It’s no secret that Mike and I aren’t big fans of real estate agents. A couple times when we’ve gotten together, it’s been clear that the value of agents is a running debate in the Pillars household, and I was delighted to throw my support behind Mike (at least when his wife was out of earshot).
Our general view is that while agents provide value (advertising and showing the house, providing referrals to mortgage brokers and lawyers, and helping explain some of the relevant laws on the seller side) it’s not worth 5% of the sale price. What we REALLY take exception to, if Mike will let me speak for both of us, is that they get a percentage of the sale price, which gives them an incentive to sell as quickly as possible, rather than to get the highest price.
Larry MacDonald wrote about the agent monopoly, and recently sold his house himself (without an agent).
As with many things though, there is another story. Part of the reason agents get paid so well on the sales that go through is that MANY of them don’t. Much as volatile stocks have a greater return, jobs with uncertainty of compensation (such as commission work), often pay better. An agent can easily have a run of bad luck, not make any sales (and therefore not make any money). Additionally, they have to put a brave face on it and not complain (since who would want to work with an agent who was struggling? We all want the best!).
The buyer’s agreement is another double edges sword. It’s an agreement that you’ll only buy from the agent you sign with (if you buy a property on your own or with another agent, they can sue you for part of the commission). Some agents try to sell this as a benefit to the buyer, which is insulting. HOWEVER, some buyers pull a dirty trick where they get an agent to help them find a house, then buy it themselves (or with a friend who is an agent), and cheat the original agent out of their commission. A rant on a real estate agents blog I found recently details her… passionate… reaction when she saw this happen on HGTV’s “Property Virgins”.
Speaking of which, my ex and I were ALMOST on “Property Virgins”. We wrote them a nice little e-mail (attached a picture) and they called us back. Unfortunately my ex spilled the beans about my rental condo, and they said I wasn’t a virgin (which kind of hurt) and we therefore weren’t eligible. In retrospect it might be a good thing, as the show probably would have been about us breaking up rather than buying a property :-).
57 replies on “Real Estate Agents – The Other Side of the Coin”
Excellent post, and oddly enough, I completely agree with you!!
I’m planning to do my anti-agent post sometime in the distant future…maybe we can do a series?? 🙂
That’s funny that you guys could have been on PV – I would have loved to have seen that.
Mike
I’ve got to disagree with you, Mr. Cheap (and I guess Mike), on this one. I’ve seen some statistics that suggest that an agent listed property will sell for more than a for sale by owner, but I’ve also seen some statistics that suggest that the price difference does not amount to the commission paid.
I always wonder though whether, given a choice, any person would choose a fee-based service rather than the contingent percentage of purchase price method. I doubt many. Some may do fine selling themselves. I always think this is worth consideration–just like it is in deciding to forego hiring an attorney to start your business or handling your own financial planning. But the expertise of an attorney or financial planner has value, for their knowledge and experience. I think the same can be true for a good real estate agent. And certainly, not every home-seller will have the necessary knowledge or skill to go it alone. Those people should almost certainly hire an agent, and I doubt many of them would pay a fee for the service other than based on a successful sale–a standard to which we don’t hold attorneys or financial planners.
In closing to this overly long comment, Mr. Cheap, I think you should still feel completely comfortable wearing white to your next closing. So don’t feel so bad. 🙂
Hi Mike, that’s a good point that the fee might have to be paid even if the house isn’t sold/bought.
I would suggest that the fixed fee be paid only when the house is bought or sold.
I personally think that people are still better with agents partially because of their expertise but because of MLS. I’m not sure if this is true everywhere but up here, if you list a house for sale by owner you can’t get onto the MLS which means that most buyers won’t even know/consider it.
Mike
OK, I’m a computer consultant, we bill my time at $3000 / week (though it should probably be more 🙂 ). I have a 4 year degree plus additional professional certifications and a little over 5 years in the field. I build systems that are core to operation of your business and that deal with all of your sensitive data.
A realtor requires nowhere near my level of education. They certainly deserve to get paid for the work that they do, but if I’m going to pay a realtor 12k for selling a house I want to see 160+ hours of work done (and when did you ever see that?)
You see for 12k you can get 160 hours of my (or probably Cheap’s) very valuable time. An average professional is making somewhere in the $25-30/hour region so 12k = 400+ hours of that professional’s time. If you’re a regular stiff looking to sell your home with a commission in the 12k region, then your break even number is 400+ hours!
And this about sums up my problem with realtors: they’re grossly overpaid, they’re not useless, they’re just too expensive. If I’m going to sign a Buyer’s Agent Agreement, this is basically the same as signing a contract for a work order. But I don’t want to pay you some interest-conflicted rate / dollar which is what’s happening. Really, I want to pay you 2k for 40 hours of your time and I want you to generate a bunch of good leads. If none of those leads pan out, you still get to keep the 2k. If you paid an agent 2k/week that would be $50/hour, which seems to be a pretty good bill out rate for an entry-level job.
Obviously my philosphy on selling with an agent is another post entirely 🙂
It really varies in situations
I have seen both cases
We sold our condo for $255K, through our lovely agent on her own ads, and 3.5% only (not even on MLS), when we only expect to get $240K after everything. We were happy
My friend just sold their semi for $242 when my agent recommend $249900 price, so he is a bit ahead
Unforunately I don’t have $$$ houses to try, but I am sure “million dollar homes” get sold through agents way more than FSBO. That is one niche market and agents should bring in their own $$ clientales.
I see a $$$ house with FSBO sign for couple months without being sold, and I guess rich people = cheap people 😀
Great comment Gates.
On the buy side I think RE agents should be paid by the hour (like a lawyer), but a much lower rate – ie $20/hour with a 2 hour minimum. If a sale actually takes place then you might have to pay a closing fee (for paperwork etc) ie $1000.
I agree – I think agents are worthwhile, in fact I really like the one that I used but they (and their brokerages) are too expensive. Because they charge a percentage and because real estate values have gone up so much over the last 10-15 years, their fees have gone up way more than inflation.
Mike
NSB – congrats on the sale of your house.
I don’t think the agent has anything to do with the sale price. I think that if it’s listed on MLS (or advertised in general) and the house matches the price then it will sell itself.
Mike
Agents love to trot out the “houses sold by agents make more then enough to cover the commission” stat. I’d love to see the actual research behind this, but I think its also one of those situations where the average investor would be best served by buying index funds, but there is the possiblity for people willing to do a bit more work (such as asset allocation) to get a higher return.
Those of us in the PF DIY world would be the types who would learn how to market our houses, how to stage it, how to show it, and how to complete the sales, and I’m sure we’d be at the upper end of sale prices.
Mike-TWA: Why don’t you, as an experiment, try to sell the next property you sell yourself. Do the research, figure out market rate, and if you don’t think you’re getting a good price, don’t sell. If you don’t sell in month, turn it over to your agent, and see if the offers he brings to you are more then 5% higher then the offers you were getting yourself.
There’s a book, “How to Sell your House in 5 Days” that gives some ideas for DIY house sellers.
Mr. Cheap,
Indeed I will sell properties myself, but probably via lease purchase. But for a multitude of reasons, I’ll probably continue to use a real estate agent for a market sale. But as I say, there are situations where it may make sense to go it alone. Selling my primary residence, while I am still living in the residence and have some time flexibility may be one. We’ll see on the investments. For now, no immediate sales of TWA property planned.
Yeah, lease-options are great. Unfortunately they’re legally complicated north-of-the-border and apparently they can be a can of worms to use.
If I had property in the states, I’d definitely try to get into lease option (heck, I’d probably offer a lease option to anyone who rented from me).
John T. Reed has information about lease-to-own (how to do it legally and some potential pitfalls) that might be interesting to you at http://www.johntreed.com/leaseoption.html (maybe ask Rob for it as a Christmas gift? 😉 )
Try using a referral service like: http://www.cutcommission.ca
You get to work with an agent (full MLS ect) and get a rebate on the commission. Costco also does something like this but they pay $20/10K or something like that.
If you buy and sell you would get double the rebate. As a buyer this repersents totally ‘free’ money since you do not apy the commission at all. Certainly helps to offset some of the closing costs.
Hi Andrew, the only problem with those commission referal sites is that they don’t reduce the commission by very much and in fact you can negotiate yourself with the agent and get as big or a bigger reduction. That’s what I did when I sold my house.
Mike
The problem isn’t the agent themselves but the system. They are the only ones with access to MLS. If given choice between selling/buying your own home or hiring an agent where access to MLS was equal (i.e. no barriers for us non-agents), I suspect the competition would result in a much more equitable fee schedule and people wouldn’t feel ripped off. Those who could do it themselves would and those who could not could negotiate a fair compensation package. Our current system doesn’t afford such choices so we are all frustrated by it. Guess the solution is to smash the MLS monopoly!
You got that right TMW.
I think another problem is by charging a percentage, higher priced homes pay a lot more when in actual fact they are just as easy to sell.
Mike
Wow! Quite a scathing review of real estate agents….since I haven’t purchased a house, I can’t say that I agree or disagree. However, I think 5% sounds unbelievably high! Now, I know why so many of my friends went into real estate a few years ago (they’re college friends that I’ve kinda lost touch with, so I’m not sure how they’re doing now).
Lets not forget that you are paying for two agents, the buyers agent and the listing agent. You will still have to pay half of the commission to the agent that brings you a buyer.
Now add the cost of advertising, taking the time to find inspectors and vendors you can trust, focused marketing and keeping it all legal.
An agent may not put in 400 hours on your sale, but he/she should have the systems to save YOU that much time.
Most of the time it is not worth the cost of having your home sit for six months before you realize an agent was the right idea.
Yes I am an agent and well worth it
Hi folks…
I’d like to be paid $20 an hour, sounds great. I’m on call 9am to 11pm, seven days. Can I get overtime for working before or after this (which I often do?) Time and a half would be fine.
Commissions are split between the brokerages; or more simply, your agent isn’t making 5%.
Gates, training doesn’t equal money, or my friend who’s working on a postdoc in maths would be better paid. Real estate is not salaried. Every listing is like a mini startup; you invest your own money and time and risk losing them both.
Agents have better MLS access because the MLS is built and paid for by agents. For about 10k/year in professional fees, you too can enjoy the same access, assuming that you can pass the exams and the background check.
Mr. Cheap, you could look into vendor-take-back mortgages.
I don’t want to be snarky (ok, maybe a little, but I’m holding back.) I don’t think it’s always a bad idea for people to sell their own homes. However, I’m also sure that most people could use their time better.
I’ve done everything for my job from cleaning toilets to phoning bank managers. There’s no life like it. It’s fun. But it’s a lot of work.
Elbie & ATNP – thanks a lot for the comments, it’s great to hear from some agents on this issue.
You’re correct about the 5% being split by the selling and buying agent but the point of the article was not to advocate selling without an agent but rather to question the entire structure of compensation for agents.
I can’t imagine every agent is happy with the current system since they have to give a big chunk of the money to the brokerage, plus you could spend a lot of time with a client and not make any money with them, if for example they end up not buying a house.
Mike
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[…] everyone who has sold a house knows, real estate commissions are a rip-off. Real estate agents charge a commission for their services so it doesn’t matter what value […]
I just started my own brokerage down on the gulf coast. Some brokerages down here keep 2/3 and only offer 1/3 to the buyers agent.
I offer I will do the listing and follow thru for 1% and suggesting you offer at least 2% to the buyers agent. I will also rebate 1/2 of the buy side to the buyer, if you
use me to buy property.
I’m very cheap and have designed this around how I would like to be treated by a broker. Any feed back would be appreciated.
[…] Check out another perspective on real estate agents. […]
[…] Take a look at another perspective on real estate agents that Mr. Cheap wrote. […]
If you want to talk about real estate rip offs, I mean everything from lawyers to agents to sellers, I have been taken.
[…] Real estate agents – the other side of the coin […]
The following comment you made makes no sense at all: “What we REALLY take exception to, if Mike will let me speak for both of us, is that they get a percentage of the sale price, which gives them an incentive to sell as quickly as possible, rather than to get the highest price.”
If real estate agens made MORE MONEY by selling a house quickly, the incentive would be too sell as quickly as possible. But since they make more money the higher the sales price, the incentive is to sell as high as possible.
Perhaps you could apologize and retract your statement containing very faulty reasoning.
Dee: It makes perfect sense, sorry you’re have trouble understanding it.
I’m pretty sure you’re intentionally misunderstanding, but in case you’re not: if you sell MORE houses at a lower price, you can make a higher salary.
Imagine I have a $100K house. If it takes me 10 hours to sell it at 10% below value, 20 to sell it for fair value, or 30 to sell it for 10% above value.
First case:
Sale Price: $90K
Commission (5%): $4500
Earnings / hour: $450
Second case:
Sale Price: $100K
Commission (5%): $5000
Earnings / hour: $250
Third case:
Sale Price $110K
Commission (5%): $5500
Earnings / hour: $183.33
If I can sell houses quicker, I can sell more. Since I get paid a commission on each sale, this translates to a higher income. Of course, this screws the homeowner who wants to be in the third case, not in the first (since its a difference of $20K for him).
Dee: actually agents are loosing money longer the property is on market… they have expense for advertising, showing (gas, time..) so it make perfect sense that their first goal is to sell as quick as possible
[…] time readers know Mike and I would never say a bad word about real estate agents.? However, a recent case recently came up in Australia where a real estate […]
a good realtor will work to help you reach your goals which is usually the most money in the smallest amount of time (unless you’ve got emotional attachment issues and you really don’t want to sell it)
if i am serious about selling my home and i want top price, it’s going to be 5 star hotel quality, 10+ showing condition at all times – and quite frankly, i’ve got better things to do then spend months dusting, vacuuming, etc in hopes that that i will get a higher offer it i keep it on the market longer.
often the first offer is the best because the buyers have likely been waiting for your home to come on the market, they’ve seen a bunch of others and are growing weary of the buying experience. buyers do a lot of searching before spending their money and seeing a home sit around only raises doubts.
think about it, when you see a home that has been on the market for more than 30 days don’t you say to yourself… hmmm, what’s wrong with it? i bet i can talk them down in price since nobody seems to want to buy it… or are you naive enough to think wow, 30 days and no other buyers have seen this gem?
sigh…
Hi,
I am going out on a limb here because I am a real estate agent and I want to let your readers know that not all real estate agents are money hungry mongers. I’m relatively new to the profession, started July 2007, right before the economy started its downward spiral. I went into the profession because I wanted to help people and yes I thought I could make good money. I also have two young children so I wanted a flexible work schedule, so I wanted to be at home when they needed me. I loved all those home improvement, house hunting shows, and property virgin shows. Let me tell you, they make it look so easy. However, I found out that being a realtor is harder than it looks and a lot more expensive. First of all, real estate agents need to go through 60 hrs of training and pass a test to get their initial license and then we have to take continuing classes to keep our license. True, the classes are not overly difficult, but they are expensive and very time consuming. In my case, after I received my initial license, I was paired with a seasoned agent that showed me the ropes for a year, kind of like an internship. I had 3 transactions that year and didn’t come close to breaking even, but I learned a lot. During that year, I was amazed by how much time, stress, and energy each transaction entailed. I also found that I was working 40-60 hrs a week and was on-call 24/7. It is a lot of work. I was never home and I hardly spent anytime with my family. It has been an uphill battle trying to make a name for myself. I am still not there yet, but I am still trying. Have I mentioned how expensive it is to be a real estate agent. The overhead is unbelievable. Half of everything I make goes to my office. Then there’s insurance, training, Realtor dues, MLS fees, lockbox, signs, office supplies, etc…. I actually had to take another job just to stay a real estate agent. I believe I am worth every cent of my commission. I can’t speak for all agents but I do know the agents in my office and I work our butts off to ensure our clients are happy with the sale of their home and/or the purchase of their new home. Regarding your points on real estate agents using their knowledge and experience to manipulate their buyers and sellers. Realtors, adhere to very strict ethical guidelines from NAR (which I applaud) and there’s also Agency Law (equally wonderful) . In addition, I, personally have an office policy and a very strict broker (which I love to work for) to deal with. I love working at my particular office. All the agents that I work with are not in it for extrinsic reasons and are genuinely there to help their clients. Yes, there are agents that are in it for the money, but not all of them. I like to believe that the money mongers tend to weed themselves out eventually-especially when the market goes down. Unfortunatly, they leave a bitter taste in peoples mouth and give all real estate agents a bad reputation. My recommendation to anyone that is buying or selling a house is educate yourself, ask questions, and interview a handful of agents before you decide on one in paticular. Personally, I work primarily on referrals, so it is important for me to do every job well and I will because I one of those good agents.
Sincerely, Bridget
[…] Real estate agents – the other side of the coin […]
Wow! Your really throw real estate agents under the bus. I have been selling real estate for 24 years and most of the stuff you are saying is false. We do not get anything out or referring a client to a attorney, mortgage company or inspectors. I would much rather my clients know what they are paying for in points, fees etc, and if I can help them save money I will. An experienced negociator that knows the market is crucial to getting the best price for your property. Putting a property on way to high just to get the listing is not doing anyone any good. I can’t stand the fact that any realtor will tell the seller what they want to hear instead of the facts. It is not fair to the sellers. They should know what their property is worth so they can make an informed decision on if this is the right time for them to sell. Open houses are to bring buyers in and to meet prospective sellers. Many of my sellers insist upon it. I don’t incourage it but will conduct one if asked. It is my job. If find it rediculas that you are charging money for a book that you have no idea what you are talking about.
Well there is so much to say in response to the previous comments bashing the work/services provided by Realtors.
Maybe we should start with the stats related to “when a real estate deal goes bad” In the city I live (population approx. 1m) there are on average 1000 court cases related to real estate per month. If you remove the forclosures from the equation you will find approx 200 cases in which a problem arose in the transaction ( i.e. latent defect that was not declared by the seller is one example) The actual cases represent only a portion of actual cases in which these problems have occured since many people are not willing to take things to that level. Proper conceincious representation by a licensed professional will help steer clear of these issues. Besides being trained to be on the lookout for potential problems that can occur Realtors also carry insurance that cover clients if the agent failed to warn or advise their clients properly. Another layer of protection. Or how about a holdback on the final payment to ensure repairs have been done. Properties listed with a Real Estate agent must provide a declaration of latent defects. This is a very important distinction between “for sale by owner” and MLS listed properties as it squarely puts the seller in a liability position should they “fail to disclose”. During the phenominal rise in the market we saw investors and some homeowners selling off (by private sale requiring no declaration) properties that were to expensive to fix up…many with latent defects that the inexperienced buyers were ultimatley stuck with. Buyer beware! Who’s watching your back? As an agent I would never advise my client to purchase a property without a proper professional inspection even though in multiple offer situations the offer with the fewest conditions usually won out. This of course cost me sales but in the end a lot less hastle and expense dealing with the aftermath.
Secondly when a problem arises an agent will have solutions because of his/her training and experience that are not readily available to buyers sellers. Here is an example … My client had secured a pre-approved loan from their bank we found them a townhome negotiated a price provided the deposit, had an inspection, removed conditions, etc.etc. 3 days before the deal was about to close my clients bank contacted them to inform them their financing had been declined. ( the loans officer they originally dealt with was on holidays as this was between Christmas and New Years, instead of signing off the “new” bank manager reviewed the file and arbitrairily decided to quash the deal.) I contacted our broker…explained the situation and the fact that my client would loose his deposit if we don’t get the problem resolved. In the end he found us a mortgage at 1/2 percent less than what they had originally agreed to ….. here is the kicker …. it was with the same bank that gave my client the runaround in the first place ! Another satisfied customer. And the additional work/services didn’t cost them a penny.
Another issue we were able to resolve was when the home my clients bought had the furnace shut off (accidentally) the pipes froze necessitating last minute repairs before move-in. (since the damages were minimal we negotiated a deal with the seller through their agent) Only problem was there was not a plumber available that could respond in time to fix the problem before the possession date. I contacted a friend who was able to come in the evening. With my assistance we addressed the repair and the clients were able to move in on time. Connections are always a good thing in cases like this.
As for Realtors only looking for a quick buck. I’ve been in the business approx 8 years. A few years ago I donated all the money I made that year to chairity. When you consider my expenses for that year I came out in the negative. I was able to do this because of a previous business sale and am not here to brag but saying all agents are bad is like saying all cops, judges, politicians, doctors, lawyers, bankers etc. are bad people because of a few “bad apples”. While I agree everyone should attempt to educate themselves to whatever degree possible so they can question things like recommended asking prices etc. Not everyone is able or has the time for such endeavors. Interview whomever you hire to do a job for you ask for references and make sure they understand your needs and have similar values. I know this can seem daunting but there is a payoff in the end.
When I was in high school I rebuilt the brakes on my car …. I havn’t done that since. With the changes in technology, the potential for liability and safety for my family I wouldn’t do it today ….. the risks far outweigh the benefits. There is a place for experts in many fields to provide needed and necessary services for the benefit of the public. That is unless you or someone you know has had a “bad” experience with a mechanic in which case you may believe they are all “bad”
Being in real estate for over 23 years , I have seen many things. The one tht has always stood out in my mind was when I went on an appointment to list a home. I gave all the information pertaining to the market, the home the area and the price. I left all these things with my potential client.
Well, calling back to see if the decision was made, I was politely told that they will be selling their home themselves.
Moving foirward 6 months later…receiving a call from these same people asking if there is anything I could do to help them out of a contract they wrote that an attorney approved …I said, no. But before I politely refused any help, I aksed what the problem was.
Here, I heard this wonderful story of what not to do….
The sellers purchased a contract for selling a home at their local stationary store. The buyers and sellers filled in all the blanks but failed one small detail. The actual closing date. there was no where for this item so the attorney for the buyer and seller both missed this small detail.
The seller was begging to find out how he can get out of this deqal since it has been so called “under contrqact” for the last six months without a sign the buyer wanting to close.
Well….funny thing..I had no sympathy at all…I said since you have no date for a time of closing, your property is tied up until 1, you go to court, 2 pay the buyer off…and I cannot help you. Call the attorney that approved your contract.
I believe this buyer was extremely savvy and knew the ropes and must have done this before, otherwise the buyer would have pointed out that he wanted this home at this certain time and date..was very rewarding to me knowing that some sellers do get the karma they give, just as sdome buyers do too.
Mr. Cheap,
WOW! not sure what happened and it is obvious you hate Realtors but I can assure you have no ideal how the Real Estate process operates just as we have no idea how your business works.( If you do work) I could list everything we do from listing to closing every transaction and it would astound you. No Realtor claims to be perfect but we are providing a respectable service to our Clients. You might want to take a look at yourself and see why you have such a negative outlook on life and channel them thoughts into positive.
No matter what excuses you realtors make, nobody DESERVES to be paid 100.000.00 for selling a 2 Million$ house.
Nuff’ excuses. You should make $10K max (after advertising costs, but before the house split of your comm) and you would still have been paid well.
You do not put in more effort to sell a $2 Mil property than a $100K property.
Quit lying.
The Ex-realtor.
My comments are as a former administrator in education of 39 years and a firm believer in Real Estate, whether for purely investing in or for the purchase of a home (also an investment, of course). My dad and others taught me that it is what is “grounded” but you still have to be wise when engaging in such. I decided to retire to this line of business and like any other line, will try and test it for a certain period of time, giving it my all and following professional sales principles and advice. I have been in the business for 3+ years. Here is my take on this issue:
* This article sure makes one think – but why defensively? We can also use this article to reflect on who we are in this business.
* Many points are well taken and many have no credibility.
* Many persons, regarless of the column, take general positions based on the “law of personal experiences”, much of which is planted via media persuasion.
* I wish people would develop wisdom and STOP “painting every RE person with the same brush”; ie, generalizing. But it sells media, right?
* Yes, there are non-professionals in the RE business. Name me a business where there aren’t. Put away the brush, please.
* On that note, what I bring to the RE business must have an impact when a colleague thought I was in the business for 14 years when in fact I was in for 2 months. So what are the skills, knowledge, aptitudes and education of a professional in any profession? Individuals bring many life experiences to their jobs. Each person has to answer to the morals and ethics him/herself.
* Homes that sell private CAN be part of MLS. Check it out.
* Most homes in Canada initially list privately ARE introduced to the Buyer via a RE Representative and are then SOLD or are SOLD once the listing is provided to RE. Check the stats.
* Many private sellers want to keep the entire commission but listing the home according to the MLS comparables yet often refuse or degrade a Buyer’s RE commission within the listing price. They deserve to keep their portion – but then why not drop the price and be fair to the Buyer? Now who’s the “bad guy/gal”?
* Consumers want protection. sure you can get it from a RE Lawyer – but that is why lawyers honour our position from a contractual expertise point of view. Note: I did say RE Lawyer.
* After 4 separate sales, I did the number crunching and the expense accounting – and on most of those 4 transactions, I have earned less than $ 5.00 per hour . In one deal I invested personal monies for a loss of $ 4,300. All the while, the client had full input; consensually agreed with the strategies; admitted having received quite an education; did not put in a cent him/herself nor should they according to the agreement
* Sellers and Buyers are swayed by ads and self promotion and many do not even interview a RE professional for the Service role they are hired to take on
* Many RE Representatives do NOT lay claim to a service fee until the transaction is done – read the Rep Client Agreement Contracts.
* I work for free – until the sale is made. Many other Service industries do as well. Value is in the service or it isn’t. Interview your RE Reps prior to hiring and come to terms prior to establishing a relationship. Reps and clients who “dump” those in the relationship are “non professional”. If things are not working out, indicate clearly and objectively why. Perhaps you could also reward with why they are as well. Employers (Buyer/Seller) are supposed to work cooperatively with the Employee (RE Professional.)That would be nice in any employment state, whether production or service!
* Cheap is an indication that you get what you pay for. Check what you are paying for before putting the penny on the table for if you do, a penny is what you may get in return! Did you know that commissions are negotiable? Higher home, adjusted commission. Multiple deals or “ends”, adjusted commission. It can be made to be relative and is up to the “independent contractor”. I do refuse to work for free – but often it ends up that I work and lose b/c of personal invested costs.
* A variety and current package of service is worth every penny and more. Creative packaging and marketing is the key to good service. Either the Seller/Buyer should perform due diligence and ask about it OR the RE professional should point it out at the start.
* Any RE professional or ANY Sales person should “walk in the shoes of the client”. If they do not and “push” sales, they may have enough to buy all the bill boards in town, but are they worthy? Then again, some persons DO achieve success AND are ethical, credible and accountalbe. Please recognize and herald PROFESSIONALISM in RE when you see it.
Have a great day.
Enjoy your Real Estate ventures, everyone!
I agree with Mr. Cheap on a lot of things. There are good realtors and bad realtors. The fact is they will tell you anything to get a listing for your house. (ours said she never would do that)We have been told the price of the house is too high but she is the one that suggested the price, 2 weeks later lower the price…lower the price…thats all you hear from a realtor that cant sell your house. We lowered the price of our home $22,000 because we trusted her when she said the neighborhood wasnt selling that high, We have had nothing but grief but thank god her contract is up in 30 days. She refused to release us saying it cost her a lot of money to list our home, but she wont show expenses to us. On the other hand we came acrossed a great realtor who is going to list our house at the end of our contract. Can you believe when interviewing for a new realtor that most thought the price is too low (all brought their comps and everything for us to see) for what we have to offer and our realtor wanted us to list it another $6000 lower than 392,000. They also cant believe with the amount of traffic that has come thru our house in 5 months that it hasnt sold. be careful when you list your home and sign a contract. Check them out on Real Estate Council of BC, they list all complaints about realtors and companies. if they want 6mths listing walk away, go 3mths at a time if they want you to lower the price refuse, they should know the market and let you know what pricing is in your area before they suggest a selling price. And you get what you pay for we learned the hard way a cheaper realty company doesnt always get you results. I will now stick with the regular commissioned realtor. live and learn. I personally keep my eye on listing in my neighborhood from mls, I also have them posted up in my home for when we have showings. Not all realtors give clients information because they are afraid they wont get a sell or buy. No sell no money….No buy no money…I have noticed that most of the negative remarks about mr. cheap come from realtors…funny they dont want you to say they are vultures waiting to pick your pocket clean….they want you to believe you can trust them and they have your best interest at heart…I know there are great realtors out there but be careful..investigate…check out their websites, you will find that they keep listings up that are no longer for sale or are for sale by other realtors…they need to make you think they have all those listings. you can write down the mls # and check it online.
I think there should be a deemed commission when a home is for sale by owner. That portion should be divided if a buyer wants to use a Realtor – and the seller should be deemed anticompetitive if the seller won’t allow a Realtor to be paid. Additionally, I think the for sale by owner commission portion, should have to be declared as income and tax paid on the money as underground electricians have to do. Often, for sale by owners are as high or higher than those on MLS, yet the sellers don’t reduce the home by the price of the commission while denigrating Realtors; they simply want it for themselves. They should have to declare it as income and pay a fair commission to Realtors. Additionally, I think municipalities should charge a fee for for sale by owners as they do garage sales; they should also have to take a course as boat drivers have to do; and they should have to find errors and omissions insurance or post a bond, particularly if they are leaving the province or country. I think it is mind boggling, particularly regarding condos, that so many try to sell for sale by owner and haven’t a clue what they are doing – and neither do the buyers. The government needs to look at the realities of so many for sale by owners’ transactions – ie what, really, is happening on contracts prior to going to lawyers. Perhaps the government should issue real estate licences to all citizens at 18 or 19, whatever the legal age is in provinces. Apparently, there aren’t any requirements required to sell homes – no pitfalls, not a thing one really needs to know. Trust the sellers, trust the buyers – sign on the dotted line and hope for the best. What madness.
Just a comment about MLS. My understanding is that the MLS system was created and is paid for by licensed realtors. So the fact that only they have access to it is understandable. Putting a FSBO on the MLS would be comparable to taking your used car down to a car dealership parking it, putting a sign on it and standing there looking for buyers. Does that seem right? Especially when you consider the dealership is paying for the property, advertising and spending their own money to get people to come to the car lot. It’s that same thing for the MLS. It works because a lot of effort, time and money goes into making it the best way to find a property.
Lets talk about Dual-Agency…what a scam how can one avoid it if the buyer
walks in without an agent and is asked to sign with my Agent. by her…….remember Iam the Fiduciary…and if your agent fails to mention that she is representing the buyer as well…my ignorance not reading the fine print…isnt this illegal?………Former Coop owner in New York City……
The Buyers Representation Agreement not only protects the agent, but it also establishes a fiduciary agreement between the buyer and the agent. Technically, without the rep agreement the buyers agent is working for the seller to get the home sold. Once the buyers representation agreement is executed it assures the buyer that the agent is not working with the buyer to help find a home and to help negotiate the best possible deal for the buyer. Many agents including myself, have represented buyers without a buyers representation agreement and still of course worked for the buyer in a fiduciary capacity. I don’t want to work with a client who doesn’t want to work with me. So, if I feel that their intention is not to use me through the end of the transaction, I won’t ask them to sign an agreement. I simply let them go elsewhere for help. Just like everyone else, my time is valuable. I do a lot for my clients in which I don’t get paid, and I am fine with that. But I am not fine with being used then tossed to side when closing comes. I once had a teacher client who did this to me. I found her the house, I showed it to her twice. She was not able to find exactly what she was looking for, because it didn’t exist! So she decided to seek another agent to help her. Guess what? She waited until our rep agreement was expired and bought the house I showed her because her new Realtor® didn’t have a magic wand either. I got nothing for that transaction, even though I worked with her for over 6 months and showed her over 50 homes… I don’t do that any more. I feel my experience helps not only myself but my clients. So, I am not convinced that a buyers representation agreement necessary or helpful. I seek clients who are of good character and I can work with. Because I want to be treated the same way I treat my clients.
It is very apparent that a bad realtor has left a bad taste in some of your mouths. Let me point out some flaws.
1. Commission – in my state…buyers don’t pay. Working with a buyer’s agent is free. I have seen agents drive people around the entire metroplex showing hundreds of homes, spending tons of money on gas…maintenance, time away from family, time wasted searching for properties in MLS, consulting with buyers…and the buyer ends up saying “we’re going to wait till next year”. I dont know what planet you are from talking about this 160+ hours nonsense. Realtors put in more hours than you “see”..most of the work and training etc, ever changing laws, marketing and networking, lead gen time…its certainly more work than your measly IT job.
Reality – that 12k commission is what 6%? You obviously have no idea where the money goes if you think the realtor spent 1 hour at a listing consultation and makes 12k when your home sells straight to his pocket. 3% to buyer agent, 3% to listing agent. So…its 6k to the listing agent. out of this 3%,…1% goes to their broker, 1% goes to marketing your home and office fees/board fees/insurance/admin, and 1 % to the agent…which THEY PAY TAXES on. So…a 12k commision…after all said and done is ~2700 in the agents pocket. It takes what? 60 days to close in some cases….so if I had 3 homes closing in a 2 month period…I end up making a normal salary as you would at a decent paying job. Only difference? when you are sitting on your fat bitching ass at home drinking your beer….Im holding open houses, showing homes, meeting with clients, attending board meetings, doing MCE training, paying my board dues, researching market trends so I can best advise my clients. Dont talk to me about value. How long would it take a FSBO to sell their home (which they dont even know the market trend in their area or how to value a home…or how to fill out promulgated forms…or timelines that need to be met…or marketing their own home. In many cases, people have to sell their home because of a life change, relocation etc…and I have sold their home in 10 days or less….netted them more money than they could on their own AND covered my commission.
Truth – investors and savvy buyers target FSBO homes…why? because they know you are saving 3% by not paying an agent…so they take it off the sale price offer.
Not to mention the legal issues that can arise under contract.
Most of the agents i have worked with wouldn’t know a wood door from a metal and most know nothing about mechanical equipment in a house. they will tell you it’s a nice deal a great deal curb appeal that all sugar on top. most people are making the largest purchase they will ever make in their life wouldn’t you want someone knowledgeable to show you the house. I think all agents should be trained with knowledge of the building trades and practices then the buyers can be better informed.
I just listed my property and the agent said not to put an asking price, is that OK? It’s zoned for 20 units.
Hello,
I am selling my house in a niche market. It is situated in a resort and
we have a sales force here at the park. They don’t do multiple listings.
I decided to go with a larger well known agency so they will MLS my house. I am being punished for doing so as I cannot advertise on the internet site for the resort. They claim they are in charge of that. Yet, I pay assessments.
Furthermore, they are not showing my home because I am not involved with them. Is this legal?
How legal is it when my agent calls me to tell me an offer has come in on my home (which is of course too low) and the next bit of news is that because the buyer’s agent has shown his clients properties for three months she wants $4,000.00 on top of her commission and this gets included in the offer? Is it my fault? My house sat on the market for 7 months. She could have shown this house to them months ago! Why do I have to pay for the fact that she did not. I am forced into a corner if I want to sell my house which has lingered on the market for all those months. I don’t believe for one minute my agent isn’t getting a chunk of that extra, extorted commission. I’m pretty disgusted.
I really think that the “fault” of the over inflated prices of homes in California are mainly due to the Real Estate Agents and the gullible Buyers who accept all the B.S. that RE Agents enjoy dishing out to them. The RE purchase contracts and mortgage loans with all the padded over-priced closing costs without a transparent explanation of what they all are for is a clever way designed to keep the RE Agents, Loan Officers and RE Lawyers in business. When someone comes up with an ingenious way of a prospective buyer having access to the inside of a property – without the help of an agent getting in the way of the buyer – then if interested, making an on-line offer with the help of a Computer Guided RE Agent with easy click on access to guide the buyer from beginning to end of closing with a clear cut 2.5 commission fee and discounted transparent fees and charges explaining what and why they were charged and for what purpose would cut all the B.S. – maybe this type of technology with access for a legit buyer to tour properties in person will be coming soon?