JJ,
I dont think the compensation system is perfect either and would love to work on an hourly basis but your post shows alot of naivity.
“For that amount of money, you could hire the best law firm in San Diego to handle the paperwork, and a chunk of the resulting litigation if something went horribly wrong.”
How about you walk into that law firm and tell them, you’d like to handle all the paperwork on the houses you are interested in. You would like to lowball several to see what happens. You tell them they get paid nothing until one is accepted and actually closes. Then of course you only get paid on that one.
A more realistic comparison would be the contingency fees lawyer get on lawsuits. i think that runs about 10 to 33% of the settlement in most cases. You must not be a sales guy. Sales guys get paid on performance not effort. Good ones get paid lots and poor ones get little. RE is no different.
Here’s some real numbers. A typical agent that represents someone selling their home and buying another (lets say the total is $1.5M) generates gross commissions of about $37,500 (2.5% comm is market avg now). Assuming they are very experienced and a top producer they walk away with about $27,000. A good solid agent should do about 4 to 5 times that volume a year and more is defintely the top 1 or 2% of agents. So they generate net commission of $108,000 to $135,000. As an independent contractor they pay all their own expenses, both sides of Social Security, benefits, marketing costs and misc realtor fees. They also put their entire income at risk and could earn nothing. For an experienced Sales Guy thats hardly impressive. Would you take that job?
And yes there are lots of idiots running around out there with RE licenses but no real skills or experience
The problem is that both “lawyers” (RE agents) in a RE transaction are working on “contingency”, ie getting a cut of the final settlement. Imagine if you went to trial as the defendant with an arrangment that your lawyer would be paid out of the judgment. Even if it was a damages only case where all involved conceded liability from the outset, so some award was a surety, it would be absurd to believe that a conflict did not exist. Yet, this is how the commission structure in RE transactions is set up for a buyer. Absurd.
And yes, it would be cheaper than $24k to have a lawyer do MANY low ball offers. Thats the beauty of Winforms, isn’t it?
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