Victory Prop…, Real Estate Pro in Raleigh, NC

Given current market conditions, do buyers and sellers in Wilmington think that REALTORS are overpaid for

Asked by Victory Property Management, Raleigh, NC Tue Sep 9, 2008

their services? These days it’s hard to find a buyer who is serious about making a purchase. However, many are still very interested in looking at homes these days. During the boom time, there was a large amount of controversy over how much brokers were making, and I completely agree. I doubt there is little doubt that over inflated fees from real estate agents, and mortgage lenders helped to exasperate the housing bubble. However, do you think this is still the case? Do you think that all brokers should move to a flat fee business model such as with an attorney? For instance, when I list a home for 6%, I offer 4% to the buyers agent, because finding good buyers these days is particularly hard. I have also received a lot of interest in my flat fee services. Is it time for a real estate revolution?

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What a great question!

Given the current market conditions, I feel that Realtors are more necessary than ever. Wilmington is still a good market, we have had growth in home sales this year. It takes a little more time and skill to sell houses now.

Sellers need the expertise of a Realtor to: 1)help them price their home - we all know that overpricing a home costs a lot of time and money, 2) market their home not only by way of our MLS but by actively seeking buyers, 3) negotiating the price and contract, 4) closing the deal, the agent has to stay on top of the transaction to avoid pitfalls and then when there are problems to solve them quickly. With the mortgage market in the shape it is, the agent has to maintain close contact with the lender.

Buyers need us more than ever now as well, there are so many houses on the market. It is our job to truly listen to our clients and find them what they need. Nothing makes me crazier than to hear another agent say they showed 20 or 30 houses to a buyer one day or even on a weekend. When I hear that I know that the agent does not have a clue what their client wants and the POOR client - imagine being taken to 30 houses that do not meet your needs. (Please do not get me wrong we have all had the client that has to see all of the houses between $100k and $300k themselves... but MOST buyers do not want to see everything.) Buyers need an agent that is going to listen to them and read between the lines - the old saying buyers are liars is not true, often times their wants and needs cannot be summed up in 25 words or less, we really have to py attention. Then once the agent knows what their clients need they have to do some research, such as calling the listing agent and previewing the houses.

All I can say is when you have a good agent you don't know how valuable they are until you get a "not so good" agent. You get what you pay for. There is definitely a place for flat fee companies, but they will never take the place of a GOOD full service agent.
1 vote Thank Flag Link Sat Sep 13, 2008
Hi Scott,
I appreciate your opinion, but I am very surprised. If I weren't as active on this site, there would be very little activity for the Wilmington area. I enjoy the input. I research 5-10 articles a day. I blog for my readers. I watch CNBC several hours a day. I very much have an interest in what is going on in my country. I may be wrong, but I think my questions have added a lot of value to this forum. If you are not happy with my input, please do no respond. Thanks...
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0 votes Thank Flag Link Fri Sep 12, 2008
Hi Scott, I'm not talking about our endorsing "discount brokers". I agree completely you get what you pay for. That's why I couldn't understand what all the fuss was about when large discount companies started showing up. Everyone acted as if their business was going to end. If you're truly good at what you do, put your clients needs first and produce results, then you have nothing to fear. When Foxtons came to our area, everyone had a bad opinion. Now they're out of business (at least in our area). I don't worry about discounters, you need to spend money in this business to be successful. But I do think a fee for service makes more sense. Get paid for the work you do. Cover your costs, make a small profit on each listing using a flat fee and have the opportunity to make a commission by selling it yourself. That model just make more common sense to me. I know I'm going to have 1 or 2 listings each year that just won't sell for one reason or another. They list with someone else at the price I recommended to begin with and that agent gets the commission. It drives me nuts. We could be reducing the cost to our clients because we wouldn't need to charge so much and we would still be making the same money (we'd be wasting less). Sellers would be less likely to flee if they already paid for advertising and marketing. Problem is most sellers just don't have the money upfront, they only get it from the proceeds of the sale. I just think there has to be a better way.... a way to reduce the cost to the sellers, keep our overhead lower and everyone wins. Just my 2 cents.
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0 votes Thank Flag Link Tue Sep 9, 2008
The problem is that Ralph here is using the Q & A board here at Trulia as a free marketing Billboard, which is not what it's designed for. It's designed for buyers and sellers to get PROFESSIONAL advice from professionals that are in the industry working everyday. As for the commission question, you always get what you pay for. ALWAYS. There are so many local nuances that are unique to each and every local community that you have to be actively working in the market to guide home buyers and sellers. You also have to spend money on each listing that you want to sell properly for your clients. If you have an effective formula in place that really works, it will take 1-2%(except maybe higher priced properties that will sit out there longer anyway) to effectively market and sell the property. Now, unless you're planning on being a volunteer and working for free, you won't be in business very long.

Discount brokerages and listing agents only taking 2% will not spend the money and effort on your listing that someone with 3% on the listing side will. It's just that simple. It's not enough to just put it in your MLS and hope that another agent in your area sells it for you. And that's what the majority of discount agents are doing. But it's not doing the right thing by their clients. You ALWAYS get what you pay for.

Doctors and attornetys don't work on commission because they truly are doing the same work. It's the same basic process, period. It's all relative because the higher the price of the home, typically the harder it is to sell, since the mortgage industry shake out. What you've got to ask yourself is..."In this market, where properties are sitting on the market longer, and buyers are a little wishy washy about committing and signing on the dotted line, do you want to have your property listed with someone that's going to spend more money on marketing or less?"
0 votes Thank Flag Link Tue Sep 9, 2008
There already are flat fee and reduced fee options, and there have been for years (although perhaps not throughout the country).
0 votes Thank Flag Link Tue Sep 9, 2008
Ralph, this is the one area of the industry I've never agreed with. I know I'll get blasted for this but the reality is what's the difference if you're selling a $300,000 home compared to a $375,000 home???? The commission! From a sales point of view, you're going to do the same marketing, advertising, open houses, etc.... for both. So why do we get paid more? On the flip side, if we kill ourselves trying to sell a home for six months, paying advertising, marketing and our time but a difficult seller and declining market keeps it from selling we get nothing. The seller moves on to another agent and we're left with large advertising bills and nothing to show for our time. If we expect to be treated like professionals, we need to start acting like professionals. Do doctors, attorneys, cpa's work on commission? I think fee for service will come, just not sure how soon.
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0 votes Thank Flag Link Tue Sep 9, 2008
i would love to see a 4% cobroke, here in NH we still see 2 in the buyer agent column. Commission is a negotiable part that is based on what market conditions will bear and how much work is entailed. with anything there is an up and a down, hot and cold and good and bad agents. the old addage you get what you pay for is so true in low cost models. to see a seller save $4000 on a commission but sold his house $16,000 below what he could have got is a great reason to see why we need experts to advise on current prices, sales and market conditions.
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0 votes Thank Flag Link Tue Sep 9, 2008
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