a home as easy as trading stocks, ordering books, or ordering travel, the market would have eliminated the ability to charge for those services.
I am a REALTOR, I use REALTORS when I buy and sell, I am an Attorney, I hire an attorney when I litigate or need contracts drafted, when I travel, I hire a travel agent to plan my trip; I pay premium prices to eat at premium establishments, in seeking medical care I go to specialists, not a veterinarian to save money. My goal is always to maximize the value of the service by getting the best outcome, not the lowest price. The lowest priced provider seldom produces the highest quality outcome. Think government contracting seeking the lowest price bidder, not highest value return.
If you had a bad experience, hired a bad REALTOR, made poor real estate decisions look in the mirror you will see the source of your problem staring back at you. It is not an industry problem it is a personal problem.

Bwhahahahaha.

Look at the used house pimp's rationalizations and lies.