Today I want to take a tangent and discuss real estate — specifically real estate agents. I have a good family friend that is looking to buy their first home, and their experience hasn’t been easy. That’s not to say that buying real estate is ever easy, but dealing with a real estate agent should be easy. That’s what they’re there for!
Beyond my friend’s transaction, I started thinking about my experiences in real estate, as well as discussions I’ve had with friends and family. Without a doubt, real estate has drastically changed over the last 20 years — even over the last five years since the mortgage debacle. And all of my conversations seemed to point to one conclusion — what do real estate agents really do anymore?
Before you jump to conclusions – I’m not advocating you skip an agent. They still bring some value to both buyers and sellers. What I am going to talk about is what they are supposed to do, what they do looks like in practice, and what value their services should cost.
Let’s break it down.
What Real Estate Agents are Supposed to Do
The first thing we should look at is what real estate agents are supposed to do.
According to the National Association of Realtors, a buyer agent should:
- Provide you with information detailing current market conditions
- Help you with financial information, such as how much house you can afford
- Guide you through the home purchase process, including getting financing and what information you’ll need to provide
According to the National Association of Realtors, a buyer agent also can:
- Help you understand: real estate values, taxes, utility costs, municipal services and facilities, and local zoning ordinances
- Research homes for you using tools like MLS (Multiple Listing Service)
- Show you homes best-suited to your needs
- Facilitate the negotiation of a home purchase
If you’re selling a home, here’s what a real estate agent is supposed to do for you:
- Provide up-to-date information on the market to determine a reasonable asking price
- Show you the terms and conditions of competing properties
- Develop a marketing plan that could include repair suggestions, open houses, advertising, etc.
- Provide security for your home when it is being shown to strangers
- Negotiate the best price for your home
- Monitor the sale process, renegotiate as needed, and resolve issues prior to closing
Now that we have a good baseline, let’s take a look at what they really do.
The Internet Has Eliminated Most Private Information
It used to be that real estate agents had a secret weapon of information: the MLS. With this private/paid tool, real estate agents could list properties, see transaction histories, and get market analysis. If you, as a buyer or seller, wanted that information, you had to pay for it — in terms of hiring a real estate agent to represent you to get the goods.
However, today, there are 50+ real estate websites that publicly display that same information. You want market comparisons? Check out the recently sold section of Zillow.com. Is that comp really a comp? There are pictures for you to check out as well!
Beyond using these mainstream websites to do your own research, let’s look at how the buying process looks in reality. If you want to buy a home, you’ll typically contact an agent who will ask you for all the criteria you’re looking for in a home. That agent will then take that information, and set up an automatic screening for you in the MLS. Then, each day, you’ll get an email digest of all the homes that have come on the market that match your criteria.
While this is a handy tool, the same information can be found publicly. In fact, I look at this more as a way out of having a real estate agent showing homes. In fact, I rarely hear about real estate agents actually taking clients to homes anymore — it only happens on House Hunters. Instead, what typically happens is that the clients do their own research, and then simply tell their real estate agent which houses they’d like to see.
Want tax information? It’s online. Want local parks and school ratings? It’s online. Want to know about crime in your area? It’s online. What to know how the neighbors are? Sign up for Neighborhood.com and get a glimpse yourself.
But I’m getting ahead of myself . . . .
Do You Even Need a Real Estate Agent to View a Home Anymore?
Beyond the MLS, many properties are now coming to market with their own websites that have hundreds of pictures of the house. Some even go as far as putting together virtual tours of properties so that you can get a real sense of things.
However, viewing properties online will never replace checking out a property in person, but there are open houses, or you could simply go to the house and peek in the windows!
The only time you actually need to call a real estate agent is if you want to get inside the house without breaking in! And by that point, you’ve probably already short-listed the property.
So You’ve Found the Home — They Help You Negotiate, Right?
In my own past, I’ve put in offers for roughly a dozen different pieces of real estate, and never have I really felt that a real estate agent negotiated for me.
The conversations typically go like this:
Me: I’m thinking about putting in an offer.
Agent: How much do you want to offer?
Me: What do you think I should offer?
Agent: Well, the seller has it listed for this, and the comps look like it could go for this.
Me: Well, what do you think?
Agent: Well, offer what you’re comfortable with.
Me: Thanks for being so helpful.
Do you see my point here? I’ve watched enough Million Dollar Listing shows on Bravo to understand it doesn’t usually work that way. I’ve never had a agent tell me they think they can get me “this great deal,” or that “we should go in at this price.” I’ve found that real estate agents have simply become messengers — just doing what they’re told by their clients.
But They Help With Financing, Right?
Nope. Every real estate agent has a mortgage broker that they work with. 90% of real estate agents have no clue what they’re talking about when it comes to mortgages and financing options. They’ll simply refer you to the mortgage broker that they know.
I don’t know what the agreements they have look like – but I have a hunch there is something. For example, on a deal I recently looked at, the sellers agent made me get prequalified with their mortgage broker to even consider presenting our offer to their client. It felt extremely dirty – and the sleezy mortgage broker just put us on his list and hounded us for months until we finally got out number removed.
If you don’t know how much house you can afford, you need to head over to websites like Bankrate.com, and use their free calculators. If you’re still not sure, contact your favorite bank and see what they say you can afford. Don’t just take your real estate agent’s word for it.
Plus, there’s online mortgage lenders now that will help you without ever setting foot into an office somewhere!
Real Estate Agents Do Monitor the Transaction
Some of it they do. Actually, there is a new trend in the real estate transaction game: real estate transaction coordinators. For the last two properties I’ve worked on, once the offer is signed by both parties (the buyer and seller), the real estate agents disappear and you start dealing with a transaction coordinator.
The great thing is that the transaction coordinator is typically the smartest person that you’ll deal with in the transaction — they’re organized and efficient, and know exactly what’s going on with all details of the transaction and what needs to be done.
Chances are, if you call your real estate agent to check the status of the transaction, you won’t get a call back until the agent checks with the transaction coordinator.
Shoot, the transaction coordinator basically tells the real estate agent when they have to do something at this point — open the house up for an inspector or appraiser, or get the buyer or seller to sign a paper. The real estate agent typically has no clue about the details.
Talking to my parents, they were telling me it used to be the agent who did all the paperwork and ensured that everything was complete from start to finish — not a third-party.
So Let’s Look at Our List
Buyer agents:
Provide you with information detailing current market conditions— Zillow.com and Realtor.comHelp you with financial information, such as how much house you can afford— Bankrate.comGuide you through the home purchase process, including getting financing and what information you’ll need to provide— transaction coordinator
Buyer agents can:
Help you understand: real estate values, taxes, utility costs, municipal services and facilities, and local zoning ordinances— Zillow.comResearch homes for you using tools like MLS (Multiple Listing Service)— Realtor.com- Show you homes best-suited to your needs
- Facilitate the negotiation of a home purchase
Seller agents:
Provide up-to-date information on the market to determine a reasonable asking price— Zillow.com and Realtor.comShow you the terms and conditions of competing properties— Realtor.com- Develop a marketing plan that could include repair suggestions, open houses, advertising, etc.
Provide security for your home when it is being shown to strangers— This just doesn’t happen oftenNegotiate the best price for your home— See my story aboveMonitor the sale process, renegotiate as needed, and resolve issues prior to closing— transaction coordinator
So What Do Real Estate Agents Really Do Anymore?
Well, if you look at our list, it appears that buyer agents simply show you houses and give you the appropriate documents for the purchase. As we discussed, they also only show you houses that you tell them to — there is no real work on the real estate agent’s part to do this.
As for getting the appropriate documents — some people still do sell their homes themselves. In fact, it’s a trend that is growing in popularity. Since most documents for a home sale are standardized, you could buy or sell a house without using a real estate agent.
As for selling a home, a real estate agent typically is a marketing guy. That’s it. When selecting a seller agent, make sure that you’re looking for the best marketing person you can find — who cares if they know what your house is worth, you’ll have to do that part yourself.
This Is Always Controversial To Real Estate Agents
A few times a year, this post comes up in circles of real estate agents and it always strikes a cord. Some agents are happy about this post (in the minority), because they understand the modern day client, the way things are progressing with technology, and realize they need to step up their game to provide value to the transaction.
Sadly, I get more upset agents that read this and think I’m a terrible (or stupid) person for writing it, or I clearly dealt with “bad” agents. Maybe I did – in the big scheme of the United States, I’ve dealt with and worked with maybe a dozen different agents in my life (buyer, seller, other party’s agent, etc).
What I think it really comes down to is justification of value. Let’s take the sale of my home – $1,000,000. Did the agent really earn $50,000 for the work they did (or really, $25,000 because of the split with the buyers agent)? Did they do more work for me that when I sold my $200,000 condo and only earned $10,000?
I’m not purporting that people sell their homes themselves OR not use a buyers agent. I think as someone using an agent for both sides of the transaction, you need to assess the value you receive, and ensure that the compensation reflects that. I fully realize that the agent has fees involved, especially the selling agent. There’s photos, drones (today), time, not to mention the overhead of licenses, insurance, splitting fees with their broker, etc. All that means is that agents need to bring value more than ever.
If they want to earn their commission, they have to do more than add their clients to the MLS, send them automatic updates, and go to a showing. Or if they’re selling a property, they need to be marketing, and not just data entry into the MLS system.
What do you think? Are real estate agents worth a 6% commission? I’ve never passed 5%, but even that’s pushing it to me . . . . End rant.
Pauline says
Sadly I have never met a good realtor. The last one wanted over 10% commission to sell my house (read put it on internet and wait for people to come). They are all sweet telling you your house can sell for 1 zillion just to get the business, then do nothing for 3 months and tell you the same property is actually worth $1,000 so they can get a super quick easy sale. I ended up putting the ads myself and sold in 3 months for a better price.
Robert says
Really awesome to hear that you sold your home yourself. How did you find the process to be?
Judy Pribanic says
Well very sorry to hear that you made a very poor decision in the selection of your realtor, first off, the highest we ever charge is typically 6-7%, I have been in the business 18 years and have a 98% sale price to offer price, my homes sell with under a few weeks, many the first day.
Key is Marketing aggressively , Pricing the home for your particular market is key, I do not agree with sellers IF they are asking for a Dream Price rather than a realistic price, I have turned a few down in my career due to seller overpricing and so happy I did, they sat…..
There are sales associates and there are Realtors, I am a Realtor ….. and I set my standards high with great results.
Sad to say, there are many agents that will “Buy” a listing, and what the means is, they tell you what you want to hear just to get the listing, a GOOD realtor will not, their reputation is also on the line, no one wants a house to sit.
Judy
Charlie Gray says
100% Agree!
Lissette says
I am a licensed Realtor. I disagree with most of it but because I’m not that type of agent. Those who are is the reason for this article. Infuriates me because so many have the same complaint about realtors while.some of us who actually work, are looked down on. I work my ass off why I’m not rolling in bullshit commissions earned doing nothing. I look and SHOW properties to buyers and I actually help sellers not talk up a pretty story and disappear. I don’t use transaction coordinators because I want it done right and I like to have control of every one of my transactions. We’re not all the same. I am different. This article does not depict every Realtor and the internet will NEVER replace genuine.
Angie says
We hired an agent/broker to sell our house. It has been a NIGHTMARE!! First she told us to decline an almost full price offer because of bad financing, only to find out they were preapproved. Then she brought us an offer 25k below asking and when we asked to counter she advised against it. Then, unfortunately my husband lost his job and we could not afford to move. We asked her to remove listing and this is where it went to hell. First she requested us to sign a contract to use her whenever we decide to sell again (bonding for life contract I call it). We told her no. Thank we asked her to raise the price of the house due to renovations we did (new deck, new driveway, new appliances, ect) and because the market value of the house was way higher than she listed it for. After months of not hearing back after repeatedly asking for it to be changed, she is now threatening to sue us because we stopped showing the house.
WORD OF ADVICE.. always make sure you read the contract carefully and have a backiut clause.
If we were to sell our house now at price she wants to sell it at (not the price we want to sell it at), we will be homeless with 4 kids. We are stuck. And we will never trust another agent again.
Pat says
What state are you in? Let her try and sue you. Realtors do not own you, and I am a realtor. Before I became one, my wife fired one of the top agents in our state because her communication was awful! This person couldn’t believe it. She was one of the top agents in the state, but she worked with a “team” and pawned off all her tasks on underlings and my wife hated it. If you are not happy with her you have every right to not use her, contract or not! It costs money to sue people so I doubt she is going to sue you. File a complaint with her boss or local realtor association.
Sometimes a lower offer for less money with a highly qualified buyer is better than a full price offer with a questionable buyer.
Jules says
I hear this all the time. Every agent says they are different. This is just insulting.
Amanda says
Sold two homes simultaneously, one using a broker agent one on my own.
The difference in the transaction was night and day we had so many Hang-Ups with the listing of the house that had the agent.
And then paying 5% on top of it was just horrible. Never again will I use a realtor. I will also recommend anyone I contact to never use an agent as well.
Deborah says
When doing it on your own did you us a lawyer? We’ve only been on the buying end. I’ve been doing research, but my head is spinning.
Jv says
Man, when I sold my first home I fired two agents and the hired redfin. Even with redfin I was doing the work for both the buying and selling agents. All they did was collect the fees. Really, I sold the home and did all networking and showings. Realtors dont invest money I to the properties and they have the nerves to call them “my home” or “my condo”. Agents really have no place in real estate anymore because technology has removed their lazy butts from the equation.
Andrea says
I agree. I’m a buyer and due to bubble we are waiting. Realtors have set a $400k minimum price point in a market where values are $200k or less. As a result nobody is buying and homes are sitting for 120 days or more. This salaries in this area do not support it. It’s crazy. I’ve been talked down to, come across fraudulent l listings (which I report), had the listing and buyers agent collude to go beyond asking price, blatantly lies to and worse. Not to mention there is absolutely no customer service. I am done with the incompetence out there. It’s crazy bad!
Emily @ evolvingPF says
My mom actually just became a real estate agent this year! I agree with many of your thoughts. (Also, I was surprised to find at how many things she is legally barred from saying/doing. A lot of them would be helpful to the buyer/seller!) However, I think that even if you could do everything that a real estate agent does – and probably few people can, skillfully – they still have a place to serve people who can’t or don’t want to do it all on their own. What you’ve described takes a LOT of work. I have observed that my mom is mostly working with people who are moving in from anther area or have super busy jobs.
Mark kasper says
So when the recession hit and for years even when things improving why were no top performers selling anything? They are geniuses only when the economy is good. No value. I don’t know anyone talked into a home by a realtor. Seriously. You think people are buying the home because the realtor was the deciding factor? Hilarious!
Michael says
Mark,
Purchasing a home is often the most significant financial commitment that an individual(s) makes in there lifetime. With that said, you are absolutely right, they are not being “sold” by the Realtor. The Clients have made a decision to buy a home and seek out expertise and guidance from a Professional (Realtor) that is involved in the process of buying and selling homes daily. I can assure you that a majority of buyers are better off to have a Realtor working for them. I say this with hesitation, but it is similar to trying to represent yourself in a court room without a Lawyer. As with any profession there is a diverse spectrum when it comes to quality.
In theory, it is an easy job. When you actually get the license yourself and then begin the process of building a career, you quickly face a very evident reality. Getting a license is the easy part. Becoming successful takes much more work than most would expect.
Just my thoughts.
Jack London says
Are you comparing a realtor to a lawyer? I practice law, and it takes 7 to 8 years of post secondary education to become an attorney.
Realtors can not give you any professional advice that can stand up in a court of law. At the best, realtors are glorified show salesmen
Jo says
I think it was meant to be an analogy, meaning you can go pro se in a court of law, but it certainly would take a lot of work on your part to represent yourself as well as a lawyer who is more inept as to process and procedure rendering you a more favorable outcome. You can represent yourself in a real estate transaction and it would also take considerable research on your part to gain the insight a realtor has from their experience gained in each transaction. For a lawyer, you really ran way off with that one! Nobody was touting a real estate agent as a stand in for legal advice or services…
Andrea says
Exactly. I agree. I’m a buyer and due to bubble we are waiting. Realtors have set a $400k minimum price point in a market where values are $200k or less. As a result nobody is buying and homes are sitting for 120 days or more. This salaries in this area do not support it. It’s crazy. I’ve been talked down to, come across fraudulent l listings (which I report), had the listing and buyers agent collude to go beyond asking price, blatantly lies to and worse. Not to mention there is absolutely no customer service. I am done with the incompetence out there. It’s crazy bad!
Money Beagle says
I have used the same realtor for all three of my real estate transactions (buying a condo in 1999, selling that condo in 2007 along with buying our current house at the same time). He was a referral from a family friend and I think he did a great job.
He did actually work a better price for us. We made an offer on our house, and the seller came back with a counter offer that was their ‘final offer’. I was prepared to accept it but my realtor said ‘I know the agent, so let’s try once more. Go in $5k cheaper.’ I did so and they accepted.
The commission on my condo was about $6k, and as he later pointed out, his push basically brought that down to practically nothing. Since he got 3% of the commission on the house we bought as well, he effectively cost himself $150 by advising us on the lower offer.
In that case, I think he was very useful and was worth his cost.
Michelle L Shelton says
Love this as this is how it is supposed to be! Kuddos to your realtor
Jacob says
But doesn’t that illustrate the problem perfectly? “How [they’re] supposed to be”, in your interests, is against their own interests. Therein lies the problem.
Sheila Mechem says
I agree we have an agent who A YEAR LATER was supposed to be helping us sell our home. She couldn’t even keep up with her listings not to mention she put it on 1 website the MLS. Upon our contract ending, I informed her that we would be using someone else. Low and behold I then started receiving reports from realtor.com. Here’s some advice: ask them on what sites do they list their properties then CHECK IT two days later if it’s not there make sure u put a revision in the contract that if your home is not in all of those sites, they are fired!! I may have learned the hard way but know I know
Eric says
Those are third party sites and real estate agents do not list on third party sites as they have NO access. Third party sites PULL the information from MLS. Do your research as to how thinks work before making an ignorant comment.
BT says
That is a feel-good story but what about the seller’s agent? What did he do for his $6K? He caved and cost his clients $5K. It sounds like both agents just wanted to get the deal done so they could get their commission. Agents claim to be able to save buyers money and get the top dollar for sales. However, you can’t have it both ways.
Chuck says
“It sounds like both agents just wanted to get the deal done so they could get their commission. ”
You do realize there’s nothing wrong with wanting to be paid for working, right? Everybody says “commission” like it’s a four letter word, yet what nobody ever wants to poitn out is that it’s the only way Realtors get paid. All those times we show you property or coordinate appointments, or market listings, or chase lenders for you because you’re not getting your phone calls returned, or chasing the HOA because your question about fencing or whether you can purchase a 5 pound dog – we don’t get ANYTHING unless you actually buy a house. We have families, mortgages, car payments, just like everybody else, and all of that costs money. So honestly – why do you begrudge us getting paid? What is your problem with us getting a commission?
Furthermore – it’s not “caving” if it’s a contract that everybody’s agreeing to. This idea that everybody has to be adversarial in a transaction is honestly very ignorant and makes the entire process miserable for everybody. Do yourself a favor and tell any future Realtor who draws the short straw to work with you what your intentions are up front so they can never return your calls or emails, because at the end of the day all you’ll do is frustrate everybody with your self-centered attitude and hurt your agent’s reputation for even associating with them.
H.L. says
I agree with Chuck’s comments. It’s surprising how much people want to paint all agents with a broad brush and devalue what we do. I’ve only been an agent for a little over 6 years but it’s the most difficult and selfless job I’ve ever done. I’m committed to working hard for my clients and handling their transactions from start to finish, paying close attention to every detail. There is so much work that takes place to get someone from the point where they decide to buy or sell a house, all the way to the closing table with a happy outcome. Every industry has its bad apples but there is such an effort to undermine and demonize us at every turn. Because I do a fabulous job for my clients, they are more than happy to give me great testimonials, referrals, and repeat business. But getting people who don’t know you to trust you, and to understand how much you can help them is harder and harder because of bad press like this article. It’s a shame.
Merlee Kay says
All the agents jump in to say “not all agents are like that.” So predictictable, like the cops.
Well most are like that. They will work so hard to get the listing, and then once they have it, that’s the end. The sign goes up and they wait. And in a week or two, they’ll start hinting at dropping your price.
Smh!
Mark Kasper says
Being an agent is the most difficult job and selfless at the same time. What? I’m sorry. I’m sure there are better agents than others and it probably comes down to listings and not actual selling. Recession no one was selling houses by where I live. No one. Not even the top million plus performers who get trophies in previous years. But now market is good and realtors are geniuses again! Hilarious!
Sheila Mechem says
He’s absolutely right. Some agents just list a property and wait for others to sell it. THIS IS A FACT I don’t understand why you are so defensive unless you do it too I’ve hired an agent to sell my home. A year later I am finding this out. I TRUSTED HER only to find she ONLY LISTS PROPERTIES and waits for other agents to sell it for her. She has NEVER brought one of her clients here and we are in the most sought after neighborhoods. In addition we found out she works as a nurse full time and does this “on the side”. She blew 2 sales bynit getting back to agents immediately and waited a week to respond to them. So here I was answering the same 3 questions repeatedly for a week because she couldn’t keep listings straight and the buyers went elsewhere. So if your trying to say agents do not do this you are sadly mistaken
Chris says
I’m curious if you “want” your agent to bring a buyer if you have your home listed with her. Do you “want” her to represent you both, or do you want her to represent you are your best interests? Is this really a fair demand since her fiduciary responsibility is to you?
Tiffany Jennings says
Thank you Chuck. If we only had the foresight of each client to know which ones to avoid!
James Dericks says
What most sellers don’t realize is an agent can not sell your house for more than the market will give. Buyers shop around, and the buying agent makes them aware of all of the opportunities. So what makes you think your house will go for more?
A comparative market analysis, determines what the market value of your house is. The MARKET value. not the assessed, appraised, historical, emotional, sentimental, the how much money you put into it, or any other value.
Kim says
No one has a problem with you getting paid. We are working with an agent that simply relays information. Lockbox on house is available to other agents. She has showed it twice out of all showings. When their is a question she asks us and relays to other agent. That’s it. We can do that ourselves. Especially for 7000.
Chris says
He actually got less than 3%. Unless he owned his own company, he shared his commission with his broker, paid several fees for services he provided such as his MLS (sometimes there are as many as 3 in any given market,) paid for the service to access the property, paid for gas and sometimes even lunch, paid for license fees and required classroom time, and a lot more. Most Realtors make about 1.75% of the sales price after fees are paid. So in your case, he made about $1500. How many hours did he spend working with you, would you say? If he spent 3 days showing you homes, and spent 6 hours per day doing so, plus the back work of another 6 hours, that’s 24 hours. $1500/24 = approximately $62/hour. That’s still good money, but he might not close another sale that month especially if it is in the winter. If he bought a closing gift for you, that means he was down into the $50/hour range. He would need to close a minimum of 2 of these a month to be just under the median income of $40,000/year.
So if anyone is upset about Realtors making so much money, consider that the ones you don’t like are the ones busting their butts out there working sometimes 100 hours a week. Sure there are some bad eggs, but that title goes to every profession.
Pat says
Good point. I would like my realtor to keep track of their “hours worked” and I will gladly pay them 20/hr. Instead we end up paying an insane amount. On a 230k house I would pay around 7k just to the seller’s agent. Even IF he put in 50 hours of true work on my home he will be making 140/hr. What kind of doctor was he again? What a joke.
Margie Ball says
Your example of a realtor making $40,000 a year working 48 hours a month (2 houses, 24 hours per house) sounds pretty good when you consider that the people who are buying houses work a minimum of 160 hours a month. Realtors are incredibly overpaid for the service they provide. Mine did nothing proactive at all, took the listing, told me to clean my house and get it ready to show in 4 days for a community open house for realtors. That was cancelled due to weather (no ones fault) but it took 6 weeks to reschedule. SIX WEEKS, and not one single showing because none of the realtors had seen it. Then, TWO MONTHS after they took the listing, a realtor took a client to see it, and the battery on the lock box was dead. They couldn’t get in. They went on to look at houses they could actually see. And I found out about it from a neighbor. My realtor did not even bother to follow up with the agent until I asked. This is a very experienced realtor, with a brokers license, who should surely know better. Who had the nerve to complain that I was pushing too much.
jOHN FARABAUGH says
As this industry makes it easier to be an agent and you get more and more part timers, you will find the fewer and fewer good agents. But there is a reason 20 percent of the Agents basically sell 80 percent of the homes.
A good or maybe great agent has an extension amount on knowledge of not only the market condition, but also a good knowledge home construction, home maintenance, zoning, easements, legal recourse, inspections, types of mortgages, lender requirements per type, taxes, tax appeals, pricing strategies that work, strategies that don’t work, home preparation tips that truly work in your prices range, home prep tips that are worth doing, understanding how to negotiating against other realtors, understanding how to negotiate based on the type of buyer or seller, and many ..many more tools.
Also, these top agents have lots of contacts (or resources) at their fingertips to call for advice when needed. (e.g. …attorneys, surveyors, electrician, contractors, plumbers, insurance agents, and many other specialists) For instance, i had a seller that was going on market in 3 days…she call 3 places to replace bad carpet in the 2 bedrooms. They all told her they were 2+ weeks out. I made a call to my local flooring contact and …It was installed in 24 hours. Whether i need to make a call for advice on getting out of a flood zone, or handling a road maintenance agreement…i usually get those answers fast.
A good agent will use all his knowledge and resources to see ahead and prevent obstacles from arising. He know what could happen before most even know it something happened. Deals fall apart everyday. A typical newer agent will easily have 1 out of 3 deals far apart, whereas the best of us …maybe have 1 in 20.
So when you make a statement like “what do agents really do’?..Maybe you realize that every profession only carries a small percentage of people that do a great job and are worth every cent…The rest of them are just for the easy..simple deals that a monkey could do. Unfortunately they are far and few between anymore, and a poor uninformed agent can cost you the house you wanted or tens of thousands of dollars screwing your deal up or your marketing up. You make the choice of what you want. For those sellers that had a bad experience, many of them wanted to be cheap with their choice then complained what they got. Also, all top performers are not always great agents..some just though enough sh** of the wall and hoping enough will stick. Those are the ones that take on 30 and 40 listings and do not have the time to market properly in detail.
I can go on and on….but hopefully everyone can get the point.
‘NOT ALL AGENTS ARE CREATED EQUAL’
Angeli says
Dear John,
Great input and I got your point. Your comment is targeted at clients, but I, as a newer agent, am sad to read some comment like this. Being new at this, I am genuinely excited about the industry and many things that you need to learn and know, as well as many fees you have to pay to be in this role. I am trying my best to stay on top of all these things that I need to know but and the same time have little experience. Your comment basically implies that the client should never consider using a new very much determined agent But rather hire a person like yourself with contacts etc. Meanwhile I would have gone out of my way to get the best results for them, and for their transaction to be as smooth and as painless as possible, if given a chance. But public statetments and comments like yours make it nearly impossible for a newer agents to get business from public who potentially researches articles like the above. On the contrary, I would say the longer you are in the business, the more money you will demand from your clients for your valuable “service”, which doesn’t necessarily mean you service is indeed more valuable than that of the newer agent’s.
Christen says
I am 2 years in, in those 2 years I have seen long time agents put literally no effort into getting a house sold. They post a minimal amount of blurry, crooked pictures. Do zero marketing and tells lots of untruths to their sellers in order to keep them from terminating the listing. On the flip side I have seen lots of long term agents who work hard to stay on top of the market trends, take classes and continue to build on their knowledge to provide the best service for the clients. My first 6 months in the business I closed over 20 deals and then my first full year I closed 50. I watch where other agents go wrong and do it differently. I also watch and learn from agents doing it right. I applied that and have been very successful. I’m saying all of this to prove it doesn’t matter whether you’re new or seasoned, it’s about your work ethic, level of care for your client and willingness to learn.
Andy Hough says
I think there are going to be some major changes in how the real estate agent system works in the next few years. There will probably be a lot more agencies with a business model like Redfin. I do think real estate agents provide some value, but I don’t think they deliver 6% value in most cases.
jacob | iHeartBudgets says
Our agent helped us become familiar with a process that we weren’t familiar with before. He also did help us negotiate a bit. But you’re right, it’s hard to say why commissions can’t come down a bit, because there is SO much information out there that you used to have to go to an agent to get. It’s a tough biz, and we’ll probably see a decline in commissions/agents in the next 10 years. If not, then people are just lazy 🙂
krantcents says
My wife and I use a long time friend who has 40 years experience in real estate. She knows us as well as we do. The information she provides is beyond the standard stuff. Is she worth 5-6%? Yes, but she also rebates part of her commission back to us so the net rate is lower.
Jeremy Fouse says
That’s great but not legal in some states. Kansas, as example, this is illegal. Agents and brokers would lose their licenses for an action like this.
Jason Hull says
Robert–I totally agree with your conclusion: if you’re selling one and don’t want to do the marketing yourself, find the best dang marketer you can who also happens to have a real estate license. There is one area where my Realtor has been gold. She gets the early scoop on the “fell into my lap” investment properties. She’s the magnet for the people who inherited the house from the mother, live 43 states over, and just don’t want to mess with it. Her response is always “I know this guy who can close in 7 days for cash. Are you interested?”
Game over.
For the one of her, I’ve seen 100 clots. I’ve also seen the attempts to break the cabal by fixed price real estate service providers. It’s the exact same problem that hourly financial planners face versus asset managers: people refuse to pay up front, even if they pay 10x on the back end.
So, I agree. 99 out of 100 Realtors waste time. The other one needs to be provided with lots of deals and love because she’ll make you money.
K Hobbs says
1st of all , Real estate agents, do NOT get kick backs from the mortgage officer!!! I have no idea where you got that priceless info and also, I know for a fact that most of the transactions I have been involved in this year closed because of my diligence and hard work and watching timelines and making sure things were done. And try to do a foreclosure by yourself, not too much fun. I do negotiate and go through hell sometimes to get what my client wants. I recently paid for a client to stay in the home past closing, just to keep peace.
Having a good agent is well worth the commission. Yes, you can go on many websites and look at property. Who do you think puts 95% of the listings online that your looking at genius. Professional real estate agents, and we pay $525.00+ for the privilege, as well as measure, take tons of pictures and do tons of dang paperwork that the lawyers at the state real estate com require. Also, I and most all agents pay a LOT of money to at least 3 different Realtor organizations, as well as the licensing dues and insurance dues and continuing education dues yearly. The MLS is not a magical thing, agents put that information on there. We pay a lot of money for advertising our listings, as well as the internet. I myself pay ZIllow more than you would think. Yes, i’m a real estate agent since 1999, and I know for a fact that there is more to it than most people think. You should try it sometime, for at least 2 years, and then see what you think. Just like running a restaurant, there is a lot more to it than just cooking.
Robert Farrington says
Thanks for sharing your side – I will definitely host your comments as long as they’re respectful.
I do have a question though – how much different is the work for a $60k condo or a $600k house? Does it justify a 10x commission?
Billy jones says
I was about to write this article myself, but I did a last resort search and am relieved that you have saved me the time. Thank you. I think most of the articles out are very outdated as , like you said, websites such as zillow , redfin , etc provide pretty much everything any investor or prospective home buyer needs. Orbitz, Kayak was to the travel agent like Zillow, Redfin will be to the RE agent. Fate is sealed. To answer your question tho I bet selling a 60k condo is actually probably more of a hassle than a 600k house! Have to deal with HOA stuff, other tenants in the complex that may hamper the sale etc…It is embarassing that it has taken this many years to unravel a completely ass backwards system. Its crazy that agents are just not salaried employees who receive some performance incentives like any other sales oriented position.
Dina says
I’m in my late 20s and my husband is 30 we just looked at a new constructed home after visiting the model home. We decided we were interested although we didn’t have an agent when we went to look I figured I’d reach out to an agent that I met at a different open house. I called the agent to get some information and get to know her before deciding if I wanted to work with her. She said because we already put an offer in she doesn’t know if they’ll allow her to work with us, which was fine because I didn’t ask for her service I simply called to get an idea of who she was and what she does. After my husband and I got off the phone to discuss somethings she had called back shortly after and said she reached out to the sellers agent already and they were ok with her working with us. At this point it was awkward to turn her away and the good news is that the builders would pay for our agents fees. This really left a sour taste in my mouth because she called without our consent and has been harassing me the whole night after that. She kept texting me when I told her I was at dinner and wouldn’t stop. I’m glad I’m not paying for her fees she hasn’t told us anything that we already don’t know. I’m really annoyed…but I understand it’s a business and next time when I call an agent I will tell them nothing until I am sure they are who I want to work with and if they have more to offer me.
MJK says
I agree that a salary plus commission model would better serve all…similar to SaaS sales, agents could have a low one year salary with structured bonus commissions based on performance. But in that model agents are employees, which makes them much more costly the the”independent
Contractor” status they are at most firms
Matt Slechta says
Robert,
The fact that you ask that question, and I’m not trying to be rude here, proves your ignorance about the process. The market, supply of buyers, for a 60k home is literally hundreds of times larger than the market for a 600k home. I can sell sub-200k condos in a weekend and get multiple offers just by pricing it competitively and placing it on the MLS. Then my seller gets to pick the offer they like the best, usually the highest one that is all cash, close in a week.
A 600k home doesn’t have even close to that many buyers looking at it. I literally have to go find the buyers (do some real marketing) to find someone willing to shell out over half a million for a home. And if the stats are even close to accurate of a realtor selling your house from 10-15% more than you’d do it yourself, that 10-15% means a lot more on that 600k than it does the 60k.
Robert Farrington says
I think that clearly depends on the location – major cities (like my location) will see multiple offers on most properties on listing weekend, up to about $1.2 million range. You won’t find a property less than $200k, even for a dirt trailer park stall.
Jeff R says
I agree. Robert you have no idea what you’re talking about to suggest marketing and selling a $60k home is the same as a $600k home. It’s completely different. Probably costs at least a few thousand to market a $600k home after you talk about pictures, many times drone photography is needed, most high end properties have very strict HOA’s. In Texas where I live many are acreage properties so then you get into large tract surveys, mineral rights, septic tanks, etc. I’ve spent all day on these types of properties navigating HOA rules and city ordinances on easements and restrictions. The amount of buyers that can afford those properties is much slimmer than the $60k Home that includes investors willing to throw cash at it. Investors don’t buy many $600k+ homes.
I know many Redfin agents. And they suck. You know why? Because they’re salaried employees and every client is the same. They don’t care. It’s like a waiter who doesn’t work for tips. There’s zero interest in providing a good service.
Zillow May be trying to make it easier to sell. But for higher end properties without a good agent many of the homes will sit there.
I’ve had many friends get into Real Estate…thinking “oh it’s easy. You just show homes.” A year later they get out because they realize how difficult it truly is. We work 80-100 hours a week sometimes. And good agents deal with so many behind the scenes issues that the client never even knows about. Trust me…I’ve had clients come running back after trying to sell their home themselves and being screwed because they got worked over by an investor or didn’t know how to handle any negotiations or repairs etc. it’s not as easy as it looks. Try it for a few months. I guarantee you if you do you will have a whole new respect for what we do
Mark kasper says
Let’s take one line at a time. You say it takes few thousand to market a $600k home after talking about pictures, drone photography versus a less expensive one . So pictures cost more on a $600k home? Drone photography is so expensive? Hilarious! Seriously. You just highlight a bunch of nonsense. Sound like a democrat and liberal. No proof, evidence, facts. Just bash everyone else who disagrees with you. But provide zero evidence. Make zero sense. Love the Internet. We now have these ridiculous comments for all to see. How about someone provide you with all the drone photos of their home. They give you the key, the photos, and you schmucks just have it listed on your realtors website, maybe a publication, and do a few open houses and your geniuses! Guess no regular joe could provide photos to be posted, and open the door for a two hour open house where people sign in and just need to be told to remove their shoes!
Ginny Sawyer says
I agree that people don’t understand that marketing a $600k home is far different than marketing a $60k home. I look at being a listing agent as extending credit to the homeowner. I take thousands (and yes, great photography, drone, 3D, surveys, house measurements, print marketing, branded websites, Facebook ads, newspaper ads, and open houses all cost money) to market a house effectively and stand out from all of the other homes on the market. If the homeowner will not be reasonable in what they believe their home is worth (I don’t set the value of a home, I just interpret the market, and it is only worth what someone will pay for it), they have a change or heart, or a change of circumstances…I am out the money that I invested originally. If a homeowner wants to invest their own money up front (all of it, not just what they want to spend, because it works as a package to get the most eyes on a property), then I would gladly make my commission lower.
But the truth is, I am a full time real estate agent, who has extensive education and experience in not only real estate, but financial services and interior design. My expertise has saved my clients tens of thousands of dollars. And, my clients call and text me at all hours of the day with an almost immediate response. If they didn’t need me, they wouldn’t contact me every day for my opinion. Don’t I deserve to be paid, as a professional, for my expertise and time? I don’t believe that the general public understands what is involved in being a real estate agent. And yes, there are bad ones out there. That is why I got into the business.
After three transactions with a top agent in the area, I was tired of her making tens of thousands of dollars off of each of our transactions and barely showing up. And none of the transactions went smoothly. So, I decided to get into the business and do better for people. And, that’s what I have done and I want to be paid for my services.
What I will agree with is that there should be a change in the industry. Why should someone selling their home pay the entire commission? Why shouldn’t clients be given the option of bearing the financial risk up front in order to receive a lower commission percentage at the back end? Why shouldn’t real estate professionals be paid by the hour (but remember you get what you pay for and a $20 an hour agent isn’t likely to help you as much, I would expect to be paid like the professional that I am…glad to as a matter of fact because I might just make more in the long run)? Oh, and since I have to pay the state for the privilege of being a real estate agent (in two states), I’m going to ask for a small, non-refundable retainer up front to offset my costs for getting the expertise it takes to ACTUALLY sell and buy homes properly. I’m ok with changes to the industry and would love to be one of the ones that makes those changes. But until the general public changes their attitudes about their contribution to the process, it isn’t likely that real change will happen.
Mark kasper says
What? Makes no sense Jeff R. Do $60k homes even exist let’s say in Seattle, Washington D.C, Chicago, Atlanta, Anywhere in California? $600k in these places barely exist. You make zero sense! Say it costs more to market a $600k home. How exactly? The ad in that realtor magazine is the same size for the $60k home if they even exist as a $600k home. Go to Seattle and see how a $600k listing does! My grandmother could sell a home in Seattle, California, Chicago for $600k with zero experience.
Jeremy Fouse says
Mark, I’m a broker of 20 years and truthfully, I’ve been working on a model for people with this belief because it isn’t going away. And I kind of agree to a point, especially on the higher end homes. But to answer your question, with proof, yes it costs more to market a $600k house than a $60k house. My proof, a $60k house I’ll shoot the pics myself because the house is going to sell in a week or less. Professional photographers are like anyone else, the more time they spend in the house, the bigger the bill. So even if I did hire a pro to shoot pics of the $60k house (which I’ve done when I’m too busy to mess with it), he charges me $75 based on the hour, or less, he’d be there. My bill on $600k houses from him is usually $500-600, depending on the size of the property because it takes much longer to photograph. Then another $750 for drone photography that I certainly wouldn’t do on a $60k house. And let’s be real here, who does these magazine ads you keep mentioning? But let’s say someone does print advertising, I agree the ad size wouldn’t be any price difference but there’s two things to factor in, 1) the $60k house will be in one magazine and then it’s sold whereas the $600k house is likely to be in the magazine for months on end. I’m talking about the Kansas market, not Seattle because like you said, there are no $60k houses so let’s put it more in Seattle terms, apples to apples if you will; a $600k house vs a $6M house. We keep talking about 10x on the $60k vs $600k so let’s make it realistic for larger markets. 2) any agent worth a grain of sand is going to have a lot larger ad copy for the 10x house ($600k or $6M) than they would for the 1x house ($60k or $600k), thus the answer is yes, it would cost more for the print advertising on a larger house since the ad will run longer and the ad will be bigger. The other thing to remember are the expenses that no one has mentioned being the agent’s expenses whether the house sells or not. If I spend $600 on photography, $750 on drone footage, $175 on a virtual tour, $700 on a walk through video, $2000 on print advertising (none of which I’d spend on a $60k listing), plus all the monthly subscriptions to syndication sites so all the websites touted herein keep up with the most current info on the house (because Zillow won’t pay for syndication so now they make agents pay to syndicate on their sites then expect us to pay for the names they generate with our information that we’ve paid them to put on their sites, I digress), then we have the expense of signs, lock boxes, flyers, etc… and the house doesn’t sell, the seller isn’t liable to pay $1 to the agent. Some call this operating expenses, the cost of doing business, etc… and they are right but let’s look at other industries. Pepsi used to be 50¢ per can from a vending machine when I was a kid, now it’s $1.50-$2 per can at the same vending machine. I don’t hear or see anyone boycotting vending machines and saying that Pepsi isn’t worth the money. Doritos sells the same size of bag for $3 more than when I was a kid but the bag is half air now and was totally full when I was kid. Where are the articles boycotting Doritos? But you know what hasn’t changed since I was a kid? Realtor commissions. It was 7% the first time my folks sold their house and today, in the same town they are being charged 6% to sell their house. So 40 years later and the realtors commission has gone down in my hometown. The only raise agents ever get is inflation based. But when there is a recession, Pepsi and Doritos price stay the same but as house values go down so do agent’s wages for doing the same job (or in comparison providing the same product). But back to the point at hand, the $60k house that will sell in a week costs less because there really is no ad cost associated with it and the $600k house will take a lot of ad cost being listed for much longer.
Chuck Wilson says
how much different is the work for a $60k condo or a $600k house? Does it justify a 10x commission?
NONE – NO
Chris says
Actually, if you hire a good realtor, it does. A $60k condo does not require the level of advertising and marketing as a $600k home. A $600k home also requires a lot more time and effort because it is a larger investment that often falls under the jumbo-loan process.
On the flip side, if you hire an agent that is just going to stick a sign in the yard, then no… but a good agent should be giving you a checklist of everything that the do… and invite you to check the box when he or she does it.
Mark kasper says
Zero sense. A more expensive home requires more expensive ads and marketing! What? So that magazine even though the ad size is the same it costs more for a more expensive home? Please explain the more expensive marketing on the $600k home versus the $60k condo? This should be good!
SGordo says
Some Agents do receive kickbacks…..that’s why it became illegal. (@ K Hobbs)Still happens…don’t be naïve. Talk to any mortgage lender that has worked in the industry over 12 years. Amazing that you even think your statement was believable. And I guarantee, as hard as you think you worked on those previous transactions….The Escrow/Title and Lender (including Processing and closing) did over 95% of the work and got paid a fraction of your commission. So you paid a per diem because your Seller couldn’t find a place to live past closing? You should receive a medal- thanks for making sure we all know you’re a “stand up” Real Estate Professional. If you had negotiated the transaction correctly….that wouldn’t have been necessary.
The fact is, a weekend crash course that instructs you how to pass the test and $1000 can get you a license to start “THAT” new career.The majority, not all….but the majority have no clue what they’re doing. They saw the same thing ALL Agents did….big commissions, little education required. Plain and simple. Those that value perfecting their craft will always succeed in any Real Estate Market. But where there’s professionals with integrity and drive, there’s also Part-time Uber drivers and bartenders that call themselves Real Estate Agents.
Soledad Parker says
I had an agent who did indeed get a $500 bonus in 2017 for selling a foreclosure to me. She had done essentially nada & did nada during the whole process, knew absolutely nothing when I asked for answers, even gave me the code to access the home, and never showed up for closing! I have nothing but contempt for realtors. They know what kind of job this is, what it entails, and then they cry about commissions and this and that, well hell go find a different career, if you aren’t earning your way with this one.
Nancy says
As buyers who are in the process of purchasing our 12th home, we have been in the real estate game for 23 years and actually have found realtors today DO do something very important – they keep potential buyers locked out of the homes they’re interested in until the listing agent decides they’re in the mood to show it. This insane procedure of being forced to be at the mercy of mercurial divas who work bankers hours does NOTHING for the home buyers OR sellers; it only works for people who cash the tens of thousands of dollars commissions checks for no work at all. It is a ridiculous monopoly and I wish Help-U-Sell had broken them once-upon-a-time.
Bill says
As someone already pointed out, since Dodd-Frank, kickbacks from mortgage companies are illegal.
Also, keep in mind, a single agent isn’t pocketing 6%. In a typical transaction, that 6% is getting split 4 ways between both the buyer’s and seller’s agents and the agents brokerages (1.5% each). As the model continues to change and evolve, costs will be removed and the commission drop. It’s inevitable.
ArealREagent says
Mr. Farmington,
I think you should shadow an experienced agent before you go spouting off on a profession that you very apparently know next to nothing about.
Robert Farrington says
As a client, I can only share my experience in multiple transactions, and those of people around me.
Mark kasper says
When did recession hit. 07/08? And for years. 7 years no real estate agents were listing or selling anything. Even those top performers from years prior. So which agents can we shadow that did jack for over 6 years when times were tough but when economy is good and even my grandmother could sell homes when things are good we’re supposed to shadow these genius realtors!
Mike says
Mark, question – since during the period you described literally millions of people lost their hoes, and their jobs or had their income reduced significantly, the number of people that were actually able to obtain a loan shrank to minuscule levels. Savvy investors that had the $ watched the market slide and were willing to wait longer to buy at a better price.
What do you sell? Any product I know of will have the price plummet if the available items increase by 10X and the number of buyers shrinks by factor of 10. In that situation the good agents survived by doing what they do. Serving their clients, working out short sales etc. The less competent agents failed.
Is it easier to sell a Honda Accord or a Bugatti. According to you it should be the same. After all they are both just cars. Everyone can afford either one right???? Thats me being a little snarky back after reading some of your disparaging remarks.
Are all realtors equal – NO! Is a good one worth the commission – in my opinion yes. Just because you live in an area that doesn’t have $200,000 homes does not mean there are not market areas where that is a normal price.
Example – I worked with a young couple buying there first home, We vowed multiple homes. They fell in love with a $150,000 home that just barely fit into their budget. Our inspection process determined that the home had polybutelyne piping. We negotiated a complete replacement of the existing plumbing while maintaining the price at $150K. Is that worth anything to you.
What would you do if encountered a home the had been built using EIFS during the construction? Can you pick out an Atlas Chalet roof shingled homes just by observing the roof from the street? If you can’t then you are buying trouble.
Ben says
I’m a second generation Realtor. I grew up watching my top-producer mother work all hours, weekends and holidays. Ironically, I swore I never wanted to be a Realtor, yet here I am. There is a ton of value that a good Realtor can bring, and often they save clients more than their commission amount (typically 3% to the listing agent and 3% to buyer’s agent in my market, which is split again with the brokerage before agent’s expenses are taken out).
But… the fundamental problem in the industry is that the barrier to entry is too low. The ‘average’ Realtor only sells a few home a year and has been in the business for less than three years. As long as brokerages continue to hire anyone with a pulse and a license Realtors will continue to get a bad reputation. With so many transactions being done by agents with little more knowledge than their clients, it’s no wonder so many people are underwhelmed by their Realtor.
Many of our clients are older and downsizing from large homes with lots of deferred maintenance to catch up on, or updates to be made. Contractors in this area (I suppose most areas) can charge thousands for jobs that I can get done (with preferred/trusted vendors) for hundreds. A new agent in my office paid $5,000 to have the insulation in her own crawlspace replaced. I just got the invoice from my favorite handyman to do one of my client’s homes for $780. If the owner decides to replace the roof, I could save her another $3-5,000 over the typical contractor quote in this area. That’s just one of the ways we deliver more value than owner-posted listing on Zillow.
If I ever meet with you to list your home, I’ll gladly give you the full list of value added services we offer… and we could even meet outside of banking hours.
Robert Farrington says
Sounds like you understand customer service and helping clients more than most. Interesting about the barrier to entry. I’m curious about what you’d like to see changed?
Nancy Davis says
Ben,
What if your vendor does not have good reviews. And, what if the job they performed does not come out to the owner’s liking? Who will take the responsibility in this case? Are your vendors insured? Do you get kickbacks for using your vendors? So then, do you care that the job is completed to the homeowner’s liking? Would you withhold this “perk” (to use one of your vendors) if one of your client’s negotiated a lower commission and you agreed because you wanted/needed a listing? Or would you gladly share up front that you have vendors that are reputable and will do a good job on repairs, etc.
Sellers have to think of all these things because we are the ones that will eventually have to “pay” the bill.
Thanks for reading this?
Ginny Sawyer says
I completely agree, the barrier to entry is far too low for an industry that serves people in what is likely the largest purchase of their lives. I’m surprised that it isn’t more difficult to become a real estate agent and would actually welcome big changes. Here you only need to be 18 years old and have a high school diploma. You can then go to 72 hours of classroom instruction and take a general test. Then you have to complete another 90 hours of education to be taken off of provisional status. Another 8 hours of continuing education per year and a mandatory ethics course every 2 years rounds out the requirements. It isn’t enough and the subjects covered aren’t the ones that will really serve the client in the long run. It would be beneficial to have to take a financial acumen test, learn construction terminology and local building codes. These are all things that come with time, but cost the reputation of the entire industry because of ignorance of new agents.
Serena says
I have a few thoughts.
First, I HAVE to comment on the fact that you’re getting your research data from reality tv… REALLY?
So, lets just dive in, shall we….
Yes, we get the same information as you, because our MLS syndicates to those sites. Although, not everyone allows the syndication, but lets breeze by that shall we? Do you know that those site are not able to get the rest of the info? When a house goes off the market, when a house goes under contract and falls out, when a house cancels…. nope. But ok, lets just say that you don’t care, you can find a house, see if it’s still active and go through that… sure, that’s easy. I tell people all the time, I do not find homes. Searching is much more complex, especially since 99% of buyers don’t buy the home they originally described… but ok
You want comps? Sure, cause the data from the most inaccurate site is an excellent way to determine value. Nevermind that some of those stats are refi’s or that some closed 2 years ago… did they not teach you that on HGTV?
Do those sites also teach you that it doesn’t matter what you WANT to buy the home for, or what the seller wants for it. It mostly matters what the appraiser thinks you should buy the home for. Do they walk you through the process of valuing a home based on upgrades vs updates? (did you know those were different and that there are 3 levels of it) Do they tell you how to determine the value based on condition or that some conditions will prevent you from even getting a loan? No?
Lets say you’re comfortable with the value. Do you honestly think that price IS the negotiation? What about the close date, the concessions, the warranties, the HOA, the inspections… oh… the inspections. Do you feel confident enough in your 15 min. tour to determine price appropriately? What happens when something is found in disrepair? Do you know the laws governing either side? Approaching the other side to get your ‘number’ accepted is only one step. It’s not always about the bottom dollar, but it’s only one step. Do you know how to get yourself through a 10-100 page contract without getting sued, losing leverage, or losing your earnest deposit? What happens when your lender decides he can’t get you the loan… are you SURE they checked the right box on the disapproval, that gets your earnest back?
People pay 20 times this every year in car, home, health and life insurance.. but you don’t believe that we have ANY value when it comes to your future return in investment?
Are there lazy, uneducated agents out there that think you’re an easy target for a quick paycheck? Hell yeah there are… but only a uneducated simpleton will actually go through the process of interviewing an agent to represent them in the biggest investment of their life and choose the one that could’n’t even show their value enough to support their own paycheck. Why not interview your agent better? How knowledgeable are they? How would they negotiate for YOU… because it’s different for everyone. How much do they know about financing, inspections, appraisals, escrow, the contract etc.
Sorry, but YOUR failure to find a competent agent, is NOT reflective of those of us out there that take out industry seriously.
Robert Farrington says
I was tempted not to approve your comment because it’s pretty disrespectful, but you bring up a poorly-worded valid argument I found worth responding to. I’m a client or potential client – keep that in mind at all times. I’m a user of your industries services, and this has been my experience through a decade+ of various transactions. I don’t purport to be an expert on the insides of how it works – but I have experience. I also don’t purport to be an expert on how your industry works – once again, I’m just a client. Maybe you should take some of the criticism in my article and view it through one of your client’s eyes.
But do realize that I’ve personally been a part of more real estate transactions than the average person. I’ve seen first hand what can happen when real estate and law mix in a lawsuit. I’ve dealt with shady appraisers, and lenders than don’t get loans done on time. I’ve dealt with home inspectors, problems with the house that need repair, and more. While they are all difficult situations on their own, it’s not something that the agents I’ve worked with have had to deal with much directly.
Due Diligence? While my agent put together the contract, I read every line, ensured every boxed was checked, etc.
Lawsuit? Lawyer
Appraiser? Dealt with the lender, agent just kept in loop, maybe asked for extension if needed
Deal fell through due to lender? Agent sent cancellation form, earnest money back in my pocket next day
Home inspector? I found them every time, agent let me into property
Problem? I arranged my own contractors, agent let me into property
I don’t dismiss that an agent can provide value – especially as a buyer (where they’re basically free). As a seller, though, you need to ensure you get your value for what you pay.
As to my question to your sassy last sentence – how would you vet an agent to see if they are competent? Maybe a reader in the future could find value in your insights.
Erin Brant says
Have you ever met a doctor that has to go on articles and defend Their job? Never. There is not a single neurosurgeon out there that would go and comment on an article that’s attacking their highly paid positions (by the way I’m married to one). He gets paid hundreds of thousands each year and premiums to see him are outrageous. Insurance companies pay a ton of money for him, as do premiums out of pocket. That being said, you aren’t compared to a neurosurgeon obviously, but not a single agent has compared apples to apples. It’s amazing all of these realtors that are attacking the author of this article, thus proving his point. If you have to go on an article or anywhere online and defend their jobs, because people think they are worthless…. well, if the shoe fits.
Alan May says
As an agent, you are right, this article does strike a “chord”. And I’m sure you’ll be ‘blasted’ by some agents.. in fact you already have.
This will be too long, but what the heck… here we go: There is a lot of truth in your article… along with some fiction. We don’t assist with the financing, however, we do point you to qualified loan officers who will walk you through the process and deliver you timely, safe and sound to the closing. And, “no”, we do not receive a kickback of any kind from them… that would be a RESPA violation (having nothing to do with Dodd-Frank). Finding a good loan officer is no small feat these days, and we know who the reputable ones are, based on experience.
The same applies to inspectors. We know who the ones that gloss over issues and the ones who do an excellent job. Finding a reputable inspector is no small feat either.
The recommendation of these two professionals (as well as a good real estate attorney, for those areas that use them) isn’t us just sloughing-off our fiduciary duties to them. It’s actually making sure our clients are well cared for by our stable of professionals.
And “no”, we don’t get kickbacks from any of them, unless you count the occasional holiday chocolates or bottle of wine.
Transaction Coordinators are a relatively new thing, and are not in use nationwide. They are rare, in my area, but when they are used, it is the Realtor who pays them because that Realtor is just so busy, they can’t keep track of all the documents, dates, deadlines involved without one.
Regarding negotiation… yes, there are agents who respond in what I like to call “Psychotherapeutic real estate” (ie: I don’t know… how much would YOU think we should offer?), but there are also those of us who offer heavily-detailed CMA’s recommending the true value of the property, and an opening bid based on how to arrive at that point. This may, indeed, be a situation of: “You just haven’t found the right Realtor”… and you could/should have done a better job of interviewing your buyer’s agent.
MLS information is far more current and accurate than anything a consumer may find online. I can’t tell you how often clients contact me about a property they’ve found on one of the many public websites and ask why I haven’t sent/shown them that one. It turns our that the reasonis it went under contract, or even closed, months ago… and yet it still appears as live on one of the websites.
And yet, from a consumer’s viewpoint, I agree… much of the landscape appears as you’ve described. I don’t think you’re terrible, or stupid. You’re merely representing the experiences you’ve had, and I’m sorry it hasn’t been better. We, as Realtors, have to do better.
Robert Farrington says
Thanks for sharing – especially on the “kickbacks”. It’s so odd though, especially in my last interaction this past fall, that a seller’s agent was so demanding on using a specific mortgage broker to pre-qualify, even though we were already pre-qualified, putting 50% down, and the loan was relatively small. The entire thing seemed very shady – and the mortgage broker ended up being pretty shady too.
Alan May says
It’s easy. Sometimes the buyer will arrive with a pre-approval from an unknown lender. We, as a fiduciary for the seller, might ask (insist) that the buyer gets pre-approved by one of our known and trusted lenders… to prove that they’re truly approved.
The buyer is not obligated to use the lender we insisted do the 2nd pre-approval… we just want our guy to “vet” him.
Capiçe?
Robert Farrington says
Yes, but what does “vet” include…
What if the offer includes no financing or appraisal contingency? What does it matter?
The whole thing was shady…
Alan May says
If the offer includes zero financing (whether it has an appraisal contingency, or not), then there is no pre-approval, and no reason to “vet” it.
And what does “vet” mean? It means that a loan officers that I (the listing agent) know and trust has confirmed that they are approved and have the wherewithal to actually get the loan.
Robert Farrington says
50% financing, but no loan contingency or appraisal contingency on the offer – so no risk to the seller effectively (I guess the deal still couldn’t close, but they’d collect the earnest money, which was $100,000).
Insp says
They definitely receive some sort of kickback from these shady lenders (and they’re ALMOST ALWAYS shady). The agents act as if they’re the only people that could get the loan done and no one else.
Kathy Howe says
Interesting read.
I am a real estate broker of 28 years (3 more years as a salesperson), AND I teach real estate (I own and operate a real estate school) and have for most of those 28 years.
Entry level too low? No. The point of basic licensing is to ensure they meet the minimum standards and then on to the Broker for training. Recent example: one of my prelicense learners has been licensed for 2 months and has 3 properties in escrow and is getting his 3rd listing this week. A rockstar! He cares. Most others are still without training from the brokers…but, they are independent contractors. And then, some are just not suited for the business and drop out.
The good people in real estate are the best. We do much behind the scenes that clients don’t see, but, your article makes the point that we could be involving our clients more. I agree with you.
The difference between being a listing agent and a buyer’s agent. Agreed on some levels. Yes, we still have agents taking pictures of the home with their cell phone. This week I have been trying to get the BEST photographer for our new listing… to include drone shots. Cost: $200-$400. Seller has multiple lots surrounding the home/lot. Making sure that the subdivision laws of our state are met… protecting the seller by going to the county to determine ownership, dates, etc. Sellers do not usually understand subdivision laws. Will need much more info before even putting properties on market. A good listing agent wants to be sure their seller is “bulletproof”. Yes, we are planning 2 special invitation open houses and we will be doing private showings and open houses. We are almost complete with our marketing plan. My agent and I are a team. We don’t have a “coordinator” but we do a great job of making sure our clients are aware of everything we do.
When I receive offers on my listings, I offer each buyer agent the opportunity to be at the presentation of the offer (Through MLS rules). In 12 years I have not had one agent accept my offer…they have just emailed the offer for me to present. Sad.
As a buyer’s agent, those I know schedule the inspections, including any contractors, bids, and work closely with the listing agent to be certain we get everything ready for any further negotiations. Agreed that not all agents are equal.
I do wish that buyers agents were paid by the buyer. Let each side negotiate their value. Yes, many of us rebate commissions on transactions which are easy… we use the commission portion to pay a buyer’s closing costs. Many of us even advertise our commission rates: Example: mine for almost 20 years has been: 5-4-3%. 5% if any two agents are part of the transaction; 4% if I am the only agent in the transaction (in my state we do “limited representation” in lieu of dual agency), and 3% if the seller brings me a buyer to close. Yes, I’ve had 2 people in the last 3 years who have brought me their buyer to close.
I do take your words seriously and know we are going through huge changes. Thanks again for the post.
Austin Wolff says
I have a couple things to add. There are weeks where I’ll show properties to buyers I’ve educated and qualified where I’ll put hundreds of miles on my car, dozens of hours digging through records and property searching tools, and even a few hours writing offers – and at the end of those efforts, I’ll receive $0.
While I sometimes do see a check for $20,000 and think something like “wow, this was a really smooth transaction – not sure if I can justify my own cost on that one” – I also see a check for $700 that, when broken down hourly, comes out to less than $3 per hour.
Right now, as an example, I have 6 transactions under contract that equate to roughly $20k. That’s $3,300 / transaction, and that seems totally fair to me based on the amount of work I’m doing toward each one of the files in an overall, big picture manner.
There are transactions that take 15 hours, and others that take 150 – sometimes the 15 hour transactions are the ones where we see a huge check (huge being drastically different, based on the market), and other times, it’s a 150 hour check — of course, before taxes, advertising costs, Realtor Association costs and licensing / continuing education fees.
Interesting read!
Joe Logsdon says
I think a buyer’s realtor in today’s age is completely useless. As I am buying a $750,000.00 property, is a buyer’s agent worth the $21,000 when I likely find the home through an amazing platform such as Redfin? No. The work of a buyer’s agent should barely pay minimum wage, and I am very excited about the prospects of Amazon and Google entering the space.
Think about this, my offer of $735,000 without a buyer’s agent beats a $750,000 offer with a buyer’s agent by $6,000. Those are some serious numbers. I will say that at a realtor on the sell-side makes much more sense. They have to juggle the offers (assuming a hot market) and organize all of the people to make your listing shine. Let us all boycott the buyer’s agent! It will be tough… many will pitch you their BS. Say no!
S. D. says
Actually, that’s not how it works. The money you think you’re saving is often pocketed by the listing agent if you choose not to have representation. At least, that’s the way it’s done in our listing agreements in D.C. The offer of a cooperating fee (buyer agent commission) is to a cooperating broker IF ANY. Otherwise, the seller’s broker keeps the full commission.
NM says
Actually, you can have your real estate lawyer stipulate in the contract that 3% kicks back to you since you’re not using an agent.
Jeremy says
Unless buyer rebates are illegal like in Kansas.
Lucas says
I am a real estate investor (rentals), I have bought properties with and without a real estate agent.
My wife recently became an agent. I now get to see how much work an agent puts in. That 6% which gets split to 3%, which then the broker takes a share of becomes very little… Unless of course the house is worth 1 million, but in our area houses are 60k-200k. Her average pay is probably around $10 per hour currently. I expect it will max out around $25-$35 per hour, as she starts selling more, gets more efficient, etc. Her office is also helpful in that they go through a house to be sold and point out which fixes will bring the most value.
All that being said, at my current job I make more than $35 per hour. So assuming I can work overtime or assuming I have a certain amount of time I set a side for other things in my life (leisure, time with the dog, etc) I often find it advantages to save a few hours of searching through houses myself and just pay an agent. Also trying to find the real price that a house sold for can be time consuming. (Zillow is often way off on sale prices!! Which is surprising since it is public town/city/etc records.)
While I find it appropriate to use an agent time value is different for different people. My time is worth roughly $45 an hour. if my time was worth $11.50 an hour I would most certainly take on all of the real estate duties myself.
How does this help others?
I would recommend people look at this from a time value perspective, nothing a real estate agent does is very hard, but then again most jobs aren’t very hard, except rocket science of course ;).
Here are some everyday examples a person could change their own car oil, brakes, etc. It is easy, yet mechanics are in business still. Why? because it is not worth it for most people.
You could also cook your own breakfast, lunch, and dinner every day and never go out to eat. Yet people still go out to eat.
Why do we seemingly waste money all of the time? Because we have deemed (consciously or unconsciously) some things worth our time and some things not.
When evaluating whether or not to use a real estate agent make sure to analyze the time cost. I am fine with people using one, or not. If you make $100 an hour at your job, I can guess you are not going to be using an agent. Of course if you really really wanted to learn about what a real estate agent does and such, then maybe you will anyways despite the fact that you are losing money by not using an agent!
As a side note I have never done a closing without a lawyer, yet! 😉 NYS does not require a lawyer for closing, however with how cheap they are for closing I find it is not worth my time to handle that myself, the same is true of evictions.
NM says
This article is spot-on. My husband and I were young buyers that just didn’t see the value of using an agent when we purchased, so we didn’t, and saved a bundle.
8 years later as sellers, we came to the same conclusion and again saved a bundle.
My tip – a good real estate attorney is INVALUABLE. They do all the essential things needed to buy or sell, but for about $1,000.
Now we’re about to sell another house and are really strapped for time, so we will use a discount realtor like Redfin.
Chuck Wilson says
I have several problems with real estate agents/brokers. One is that the fee is simply too high. On a $300,000 property they will typically get $18,000.00. $18,000.00! For what? Providing a purchase agreement and collecting signatures? Real estate people make the most of anyone in the transaction and they have absolutely no “skin” in the game.
No one involved in the transaction.. not even the lawyers or even the mortgage companies, make this kind of money, and they do a lot more work.
A point to consider.. if you are buying this house, you are paying this $18,000 real estate commission. Yes I know they will tell you it comes from the seller but in reality that is a crock. The seller would be inclined to reduce his price if there were no commissions. The buyer is really the one paying. This fee rolled into the loan, which means you are financing it for 30 years. Over the life of the loan, that $18.000.00 ends up costing you over $30,000.00…. and your monthly payment?? About $90.00 per month of your monthly payment goes to cover the cost of the real estate commission. These are some big numbers for something for which there is so little value. I don’t know about you, but I would rather have that 18G to buy furniture, or a car, or to simply reduce the cost of the house.
Another issue is the way the transaction is handled, from the seller’s perspective. Again, using this $300,000 house as an example, the seller at closing will receive only 282,000. The real estate broker will receive a check for $18,000.00. Then, the closing attorney will hand the seller a 1099 for 300,000. The seller gets a 1099 for $18,000 that he never received! Yes, I know the seller can adjust his cost basis to allow for the commissions, but why on earth is it done this way? One of the main reasons for a 1099 is so that the irs is informed about where the money went. Here we have a real estate guy who receives $18,000 and no notice (1099). It would be very easy for a less-than-honest broker with to pocket some of the cash and only report part of it.. or, in some situations, report none of it at all.
Bottom line is this. The services provided by real estate people are simply not worth what they charge. Everything they do one can do themselves. The fees should in no way be a percentage of sale. There is no difference in the amount of work for a $50,000 house or a $500,000 house. Real estate commission should be fairly priced and a flat rate.
Realtors are awful says
Totally agree, it’s the worst system run by bored housewives who barely graduated high school
Realtors are awful says
Realtors will be gone within 2 years, it is the most archaic system I have ever seen. People fail at other parts of life then do this, it’s a joke. I am sure there are good ones but out of 100, 3 are decent. I have a masters in economics from an Ivy League, that is hard, comps and a sign and your stuff face everywhere is not revolutionary, is bs and dumb. McDonald’s will have a ton more cashiers when this crashes. Hope you all saved the money you ripped off from educated hard working people.
Kate says
Interesting article. I understand where you are coming from because when we sold our house 1.5 years ago I too didn’t understand why the commission structure was set up to pay agents for what I thought was a little amount of work. Then I became an agent myself 7 months ago. (Prior to being an agent I was a teacher and thus college educated with a degree and credentials, so not a bored housewife like someone mentioned above). One thing that some people don’t realize is how little of the commission an agent sees versus what people think they get. I closed my first transaction as a buyer’s agent in January. I had worked with the clients since October, nearly 3 months due to our competitive market. I was in contact with the clients every single day throughout the process. For the closing, the sellers paid $20,0000 in commission. Most commission rates are 5%, you rarely see 6% where I am at. My share was technically $10,000. Except you have to remember an agent’s broker split if you are with a big company is 35-50%. So my brokerage got $4000 and I got $6000. Then you have to pay 30% taxes being that you are self employed so that brought it down to $4800. Then you take out expenses (gas, fees, $400 for a closing gift, etc.) and I truly made about $4200. For 3 months work. I get no benefits, no insurance, no retirement paid by an employer. So the $20k an agent looks like they are making is an illusion, agents are not making as much as you think with the multiple splits and the expenses.
A good agent is worth their weight in gold. There are many agents out there who are unscrupulous, but there’s also a ton of agents who really care about their clients.
Mark says
But the $20k the customer pay is not an illusion to the customer. Why would customers care about anything other than what they are paying?
Even though you were in contact with your client every day for 3 months, I doubt seriously you spent 8 hours/day with the client.
If you want to make real money then reinvent the market and put all of these realtors out of business. Use travel agents vs online travel planning as an example. I am in the cell phone design and manufacturing business. We reduce the cost of our parts while reducing size and increasing functionality every year. We are constantly attacked by competition and have to fight for spots in phones every year. Realtors just want to drive people around in nice cars, give them bottles of water and collect thousands of dollars.
Mark says
Of course realtors are not going to like this kind of talk and will be defensive. We are going after their income. Well realtors… Welcome to the real world. Whether you know it or not, all jobs and industries are always under attack from competition and customers. Realtors have been very lucky in that they have no competition. By competition I don’t mean other realtors I mean how Walmart is competition to the mall and how amazon is competition to Walmart. There has been no innovation in the real estate industry because of the MLS and realtors protecting what they have. Sites like Zillow, realtor, etc have taken away some of that protection but it still exists with the MLS. Realtors have a dollar situation to government workers in that everyone must go through the MLS to participate. This is why all monopolies are bad.
Realtors should not see this as an attack on their industry but as a bit of advice. Something will come along to change real estate. You can hear customers voicing concern about it now and it’s only increasing. So as a realtor you can either be defensive and stick to your guns or be on the leading edge of the change and get rich doing it.
I hear a lot of realtors say that they do not actually make much as a realtor because they have to split the commission, then split the split with their broker and then subtract expenses. To be honest as a customer I don’t care where your expenses are. In every other business we must figure out where our expenses are and reduce them or we go out of business. I will give you a hint of where expenses can be reduced and that is with the broker. As a customer the broker acts as nothing more than a pyramid scheme and pimp for the agents under them. Brokers are taking half of your income for what? If agents would do a deal for 1.5% each or half what they charge now I think most people would be happy to pay it. If you are an agent get creative and stick it to the brokers, make your customers happy with lower fees and make money doing it.
Mark says
“Realtors have a dollar situation to ” should be ” Realtors have a similar situation to “. Thanks autocorrect.
Banks replacing Realtors says
The fees Realtors charge are not only for the hours worked during the transaction but for the hours of education. They are educated in the activities of buying and selling real estate but also in protecting the public from unscrupulous or predatory buyers and sellers. “Buyer Beware” is a law in most states. I suspect we will see a rise in stores of people that completed a “Do It Yourself transaction” and were victimized.
The big banks are about to take over the whole process.
Within a few years an hourly paid bank employee will be assigned to help with your RE transaction, in conjunction with your loan financing.
Mark says
Training? Hahaha. It’s not like you get a Master’s in Realtor. My experience is that realtors know nothing other than who to call. Just call an inspector and closing attorney yourself and you will be fine.
Mark kasper says
This comment seems a bit shortsited. If they are so educated at buying and selling, and other areas why after the recession can none of them sell anything? Even historical top performers go to nothing and that was for years. But now economy great. Nothing to do with anything realtors did are praised and geniuses in real estate again! Funny!
Julie says
Just ran across this excellent story. I was looking for some information on why the big realtor dot com site has taken down public status on listed homes. (Example. Offer-show). As of today the sales status is not showing. I can only imagine this was put in to place for the realtors so they seem more valuable. Just wait until a couple from out of town runs down a list of homes they want to see… only to find out that they all already have offers!! Happened to me once in the 90’s. We wasted an expensive trip to look for a home only to end up with nothing. I have sold 2 homes fsbo in the past and thought I would try a listing agent this time. As soon as my contract expires I am going flat fee mls. For today I have a sellers agent. She lists and markets my home. I see her work and I see my house on the mls. Is it worth 18k? No for that I should be getting tv commercials every day. At the same time I am at the mercy of buyers agents to walk someone through my home. Since my sellers agent/listing agent does not come to the showings (they say that would be awkward and this is never done on my area) Who I ask is actually SELLING my house? No one. In fact not even all buyers agents want to be honest with you about buying a house. I got a phone call from a friend who had a customer in her flooring store to purchase some tile. The woman just purchased a home in the area. She told her that it took a long time to find the right home and did so after realizing her buyers agent was always taking down the houses she wanted to look at in order to get her to buy a home that was also listed by their agency. So why get a buyers agent? Hire yourself a real estate attorney for a few hundred bucks and then call the sellers agent direct. Negotiate a 3% discount off the house since no buyers agent was involved. In the end it is the title company that does all the work and will not go to close if everything is not completed.
Jack Smith says
You said “Who I ask is actually SELLING my house?”
The buyer’s agent is selling your house.
What is selling? You find out what the prospects needs are by asking them and then you present a solution that fits their needs. That’s selling.
What you *really* need from a listing agent is to handle the buyers agents. Put the correct information in the buying agent’s hands and head so you *help* him make the case for your house. To make sure that your house is in the discussion at all times.
Then you need the listing agent to *coach* the buyer’s agent through all the possible snags in the deal. Why? Because most of the buyer’s agents are just semi-pros (you know that already 🙂 ) and you want that buyer’s agent working with you, on your side. The buyer’s agent does *not* want to lose the deal. Just make him look good and help him get paid. He could make or break the deal for you.
Why use buyer’s agents at all? Why, indeed. The fact is, buyer’s agents bring 99% of buyers at this point (2019). You need a listing agent who can handle them.
I agree with you it’s way overpriced. Every agent wants to work with listings and not buyers because listings are so much easier.
Economically speaking, the way to make more people want to work with buyers and not sellers is to pay more to buyers and less to sellers. It doesn’t make any sense at all to pay the same to the listing agent as to the buying agent.
Do it this way and you will have the love and respect of all the hardworking buyers agents. Another reason for them to be on your side.
Lisa says
This has been my experience the past year and its horrible!
As a buyer I have do e the leg work, the agent never knows the answer to any questions I have and I wonder why there needs to be this person involved.
Bruce M says
As a small time investor in the CLT market I can say without question real estate agents are worthless…I find my own homes…they simply let me into the property and write a contract ( which they screw up sometimes). With technology today Agents are out dated…the only REAL person who works in a deal is the Closing Lawyer/Attorney . By By 6% leach.
Mandi Lowthian Smith says
I have bought or sold 19 homes; some privately, other times through agents.
Of these agents, there are 2 that I would trust implicitly. They are honest, and know exactly what they are doing. We make bets about what the place will sell for! And I buy their kids gifts.
The rest not only waste my time, but in several cases have actually compromised deals.
A case in point: agent misspells my name on the listing, photographs my home from a cellphone, including neighbour’s property, hosts open houses without my permission, brings no clients of his own, and accesses my home without my permission smoking a cigar (I am asthmatic).
The governing board, in their infinite wisdom, wanted me to fill in a 5-page report. And he is still selling 5 years later.
Other agents say they never view private listings, because they are “irrelevant”.
Another took the listing and offered $40K less than what it was worth the next day.
More recently one had me sign a document assigning 5% of the value of the house I purchased anywhere in Canada.
Nobody knows my house better than I do. Like my fave agents, I am honest, fair, and straight goods. I’m well skilled in fair market value and perceived value. My background in CPG marketing helps too. And my lawyer is bar none the best.
I haven’t eliminated agents altogether. I would still prepared to cut 2.5% if I were in a hurry. But as soon as they start with the “give me the listing” crap they will she shown to the door.
James says
I’ve never ever found real estate agents to be helpful and absolutely baffled why, in high-end markets they still make 3% for opening the door and letting me see the house. I’ve never had an agent show me a house that they found or had some inside line on. Complete waste of money, and often cost me more money in the end because they are trying to buffer their commission.
Patricia says
I’m so frustrated with the experience we’re having so far wit the listing agent and the sale of our home. Technology has transformed the real estate market to become so De-humanized like it does with most things. We get a notification through a txt message to show the house, no contact whatsoever with our listing agent, but instead with some MLS appointment scheduler. So each time our house is shown it is with a complete stranger, that has no idea of the lay out of our house or anything at all that could play an important part in someones opinion looking. In other words, a listing agent does ABSOLUTELY NOTHING to promote your home or sell your home to other agents clients that are coming through. They sit back and wait for a email from the agent with the 5 question feedback note,. It’s a joke! then if it doesn’t sell within the first 3 weeks, they immediately want you to lower the price, so it goes back out as a new listing on the MLS. Personally I think the today Selling listing Agents are not worth any commission because they do absolutely nothing to sell your home!
Gonzo says
Great post. Hits all the key points that I came to in my own analysis of whether I should engage an agent (6%) or go it alone. For a house in the $550K range, that meant a payout of $33,000. It comes out of the final sales price. The listing agent faces two competing impulses — give me an accurate listing price/value, or inflate that number by $33K to cover their commission. The latter strategy pushes it beyond realistic comps, and likely will lead to a future price reduction (game playing) and ultimately a commission coming from the realistic market value. If I’m going to pay that, what do I get? As others have noted, I might get full service — or someone who acts like a glorified clerk, entering data on the MLS, then sitting back and waiting for someone else to sell the house. I chose to sell the house myself, listed it with a fixed-fee online agency, SavvyLane.com, and purchased supplemental marketing tools, all for less than $200 to get it on MLS, Zillow, Realtor.com etc. If I needed to make changes, I made them and paid a small change fee. Instantly saved $16,500. To get on MLS, FSBOs like me have to offer a buyer broker commission. I offered 2%. Bring me a buyer, and you get $11,000. Not bad, for a little time spent showing the house (which you likely have never seen, despite not attending an agent open house that I organized and publicized directly to every agent in our market area), and then writing up an offer sheet, which may have led to a little back and forth, but possibly none of that if it was a respectful offer. So, $11K for maybe 8 hours of work, before it all goes to the escrow-title company? And the dollar amounts just keep rising, with the price of the house, for the same or very similar work. As it happened, I sold my house to a word-of-mouth referral, and because no broker was involved, I was able to reduce the sale price, which cost me nothing, and was a nice inducement to the buyer. Win-win. All without the services of a Realtor, who could likely have brought the value of the agent who listed the house next door in the fall of 2017, saw it sit on the market for months at a price $50K higher than the price it sold for in April of 2018. I’m sure that agent collected her commission, but for what? Other FSBO people with whom I have spoken — and agents themselves — have told me that the local real estate industry has collectively agreed not to show FSBO properties, unless a buyer asks them to. So, smart buyers will start with the MLS web sites (Realtor.com), look for FSBO properties, then do some door knocking, and leave the traditional agents out of the equation. It works, saves thousands, and sticks a thumb in the eye of the cartel.
missy says
Gonzo thanks for the tip.
I use real estate agents to list my property on the MLS and FMLS. Then, I ask that they list my home with a flat fee listing (meaning that there is no commission on the seller’s side). My name and number can be on the listing but most realtors want to receive calls for future business. It is a win-win situation.
Chris H says
I fell a duty to say, if you are basing your knowledge on what Realtors do on a TV show with actors…. in your case “Million Dollar Listings” where they can’t even pronounce “Realtor” correctly, you just might be on the wrong track to give advice about what an entire profession does.
Chris says
I would love to know what the negative posters here do for a living and if anyone thinks that they don’t earn their keep. Realtors are some of the hardest working people out there… in the heat… in the cold, rain, snow and sometimes all of these things. If you don’t want to hire an agent, no one will begrudge you for it. Just educate yourself for what you are in for. Are you willing to open your home to strangers? Do you have a strategy for how to vet the lookers and find out if they are qualified? Do you know how to find accurate information on the web, and sort out what is true and what is not?
My advice is to talk to an agent at some point during your process. Talk to your friends and find someone that they have used and recommend. You don’t have to hire them, but at least you will have options and you might just learn something from them that is valuable if you decide to list your home for sale by owner. A Realtor’s job is to make the process smoother than on your own. Can I cut my own hair? Absolutely. Can I cut it as good as a licensed professional… unlikely, but it’s possible.
Mark kasper says
I’m no negative poster but I am an experienced product manager who spent 4 years in college. Worked 70 hr weeks for years. I’ve worked in tech and have seen top engineers design things that no one in the world could. Got patents. Launched first cellphones in the world and I know realtors who make more than them! Give me a break. When recession hit and years even these top realtors couldn’t sell anything. But only when economy is good they are geniuses again…These engineers even in recession times were designing products, getting patents. I’m sorry but your post makes no sense to me. It’s a scam. Title company, how to list, then what if someone wants to buy. It’s a racket. Regular people are confused and scared about listing and selling a home. Make it easier. Like a title and selling a car and realtors are gone. I had a realtor list my home when economy was good. One ad. An offer came in. And when I agreed we went to the title company and they did everything. Realtor did virtually nothing. Just basic forms, like a used car salesman does…
Lisa says
I see your point. However, a world without Realtors, would make our world a self service world. With no assistance from a human person, only dependant on machines.
I see your point and the point of others, why not meet in the middle? Most Realtors, like myself, are passionate about the field of real estate. I have performed well, prior to Internet and I made decent income. I would do the same performance for less, as the passion alone achieved is alot, however, still, as any business, I expect professionalism from myself, and am privileged to achieve income for doing what I love. It is a lot of work, and a lot of expenses. These days , more expenses, as Board of Realtors seize the opportunity of charging $1000 or more annually to just be a member. The part I found intriguing, as of lately, is the Board of Realtors fees have gone up, with no benefit at all for a Broker. You are just a member of a group. Meanwhile, when affiliated with the Multiple Listing Service, this benefit is a tool in how our process works.
The scary part, is with internet, yea, information is readily available, but only to the extent of accuracy. Places like Zillow, have been found numerous times, to be inaccurate, throwing the sales market analysis off. And With the recent bidding wars that have taken place as well, from a relatively small portion of cash heavy consumers, this too, throws off the “Machine”. Resulting in false readings, no basis for an accurate sales market theme report.
So the idea of no Realtors would be a mess, and it would sadden me greatly to have to let go of something I enjoy so much. And I will not stop doing what I love.
Now,
If we do away with people, ok, vision this, no Car salesmen, no Realtors, no bank tellers , no mortgage brokers, basically, no people, who would be left, as buyers? Who would be able to buy? The cycle of income would halt.. the circle of revolving income and expenditure would cease to run smoothly. And we would, as consumers, would be yelling and thumping on a computer screen when it failed to assist us…
Thoughts?
Maybe somewhere in between, lower fees, and we all work together.
It is my opinion that if you keep the professional in their position, someone that is out there, with an everyday focus on their product, a far better version than, in real estate, just a homeowner who is wanting to sell his house, and looking at only the monetary achievement, Not the professional guidence, knowledge, and focus that the prodessional gives his individual attention to, daily.
Thank you.
I enjoy your blogs.
Braulio says
I’m buying a house right now, I have an agent/couple who describe what you wrote about. I have literally seen zero properties they suggested and I don’t think they have negotiated at all. I’ve been scouring the redfin and trulia every day. I wish I could just do it all myself. I deserve their commission.
A realtor says
You can. Call the listing agent of the house you want to see and go view it. OR find a new agent because the ones you are using are worthless.
Joe G says
I’ve been a commercial realtor of over 30 years. What I write applies to commercial and residential real estate. Without exception, a seller will obtain the highest price in the shortest possible time with the use of a real estate professional.
Good real estate practitioners are worth their “commission”. When you are a motivated seller, its comforting to have a pro working with you. I want to emphasize using a “pro”. As in any profession that has low barriers to entry, as real estate agents do, there are many individual agents who are ill prepared, untrained, inexperienced, etc. You can control that, however. Take the time to interview agents, ask about their experience and review a marketing plan. Oh, and make sure you get along with the individual.
If you’re a buyer, using agent to exclusively help you in seeking a property, you should interview. Anyone can search the MLS and come up with target properties, but its the experienced agent that can preview, inspect, guide and generally discuss trends with you about neighborhoods, schools or even whether or not somebody jumped off the roof of that house your looking at next to the canyon. It’s info you’ll never ever get without speaking with a knowledgeable professional.
But, you still must interview and take the time to explore the agent’s abilities. It makes all the difference. There is no need to settle for less
Mark kasper says
A seller will obtain the highest price with a real estate professional! What? When recession hit in 2007/8 and for years until just a year and a half ago realtors weren’t selling anything. Top performers were eating Ramen noodles for years. Give me a break. Economy picks up, last two years going crazy, nothing to do with with realtors but they are now geniuses and selling again! So if these real estate geniuses couldn’t sell anything for 5 to 6 years it didn’t matter what the property was listed at! Give me a break. They can’t sell during tough times but only during great economic times. And you tell us they are worth their commission!
Justin says
If it’s so easy why don’t you get licensed and sit back while the money flows? Many of you would not make it through year 1 much less year 2. Our industry has an 87% failure rate. Why? Because it’s not easy! 20% of the 13% who make it close 80% of market sales. I am sorry you have had bad experiences but don’t devalue the work that those of us who are busting our asses do on a daily bases.. The problem is, people hire an agent with ZERO research. Your buddy at work used that agent? Let’s use him/her too! Agents that do nothing continue to do nothing because people like you arbitrarily hire them so they keep getting paid to do nothing. Did you ask for a resume? Did you check references? Did you look at reviews and social media? Did you ask for a marketing plan? Did you interview multiple agents and carefully select the best one? This is an important BUSINESS/FINANCIAL decision. Treat it as such! There are a lot of bad agents out there, yes, but you need to take some accountability for your hiring methods if you’ve had 12 bad agents. And by the way, on a $15,000 commission I walk away with $2,800 after co-broke splits, company splits, military rebates, business expenses, and taxes.
Mark says
I said it earlier and I will say it again…As a consumer I don’t care how much of the $15k you take home. To me I still have to pay $15k. When you are the consumer of another item or device, you say the same thing.
Aaron says
I am a real estate agent and I love this article. I agree on most of the points, but I will tell you a little secret…. The commission you pay on listing your home is negotiable. Typically I list homes for 4.5% with 3% going to the buyer agent and 1.5% to the listing side. The listing side has a few more costs, but can be significantly less expensive then the buying side of the transaction when you factor in time. I have had clients in the past that we had viewed around 30 – 50 properties prior to landing on the perfect home.
Mark kasper says
30 to 50 properties before landing their perfect home? Not sure what value you or any realtor provides when so many properties are viewed. Obviously the majority of buyers are not talked into something they don’t want. But rather continue to look at properties until they find something they want! Zero benefit from a realtor. Zero.
CN says
I think this was a great article and very honest. My husband and I have talked about me becoming a realtor as a side job and I’ve mentioned that I think they will soon be obsolete. This article totally proved that and we just sold our house by owner in less than 10 days (my pictures were much better than you see on most the websites as well). The buyers had a realtor and we agreed to pay half of her 3% fee and its worked out beautifully. The house were buying is by owner also and were just making up the paperwork as we go along and making life much simpler on both parties (getting all the necessaries done of course).
Thanks again for the great article!
cn
Merlee Kay says
I 100% agree. We live in an area with high home prices. We hired a realtor that came highly recommended and he’s been such a disappointment. Basically stuck a sign in front of the house, no flyers. He couldn’t even be bothered to hold an Open House even though this is the only listing he currently has (per his website).
At $2mm, our house is below market as we wanted a quick sale. Even before the listing went live, he started to talk about maybe cutting the price after 3 weeks. Good luck with that! Unbelievable!!
Elmer J. Fudd says
Merlee Kay, we may not be in the same market but we are definitely in the same boat. You would think that at the $2mm plus price point those boats should be luxury yachts. But rather, the current RE system creates the environment where buyers and sellers are alone in a sinking, leaking dinghies, out in Open Ocean, surrounded by sharks. The fact that these homes will sell in the millions only makes the stakes that much greater. I had a Listing Realtor on a $2mm plus property that wanted me to further reduce my asking price by $150k after 3 weeks of signing up with her. The wild part was that I had reduced my asking price by over $300k when I signed with her. I guess she figured $450k is all monopoly money when it isn’t yours. I had to remind her more than once who she worked for and to concentrate her efforts on getting an offer and not on wearing me out. When the system serves only the sharks, it’s time to do away with the system.
Mark, your article is spot on not only because it echoes the experiences shared by many but also because it clearly states the motivations of those sharks that attempt to continually hide what is painfully obvious. That truth is that Brokers, Realtors, and Agents add very little unique value to the home buying and selling experience. When those that have the least skin in the game are the same ones that most zealously advocate for the status quo, their motives cannot be denied.
In our current twisted world of real estate, Brokers, Realtors, and Agents act with a sense of entitlement that does not correlate with their level of contributions to the process. Their “I eat first” mentality originates from unearned institutional advantages in what is a rigged game. That the industry’s structure resembles a pyramid scheme coupled with the dwindling importance of the efforts of Brokers, Realtors, and Agents dictate that it’s time for a paradigm shift.
The disbursement of real estate information on the internet serves to level the playing field for buyers and sellers by pulling back the curtain to reveal Oz the Great and Powerful. Sophisticated consumers will first do for themselves and will not pay for the application of free market data that when mated with basic business principles yield answers to specific questions of what should be a common transaction. There is very little pertinent information that is unattainable. And because competent real estate attorneys are readily available, with unbiased expertise at a price that is very often more advantageous for consumers, the cries of “We’ve always done it this way” become the swan song of a dying breed. Those ardently holding onto “Doing business as usual” are the standing in the way of a steamroller named “Progress” that is gaining speed fast and is short on brakes.
The real estate industry, for sake of their own survival, must recognize that the interests of buyers and sellers must be placed ahead of all others. Likewise, many Realty Boards have devolved into structures that exist to serve the principals while the members are not receiving a continuing and growing value stream. If the real estate industry chooses not to address its abuses, its archaic structures, and its system of compromised relationships, legislators, the courts and or the proposition process will bring rapid consumer-focused changes.
On a more personal scale, the vanguard of positive changes uses value as their currency. Sales professionals that lead by adding true value to the process will be rewarded with loyalty and their exceptional efforts will be made known very quickly to future buyers and sellers through technology and personal recommendations.
My contribution to changing this industry for the better is based on an assessment of what has not worked and choosing to opt out of patronizing entrenched failures. I believe that the majority of the responsibilities of the Listing Agent can, for the most part, be successfully executed by a motivated and informed seller. The FSBO process can be improved by applying a hybrid of the open listing contract that shifts the majority of the commissions to the person that brings a buyer. The goal is to find a buyer. The MLS has simplified the process of broadcasting the sale of a specific property. It has been repeated here and on many other sites that the vast majority of the Listing Agent’s efforts begin, end, and are focused on acquiring the listing. That is why the allocation of commissions must remain disproportionally high to benefit the buyer’s agent.
I adopted a marketing plan that applies to especially high dollar properties. It begins by creating a list of buyer profiles, that includes as many specifics as possible. During the vetting process of brokers and agents, ample considerations as to what candidates are most likely to attract and influence those specific buyer profiles are given. The research should yield several worthy contenders. Coverage of geographic, ethnic, language, industry-specific, religious affiliations, and social contacts should be made to encompass as much of the specific buyer profiles pools as possible. Several open listing contracts are offered to ensure that the fires of competition burn bright and hot.
Mark kasper says
I laugh at realtors who are offended and say don’t paint all of them with a broad brush. That they are trained, work hard, crazy hours. I’ve used realtors to sell a few homes. When economy and market was good no problem. But recession in 07/8, years go by. 5 years and no realtors selling anything. Even top performers. So if top performers can’t sell homes for 6 years how can you defend them? Now economy is good. Nothing to do with what realtors did but now they are geniuses again! Hilarious!
William Martin says
The value of having a listing agent is when the seller is out of town. Having said that, everyone is right, realtors have no value. Sadly, we are out of town and totally dependent on a sorry listing agent. Lack of communication is one of my biggest beefs. We interviewed several agents before listing and our current agent assured us that we would receive weekly updates that described who was seeing the property and their feedback. We quickly got to the point where we were begging for information. We started getting the same feedback from every update (to many stairs–3 story townhouse–really?) They stopped with that line after we called them out. We have gone through the several price reductions even after being assured that we were in a booming market and the townhouse was priced lowest than others in the area. The townhouse is clean, empty and in top notch condition. When I suggested that our listing agent do some creative marketing, he fu-fued me and said that he was the expert. I even suggested that he concentrate his marketing to young professionals (the townhouse is located in the downtown area). I got a phone call (he had a hissy fit) saying that I was suggesting age discrimination and that he could lose his license. I am 70 years old. I think that he was insulted that I would suggest how he should do his job! We are 6 weeks away from the end of our 6 months contract with no offers, not even low ball offers. I think that the way to get rid of these poor agents is through word of mouth, publishing experiences and people paying attention to reviews. Be assured, I will be providing a review in 6 weeks.
Ideal markeyer says
Sounds like a case of take listing, place on MLS, sit back and wait. Unfortunately that is the marketing plan that too many agent follow. A good agent evaluates the property to determine the most likely buyers. Then prepares a marketing plan designed to target those individuals. The MLS is only a data consolidator designed primarily for the benefit of real estate industry professionals. Although, in most cases, it broad cast the property information to hundreds of web portals, i.e. Zillow, Trula, Realtor.com, etc.. it is not a marketing platform.
Properly marketing a property for sale is far more than allowing the system to do its thing. The agent you want needs to be ready to invest time and money in advertising to get your house in front of the ideal buyer. If the most likely buyer is a young couple in their thirties with two children, then that is the group to target. Today, social media platforms give the real estate agent the ability to reach out directly to any demographic, of course there are Fedreal Fair housing standards that have to be adheared to when advertising. But, there is a lot that can be done and still not violate the law. Prior to social media capability the real estate agent could have done the sam type of marketing using targeted mailing list. Next agent you hire make sure that they are ready to promote your home and not just list it. As a minimum you should hear about a facebook campaign. Ideally the agent will use facebook, Instagram, and LinkedIn as tools in the marketing plan
Joe says
Many agents do not bring value to a transaction but to suggest realtors can’t provide value in today’s market suggests you are probably operating at a price point where the Pro’s are not playing. Sadly that means most first time buyers don’t have a great experience.
In my last transaction my buyer secured a property off market in an A+ location for $511,000 below the inflated ”Zestimate”. Roughly a 45% discount off of retail for a cosmetic fixer. He had $200k in equity by the time he moved in. Another client purchased a home directly from a builder for $94,000 below ask and $49k below the most recent comp with $46,000 in upgrades included through negotiation. Another client sold a $1m+ home that has been on the market for nearly 2 years as a FSBO and with a discount broker. How does a house that has been on market for 20 months suddenly get multiple when a new agent takes over? It’s not dumb luck or an accident.
There are several types of buyers and sellers. The DIY guy that thinks they can do it all online then go directly to the listing agent who then takes a haircut is missing out on a huge percentage of the deals available. They simply don’t understand that a huge percentage of the good deals never show up on the MLS or if they do they are pending within hours. They don’t understand that good agents have dozens of homes in off market inventory that will be hitting the market in the next 4-6-12 months. They don’t understand who guides the high end buyers that will pay full retail… the doctor or executive with housing perks in their contract that moving here with one weekend to pick out a house. Which luxury homes do you think he is going to see?
Are we going to bring those deals to people that think we provide no value and want to cut our income by 25-50%… probably not. Good agents can negotiate and deal make at a level where they don’t have to deal with people who do not value them.
The sad part is that when I talk about good agents I am talking about the top 10%. There is a lot of dead weight in my industry.,
Andy says
I have recently persuaded my 18 year old son to get a real estate license. It took him less than 2 weeks to pass an online class and get his license. We did find an almost defunct brokerage in our are for a managing broker to hold his license and we agreed to pay him 1000 a deal flat.
I am a real estate investor (mostly commercial and residential income)and was tired of seeing brokers doing practically nothing and showing up at the closing to collect the commission. I was doing research, going to the properties and even talking to the seller’s agent. My typical deals are north of 500k up to 2m. In the last year I have purchased properties worth 4m, and my son pocketed 100k just for showing up at the closing as the buyer’s agent. Keeps money in the family and I could negotiate a more hardball deals myself.
Also, when time came to sell our own house, he listed it for us and offered a measly 1.25% buyer’s agent commission. MLS would not let him list for less than 3% buyer’s commission but that’s the turf Realtors are trying to protect. You can list on Zillow easily without being subject to that condition. Guess what, the house sold at the asking price in 2 weeks. Most buyer’s agents did not even bother to negotiate on their client’s behalf. All they wanted was a quick closing and then run.
I am not saying everyone can do it themselves but it is not that hard. For people who want to employ an agent should negotiate a flattening percentage for higher property values. I recommend a 5,2,1 approach when you pay 5% of first 100k, 2% of next 100k and then 1% of anything above that.
P.S.; My son has no desire to do this as a career. He already finds the whole process despicable.
Gunnar Jones says
If you don’t want to work with a real estate agent dont. If you are having a bad experience with any service provider there is no need to stay with them. So severe the relationship. As a buyer if you choose to not work with an agent you will just deal directly with the listing agent. The listing agent represents the seller not you. so please dont think it is a two way street. best of luck.
If you are a seller and dont want to use an agent you dont have to. So dont. Do it yourself. best of luck.
There are a lot of bitter people on this thread. If you’re this angry at real estate agents you’re probably angry about everything. lol. If you dont like them. dont use them. So you can move on and use the comical anger toward all of the other things you people are upset about.
Disclosure im a real estate investor. I have been involved in the industry a long time. there are bad agents. plenty of them. there is a low barrier of entry. There are also good agents. plenty of them. real estate agent are 100% commission and its a tough gig. High failure rate because of how tough it is be make it. I know many agents that do very well financially. Some have MBA’s some dont. But they run their businesses very well. Disrespecting the entire profession is silly.
Be well all.
Edgar says
You say, “The listing agent represents the seller not you. so please dont think it is a two way street. best of luck.”
Well, the “Buyer’s Agent” represents the seller too, so what’s your point? Which buyer is the Listing Agent most willing to negotiate with, the one offering them 3% commission using a so-called “Buyer’s Agent” or the buyer going directly to them and offering 6% commission.
Reality’s coming and it’s calling out all the tricks you people use to swindle consumers. It must and will end.
N. Davis says
Thank you, I agree. I currently have a really good agent and it is not an easy job to be and stay a top performing one. He loves his job and he is very personable. This is what makes him a good agent. It’s just in him to be what he is (a real estate agent).
Kudos to you on your remarks. Keep up the good work and much continued success to you and your business!!
Mark says
I have put my money where my mouth is and just sold a house with a MLS only listing. I just closed today and everything went great. I did the market analysis myself and listed at $5k below that to move it quickly. I had 3 offers with one of them at $5k above listing price or right where I predicted it should be. I also negotiated that we rent the house
from the buyer until our new house is available.This is not that hard people. What else would a realtor done for me except take $11k of my money?
When looking at the closing cost breakdown, it pissed me off that of the $15k in closing costs, $11k of it went to the buying agent. $11k!! I talked to the buyers and they found the house and came up with the offer. They we’re not happy with their realtor. I told them that if they had come with no realtor then I would have taken $8k off the price for them and I would have kept $3k. They just looked at each other with a disappointed look.
Someone mentioned earlier that a lot of people seem angry and that they must be any people. In truth people get angry when others take $20k+ for a job that is nowhere near worth that. Do you think the couple I just sold to are happy that they paid $8k too much because I had to pay their realtor? That will cause easy going people to become angry.
Mark says
Just to add to my above post… I had a realtor friend tell me to take my first offer that was $15k below my final selling price. My first offer was a cash offer and she said that was worth a lot of money. I told her that whether the buyer gets a loan or has cash, it’s all cash to me and I knew what the house was worth. My first offer also wanted immediate possession so I would have to move twice and gotten short term rental at $2.5k per month for 2 months.
So let’s add it up. If I had used a realtor and taken their advice I would have lost
$15k in a lower cash price
$11k in realtor commission
$5k in short term rental
$4k in additional moving expenses and storage
For a grand total of $35k!!!
But wait… There’s more! I did not use a realtor on my buying end because it was new construction which was worth $14.5k
But wait… There’s even more! I found the builder and worked out all of the details with him so I told the selling agent that I wouldn’t do the deal without a 50% commission reduction. He balked but eventually came back and said he would do it for 2% so there’s another $5k.
Add it all up and it’s $55k!!!
$55k for a deal that would have been more stressful for my family, had more stuff broken from additional
move but at least the Realtors could have gotten a new BMW.
If you think a realtor has your interest at heart then you are mistaken. They want to get the deal done so they get paid.
The downside to my situation is that I have to figure out what to do with the extra $55k.
Gunnar Jones says
That would have been your fault for listening to an incompetent friend. Doesn’t matter the profession. That was a long winded way to pat yourself on the back. Just dont dont use agents ever. since you consult friends that aren’t very good at their job to help its probably for the best. problem solved.
Mark says
However you want to take it is fine but I noticed you didn’t disagree with any of the facts. The facts are that realtors are leaches on real estate deals and they pound it in everyone’s head that they are needed when in fact all they do is take money and provide no service.
As far as my friend goes it is common with realtors to recommend that you take a cash offer that is lower because it is less likely to fall apart due to financing, appraisals, or the buyers just changing their minds. While that is true I also believe that realtors favor a cash deal because they are more likely to get paid.
Just sharing my experiences and yes I am proud of the job I did to save myself $55k. Wouldn’t you be?
David says
Cash is perceived as being higher value and you can close sooner (somewhat). However as a seller you should make sure the buyer is pre-qualified, perhaps even by multiple lenders. You can also counter with less contingencies (e.g. lower # days for due diligence/evaluation) and offer a home inspection report and appraisal (I recommend doing both even though its’ out of your pocket). Both will expedite and reduce risk of a loan/mortgage contingency buyer. Yes they (lender) will still need to do their own appraisal but at least you have a solid reference. Also if your sales prices happens to be over appraisal they can still buy (get a loan) but need to put more down to cover the gap
Dave says
My experience with a dozen real estate transactions has led me to a few different conclusions.
I first think that anyone that has never bought or sold a house should consider using an agent. Realizing that agents really are the go between and they are not authorized to negotiate on your behalf through a standard real estate contract. The thing that comes to mind that I think is valuable is the hand holding. There are a few challenges that come along with real estate transactions that a typical agent will hopefully guide you through and if you are lucky the really nasty (often hidden) challenges will be caught – but they are often overlooked.
As a buyer here is my strategy: Time is always of the essence but critical in a hot seller’s market.
Most buyers are hesitant to make an offer; they want to wait to chat with their spouse, to swing by after work, to go to the open house “next” weekend. If you think it might be what you’re looking make an offer – now, as in this minute.
At this step I never use a buyer’s agent, they slow the communications down. I instead chose to call the listing agent directly to discuss the property and any potential offer and introduce urgency. This removes the me calling my buying agent who is golfing or on vacation otherwise indisposed who will when time permits call the listing agent who will at some time talk with the seller. If the listing agent is not available call the broker directly. In a hot market 3 hours can be the difference between owning a new home or driving by a home someone 2 hours ahead of you now owns. The second piece is if the property is even remotely attractive to me and the price is in line I immediately move to make an offer – and specifically request the listing agent to act as the both the listing and buying agent. In doing so I “offer” the listing agent to submit my offer (basically send me the contract to sign and send to the seller). I offer this at 1%. The way this plays out (most of the time) is I request the remaining 2% to be returned to me at close of escrow to be applied to xyz on the house e.g. roof/deck/yard etc.to (typically needs to be written be applied to repair/enhance something) This is a win win, the listing agent (actually broker) gets 4% instead of 3% and I get 2% off the total transaction. I occasionally have pushback from a listing agent or broker wanting all 6%. This is when I remind them that I’m happy to bring in my buyer’s agent to pick up the full 3%… Even the dullest lightbulb in the room will light up with that conversation. In the end my real goal is to accelerate the time to offer – getting 2% off on a property I really want is even better.
Acting fast to lock a property into contract which is of interest to me is essential and the standard due diligence time clause in standard contracts (often 17 days) provides plenty of time to evaluate the property and if not desirable you (I) can move on. Recognize that you can be looking further at the property while the paperwork is in flight. If it’s really not attractive you can back out even before you get to the signing time. But if you are out of town it gives you time to get back and really determine if the property works. Sure what I just said might not make many agents happy. This means you effectively “lock” the property in contract – even if you aren’t 100% sure it’s the house you want. But in all cases you would have the same opportunity – it’s still the same contract. All I’m suggesting is act as fast as possible – even on houses that “might” not be right.
So who really makes a real estate transaction happen? A Buyer a Seller with everything happening with Escrow/Title and your Financial Broker (respective lender or your cash). All timelines are tied to both and they are incented to make it happen. Your lender will walk you through everything you need for the loan and escrow will coordinate the title and lender timelines. Agents do not participate, although it would serve you well to make sure you are talking with Escrow and your lender along the way to ensure something doesn’t get dropped.
Of course there are plenty of due diligence steps that the buyer needs to do – with our without an agent. This can (should) include talking with the neighbors and checking county records.
On the selling/listing side – things are a bit more complicated. Regardless of if you use an agent or sell by owner; as a seller the most important thing you need is knowledge about your own property. Invest in a home/pest inspection (normally the buyer does this) and pay for your own appraisal. These come into play in the following ways: The pest/home inspection will identify key areas of concern that you can circumvent before you list or exclude from the contract. For example a failing deck – the defaults in contracts would most often have the seller to be required to fix it. However, it’s a standard contract that is a template. It has places to change what the seller is willing to do or not – this could even be SOLD-AS-IS. In the least it will remind you to strap your hot water tank, move dirt away from areas where wood and earth are contacting as well as looking to eradicate pests and perhaps “fixup” the deck in weak areas. The appraisal is also a no brainer as it is a contingency of the lender for the buyer. Yes, the buyer normally does this during their loan application phase. However, this ensures your house is priced where the lender will qualify it as well as show you other comparable properties that might give you insight as to changes you might want to make before you list.
I will say the WORST experiences I’ve ever had are with agents is on the listing side. Take the time to understand the contract – yes it’s dry but the “options” are important particularly if something goes sideways so you know what your liability is. At the end of the day – “most” agents are not familiar with the intimate details of a real estate contract – I second that “most”.. Moreover – you are signing the contract not them. All liability in this area is on you. Remember you are selling – there is no urgency take the time to protect yourself.
I personally see little value in a buyer’s agent with today’s technology and agree with the author. On the listing side, sure there is value. I don’t think the service delivered is worth more than $10k in most cases and in the next few years you will find the likes of the Zillow’s of the world and Rocket Mortgage chipping away at making the purchases more amazon-like. The likes of staging and other marketing aspects are already well documented for those that wish to self-list – although I would suggest “budget” list vs 100% FSBO. Although I haven’t seen it yet the “show my house” as a service much like the uber service for rides may not be that far down the road. That said – for many agents, it’s a thankless 24/7 job with people like me demanding to call their seller with my offer
Look for new services to help home owners prep and sell their homes without the need of expensive traditional agents. Times are changing, the only question is will agents change to meet the times.
Dan says
The concept of asking “what does a real estate agent bring to the table” is a good one. I’m an agent by the way. I personally think many don’t bring enough and are literally just good at getting sales(self promotion), but this article is missing a very big concept. Zillow, Trulia, realtor.com and many others, where do they get all their useful data? The MLS. And who pays for and inputs all that data for the MLS? Agents and their brokerages. Who pays for the physical buildings? Agents and their brokerages. Who pays for the legal forms and their updating (staying current with the laws)? Agents and their brokerages. Who pays for continued education because of new laws? Agents and their brokerages. How about insurance just liked other licensed professionals? There’s more to the list , but maybe you’re getting it? Basically you see a big price tag, but you don’t see the associated cost for the the “infrastructure”. Will there be a more cost effective way? Probably, but don’t think Zillow will be free if they start providing all sales histories on their own at their cost, plus how will they get it accurately without the MLS. What contracts will you use and what will you do with earnest money if any? Does your area (city/country/state) have any unique laws (will Zillow know)?
As an agent I’ve had clients not believe me that their offers would lose to others, which they did. I’ve also had clients willing to pay too much and advised them otherwise and they listened. A better question is why hire one agent over another agent (what’s on their resume). For myself (a landlord, investor, flipper, agent) I’ve experienced personally more than most people, agents included. Knowing how much effort or how much it costs to pay for repairs/updates makes me better at understanding real value.
cole says
The very truth is simple. Some deals are simple and smooth, some not. Some agents are savvy with lots of other world experience, some not. Most are not. Those that are bring a lot of value to their buyer/seller. You never know what might transpire in a deal. I’ve made huge commissions on smooth transactions and thought it a joke, then the opposite. But as an agent I do believe I bring value. Can’t understand the venom over realtors making a decent living. If you don’t like it go for it yourself. If so easy why aren’t you a realtor raking in the big bucks with little work? Things that make you go Hmm.
Mark says
Why am I not a realtor? Because I like to be able to look at myself in the mirror and have pride in what I do.
Andy says
I agree. Realtors are leeches who suck away people’s hard earned money.
James Dericks says
OMG, Then don’t use a realtor!
Rick says
LOL, another realtor who feels that they have to defend realtors…please….just stop….nobody is buying your bs
Erik says
Great points! I have bought and sold several homes and can say none of the buying or selling agents earned the 1.5% (6% divided 4 ways). It seems like any time an issue came up during the closing, I was the person working to resolve it while taking on the cost or taking a hit to my final selling price. To me, agents do more harm than good in the sense they suck equity out of the home in the form of commissions, that could otherwise be used towards the sellers next home, thus reducing wealth generation…at least for the seller.
Mike says
Currently in the process of buying our second home. Have sold our rental property and I’m not very impressed with the buying aspect of it all. Agent is a know-it-all, been there done that, I’m in the business, blah blah blah.
Had an issue with the well at the first property we were under contract with. First water sample failed. Agent tells me the well needs to be shocked. Okay, they shock the well and retest.,, failed again. Agent tells me we will have the well shocked again. I tell her that doesn’t seem right. They go ahead and shock the well again. Agent tells me they shock wells 3-4 times sometimes.This time the owner supplied his own sample and it passed. Magical,
We go to our final walk through, all utilities are turned off. I turn them on myself, electric at the main breaker, propane at the tank, reset the well breaker. I then relight the water heater. We turn the faucets on and crap water is coming out of the lines and doesn’t clear up.
Long story short, I got a well guy out there to inspect and they tell me there is definitely a issue with the well, they smell oil in the water, would highly recommend not drinking or even showing in the water. Come to find out there was oil contaminated soil and the well was no good.
Now if I’d followed the advice of my agent my kids would be drinking and using crap water all because she was trying to seal the deal.
Not saying they are all bad but this is only one example of how our agent is horrible, not enough room to type up all the other reasons and examples.
Our agent certainly doesn’t have our best interest in mind, only her commission check.
She is also one of the more we’ll known realtors in my area.
Moral of the story.,, don’t expect an agent to be watching out for you. Do your due diligence as s prospective home buyer. If you think something smells fishy it probably is. Best of luck everyone.
Kevin says
My wife and I recently sold our home. Our friend was our listing agent (she was also the our buyer agent a few years ago when we purchased the home). We spent a lot of money and time with upgraded and were hoping to make a decent profit on the sale. We followed all of our agent’s directions in getting the property ready for sale. We hired her preferred stager and photographer. And we sold at asking, which we were very pleased with. That’s where the good news stops and the bad news begins.
The buyers of our property used an inspector who was exceptionally thorough. Yet, we made all the fixes they requested, even though some of them made no sense. We found and hired all the contractors ourselves. The agents did nothing, but wait.
Then, about two months later, we were informed by our friend/agent that the buyers were threatening to sue us do to lack of disclosure. My wife and I were baffled. We had filled out all of the forms to the best of our knowledge and assumed our agent would review them for accuracy. We weren’t deceptive in any way, but we were still facing a potential lawsuit. We assumed, wrongly again, that the the real estate firm we had just paid a hefty fee would provide us the legal support to defend the transaction they facilitated. We were wrong. And that’s when I concluded that realtors were worthless. We will never hire another realtor again and instead, as others suggest, hire a real estate attorney for $2,000 and actually have the protection we expect. Lesson learned.
John says
What is a real estate agent? A sales person. Period. Their job is to SELL SELL SELL SELL SELL SELL SELL. If you are a seller, their job is to get your house sold. NOW!! It makes no difference that yours is only one of 6 house on the block up for sale. Yours must sell and it must sell NOW!! That means aggressively marketing it. If you are a buyer, the name of the game is to have your butt in a house, NOW!! Not next week. NOW!! They are sharks in suits and they will screw you in every possible way to line their pockets. I get that they have a job to do. But they prey on people. I’ve never been a home owner. Don’t want to be. I’ve always just rented. I had a real estate agent threaten me and eventually, she had me evicted and a restraining order issued against me barring me from my living quarters. The owner was selling, and I was informed that they were selling, but the realtor refused to show the house because my presence made trying to sell it extremely difficult. So, my time frame to get out was moved up by a lot, because the realtor now called all the shots. And I was evicted because I didn’t find another place to rent as fast as the realtor wanted. They are the scourge of society and I personally have no use for them.
Rick says
Doesn’t surprise me in the least. In all fairness to the realtor (I’m not defending that profession by the way, I hate realtors too) the owner from whom you rented is the one who screwed you by willfully neglecting to tell you that they were about to sell. That’s the problem with just renting from an individual. It’s nothing but a handshake deal, so there is no lease or anything that is legally binding. So they can do whatever they want. But, at the same time, leases with actual apartment complexes get broken all the time and really aren’t worth the paper they are written on. I have been booted from an apartment before where I did have a legally binding (or so I thought) lease. I was booted because the company that owned the complex sold and the new company that bought it from them cleared everyone out so they could demolish it. I had NO notice whatsoever. Nothing sucks worse than going from a roof over your head one day to being homeless the next. I feel your pain there, bro. But, as for that realtor that had you kicked to the curb, yeah that’s typical of them, no doubt. As you said, they take over and call all the shots. You were seen as nothing more than an eyesore to them. You were hurting their sale, which was ultimately cutting into their (ahem…inflated…cough…cough) commission. Can’t be having that. Their life and livelihood is way more important than your’s don’t you know. They are certainly in the upper echelon of society. You and I are peons. Nobodies. Because all you had was a handshake deal with that homeowner, there really wasn’t any legal recourse there. But, you should have sued the crap out of that realtor for emotional distress. Could you have won? Who knows, but it would have been worth a shot, if for no other reason than to get a nice payday off of that scumbag realtor.
John says
Also, every agent out there is the greatest at what they do. The “top seller” in their area. Is your house a tough sell? Needs a ton of repairs? Not in an ideal location? Are you trying to sell right in the middle of a big time buyer’s market? NO PROBLEM!! Super agent to the rescue! If anyone can sell your house, Agent so and so can!! You can go ahead and start packing because this agent is gonna have your house sold within two days. Game. Set. Match. Your listing is going straight to the top!! What a crock of excrement..
ANON says
This is the best thing I’ve read on the internet all week. As an Attorney, I am disgusted at the rate we’ve allowed realtors to charge for their services. This is the best consumer scam going. With all due respect, becoming a realtor is entirely too easy – and when the market is booming it becomes saturated with every Tom Dick and Harry who passes the exam with the hopes of making a quick buck. An intelligent middle-school student could pass the exam and likely has more social media marketing prowess than most realtors in the game today. How have we allowed brokers to earn 5% – what consumer in their right mind wants to pay a broker 5% of their hard earned equity for the limited amount of work they actually do?! When are we going to see limits on these outrageous commissions? I’m angry and consumers should be too.
Gina Grimsley says
Good points about too many people allowed to be Realtors! But I wonder about what people might say about your or an any attirney’s charges per hour or per closing etc? Some professions just will earn more money: CPA’s, physicians, engineers etc. I have always worked with my people re: commissions. Repeat clients or someone who buys something with me and lists their house with me get a reduction in commission. I also purchase the home warranty for my buyer or seller if not covered in the offer as spending another $600 is the last thing a client wants to do. But it is so helpful for them the first year of owning their home. I also have provided and paid for window cleaning, or house Cleaning or for an organizer for clients as some house are so cluttered. You get the idea. This is rewarding in itself but I have found that I get many referrals for taking care of my clients in this way.
The other thing that people may not realize is that a Realtor has no benefits and pays for everything for their business right down to the paperclips. The gas and mileage on your car, every advertisement, sign etc are out of our own pocket. That’s why many agents can’t survive the first year. The local, state, and national dues plus the continuing education costs, lockbox and MLS charges are phenomenal.
Rick says
Funny how the only ones on here with anything good to say about realtors are other realtors!!! Not one person on here who is not a realtor has had one good thing to say about realtors.
Calvin says
I’ve felt this way ever since I bought my first property in 2012! Thanks for sharing this. I don’t think agents should get paid a percentage. It should be a fixed rate. They’ll prioritize the transaction that will get them more commission over the little 1 bedroom studio for sale! The industry needs to change the way we buy and sell property.
J. Swim says
I guess I’m glad to hear there are so many agents not doing their jobs- so when technology closes in, there will only be room left for good agents. I know my job will be safe!
GinaGrimsley says
Oh my! So much missed here! I have to say there are many Realtors that aren’t experienced and they just try to close a deal for their money. BUT! I am a former long time Realtor. Let me just mention A FEW THINGS YOU DIDNT TOUCH ON! A good Realtor is a CONNECTOR! She knows professionals who are competent and available to assist buyers and sellers with all of their needs. From rental trucks to professional movers, ethical lenders (not some internet place that doesn’t really care about a buyer/seller’s well being financially), carpet cleaners, home inspectors ( and how to interpret a scary 40 page report inspection report so they know what’s unsafe and costly vs a typical repair in a home, Home Warranties and which are the best options to buy and how to work with the vendors that do the warranty work. I have often negotiated a large ticket item such as a necessary new furnace with warranty companies. I know how their warranty business works. The vendor deems the furnace repairable. But because I am aware of safety issues, I get another HVAC company to assess. This is all AFTER a buyer closes too and I have been paid. Finding reputable builders to talk with for bids in building. Do you know after building a house with “Joe Shmoe” how many buyers have issues with the home or the process or the money?? Not if a competent informed Realtor is helping.
Who inspects septics, who puts them in, what issues on a home are there? Water issues? This works with both buyers and sellers. Explaining to a seller about truth in disclosure and taking care of an issue before it comes back to haunt them. There can be a lot of hand holding as this usually the biggest financial transaction they make. Some people only do this once or twice in their lives. Lead based paint: there are mitigation grants available in some states. Radon: testing and what to do to rid the home of radon. There are scammers in every industry. Builders should have a passive radon mitigation system put in while building. Less money and more efficient. Also ready for any future sale that may require a system. Contractors: who gives a workmanship warranty on roofs and siding etc? Are they a contractor who does odd jobs but after a hail storm swoops in to do new roofs and does them poorly or provides no workmanship warranty? As good as seeing the assessor site and the apps on line for home values, they are not always right. Values need to be ascertained on sales in the last 3-4 months in that specific neighborhood. This value changes often. The difference between ASSESSED VALUE for taxes, MARKET VALUE in your current market and an APPRAISED VALUE for refinancing etc are all different. I could go on but I need to go finish a continuing education class in Real Estate to stay on top of things even though I don’t actively sell anymore. I am now a life coach and some of my clients are Realtors. I also help future buyers and sellers to know how to find a reputable Realtor. Unless you are a hardworking, honest, ethical Realtor that provides all these services and more, you just don’t know how many 14 hour days one can put in and how many missed personal events one may miss..because that’s the job. Best wishes to all buyers and sellers out there. Gina Grimsley
Rick says
Thank you so much for coming to the rescue of your fellow realtors. You guys need to stick together. The world just has it out for all of you realtors and I can’t figure out why. I mean, y’all are truly one of the last great professions left in America. You all are honest, hard working, diligent, caring, humble, and just a pleasure to know. You work for peanuts, you are always the last to get paid, your commissions are so low that they don’t ever eat into the equity or anything. Your client is ALWAYS your number one concern, am I right?? Wink Wink. You realtors have it rough for sure. It’s a thankless job, and we ought to be kissing your butts every last chance we get because where on Earth would we be without you all??
Miriam Moorman says
Wow! While you are correct on some things, particularly the compensation based on some set percentage (which isn’t set by the way), you’ve really missed the mark on others (but kudos that you were smart enough to first add a put down to the Realtors who you knew were going to be offended). I don’t want to also accuse you of simply having worked with bad Realtors, because I don’t know who you worked with, but if this is the impression you’ve gotten of them, I do wonder how you found them! I have an MBA and decades of experience in pricing, target marketing, negotiations, customer service, and contracts. If people are hiring Realtors just because they are friends, or they like their ad, or somebody recommended them, or whatever, and not asking about this kind of experience, then they don’t understand what Realtors do (nor do you entirely because it seems you have experienced at least some Realtors who weren’t doing their job).
You can take that for what it is but I also want to call out your lack of knowledge about the online sites as well. Zillow and Realtor.com, and others like them, are REALTOR ADVERTISING sites. Yes! You are sending people to sites that will put them in 10 or more databases and they will be getting calls, emails, and texts constantly for months! They are handy for information but the information is automated, not always accurate, and sometimes even stale and if you dare to “inquire” on anything, you will get 3-5 Realtors calling you on every inquiry. And I don’t get the fear or distrust of dealing with an actual, real live person anyway! No matter how smart technology gets, there are some things that an intelligent, experienced, real live person, with knowledge of your area, is going to do better. So, yes, use the internet but if you want the best deal, and you value your time (especially if you have a job doing something other than real estate), then hire a good Realtor also, not Aunt Sally’s Realtor (unless you qualify them as I suggested above), or the nice young girl from your church who just got her license, or the “face” with all the signs around your neighborhood who, yes, is going to hand you off to a “transaction coordinator” (read agent in training or agent who couldn’t handle being the “face”). You may not want to use a Realtor but don’t mislead all the people who are reading this because many Realtors do not fit your description. The people who take the time to find a good Realtor are usually happy they did.
Jason in SoCal says
I am a commercial real estate (CRE) agent. Please make sure when trash talking on resi agents, that you make sure to specify their niche: residential. CRE agents present a huge value to their clients and that will never ever change. We offer real, high level advice to our clientele. Also – the NAR did themselves a huge disservice when they caved on making their data public. That was a huge mistake and the inevitable downfall of a once respected profession: residential RE agent. The real problem with resi agents is that they are a dime a dozen. Everyone knows at least 10 “licensed” agents, but just because you have a license doesn’t mean you are a “professional” or have any expertise. Quite the opposite actually: most licensed agents just have a license in case they have an opportunity to make an extra check once a year or whenever someone they know wants to buy/sell a house. Furthermore, a RE license (at least here in Cali), lets you do way more than you are experienced to do: residential RE, property management, commercial real estate, business broker. It used to be that you could also do mortgages, but that has changed somewhat. In my view, a RE license should teach and train you more and have various tiers. This would make the profession more, well…professional, and it would minimize the amount of licensed agents. It’s way too easy to get a license. That said, there are some really truly GREAT resi agents out there but you have to know where they are…and they earn every damn dollar they make…and that amount is shrinking….at least in terms of percentage; because of RE values, their incomes are just fine.
That’s my $.05. Carry on with your bashing. I too find most resi agents deplorable.
Jason says
I agree with Robert, I don’t see the value add. I think it’s very wrong that they have any influence on the biggest transaction honest hardworking people make in their lives. They have zero idea of what the clients true financial picture even looks like. Some of these responses are just rude, they know they have been eating high on the hog.
Vol4Life says
I’m in my first year as a real estate agent in East TN. I do this full-time with a stay at home wife and 2 kids. 100% commission, no safety net, go big or go home type mindset. This discussion is very interesting. I think both sides have a lot of merit. First off, most real estate agents, like 70%, are part-time. On average, a real estate agent doesn’t close their first deal until around 8 months. I closed my first deal in my first 30 days. The number of years an agent has been an agent means nothing. The true measure of their experience is the # of transactions. Around 60% of people that hire a Realtor only interview 1 agent and around 80% interview 2 or less. The majority of the time, people are hiring someone they “know” or a “friend of a friend” because they perceive they can trust them. Here in lies one of the biggest problems with the perception of a real estate agent’s value. Hiring someone you trust is important but it’s NOT the only thing. That agent also needs to be really good at what they do (achieving results).
How many repetitions does it take to become a master/competent of something? Well, it depends but it’s usually a lot. If someone has been a part time real estate agent for the last 2 years how many transactions have they done? Probably not many. So what ends up happening is the majority of agents out there are not very competent. But the real kicker is most clients DO NOT HIRE a competent agent, they hire an agent they know that they can trust. Which is great and all but if the agent is not also competent it really means nothing.
Something that has not been mentioned but I think is very important to note is being a real estate agent is NOT a job. I did not truly understand this concept until now but what everyone needs to understand is that being a real estate agent is being an entrepreneur, a business owner. Like any business, there is a lot of risk that comes with the territory. But the greater the risk, the greater the reward. The reason there are not a lot of Great agents is the same reason everyone is not running a successful business. It is really really hard.
*The part of this discussion that I have enjoyed and taken the most away from is the argument over a Realtor’s commission or what value does an agent provide?? I think you can bottle this argument down to 3 simple points. But before I touch on those 3 points, I think it’s vital to understand a point I’ve learned. Realtor’s DO NOT get paid for the amount of time or effort they work. Realtor’s get paid for RESULTS. Period. *
Now what are those results so we can measure those to determine the value.
1. Top dollar
2. Best amount of time
3. Least amount of hassle
If an agent can sell your house and you walk away with more NET dollars in your pocket after everything is said and done than you could have done by yourself, that agent’s commission is indisputably justified. If you can sell your house and walk away with more money without an agent then the agent has no value.
If an agent can sell your house in a better amount of time than you could, how much is that time-frame worth to you? Different people will place more or less value on that time depending on their situation.
If an agent can make the transaction as smooth and stress free as possible, how much is that worth to you? Different people will place more or less value on that stress depending on their situation.
All in all, I always like to joke with my clients and compare realtors to mechanics. We’ve all heard of the “Shade Tree mechanic”. I think there are plenty of “Shade Tree realtors” out there. If you can find a trustworthy mechanic that fixes the job and does it right, they are worth their weight in gold. Same as a trustworthy realtor that successfully achieves those 3 results. I do agree though that this profession needs to be held to higher standards, training and qualifications. An agent helps most people with their single largest purchase of their life. Those stakes are high and an agent needs to be able to add their commission’s worth of value, not through time or effort but through results. However, I do think on the flip side, clients need to Interview AT LEAST 3 realtors. I can say confidently that 95% of sellers and buyers DO NOT interview enough agents. Ultimately, I think this is the quickest solution to the problem. If sellers and buyers interview more agents, they will be more likely to hire the trustworthy competent agents, which will in turn make it harder for incompetent agents to make money, eventually forcing them out.
Pat says
Vol4Life,
There are pluses and negatives to everything. One huge negative I see with full time agents is they will often push clients into decisions because they need to make a sale. I work part time and my realtor job is extra spending money, so I never force a client into a bad decision for my own gain. Also, the realtors with the most transactions work with teams and this de-personalizes the experience for the customer. There’s a realtor in my state all over TV and radio and has 50 people under him. You will be lucky if this guy ever answers your email.
Courtney says
Okay, very new REALTOR here. I’ve been plagued by these very same concerns and mostly unimpressed by the effort most Realtors put in for the pay off.
Here’s my question for non-industry folks:
-what would you pay someone else to do, if you knew they could do it better than you?
-setting aside individual agents and commission inflation issues: if agents were to disappear, how would you suggest we avoid a ‘wild west’ scenario of sellers and buyers find and choose each other (safety, discrimination, accountability, ECT)
Technology+Information access/consumer empowerment is shaking down every industry, it is foolish to think it wouldn’t shake down RE. I just want to be standing after the shake down.
Educated guesses welcome. I’m not interested in doing less than what I’m paid for.
Courtney
Eric says
I just purchased a condo last year and I was surprised to see how the real estate model operates. That’s why I decided to do something about it. I just launched an agentless real estate service called offerReddy. We connect buyers and sellers directly and give them all the tools they need to complete the transaction. No agent. Totally digital. 0.5% listing fee. Currently available in MA.
Timothy Stites says
Stop using an opportunity to advertise your crappy services. Do you think I would trust you with my 1mill dollar home?
Clark says
I’m in my first 8 months as a Residential Real Estate agent and I have closed 9 deals so far, 3 pending and 2 active listings. I became an agent because I agreed with the original post, I also didn’t see a lot of value in agents so I got my license and now I am one of the 15,000 agents of Las Vegas. If idiots can make a lot of money doing this then I thought I could make more because I’m a bigger idiot.
Anyway I spend about an hour consulting a client in my office before we look at homes, I prep them on the process and give them all the resources they may need from finding a lender to the inspectors, to the utility companies to call at closing to the plumbers, handyman, etc that they may need throughout.
Then I laser target the properties that they wanted to see and scrub them out to see if there are any offers before we even go see them. We successfully got in contract competing with multiple offers because of the system I use. I attack the emotional part of the seller by providing a letter to the seller by the buyers.
My services to them extends beyond closing, I provide them with updates on the market on their property on which is active and sold so they know the value of their property and any real estate related needs.
When I represent the seller I help out in preparing the property for sale, I change their front doors, I stage the property, I pay for a professional photographer then basically do all I can to come up with my own buyer so that means I do high impact open houses, I call around the neighborhood and even knock on their doors. When they sell I help with moving because I have a truck that I put to good use on these occasions. Needless to say all my clients would refer me to their friends/relatives who are thinking of buying/selling.
But I still wonder if I am overpaid or if I don’t deserve the commission that my broker pays me when my broker gets his commission, time will tell. What I can tell you is that I made a difference and I was able to smooth out the transaction for my clients and I do a helluva lot better job than the agent that I used before nor most other agents out there.
Christen English says
I am a Real Estate agent, I have had my license for 2 years. I decided to choose my career path after watching much of what you spoke about in your article and read about in the comments take place for myself and my friends. When I started out my career I remembered everything I didn’t like and the complaints I had heard and did the opposite.
When it comes to giving advice, some clients just want you to be a messenger, others want you to lay out their options, some what you to
tell them what to do. I try to get to know my clients and their needs and preferences so I can best suit their needs. This not only goes into negotiations but also home searches. I do not use a system that sends them automatically. I search for each buyer individually on a daily basis and send the listings to them. Also, when it comes to lenders I try to get to know a wide range of them to see which ones will work as hard for my clients as I will. Lenders are legally not allowed to give any money to us but they do bring us lunch or treats and notepads and pens. That is however, not what determines who I send my clients to. Different lenders offer different programs and different levels of service. Once I get to know my client I then send them to the lender I feel would suit their needs best. Probably half of my buyers come pre-approved, and that’s okay too.
My clients always thank me for all of my hard work and send me lots of referrals. I think all agents should read this and step up their game.
Ken Adams says
Could not agreed more! Sold my condo in Orlando in 2018 using a Keller William agent. She lived in my same condo building, so it was a win win situation (especially when I lived out of state or else I FSBO). Frankly, first 2 weeks she was fantastic! Then the return calls went from later that day, to next day, to next week! Seriously, I don’t care if you busy, your number one job as an agent is prompt COMMUNICATION!
Jumping to today, I’m in the market for rental properties. I call, text on information of a property and the agent doesn’t return until many days later. How any owners trying to rent out a property settling for this type of service is beyond me.
Dave says
Realtors even know there are bad realtors…they work with them when handling their deals more often than not. Obtaining a license has become too easy and standards too substandard that have caused the decline of the reputation of realtors. Shady realtors create a bad experience and distrust that impacts the reputation of the entire industry…likened to used car salesman. Sale anything at any cost. Not all realtors are like this, but if someone has an experience like this with a realtor, then certainly the experience would harm both not only that realtor but the industry for allowing a realtor of such character to continue their shady actions. unfortunately, well-qualified realtors pay the price (I’m not a realtor btw) for those that aren’t so professional. That said, qualified realtors can’t ignore the harm unprofessional realtors cause to them and the industry along with how technology has changed the process of looking for and selling homes. The industry needs to evolve…it’s outdated and as a result, for the work the consumer now can do on their own to research comps and view homes, commission payment percentages need an overhaul and reduction…regardless of the current costs requested of real estate agents. Service is what you pay for and if part or most of the service component has been changed by technology, then the industry practices must also change. Look at the impact UBER had on the taxi industry. Consumers (including real estate agents who are also consumers) look for value and look at costs to decide whether what a realtor provides is worth their commission costs. It’s currently not in my opinion.
Ryan Moyle says
I am a Realtor and strongly agree with the core thoughts in this post. Charging 5-6% to real estate agents is completely not worth it. We charge 3.9% to list a home, with 1.4% going to us and 2.5% to the buyer’s agent. I wish we could charge less but sadly if you don’t offer to pay 2.5-3% to a buyer’s agent they won’t bring buyers. Hopefully, in the future things change and we can begin to charge less for the buyer’s commission.
Tom Hedberg says
There needs to be a website where buyers and sellers can post ratings and comments about their realtors, for all to see, as there is for the medical profession.
Why won’t the realtors here admit that the sales commissions they receive are not always directly proportional to the cost of their service? They surely have some practically effortless sales, but also tough market sales for stubborn sellers, that may pay the same commission. The easy sales should earn less and the tough sales should earn more. Similarly, realtors representing buyers may do little to earn their commission from one buyer, but work ten times harder to earn the same commission from another buyer.
On the other hand, realtors sometimes do work for a client, but it doesn’t end in a sale, and hence no commission. Shouldn’t those clients pay something? They should.
The only way I see to address these inequities is to introduce fee-for-service compensation, with a smaller bonus on sale.
Alan May says
Consumers can post ratings and testimonials of their agents lots of places… Zillow and Yelp! for example.
Charles Denton says
I am in the midst of selling a house myself now, a 200+ year-old house I renovated myself. The house is listed on Zillow and by extension Trulia.
A veteran of many real estate transactions, there are situations when an agent is useful, and circumstances when they complicate things.
Some thoughts on that from a buyer’s perspective:
* Buyers generally like having an agent who speaks for them –negotiations are difficult for (probably) most people
* An agency and broker give an aura of confidence to buyers –it’s legit, and there are rules and standards that agents follow (that are important to me)
* It feels like a complicated process with a lot (of $$$) at risk –want someone to manage it for me
* Agents know the market and value –an agent will ‘protect’ me
* I’m not paying for it, why not use an agent?
For buyers who do not consider themselves sophisticated in such transactions and/or who have not purchased and sold properties, most of those considerations apply. Whether it proves to be true is another matter.
I know there is a set of people looking at my Zillow listing who are uncomfortable responding to a FSBO listing. I can’t tell you how many.
From a seller’s perspective, many of the same considerations/concerns apply,
* Negotiation
* Complexity and risk of the transaction
For experienced sellers, those conners may not apply.
For me, the critical issue is time and personal circumstance. If you are working or are remote, responding to inquires and showing the house is challenging and/or impossible.
I think an agent can typically sell a property faster, because of buyer FSBO reservations and seller capacity and capability. And the agent has time (and in theory) more resources. But that is the typical sale.
Would-be FSBO sellers need to assess for themselves their capacity, capabilities, knowledge and experience and the specific nature of the market and the property. And they need to recognize they are missing a set of buyers who are simply more comfortable buying through and agent (either buyer, seller or dual).
I like selling a property by myself, if I have time and the property lends itself to it. Sometimes I need someone to get the job done for me, then I look for an agent.
The comments about ineffective realtors are things I’ve seen. At least half, probably a lot more than half the realtors, should not be in the business. Happily those realtors tend to burn out or get tired of not making enough money. I recommend having an out clause with a realtor if you (or the realtor) feel the marketing approach is not working. Don’t get tied into 6 months. You and the realtor need to work well together and communicate –a lot! Chemistry and mutual understanding is critical for both of you. Work with someone you like, trust and who performs. I have also worked deals with certain realtors. Here are my preferred terms: 5%, unless the buyer comes through the listing broker, in which case the commission is 3%. I have done that successfully for all parties on 3 sales.
My take is that realtors are hustlers and deal makers. That is a generalization and it is not meant to be negative. And I know I will get assailed for that view. Just remember, that is an ‘in general’ view. I have met realtors –esp. at the high end– whose skill and knowledge feels like those of investment bankers. But the idea is to get the transition, that’s how you as seller get paid. That’s how an agent gets paid. A realtor who doesn’t have hustle and a deal maker probably belongs in a different business.
So as a seller are hiring someone you hope will get the deal done faster, better and less onerously than doing it yourself. You hope too that when she is representing your property, she will do it well enough and hopefully as well or better than you. Just know that she is probably going to push for a deal harder than you or on terms less than you might like. That’s what deal-makers and hustlers do. It’s okay, if you know it.
I my present situation, I know the house better than any agent, I know the market as well as any agent (I live in the community and information is public), I have been through this before, and I have or am willing to make the time to respond to queries and show the house. And I have Zillow and Trulia, for free.
Zillow and Trulia are what make the difference. 2/3 (maybe now 75%) of all buyers consult Zillow or Trulia first when looking for a house first. 50% of all buyers under 50 have already scoped out the properties they want to see online.
If the house is priced well, if the photos are good, and if you can write some nice descriptive text, you will get traffic on Zillow and Trulia. In a town of 5000 people, I got 1800 views and 70 saves on Zillow in the first 3 weeks of my present listing. So, Zillow works.
What I cannot tell is how many people who saw (and liked) the house were put off by not having an agent to work with. That is unknown. And that is why I would expect (all other things equal) selling on your own will take more time. The self-service model of home buying is still being established. If you are selling your house yourself, you need to bear that in mind.
So, should you use a realtor? It depends. I would love to say no, but it really does depend on your preferences (capacity, experience, and capability), the market, the property, and your desired timing.
Isabella Kilrain says
My husband and I are looking for a small plot of land to build a log cabin kit on. I can tell you that I have been DREADING working with any realtor in the future to ‘help me find’ the land we require. As many have said on here, I use sites like zillow to give me all the info I need. It tells me everything I need to know and if for some reason it doesn’t, I can easily find all of my answers on the internet somewhere. I did detect some form of resentment towards zillow while scrolling through properties on real estate websites, you can see some realtors who try to limit their descriptions and listing info to get you to call them, but if you are one of these realtors I am letting you know now, I just go to the next property.
I know that when my husband and I do feel that we have found one worth pursuing, that will we have to work with a realtor. Not because it’s easier, or because they will be helpful, but because that’s how it USED to be done. I don’t know why people use them anymore, and I don’t know what exactly they ‘do’ or think they’re doing. But in our experience, they tend to just get in the way and add additional costs.
We have experienced this even with rentals. We have been renting for years and some of the houses we rented used realtors. When we first arrived in the state we are in, we used a realtor to try and help us find rentals thinking all they could do is help. We were so wrong.
The realtor we used back then sat on her laurels and quite literally did nothing. She had so many rentals to show us, but all of the rentals were nothing in the price range we asked for, or allowed pets, or were even in the area we were looking. She would call us once a week with a rental she had in her listing, but when we looked at it, it was an old listing that was nothing like what we told her we were looking for. We ended up finding our own rental for exactly what we wanted, but it was my own research that found the place. The realtor was so out of touch that for weeks after we moved into our apartment she was still calling us with offers even after we told her we were all set.
Another realtor, our most recent one, I wish I could tell you was made up. but she is very, very real. We contacted her about a rental, and from the start she was unorganized and confusing. I would call her up to quite literally assist her at her job. We would drive to her office to sign paperwork that she would tell us later we never signed. She would repeatedly confuse us with other clients, calling us by the wrong name even minutes after telling her who we were. The landlord that hired her of the actual rental we ended up getting was an old man that seemed to want to let her handle everything, which was fine, however I can tell you he did not get his money’s worth and he almost lost out on us renting from him several times. Our only solace was that we would never have to deal with her again after signing the rental agreement (spoiler alert: we were wrong! Keep reading!) .
On top of all of this, she was curt and snippity whenever she got confused about anything. We sat awkwardly in her office as she vented to us about the frustrations of her work one day, and she had gotten so off track that I had to remind her why we were there for a 9am appointment. On top of all of this, she showed us many properties that she very well knew had vermin infestations, mold, and other huge glaring issues. When we pointed these things out and asked if they could be rectified before move in, she shrugged her shoulders. I was bewildered at how little she cared. Yes, she is just showing rentals, but she is getting paid by these people to show them.
If we ever asked too many questions about a rental we were interested in, we were told that we were too needy. And let me add the rentals we were looking at we not cheap, these were housing rentals in very nice neighborhoods that not many people would be comfortable paying monthly for in a rental setting and would probably have just payed a mortgage instead, but that is not what we wanted and so we were willing to pay quite a bit a month to live in a beautiful picturesque neighborhood.
Several times when we called her about a listing she left us a message about, she would answer the phone with a hefty sigh as though we wouldn’t hear her. To be honest I thought it was only us, but when we moved out and she had to show the rental again, she showed this type of behavior to others right in front of us. I watched a couple about our age who walked in excited to view the rental, walk out with a certainty that they would not be renting it. She did nothing to sway them to want the rental, showed the same agitations towards them, and anytime they asked a question about the place, she literally asked me to answer them as I was busy packing up my boxes to go into the uhaul, I spent half my time boxing and the other half of my time doing her job again. I answered about a dozen or so questions about the property before I told her I had to help my husband pack the truck up. After the people viewing the place left, she talked so much crud about them behind their backs to me. I was just happy to close the door behind her and finish packing. Somehow she had become friendly with us when we weren’t the ones interested in the place anymore. And so we came to the realization that it wasn’t us, it was just her being angry at having to do her job. My husband, who had grown to refer to her as the rental harpy, swears that no matter how good a property looks in the future we need to avoid her or if necessary, even skip on that listing. No property is worth the amount of heartache of working with someone like that again.
I can tell you other horror stories about other real estate agents, but you get the drift. I am not turned off by FSBO buyers, I think that they are actually becoming more popular for around people our age. Buying from an FSBO buyer only requires more work on your part. But if we are already doing most of the work and research ourselves, why wouldn’t we mind doing a little more to avoid the headache of working with a middleman who clearly cares more about what he/ she’s going to be stuffing his/her face with come break time? I also want to add that there are so many youtube channels nowadays that literally walk you through working with an FSBO buyer. If you are concerned that you’re property won’t sell without a real estate agent, it might actually be the opposite. A lot of my friends who are actively looking consider it a plus when they don’t have to rely on a real estate agent to do the work, especially when that someone else slows things down and complicates everything. I would do your own research if you are a seller, just do the same exact research a buyer does. Use the internet for information and then sell at an accurate price, and be as flexible and communicative as you can. If you can’t do that, then sure, use a realtor. But if you can do these things, why are you paying fees for someone who is most likely turning people away and out the door? Good luck buying and selling guys <3
Nicholas says
The amount of mutual backslapping and halo polishing by the realtors on here is vomit inducing. Realtors are an absolute joke.
An Agent says
I am a real estate agent, and from what I am reading, most of the comments (including the author of the original post), have come from bad experiences that people have had with realtors.
Interesting fact, when people try to sell homes themselves, they usually sell it for somewhere between 20-25K less than what a realtor will get for that same property.
Second, I’ve seen nightmare contracts that have been negotiated by the average FSBO (for sale by owner) listings. Unless you’re getting a lawyer to review your contract (or pay a realtor to do it), you’re stepping into territory that most times you’ll lose to a savvy investor (like the one who wrote the post). An example is an “Assignable” contract. If you do not know what that is without googling it, chances are you need a realtor.
Last, 6% is a nationwide average that is set by the market. it is split between the agent who is selling your property and most times by the agent who brings the buyer. So that 6% is split between 2 agents. The seller most times can also, ask that the buyer pay that to their own agent, however, most buyers have just enough in a down payment to buy the house and if a person really wants to sell their home, they will eat that cost most of the times to sell it. A good agent will earn their commission by selling the house at a premium.
I started as an investor, so I know all of the tips and tricks that go along with this, and more times than not, we investors WANT you to try to sell your home without a realtor so that we can take advantage of what you DON’T know. Trust me on this one. What a person should do is check out their agent BEFORE you just hire someone to sell it for you. This is certainly not Home Depot and most times, not a DIY situation, most people who do this lose money in the process before they end up listing their property with a qualified agent anyway.
Janis Hall says
So, just so you’re all clear… once a house finally closes…
6% commission (on $300,000 home) = $18,000
3% to Buyer agent’s brokerage = $9000
3% to Seller agent’s brokerage = $9000
Brokerage: $9000
70%(varies) to Agent = $6300
30% (varies) to cover insurance, office costs, taxes, etc. etc.
Agent: $6300
minus: referral fee = $4725
minus: income tax, social security, self-employment tax = $3543
minus: INDIVIDUAL health insurance (try $1300+ per month!) = $2243
minus: business expenses (gas, auto, dues, education, technology, equipment, services, closing gifts, client lunches, etc.) ($1500-2000/month) = $743
$743 = what’s left over to pay for living (food, shelter, etc.)
***If we look successful to you, it’s because we are working our asses off!
Nicole says
I live in Northern VA and am trying to buy a house in NY/CT. I had one very expensive weekend up in CT, with a young inexperienced realtor that one of the major companies pawned off on me. Nobody in any of the homes we looked at were expecting us. I found one home I really liked, he suggested I offer 10K less than asking, the house was on the market over a year…and they went with another offer!! My other experience with realtors is that they act too slow for me to see a home I saw online, and when it goes off market, the realtors disappear too. “I’m not forgetting about you!” Oh yes you are! I’m going to just start calling selling agents and making offers. Realtors are worthless.
Leigh says
Here is my biggest issue with using a realtor – it’s a middleman (TWO middlemen if both buyer/seller have one, plus brokers!), and all middlemen add time and expense to any process. Just ask a farmer how much he gets paid for growing food, compared to what you pay for it in the store, after multiple levels of middlemen have been involved in the process.
When I was looking at properties in 2011, I was spending 2-3 hours every evening driving around to look at properties. Technically my agent was supposed to be with me, but she had no desire to spend that much time every driving around every evening, nor would I blame her for that.
In my mind I was wondering, why not just look up the property listing and contact the selling agent for information? There’s an “INQUIRE” link next to every listing. Because then they ASSUME you are using the SELLER’S agent, just because you inquired on a realty website about a property yourself! So even though every single realtor website has an “inquire” link, they don’t actually want you to inquire, they want your AGENT to inquire ON YOUR BEHALF. More middleman b.s.!
Oh, there’s a listing I like. Contact my middleman for a showing. Buyer’s middleman BM contacts Seller’s middleman SM who contacts owner of property OP. Oops, that date/time won’t work. Work backwards through the chain. OP > SM > BM > Buyer. Start over again. Oh, now I have a question about the property. Buyer asks > BM asks > SM asks >Seller. Then reverse again with the information.
It’s SUPER inefficient, especially in today’s world where nearly every type of information can be found on-line. NO REASON to have to go through 2 middlemen to get questions answered!
In contrast, the last property I found was FSBO. They hired an attorney, as did we. Our lawyer wrote up the offer. The entire process cost me $200 of my lawyer’s time + my home inspection fee + appraisal fee. It was SUPER EASY. Whenever we had a question about the property, or wanted to see it again, WE SPOKE WITH THE SELLERS DIRECTLY. Of course being our lawyer wrote up the offer, he made sure we had all of the appropriate terms in the offer in case the inspection or whatever came back less than favorable.
There were NO delays in passing information and questions back and forth. The bank made sure all the steps were being followed correctly and on time. We closed within 30 days. It was the easiest process in the world.
Now we are again looking at properties. This time in a large metro area, where one realtor has already told us selling agents won’t even LOOK at our offer if we don’t have an agent. WE CAN’T EVEN SIT AT THE TABLE WITHOUT TWO AGENTS PRESENT! This is FREAKING RIDICULOUS!
I know there are startups out there looking to break open this archaic industry full of extraneous milddlemen, but sadly it looks like currently most of them still entail or require agents in one capacity or another.
As a buyer, here is what I want: All of the relevant property information is listed on a website INCLUDING real-time current status (OFFER ACCEPTED, SALE PENDING), along with a Contact field for CONTACTING THE SELLER for setting up a showing. This way the seller can make sure I am not ransacking their house or leaving doors or windows open when I am done viewing. They will be able to give me direct information about the house including historical data like what year the apple tree was planted by Grandma (interesting historical data that gets lost when sales go through agents). When I am ready to offer, I want to use an on-line service to create the offer agreement. Then use an on-line service to arrange appraisal and inspection (NOT using the ones in the pockets of brokers and agents – these should be listings on-line WITH RATINGS from previous customers). And use an on-line lender to manage the loan (QuickLoans and other lenders already offer this.).
If I am a first-time buyer and nervous about the process, THEN I want to be able to use an agent, but STILL have access to all the on-line options listed above. And in this case, the fee should be a FLAT RATE (or sliding scale for exceptionally cheap listings).
This industry is primed for disruption, and it’s already started. The only thing standing in the way seems to be all of the middlemen and brokers who have something to lose if this goes the way of AirBnB.
Aaron says
This is a great article! Like many people here have said; a good broker is a rare find. We tried to sell our house using an online MLS listing agent to get our house listed then handled everything else ourselves.
It was a nightmare. Not because anything was difficult, but because dealing with buyers agents showed us how nasty, short sided, ineffective, old fashioned, and worthless most brokers actually are. We almost sold our house to three different buyers and only one had an agent (who was also pretty terrible). But, our listing eventually expired and we decided to just bite the bullet and hire a broker.
Of all the interactions we had (probably 40-50 if you count buyers agents, want to be listing agents, etc.) only one stood out to us. He showed our home twice and treaded is the way I assume brokers treat one another. He provided, feedback, asked questions, updates, and most importantly said “thanks” and wrote us a email about why his clients went with another property instead of ours.
As soon as we were ready to list he was the first person we called. He did a great job as a buyers agent and actually worked pretty hard to make sure our home showed well. He shoveled snow, dusted, turned on lights before showings, and closed things up when showings stopped. Overall it was a great experience. Was it worth $50k for him and a buyers agent to get our house a new owner? Not at all. Especially the buyers agent. But it seemed like it was our only option given the current climate and our distaste for dealing with brokers 1:1.
I really wish the US would at least move closer to a residential system like the one currently in place in Australia. But with the National Association of Realtors spending more than any other lobbying group annually… I doubt that will ever happen.
Samantha says
Here’s what I do when buying a house. Find it myself, negotiate a fair price based on comps (on my own), avoid questions about if I do or don’t have agent… deflect. Me having an agent doesn’t change negotiated price. I can see the greed in the sellers agent eyes… thinking they will get a full 6%. Then at final hour draft offer letter removing 3% of sales price since I didn’t bring agent – an offer the sellers agent is required to provide to seller. Usually seller agent complains about doing our paperwork & I agree to give them some reasonable compensation (like $500 instead of $18,000!!!!!) for actual services they provided. I am shocked & bewildered that people pay real estate agent tens of thousands of dollars! Hope someone finds my strategy useful! (Agents hate it & it’s awkward when I’m doing it but a few hours of awkward that’s saves me $17,500 is …. ummmm…. worth it!!! Sorry agents…. time to adapt!)
Samantha says
Beware agents… do you honestly think you earned that absurd amount of money???? You are headed the way of taxi cabs and blockbuster and won’t be missed. Sorry….
Aaron Auxier says
I’ve been licensed for 15 years and have no problems with your article nor any commenters slamming agents. Why? Because I agree in many ways. My best advice to consumers is find an agent who is both empathetic and authentic. An agent who is more like a concierge or advisor than a closer.
My advise to both new and experienced agents? Stop being such cheesy ‘salespersons’. Learn a niche, reinvent the industry’s dead language, and focus on educating and/or being able to connect your clients in a way others can’t (niche specialists have are more relevant than experienced ‘“top producers (who will likely be selling used Mazda’s in 2020). Blunt, either love helping protecting consumers from the sales-y agents of which I speak (90% IMO)., or stay the F out the biz.
WJL says
I am a Real Estate Agent. Wow….. Many of these comments hurt… and admittedly, many agents have earned that reputation. It is incumbent on agents to put their clients’ interests first. Every Seller wants to sell for the highest price in the shortest amount of time. Every buyer wants to buy for the lowest price possible. A good agent will consider your wants and needs and will respect that it is YOUR CASH that you are spending and YOUR EQUITY you are liquidating. Pricing for a quick sale is fine if that what the seller wants or needs, Pricing to recover the most equity is fine, if that is what the seller wants or needs. The problem like any profession is that there are agents that have experience, and agents that don’t, their are agents that serve their clients, and agents that serve themselves. Often, when people say, Oh, I sold my property for full price in a week without an agent, they likely under priced it. They saved 6% commission and sold the house for 15% less than the market…. and they brag about it.
Keep in mind, an agent typically makes absolutely nothing, unless a sale occurs. They invest time and money in the process. A good agent is one that understands and can demonstrate to you why your house is worth at least this amount, but not worth that amount. A good agent will be able to statistically show you that you are getting a good result with mathematical statistics. Volume by itself, is not an indicator of a great agent. The agent that sells the most houses, may be a great agent , many are high volume and are also excellent agents but some may also convince sellers to price lower than they needed to, as it results in more certain and consistent commissions for them. If volume is the mark of quality, the McDonald’s is the finest restaurant you have ever dined at, Walmart is the finest store you have ever shopped in. Walmart and McDonalds have their place, but you trade quality for volume. Many of the remarks here, are prejudicial , We can all generalize and say that all lawyers or politicians, or car salesmen, or Realtors are unscrupulous or incompetent…. Many are, but not all. Find an agent that is full time, with good experience, knowledge of the market, negotiating skills, a solid work ethic, and that agent will more than cover their commission by achieving a better result for you. For those that have expressed their bad experiences in this forum , perhaps it was their inexperience or lack of due diligence in failing to find a quality agent. Talk to several competing agents. If you listen, you will start to recognize who is truthful and knowledgeable and who is self serving or a bag of wind.
AFloridaRealtor says
As an experienced real estate agent, it saddens me to read this article. I find that I’m having to educate people more about what agents actually do to add value.
I know there are a lot of bad apples out there. (I’ve met some of them.) Just like not all lawyers or doctors or — heck — lawn guys are the same quality, not all real estate agents are the same quality. But that doesn’t mean that excellent agents don’t exist.
I won’t liken real estate to the practice of law or neurosurgery, but I will say that the value that a real estate agent provides is directly related to the knowledge that real estate agent has. I could, for example, invest in the stock market by using an online investment site and Google; but my success would be far greater if I used an excellent investment company whose specialty is investing in stock. I could fix a plumbing issue myself using YouTube, or I could save time and frustration by calling an experienced plumber to fix it for me.
It’s true that most buyers find the houses they want to see online. But it’s also true that that’s not the primary value that a good real estate agent provides.
A good real estate agent should be able to answer any question his or her client asks, even if it means finding the answer. A good real estate agent solves problems when they arise, even if he or she has to engage a reliable third party to resolve them. A good real estate agent holds that transaction together so that it doesn’t fall apart. A good real estate agent is your “easy” button.
And just as you wouldn’t entrust your money to just anybody, you shouldn’t entrust your home purchase to just anybody. Ask for recommendations from friends who’ve had good experiences.
There are excellent agents out there. I am committed to providing value for all of my clients.
And after reading your article, I am determined to serve them even better.
Trish says
I am seasoned Realtor and find fault in much of this article. I will agree that there agent sales associates who work the way that you have described but to lump all Realtor professionals into that group is way off base. You get what you pay for (5-6% in SoCal) You have to search out a full-time Realtor when buying or selling a home and interview more than one. And remember, the one who shows you the prettiest marketing pieces isn’t necessarily the most qualified for the job. We don’t all tell you what you want to hear. My reputation depends on my ability to price a property correctly and to sell it in a short period of time. I just lost a listing because I told the sellers the price they wanted to list was too high. And also know that we are not allowed to give tax advice. And with respect to loans, that’s not our job. Would you ask a lender how to sell your home? Of course not. He/she knows lending. Realtors know real estate sales/purchases. Don’t confuse the two. And because there is limited info regarding loans and all things real estate, online, doesn’t mean they are correct for your situation. There are many factors that have to be considered. You do yourself a disservice by relying online info as gospel.
A little knowledge is a dangerous thing…..you could end up being your own worst enemy.
Trust a professional!
.
Trish says
One other thing……don’t forget about the days, weeks, that Realtors schlep people around to numerous cities looking for a home that sometimes ends up with no purchase. Or……the buyer goes to an open house on their own and buys from the listing agent, thinking they’ll get a deal, which can’t happen because their job is to get the best price for their sellers. And they can’t do that and get you a deal too. So….we just worked for
free, all those weeks. We don’t ask buyers to pay for our time. Would you work for free? We do it often.
Sometimes buyers are not loyal to the person who showed them the ropes. But we continue to do what we do because we love people and love helping them with their biggest purchase and we just move ahead.
Jim Straughan says
With over 25 years as a Realtor most readers would assume I am going to trash this article .
However the sad truth is his observations have some validity.
We as a group have flocked to technology in a simplistic reactive way .I.E. emailing offers that have been signed with electronic signatures with the goal of spending the least amount of time with the buyer client so that we can rush onto the next deal or prospecting schedule.
So what’s wrong with the above?
If we are not sitting across the table as in days of old trying to negotiate on the behalf of the buyer client to the seller who in the vast majority of cases was represented by the listing brokerage, are not meeting in person to have the offer signed and thus ensuring we are fully educating the buyer to the terms and conditions in there offer, in many cases as noted above we are relying on automated systems or the buyer themselves to locate properties that we show prospective buyers.
Then how can we justify earning 2% for representing the buyer to the seller or the seller’s agent?
if listing agents are spending the vast majority of their time prospecting for clients and dumping listings on their local MLS.. Are they worth full commission to the seller?
The bigger the real estate team the more time they spend prospecting versus serving their clients.
I am not anti-technology actually quite the reverse. However it is my observation that realtors being salespeople have not historically been technologically oriented or have had time in their daily routine to consider the long-term view of their industry.
The various real estate boards and professional associations on a provincial or federal level have failed miserably to represent the people paying their salaries in regards to staying in front of the technology.The emergence and dominance of companies such as Zillow are proof of this.
Technology will eventually if the trend continues, relegate the realtor to a continually diminished role and thus value to the real estate transaction.
The only counterpoint to this is realtors need to embrace the latest high-tech relevant technology to both market properties on the behalf of the client and to actively interact with and assist the buyers in a meaningful and value oriented way.
Realtors from my observation are getting too little value from the organizations and Real estate boards that represent them.The millions paid on a monthly basis to real estate boards may be better spent supplying or providing real education and resources to realtors , which in turn would be a benefit to the consumer.
Real estate boards such as unfortunately my board which is the London St. Thomas real estate Board are more concerned with the usual preoccupations of bureaucracies which is kingdom building and maintaining the status quo.
Charlie says
This article outlined exactly what I have been thinking when I purchased my house 5 years ago. I literally found the house myself on Redfin. I found the process of having to set up viewing appointments with my realtor more annoying than necessary. I certainly did not needed to have another person walking around the house for no apparent reason. This person got 3% out of that transaction (about $15k), which I think is absolutely absurd for simply passing along standardized paperwork. Yes, I understand that they have overheads and fees…but really, why does there need to be such a complicated industry with overheads and fees to begin with?
I am about to sell my house, it is now worth about 750k. I just have such a hard time wrapping my head around the fact that about 45K of that goes to agents. That’s ALOT of money! That’s half of my annual income.
It seems like realtors should be a luxury service that one gets if one can afford it, like going into a high-end retail experience where there’s a pretty looking sales person looking over your shoulder…it should not be an industry standard.