Let’s be conservative and look at a simple scenario. 300K purchase price. That means buying agent gets 3% typically or ($9k) – some of which goes back to the company he/she works for. Let’s be conservative and say the agent actually gets 1.5% or $4.5K. Let’s say the agent put in 40 hours of work total with that particular sale – this means $112.5 per hour. There are very few industries that will pay an hourly rate like that unless you have a very high level of schooling in a particular industry.
This just doesn’t pencil out to me. It’s a monopoly and the general public has no choice but to comply with this compensation structure. If you try FSBO or a discount agency, you’ll just get blackballed and other realtors won’t show their customers your place to ensure that they’re compensation structure is kept in place.
Seriously, I’m shocked that this has been allowed to go on for as long as it has. I consider it a form of sanctioned organized crime.
My wife and I sold our place in Northern California last year for $400k. Realtor held 1 open house (which he didn’t work). A potential buyer visited the house during the week when I was home after work. I showed her around and talked to her for about 30min. We got an offer the next day and accepted the day after that.
Then the realtor calls me and says “You’re loving me now, aren’t you?” This guy did nothing to sell my property besides put it on the MLS.
The sad part is that I’ll likely have to use an agent to purchase our house and he’ll work very few hours because we’re educated buyers that know what we want, and he’ll make a ridiculous amount of money on our purchase and end up driving around in a mercedes and I’ll be seeing his smiling face on the back of magazine covers and newspapers.
The compensation structure of realtors is the most inequitable compensation structure around.
If it weren’t for the powerful lobby and monopoly structure the NAR has implemented, all realtor’s compensation would be market driven based on experience, level of knowledge/education just like every other industry in the country.
