Hopefloats, Home Buyer in Hopewell Junction, NY

Throughout the entire real-estate debacle, why hasn't the outrageous real-estate agents commission ever been scrutinized?

Asked by Hopefloats, Hopewell Junction, NY Sat Mar 31, 2012

From my experience and the experience of my friends and family, agents give very little added value as the majority of the research can be done online at the buyer/sellers leisure with very little effort. Even FSBO's appear on realtor.com and zillow.com. 6% is a huge portion of the transaction and in my opinion punitive to the process.

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Ya know I was going to leave this one alone because I knew you would have plenty of responses (which you did) But yesterday I had an experience that I thought I would share with you. You stated that “the majority of the research can be done online at the buyer/sellers leisure with very little effort” Which is true if you’re looking for outdated information (Trulia is a glaring example of that). What you don’t realize through your ignorance is that not all information a buyer needs is available online.

I met a couple yesterday that have been looking for 4 years for a house with storage for 5 cars (he’s a collector) and he said “you wouldn’t think that would be that hard to find”. Since most Multiple Listing Services top out at 3 cars you can’t search for 5 cars. So I reached out to the entire Real Estate community in Dutchess County via email looking for such a listing…. I found 10 homes that match his criteria. He spent years I found 10 in an afternoon. Obviously that is a service he or you cannot provide for yourselves.

I usually don’t answer the stupid questions on Trulia but I just thought I would share this with my fellow Realtors. Oh and by the way I think we should blame car dealers for the collapse of GM & Chrysler which Billions of tax payer dollars went to save…. Same premises
5 votes Thank Flag Link Sun Apr 1, 2012
Obviously you have no idea what we do. We haul people like you around for days and spend $4 gas that use to cost $1.80 while you decide what to make a super low offer on that totally wastes days of hauling you around and looking at homes that are 30-50% lower in value than 5 years ago and then you disappear with no sale. Multiply that times 5 or 10 and see how you like it. If you knew the average income a Realtor makes it would surprise you how low it actually is. Some years it's great and some it can be pretty bad.
4 votes Thank Flag Link Sat Mar 31, 2012

We do difficult work that requires experience, knowledge and attention to detail which basically means it takes smartness, hardware and extensive studies and work to be able to help clients. And after all this, no one would take less money to do the work needed.

The value we give is a lot but not realized by some people.

3 votes Thank Flag Link Sat Mar 31, 2012
And the use of our services is discretionary, not mandatory. So there.
3 votes Thank Flag Link Sat Mar 31, 2012

read all the threads and forums here and on zillow....it seems to me that our commission structure, and our industry is scrutinized, debated and critiqued.. ALL the time!

I feel no obligation to defend or explain it........

Fortunately, for you, there are vaious business models available today....some with flat fee structures or a la carte menu options................find one you are comfortable with.

Best wishes.........
3 votes Thank Flag Link Sat Mar 31, 2012
A good real estate agent that gives results, will works hard,very professional and has his clients best interest in mind. By having your best interest at hand and doing his best to earn that 5%-6% vs a flat fee commission. The goal of a listing agent is to help you sell your home for the highest price, in the shortest period of time and with the least amount of inconvenience to you. At the end of the day you get what you paid for; so be wary. Sit down with your agent and discuss how he/she is going to market, while giving you the costume touch, in selling your home. All negotiation between you and your agent about the commission will work in the long run.

Actually, if you as a home owner are looking for discount and to cut corners, the worst thing that can happen is that you ’d find out the real reason it did not sell in the first place and if do decide to list it again you won’t make the same mistake twice. I will put my experience, motivation and upbeat attitude to work for you. But these things can not be done alone. With your help and working together I am confident that we would make a great team. Clients satisfaction most be our foremost goal. If you have any questions or thoughts, I will be delighted to hear from you.
Fajardo Delacruz
Licensed Real Estate Agent
Century Homes Realty Group llc
Direct Line: 347-932-0609
3 votes Thank Flag Link Sat Mar 31, 2012
And you are certainly entitled to your opinion.
2 votes Thank Flag Link Sat Apr 7, 2012
Since you mentioned FSBO's see link below for an interesting article.
Keep in mind that commissions are always negotiable between you and your agent, there are no set standards, therefore it's wise to choose an agent with care as not all are created equal....
2 votes Thank Flag Link Sat Mar 31, 2012
Real estate agents have the potential to make a lot of money but they also can fall flat on their face. You have to look at as if you are opening a business. You have a very large outlay upfront. The cost of the schools, state exam, office fee's, advertising fees, MLS fees, and National Realtor fees. This is all before you even get your first client. Once you finally get the ball rolling then you have all of your cost of doing business. If you get with a broker is willing to cover some of the fees then they are going to also want a percentage of your commission. The commission is split in half before it reaches your office and then usually split again before it reaches you. When it is all said and done the average real estate agent on a $100,000 sale makes about $1500. Take out the cost to get the client and you are looking at close to $1000. If you don't continue to repeat this process over and over you will not make it. That is why they say 80% of homes are sold by 20% of the realtors. They are the ones the public sees and that is why the public thinks we make to much.
2 votes Thank Flag Link Sat Mar 31, 2012
Just as in any business, there is a wide range of pricing and quality. You can choose to sell your house for as little as $25 (by selling on Craigslist) or you can hire the very best realtor with the very best marketing and be charge 6 or 7 percent or even more. The real estate market is among the most 'free and open' business sectors because there are every agent represents a separate business and they can charge whatever they want. Truly the commisions charged are a direct result of the market's choosing not realtors.

Furthermore, the commission provides a barrier to speculation. Meaning that higher the cost of doing business as a developer, investor etc in the real estate sector the more cautious and thorough they are and deters unchecked speculative behavior. Though, it isn't always enough of a deterent as we recently saw; however, it would have been much worse had the costs of buying and selling were less.
2 votes Thank Flag Link Sat Mar 31, 2012
I have two observations on your question, and sorry I'm so late to the game...

1. Scrutinized? Real estate markets are open markets. Buyers and Sellers negotiate freely in those markets. Most all real estate commissions are paid by Sellers, not Buyers. (Don't think because it's included in the price the Buyer is paying it; if the Seller could get that price without the commission they would and the Buyer would pay it!). Sellers are free to negotiate with different real estate brokers to establish the terms of their contract to list and sell the home. This includes negotiating the amount of the commission. No one is forcing the Seller to pay; certainly no one is forcing the Seller to pay 6% commission. So, what is there to scrutinize? And who would do the scrutinizing?

2. Speaking of the real-estate debacle: do you remember Foxton's? This was the famous real estate brokerage that undercut all other real estate firms with a low 2% commission (I think it was 2%, I'm old, I forget stuff). Oh, you've never heard of Foxton's? That's because the firm couldn't survive in a "normal" real estate market with such a low commission structure. It costs money to run a business that is dedicated to doing one thing, like build computers, process credit card transactions (a nod to Mack: PayPal) or sell homes.

Post meltdown I met many former Foxton's agents as they transitioned over to other real estate offices to attempt to continue their real estate sales careers. I've been doing this a LONG time and I found many (but not all) of these former Foxton's folks to be only a step above "clerk" in terms of their sales abilities. In my travels throughout my local market here and the many real estate offices I have visited since the meltdown, I noticed that many of these former Foxton's folks are long gone; they couldn't cut it. I guess that says something both about what skillset was required to earn a 2% commission. Those Foxton's agents---and there are many---who successfully transitioned had the necessary understanding of sales as a profession.

3. I bought my first home from a FSBO and sold it years later myself as FSBO. I'm not a real estate agent, never have been. But I'm a professional salesperson with lots of real world experience in the real estate industry. I will tell you in both situations, the buy and then the sell, I wanted to shoot myself several times due to the frustrations of dealing with people who were neither sales professionals nor experienced in real estate transactions. In other words, I muddled through the FSBO experience, but only with much aggravation and I would not recommend the average person do the same.

4. There's nothing "punitive" about the process of buying a home (except trying to get a mortgage in the "punishing" lending environment of 2012-2013!!! LOL). It's a happy time buying and selling a home and there's a process and a system in place. Hiring professional salespeople to sell your home and pay them a fair, market-based commission to do so isn't such a terrible part of the process. Visiting homes with Purple wallpaper, shag carpets that haven't been shampooed since the 80's, now THOSE are terrible parts of the process!

5. You can wash your car yourself, but doesn't it look so much better when you bring it to a professional? And that's just washing the car! Selling a home is a bit more complicated; just a bit. :-)

Oh, wait, that's FIVE observations. I get carried away sometimes...

Trevor Curran
NMLS #40140
Mobile: 516-582-9181
Office: 516-829-2900
Fax: 516-829-2944
PowerHouse Solutions, Inc.
185 Great Neck Rd, Suite 240
Great Neck NY 11021
Licensed Mortgage Banker – NYS Dept. of Financial Services
1 vote Thank Flag Link Wed Feb 6, 2013
Realtors are not required for buying or selling a home, however, the expertise and convenience they bring to their clients adds a tremendous value. The exposure of a property for sale on the multitude of websites would be grossly reduced, as the Realtors using any MLS feeds to more than just the major 3 websites. A seller would be required to be available for all showings to serious and qualified prospects, don't forget last minute cancellations and no shows too. Showing and meeting the buyer is sometimes a good thing, the buyers will know your motive for selling and can determine your motivation for negotiating. The NATIONAL ASSOCIATION OF REALTORS® studies show that 82 percent of real estate sales are the result of agent contacts through previous clients, referrals, friends, family and personal contacts.

For buyers - oh my! Is the home in a flood zone, FEMA recently updated their maps, are all the c/o's in place, is this in or near a superfund site, what surprises will you get after your in contract. Hope they have a keen eye for the subtle like GFI's need to be installed, is that asbestos or hardy board?

Realtors also have knowledge and access to a multitude of reference sites to provide to buyers, such as parcel outlines, schools, and information about the community. We add a tremendous value and expertise, convenience and mutual respect to both buyers and sellers while upholding our iduciary responsibilities.
1 vote Thank Flag Link Wed Aug 29, 2012
The auction industry feels your pain, although they are not reducing their fees any time soon.

To buy a $50,000 bauble from a reputable auction house costs the seller between 15% and 25% of the strike price, plus a 10%-20% "buyer's premium" tacked on to that. Given that it's easy to find a Tiffany lamp online, you might say, well, I'll go to eBay, in which case, they'll nick the seller for a couple of points and PayPal will tack on 2.9% (or a credit card company will take a piece) for doing, what, exactly?

Here's a secret - promise not to tell anyone, right? You don't need a real estate broker. It's not mandatory. It's not required. Just because 80% or so of residential transactions involve real estate agents doesn't mean that it's a law. And this is at every price point - people use agents for $50,000 bungalows and $25,000,000 estates. Normal, everyday people use agents, and so do incredibly sophisticated deal makers. Donald Trump uses real estate agents, for goodness' sake.
1 vote Thank Flag Link Sat Apr 7, 2012
First of all, commissions are individual. It is illegal to set commissions.

And if you care to do the math, when the house sells for less, that commission is reduced...it's a percentage of the sales price.

If you don't think Realtors offer value, sell it yourself. National Association of Reatlors statistics prove out that Realtor represented homes sell for over 20% more than For Sale By Owners.
1 vote Thank Flag Link Sat Mar 31, 2012
I would suggest to see the true value of real estate agent you try to sell a home yourself. After you have showed your home to every unqualified buyer in the area, prepared all the necessary paperwork multiple times, spent hours and hours showing, and a small fortune on advertising with no success ..... you will learn that a skilled agent/broker is worth his/her weight in gold.
1 vote Thank Flag Link Sat Mar 31, 2012
What The housing collapse was due to financial speculation, bad lending practices and government intervention. There is no connection to agent commissions. Furthermore commissions are negotiable, so what is there to scrutinize?
1 vote Thank Flag Link Sat Mar 31, 2012

We also pay monthly dues to MLS, boards, CAR and advertising etc which can cost us anywhere between $1000-5000/month even if we did not make a cent that month from the hard work trying to reach the buyers and sellers who come with a little interest to buy or sell home and walk them thru the process whether or not they are going to commit to this transaction.

This is really more work and less money.

Thanks for bringing up the question.
0 votes Thank Flag Link Sat Apr 7, 2012
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