October 11, 2006 at 5:08 PM #37714
Thank you for the compliment. I think the system sucks and would love to see it changed. I would be more tahn happy to work for lower fees if there was more volume. If clients would agree to pay me $100/hour for my time which I believe is fair, i would do cartwheels. I bust my tail for clients for months only to have them walk into an open house and buy something for the agent thinking the listing agent will give them a better deal (which they usually dont as their fiduciary responsibility is to the seller). Last year I had clients whose house I sold a few years back and got them a great property below market before it went on the market through my network call me to list their home. We were good friends and they constantly told me I had changed their lives for the better financially as well as putting them in a house they loved on a street they loved living on in a neighborhood they never would have known about or considered. Before I got there, a neighbor whispered in their ear that they needed the marketing muscle of some slimy Realtor that advertises how great they are, they called them and the house was listed with another agent an hour before our appointment. For the record, he let them overprice their home which sat on the market and cost them $50K.
Intelligent people make incredibly bad RE decisions all the time. I get great personal satisifaction when I can truly help someone achieve something that makes a difference in their life and their families life. I take pride in my work and always try to put my clients best interests first. For this, I and the rest of my colleagues deal with the majority of clients that are disingenuous, have no loyalty to us and end up shooting themselves in the foot. When it works, its a great business but most of the time it’s pretty cut throat and brutal.October 11, 2006 at 7:50 PM #37726FutureSDguyParticipant
PC, I 100% agree with you.
sdrealtor, based on what you just said, I would pick you to help me buy a property. (Already have one I’ve been eyeing for a long time, but it’s still above my budget.) So take that as a compliment. 🙂
The first realtor in the area wanted to give me the line that prices would stay high because SD is a great place to live with great weather. The second realtor in the area wanted to be my best friend and was frankly making me uncomfortable with offers for jobs, relocation, loans, etc. I can do all that myself. I just want get the right house at the right price, and I’m very picky on both.October 11, 2006 at 9:09 PM #37730sdduuuudeParticipant
I still think the intitial premise of this post doesn’t make sense – that IPayOne getting sold indicates problems with their business plan.
It is fair that you take issue with their business plan, however, just not based on the fact that the business was sold.
Assuming they are in failure mode, though, it is likely that such failure is a result of a real-estate shakeout that is surely occuring. Having industry sales cut by 30% or more in the last year is going to hurt a startup, regardless of how good their business plan is.
sdrealtor – you defend your profession admirably, by the way. And effectively.
When you point out the limited profit in the industry, I wonder if the internet and discount brokers haven’t already had an effect. Also, with the profit spread so thinly, any significant reduction in commissions could wipe out the industry. Thus, if someone can figure out how to use the net to make it more efficient, it could take over.
Also – could the internet make it possible for a single agent to be more productive, and thereby live on smaller commission rates?
Furthermore, I think Real Estate Agents themselves have contributed to making the process as convoluted as possible – through lobbying and lawsuits – so that people perceive the need for an agent. Nothing against specific agents, but I’m sure the NAR is not working towards a smoother homebuying process.
I have purchased a house with an agent, and without. I must say it was easier without. Many of the complicated items on the forms are there just to protect the liability of the agents themselves. When buying without, I could just skip those sections altogether. Plus, the escrow agent walked us through all the details.
Worried about lawsuits? Get a lawyer, find an experienced escrow agent and do your own deal. That’s what I say.
I think the online process could go very smoothly if overseen by an escrow agent and legal advisors on both sides. They would take a fraction of the 5% agent fees.
I suspect after the coming bad times pass, the internet will rule. For the time being, though, I see the stalled momentum in the market killing any new internet-based businesses that may want to try something new.October 11, 2006 at 10:16 PM #37740powaysellerParticipant
I would like to make some realtor recommendations.
Foremost in the blogging world is Jim Klinge. I would definitely hire a guy like Jim Klinge. He’s got decades of exeperience in the field, a spreadsheet full of data, personal connections, and he’s a hard worker.
He makes sure his buyers get a home that will be easier to sell. How do we know what that is? Most people end up with a 2-story tract home. Bad idea.
Why not pay a guy like Jim a few grand, to make sure you get a home that you’ll be able to sell for a lot more, faster? I’m sure there are many more things like this, that he knows, that I wouldn’t know, and neither would anybody else working off a database and a fact sheet.
He also explains why this town is so dependent on the 1st time home buyer; the types of loans people have, why some sellers are raising their prices, and much more.
I also recommend Bob Casagrand, a savvy buyer’s agent and retired businessman. He’s got a ton of buyers on the sidelines now, and they are waiting for the right house at the right price.
Also remember SD Realtor, Adam Rappaport, who charges only 1% commission and has a wealth of experience with all types of properties. He’s an engineer, and he’s made many good posts about what to look for in a realtor.October 12, 2006 at 11:04 AM #37762FutureSDguyParticipant
sddude: “Furthermore, I think Real Estate Agents themselves have contributed to making the process as convoluted as possible”
I see the same conflict of interest happen in IT departments. System administrators who maintain linux machines, for example, want the system to be difficult to use and want users to rely on them to get things up and running. For RE to be difficult is exactly what keeps these experts employed–it is not in their interests to simplify. This is exactly why I react when I hear them telling me that “it’s not as simple as I give it credit for” and “I need them for the deal to work out right.” Whether or not any of this is ultimately true in any RE transaction is beside the point–it’s the fact that you have an industry that supports an inefficient system out of economic self-interest.October 12, 2006 at 11:42 AM #37767AnonymousGuest
The labor-intensive and expensive component is frequently the self-marketing of the brokerage and the brokers, not the services rendered to clients.
This doesn’t explain how in the USA the ‘6%’ number became so fixed, and yet in other countries, where houses are also “unique” with “unique challenges”, the fee is much lower, closer to where discount brokerages are.
But more tellingly, why such barriers and regulations, all of which appear to benefit high-fee real estate agents and not the public?
Why are legislatures enacting legistlation to protect Realtors from offering discounted services? Why limit consuemrs there?
Obviously, lawmakers are in the pocket of the REIC.
Why all the regulatory barriers by the NAR and the blacklisting of discount brokers and enforcement of the MLS cartel?October 12, 2006 at 11:49 AM #37768djrobsdParticipant
iPayone just happened to be in the wrong place at the wrong time. When they are only working for 1% commission, it’s hard for them to make a profit when the market is so slow. Besides, it costs a lot of money to build a company, and you have to pay computer programmers, web hosting companies, etc to get your infrustructure built and in place.
Ultimately, I think iPayone is a great idea. They are going against the grain, and trying to break down the traditional 6% real estate commission model. In yesterday’s market, where the average price of a home was in the $200,000 range, the 5-6% commissions were more apropriate, but in today’s market where homes are selling for half a million to 1 million bucks, 5-6% is way too much to pay to sell your home, especially when you consider that many people owe more then what their homes are worth with the decline in the real estate market.October 12, 2006 at 10:04 PM #37798SD RealtorParticipant
I saw some replies to the posts from sdrealtor in here where the replies were titled to SD Realtor. Remember we are two seperate people.
Actually sdrealtor and I have differing opinions about real estate and the commission structure. While many of you don’t find much value in Realtors, there is not a single client I have who was not only very happy with my work, but has referred friends and family to me. Admittedly my fee structure is not the same as the traditional brokerages. However, independent of the fee structure I do believe that a good Realtor will save you money regardless of whether you are a buyer or a seller.
We have had threads like this before. Since nobody that has ever posted her has ever had a for sale by owner gone bad, or had to face a lawsuit due to improper disclosure, nor have any of you ever gone to the classes where we have gone to that have illustration after illustration of lawsuits. So it is entirely understable from my point of view why the frustration about the way real estate is done.
Again, I come from an engineering profession where I routinely worked 60-70 hours for extended amounts of time on projects. I dealt with very smart people. Real estate is quite contrary to that and it is easy to diminish the value of a good agent. My answer to the frustration that all you feel was to go out and get my license. However what was quite interesting was that it wasn’t until after being in the field for a little while and dealing with buyers and sellers, and learning the industry from the inside, that the value of the job became apparent.
I can almost see you guys rolling on the ground. That’s okay because honestly, the majority of agents are booboramas… but there are a few good ones out there that will make you more money on the sale, and save you money on the purchase.October 13, 2006 at 10:24 AM #37824powaysellerParticipant
SD Realtor, I also believe that a good agent will help you find a better property at a better price. They know what makes a superior property, they can check the comps and tax records which right now only they can access and make sure the buyer doesn’t overpay, they can show you properties that are fresh on the market and not yet showing up on the realtor.com and ziprealty (which updates late). It might be helpful if you and the other realtors give some examples that show your client saved money by using a realtor. Let’s leave the commission structure for a different discussion.October 17, 2006 at 11:23 PM #37980SD RealtorParticipant
I dont want to be accused (again) by “shilling” on the site. Suffice it to say that I have saved people money simply based on the low commission I charge. Similarly every person buying real estate should know that there are some Realtors out there who will give them buyers rebates. Also many Realtors have very good established relationships with contractors and such. My client who just needed extensive remediation from termite damage had estimates of several thousand dollars from contractors they called. I have someone who I refer jobs to who did the job for $1300 and saved them over $3000. Many other people selling thier home have no ideas of the cancelled, expireds and withdrawns so thier pricing is usually off. Not pricing correctly will cost you in the long run. Finally the biggest unknown little gem is using a Realtor when you buy a new home from a builder. The builders purchase agreements are usually NOT the same as the CAR purchase agreement. These private sales are generally much more one sided (in favor of the builder) then standard resale homes. Having a Realtor represent you WILL NOT change the price of the new home, and in fact your Realtor may be able to negotiate a better price then you would be able to do. Finally, you should be able to work with that Realtor to get a rebate.
SD RealtorOctober 18, 2006 at 9:33 AM #37986
All good points SD R. You dont need to defend yourself. You are close to a full service realtor with low o/h and can work for less. I hope you never run into any problems. Agents like you do a good job for their clients but could never support the entire market. There will always be room for niche players like you.
IPayone on the other hand is a bloated pig with no advantages and they provide none of the personal service you do. They misprice listings more than anyone. They have a minimum wage admin person running CMA’s without knowing the neighborhood or ever seeing the property.I went to one of their seminars early on and listened to the CEO/Co-Founder speak. It was a classic bait and switch scam from day 1 and he is slimey. It will be good to see them vanish as they added no value to the system.April 5, 2007 at 3:40 PM #49344
Here’s the orginal thread!
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