Do we need realtors?

[SD Realtor]

newguy –

Did you ever ask your agent to show you new developments? IF you asked him and he did not show and ignored your request then you are right, he is a bonehead. You are incorrect about your assumption of developers only giving agents 1% commission. In fact some developers exceed the standard which right now is 2.5-3.0%. Furthermore you could have used your Redfin agent to get a portion of that commission on the purchase you just made without having any effect on the price of your home you just bought.

My only advice to people, as their agent, is that to buy now is economically not a great thing to do, but there may be other reasons so I can understand that.

So anyways, I understand you are saying no agents ever showed me new homes. If you asked them to show you new homes and they did not then I would consider it their loss. You did ask them to right?

As for the hourly cost of what they make compared to what normal working stiffs make, yes it is an abomination. As a normal working stiff, my hourly rate working on much more challenging sophisticated engineering is a pittance compared to what your standard higher player realtor makes. However, first off I don’t believe your agent sold 20 homes and even if he did, recall his commission is split many ways. If he takes home half of it that would be good for him.

It sounds like your experience with agents is that either they did not listen to what you really wanted. This happens alot.

SD Realtor

[SD Realtor]

newguy –

Did you ever ask your agent to show you new developments? IF you asked him and he did not show and ignored your request then you are right, he is a bonehead. You are incorrect about your assumption of developers only giving agents 1% commission. In fact some developers exceed the standard which right now is 2.5-3.0%. Furthermore you could have used your Redfin agent to get a portion of that commission on the purchase you just made without having any effect on the price of your home you just bought.

My only advice to people, as their agent, is that to buy now is economically not a great thing to do, but there may be other reasons so I can understand that.

So anyways, I understand you are saying no agents ever showed me new homes. If you asked them to show you new homes and they did not then I would consider it their loss. You did ask them to right?

As for the hourly cost of what they make compared to what normal working stiffs make, yes it is an abomination. As a normal working stiff, my hourly rate working on much more challenging sophisticated engineering is a pittance compared to what your standard higher player realtor makes. However, first off I don’t believe your agent sold 20 homes and even if he did, recall his commission is split many ways. If he takes home half of it that would be good for him.

It sounds like your experience with agents is that either they did not listen to what you really wanted. This happens alot.

SD Realtor

[NotCranky]

Thanks NewGuy,
I am sorry that your agent didn’t inform you about a better opportunity,for you, in new homes. I also would not expect everyone wants a new home, in fact many people I know would shy away from them because the path that neighborhood will take is less certain that that of an established neighborhood.Especially now. You might end up saying you wish that you had done the same and a Realtor might have planted the seed.

Try to trust that my response to your post is just my observations and not a slant or attack. I am sure if you read my previous RE related, that is not hard to do.(I don’t recommend readiing the other ones :).

First of all I give you credit for being somewhat exceptional in the combination of your assertiveness and acumen. That said you had a pretty pliable seller and a lot of leverage at the point in time which you approached them. You are also dealing with a business and a brand new house and not a quirky individual seller and a questionable but perhaps desirable older house. Once you decided to pay you were at a relatively extreme little risk of a unduly vexatious experience.
I agree your loan is fine. I see lennar as having little motivation for messing with you on that. The issue is to get rid of the house.
I imagine it is easy to see Realtors as way over paid. Sometimes we are. Sometimes we aren’t. Some try harder, some just want to do a deal now and then, so motivation affects compensation too. Your analysis of the time involved on average is about correct.40 -60 hours per transaction including showing or listing houses. I personally don’t waste a lot of time so I am not going to make the usual what about all the unpaid work stuff. No there are not any exceptionally high fees in this industry.There are a lot of ways to spend money on the business,some people consider them to be important. Continued training and seminars can be expensive in terms of time and money. Most of us give discounts or rebates to buyers and seller. I do it even when they are not smart enough to ask. I try to list at 4.5% ,keeping 2 for our office, I give cash back to my buyers on a rough combination of how long we worked and how much the commission was. In my opinion it is not more difficult to sell an expensive house than a cheap one, especially representing a buyer.Higher end clients expect you to do way more then is necessary sometimes and some Realtors cater. They also expect their realtor to have a similiar lifestyle frequently, so 1% isn’t going to cut it.(We will see if partial service at very low commissions will make larger inroads into the market.) Overhead expenses are mostly optional. Not everyone trys to drive the most expensive cars in town. On this topic you have to give credit to the consumer. Some realtors are smart enough to know that all this glitter is convincing to many clients. I refuse to go to extreme people pleasing tactics and I am sure it cost me.

You said,
“In general (to me), it seems like for a buyer, an agent is pretty much useless. However, as a seller, an agent can be pretty powerful with tools like MLS. But with sites like ziprealty and redfin, it’s looking harder and harder for me to seriously consider RE agents.”

I think you might be making a logic mistake I often make, use the exception(you) for the rule. You also might be displaying a little pride. You deserve that but the combination of two things are not going to change the way things are done. What most people need or look for will dictate what the real estate industry looks like..( Again, We will see if partial service at very low commissions will make larger inroads into the market.)

I don’t blame you for being “biased” against realtors . Ask Sdr And SDR. When I got to this blog I was fuming and embarassed to be one. I put myself on the sidlines a few years ago because I wouldn’t participate in the madness that led to the creation of blogs like this. I have several clients now and we are sitting on the sidelines together.I tell them all to come here but they don’t. Do you think they are going to go out and do what it takes to buy a house? No, They are waiting for honest old rustico to tell them what to do. When the time is right I will advocate for them as best as I can and make a lttle money for my family.
A lot of people won’t find a good agent and many times that has to do with their own prejudices or lack of experience. Recently, it has had a lot to do with a national frenzy bringing a lot of excessively opportunistic type into the mix. It is not always so gross.

Good luck to you.

[NotCranky]

Thanks NewGuy,
I am sorry that your agent didn’t inform you about a better opportunity,for you, in new homes. I also would not expect everyone wants a new home, in fact many people I know would shy away from them because the path that neighborhood will take is less certain that that of an established neighborhood.Especially now. You might end up saying you wish that you had done the same and a Realtor might have planted the seed.

Try to trust that my response to your post is just my observations and not a slant or attack. I am sure if you read my previous RE related, that is not hard to do.(I don’t recommend readiing the other ones :).

First of all I give you credit for being somewhat exceptional in the combination of your assertiveness and acumen. That said you had a pretty pliable seller and a lot of leverage at the point in time which you approached them. You are also dealing with a business and a brand new house and not a quirky individual seller and a questionable but perhaps desirable older house. Once you decided to pay you were at a relatively extreme little risk of a unduly vexatious experience.
I agree your loan is fine. I see lennar as having little motivation for messing with you on that. The issue is to get rid of the house.
I imagine it is easy to see Realtors as way over paid. Sometimes we are. Sometimes we aren’t. Some try harder, some just want to do a deal now and then, so motivation affects compensation too. Your analysis of the time involved on average is about correct.40 -60 hours per transaction including showing or listing houses. I personally don’t waste a lot of time so I am not going to make the usual what about all the unpaid work stuff. No there are not any exceptionally high fees in this industry.There are a lot of ways to spend money on the business,some people consider them to be important. Continued training and seminars can be expensive in terms of time and money. Most of us give discounts or rebates to buyers and seller. I do it even when they are not smart enough to ask. I try to list at 4.5% ,keeping 2 for our office, I give cash back to my buyers on a rough combination of how long we worked and how much the commission was. In my opinion it is not more difficult to sell an expensive house than a cheap one, especially representing a buyer.Higher end clients expect you to do way more then is necessary sometimes and some Realtors cater. They also expect their realtor to have a similiar lifestyle frequently, so 1% isn’t going to cut it.(We will see if partial service at very low commissions will make larger inroads into the market.) Overhead expenses are mostly optional. Not everyone trys to drive the most expensive cars in town. On this topic you have to give credit to the consumer. Some realtors are smart enough to know that all this glitter is convincing to many clients. I refuse to go to extreme people pleasing tactics and I am sure it cost me.

You said,
“In general (to me), it seems like for a buyer, an agent is pretty much useless. However, as a seller, an agent can be pretty powerful with tools like MLS. But with sites like ziprealty and redfin, it’s looking harder and harder for me to seriously consider RE agents.”

I think you might be making a logic mistake I often make, use the exception(you) for the rule. You also might be displaying a little pride. You deserve that but the combination of two things are not going to change the way things are done. What most people need or look for will dictate what the real estate industry looks like..( Again, We will see if partial service at very low commissions will make larger inroads into the market.)

I don’t blame you for being “biased” against realtors . Ask Sdr And SDR. When I got to this blog I was fuming and embarassed to be one. I put myself on the sidlines a few years ago because I wouldn’t participate in the madness that led to the creation of blogs like this. I have several clients now and we are sitting on the sidelines together.I tell them all to come here but they don’t. Do you think they are going to go out and do what it takes to buy a house? No, They are waiting for honest old rustico to tell them what to do. When the time is right I will advocate for them as best as I can and make a lttle money for my family.
A lot of people won’t find a good agent and many times that has to do with their own prejudices or lack of experience. Recently, it has had a lot to do with a national frenzy bringing a lot of excessively opportunistic type into the mix. It is not always so gross.

Good luck to you.

[lostkitty]

sdrealtor's response to this thread says all we need to know:

"The answer is different for everyone and there is no right or wrong answer. Some go it alone and are fine. Some go it alone and get slaughtered. More often then not when I look at someone getting slaughtered … often, the highly suspect representation was an agent representing themselves. "

So, some go alone and are fine, like I was: a 27 year-old stay-at-home new mother, with no realestate license at all, sold FSBO, used a real estate lawyer for closings, and even started a FSBO newspaper which is still in operation today …. and some get slaughtered, which, in sdr's own words are very often agents representing themselves.

 I think realtors are useful for busy people who cannot do the research or are not familiar with an area.  They are also useful for busy sellers who cannot be there to open the house up for lookers.  For both buyers and sellers, they are useful for paperwork filling out (time consuming).  However, they are WAY overpaid for these services.

Like airline pilot pay, which we suffered through a severe cut-back in (and chose to leave that career), real estate agents are probably facing the same in the near future.

[lostkitty]

sdrealtor's response to this thread says all we need to know:

"The answer is different for everyone and there is no right or wrong answer. Some go it alone and are fine. Some go it alone and get slaughtered. More often then not when I look at someone getting slaughtered … often, the highly suspect representation was an agent representing themselves. "

So, some go alone and are fine, like I was: a 27 year-old stay-at-home new mother, with no realestate license at all, sold FSBO, used a real estate lawyer for closings, and even started a FSBO newspaper which is still in operation today …. and some get slaughtered, which, in sdr's own words are very often agents representing themselves.

 I think realtors are useful for busy people who cannot do the research or are not familiar with an area.  They are also useful for busy sellers who cannot be there to open the house up for lookers.  For both buyers and sellers, they are useful for paperwork filling out (time consuming).  However, they are WAY overpaid for these services.

Like airline pilot pay, which we suffered through a severe cut-back in (and chose to leave that career), real estate agents are probably facing the same in the near future.

[Anonymous]

Have used realtors only when I didn;t know the area I was buying into and as buyers agent only, also when the company paid for them and they transferred me out of state. having someone who knows the area, good subdivisions and future plans for growth is required when being relocated. Have bought and sold 5 homes without realtors on my side, for insurance, bought the one year warranty every time at $400. One of the other parties brought in a realtor who I chiseled down to 2%, then when they wanted to renegotiate, I whiteled the commission down to 1%. they were trying to play me and advise their clients, Any time they called I threatened to get them htrown out of the transaction for not communicating things properly or in writing. Too much middle man and waiting between offers and answers for me. Total waste of time.

To sell your own home:
1. Ads in papers, FSBO websites, MLS if you wish.
2. have an open house every weekend same time as the realtors, place out balloons, bake cookies, make the place immaculate, fix anything questionable, look at the other open houses to see the good/bad and make everything look good.
3. RE forms are available free on line, just look for them. RE officers are bound by law to present any offer, even on a NAPKIN, so any special forms, etc. are not needed…I called the state attorney on this and if they say something like this they are lying…as usual.
4. the real work is done at the escrow office. call a few of these and sign one up for yourself to handle the transaction. You are sure to find ones who are pleasant to work with and will help you get comps if needed.
5. Get comps off the MLS on line, comp per square foot and by neighborhood. price your house accordingly to what you see around you and your situation. Middle $/sqft to sell a better home in the same area, lower $/sqft if you need to sell fast. Make sure to compare every couple of weeks to what is on the market. i had the best looking home every time and priced it just under the high that looked worse. Sold quicker every time! Saved more than 40K on the last CA transaction.

On the buyer side, don;t buy the line about the seller paying the RE fees, the buyer brings the money to the transaction….everyone is getting their money from the seller to pay their mortgage, agents, etc. without the buyer, the deal doesnt happen and without the deal, no one makes $$. It is a buyers market and I make offers at least 10-20% lower depending on the property and I write this in the offer line: “This offer includes the 3% agent fee which I am taking for myself in this transaction and is a portion off the price reflected”. This way you can reduce the agent fees on the other side if they try to get 6% from the buyer in their original contract. they will hem and haw…this makes it clear and legal!

On lenders…if you have good credit, what;s the issue? Deal with only the best lenders directly, wells fargo, etrade, bofa, all of these post their products on line and are above board and risk everything if they try to screw with you. Also, call them and talik to them about a situation and see what they can do, they have some leeway. you don;t need a stupid agent to fix you up with a shady lender where they are doing backroom deals. bad for the buyer and many conflicts fo interest across the board. Buyer beware, everyone is after your money!

Good luck and have fun selling your own home! EASY EASY EASY and the MONEY is really good too!

Steveno

[Anonymous]

Have used realtors only when I didn;t know the area I was buying into and as buyers agent only, also when the company paid for them and they transferred me out of state. having someone who knows the area, good subdivisions and future plans for growth is required when being relocated. Have bought and sold 5 homes without realtors on my side, for insurance, bought the one year warranty every time at $400. One of the other parties brought in a realtor who I chiseled down to 2%, then when they wanted to renegotiate, I whiteled the commission down to 1%. they were trying to play me and advise their clients, Any time they called I threatened to get them htrown out of the transaction for not communicating things properly or in writing. Too much middle man and waiting between offers and answers for me. Total waste of time.

To sell your own home:
1. Ads in papers, FSBO websites, MLS if you wish.
2. have an open house every weekend same time as the realtors, place out balloons, bake cookies, make the place immaculate, fix anything questionable, look at the other open houses to see the good/bad and make everything look good.
3. RE forms are available free on line, just look for them. RE officers are bound by law to present any offer, even on a NAPKIN, so any special forms, etc. are not needed…I called the state attorney on this and if they say something like this they are lying…as usual.
4. the real work is done at the escrow office. call a few of these and sign one up for yourself to handle the transaction. You are sure to find ones who are pleasant to work with and will help you get comps if needed.
5. Get comps off the MLS on line, comp per square foot and by neighborhood. price your house accordingly to what you see around you and your situation. Middle $/sqft to sell a better home in the same area, lower $/sqft if you need to sell fast. Make sure to compare every couple of weeks to what is on the market. i had the best looking home every time and priced it just under the high that looked worse. Sold quicker every time! Saved more than 40K on the last CA transaction.

On the buyer side, don;t buy the line about the seller paying the RE fees, the buyer brings the money to the transaction….everyone is getting their money from the seller to pay their mortgage, agents, etc. without the buyer, the deal doesnt happen and without the deal, no one makes $$. It is a buyers market and I make offers at least 10-20% lower depending on the property and I write this in the offer line: “This offer includes the 3% agent fee which I am taking for myself in this transaction and is a portion off the price reflected”. This way you can reduce the agent fees on the other side if they try to get 6% from the buyer in their original contract. they will hem and haw…this makes it clear and legal!

On lenders…if you have good credit, what;s the issue? Deal with only the best lenders directly, wells fargo, etrade, bofa, all of these post their products on line and are above board and risk everything if they try to screw with you. Also, call them and talik to them about a situation and see what they can do, they have some leeway. you don;t need a stupid agent to fix you up with a shady lender where they are doing backroom deals. bad for the buyer and many conflicts fo interest across the board. Buyer beware, everyone is after your money!

Good luck and have fun selling your own home! EASY EASY EASY and the MONEY is really good too!

Steveno

[jeeman]

“This offer includes the 3% agent fee which I am taking for myself in this transaction and is a portion off the price reflected”

You can do this without having a agent or brokers license?

Jeeman

[jeeman]

“This offer includes the 3% agent fee which I am taking for myself in this transaction and is a portion off the price reflected”

You can do this without having a agent or brokers license?

Jeeman

[sdrealtor]

New Guy,
One quick note, as SD R said I highly doubt that agent did 20 transactions a year. My guess is that 1 to 2% of agents do that type of volume and most have a team to accomplish it. I know an agent that does that kind of volume by himself and has for over a decade. He easily works 80 hours per week and is extremely shrewd. Agents that do that much business are not overpaid, they earn what they make through working hard and being at the top of their profession. I would estimate that less than 2% of agents make $200K incomes.

The real culprits of the overpaid are often the stay at home mom’s that get a license and do 1 to 3 transactions a year working part time for friends and acquaintances. They are the same incompetent agents that thought it was easy because real estate always goes up. More often than not, it is these agent’s representing themselves who got into trouble.

[sdrealtor]

New Guy,
One quick note, as SD R said I highly doubt that agent did 20 transactions a year. My guess is that 1 to 2% of agents do that type of volume and most have a team to accomplish it. I know an agent that does that kind of volume by himself and has for over a decade. He easily works 80 hours per week and is extremely shrewd. Agents that do that much business are not overpaid, they earn what they make through working hard and being at the top of their profession. I would estimate that less than 2% of agents make $200K incomes.

The real culprits of the overpaid are often the stay at home mom’s that get a license and do 1 to 3 transactions a year working part time for friends and acquaintances. They are the same incompetent agents that thought it was easy because real estate always goes up. More often than not, it is these agent’s representing themselves who got into trouble.

[gary_broker]

Sorry you missed the point of my post. As sdrealtor stated It was never my intent to suggest that realtors prevent lawsuits. The point is that when realtors (and inspectors for that matter) are involved in a transaction that ends up in litigation, they are certain to be dragged in because they carry high limit E&O insurance policies. This in effect spreads the pain around..at minimum.

Your statement “In fact, once the lawsuits start to fly, your realtor and you will certainly no longer be on the same team.” is illogical. I have direct experience with this and when a lawsuit is filed against a client and their agent they are by definition on the same team. I also take issue with your premise that a realtors will not jump in and help if a deal goes south. FYI.. I have spent many hours in mediation meetings for clients and I was more than happy to help them in any way I could. I have a stong feeling the other broker/agents that post on Piggington would do the same for their clients. You speak in absolutes regarding agents which is unfortunate because there are some good ones out there.

Lastly, your final statement “If you want actual ‘representation’, hire a lawyer” made me chuckle. Well JJ, if you sold a home and made a mistake and needed to hire an attorney I can assure you the first words out his or her mouth would be “Did you have an agent?”

[gary_broker]

Sorry you missed the point of my post. As sdrealtor stated It was never my intent to suggest that realtors prevent lawsuits. The point is that when realtors (and inspectors for that matter) are involved in a transaction that ends up in litigation, they are certain to be dragged in because they carry high limit E&O insurance policies. This in effect spreads the pain around..at minimum.

Your statement “In fact, once the lawsuits start to fly, your realtor and you will certainly no longer be on the same team.” is illogical. I have direct experience with this and when a lawsuit is filed against a client and their agent they are by definition on the same team. I also take issue with your premise that a realtors will not jump in and help if a deal goes south. FYI.. I have spent many hours in mediation meetings for clients and I was more than happy to help them in any way I could. I have a stong feeling the other broker/agents that post on Piggington would do the same for their clients. You speak in absolutes regarding agents which is unfortunate because there are some good ones out there.

Lastly, your final statement “If you want actual ‘representation’, hire a lawyer” made me chuckle. Well JJ, if you sold a home and made a mistake and needed to hire an attorney I can assure you the first words out his or her mouth would be “Did you have an agent?”

[JJGittes]

Oh so when there is a lawsuit, you will remain on the same “team” as your client? Hmm, I wonder what the plaintiff will have to say about your credibility when that becomes apparant. As I am sure you are aware, in serious situations there are also often cross claims against realtors by their own clients. Do you remain on the team of somebody who is suing you? And on the contrary, do you remain on the team of a client who misled you as to the condition of a house and put you in the middle of a lawsuit? I wonder what your carrier and managing broker would have to say about that.

I am sure you have been happy to “help clients in any way you could.” The readers of this board can decide whether that powerful statement justifies the $40k that goes to agents at the end of an average sfr north county transaction.

The bottom line for me is that agents have utility, but that utility has not doubled in value along with the price appreciation in SD in the last 7 years. The RE industry is not immune to the democratizing effects of the internet. Changes are coming to the antiquated and perverse (buyer’s agent paid by seller?)commission structure of real estate sales. Its long overdue.

[Author]

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