Art

Chris..... worn out....you never addressed the questions...got tired of askiing...

Tman... thanks for the backup. Nicely put ! - Mon Aug 4 2008, 13:47

Chris, you've worn me out. I've layed out my thoughts and do not expect full acceptance from realtors nor the general public. I'll let others review them and make commets as they see fit. All the best in your career ! - Mon Aug 4 2008, 10:06

Chris, if you feel that a $25,000 fee is appropriate for the level of work for a $420,000 house sale how would you justify $39,000 for a $650,000 house ? Is there $14,000 more work effort to sell that more expensive house. How about the $1M homes at $60,000 fees ? I know you guys do alot behind the scenes...so do school teachers and other jobs where people work all sorts of hours and weekends.

Lets get real...... if the real estate industry was a fair player not looking for the largest pay check we sellers would see a fair flat fee for a home sale. Not the percentage of home value pricing methodolgy that drives up commissions and loss of owner equity. Again the industry needs to reinvent itself or risk losing market share to discounters like Redfin and others. Hope you and others can lead the change with the vast amount of new technology coming online to reduce your time effort and fee charges. - Sun Aug 3 2008, 15:31

Well, reading all of this has been interesting. Read a lot of discussion on the value of full service realtors. I agree their service is very beneficial but at what cost.

Tony's example below of a $420,000 home earning a $25,200 commission begs the question how much service am I getting for $25K ? If realtors are getting paid $100 per hour which is way more that I make, the $25K fee would equate to 250 hours of realtor assistance. I have bought and sold five houses over the years and I can't think of any of my agents that spent 250 hours or even half that much time working with my property.

If agents averaged $50 per hour which is still more than most Americans earn they would need to work 500 hours to sell a house and earn $25K. Thats 13 forty-hour weeks. If we bounce the price of the house to $650K it now takes 780 hours to earn the $39,000 commission or 20 forty-hour weeks.

I am sure that I'll hear that it is split four ways and the individual agent gets 1/4 of that. Understand that ....but the real estate industry has determined that my sales fee should be split four ways equally. A business model that drives up the sales fee. In my work world that sounds like worker bee gets 50% and overhead boss get 50%. This need to pay a whooping 3% to overhead has drived up the cost of selling a home. I don't mind the agents making their piece but managemet is given too large a share.

Realtors answering this post have dutifully defended their side of the 3% commissions and their work effort which I still debate doesn't equate to 500 hours of dedicated work to one home or buyer in my example above. But how do you defend the other 3% of the commission going to management....What are they doing for each property listing or sale. If the answer is they provide office space and pay for heat perhaps we need to look at a business model where agents work from their homes all the time and eliminate the management fee. Seems REMAX has a decent business model if I understand it correctly. Realtors pay a flat fee to REMAX for office space. With far less overhead to pay you would hope the REMAX agents could offer lower fees to customers and come down from the standard 6%. But they don't....they see it as a way to keep the status quo and make bigger profits.

I believe the industry needs to reinvent itself to better serve customers at far lower costs. If not, I believe the 10 million realtors will have the same fate as the 10 million travel agents we once had on every street corner. Watch out .....the real estate equivalent of Expedia.com and Travelocity.com is fast approaching and it may be Redfin or similar. - Sat Aug 2 2008, 22:07

VA real estate regulations authorize a sole proprietor (non-broker owner), corporation, LLC, partnership, or association to obtain a real estate license. To operate this real estate firm the company would also have to meet the VA business establishment requirements and also have a principal broker.

Once this is established am I correct that real estate commissions would be paid to the real estate firm listed in the sales contract. The firm would then make payment of salary, commissions, office expenses, marketiing expenses, etc. as needed. Resulting profit would be payable to owner(s). In this case the owner is a sole proprietorship/LLC (non-broker owner).

I have contacted the VA Real Estate Board and a local real estate association. Both professional groups seem to be stumped by the question. Before I hire a real estate lawyer I wanted to gets some broker/agent opinions. Thanks for your comments ! - Wed Jul 30 2008, 10:11

Mb, I am thinking about using ClickIt also. Advantage is that your dealing with a very well known company (Century 21), you can get a professional C-21 sign, flyer box and lock box. Your on street presentation will look very professional and you get the most important piece....the local and national MLS marketing power. I have a beach home about $1M value......thats $60,000 realtor fees or maybe a little less if using a realtor. I just can't see paying half of that (3%=$30,000) for a realtor to type my property stuff into a MLS and hope that a buyer representative will bring a buyer. I'm OK with paying the buyer rep 2% or 3% to bring in buyers.. I have sold three homes myself with help of buyer reps and they bring the state approved contracts and I have a lawyer review it to protect myself. A lot cheaper than paying that first 3%

To qualify a buyer simply ask that they submit a bank letter of prequalification or preloan approval with their contract.

I see a alot of talk about realtors can get you 12 %, 15%, 20% more than selling it yourself and they always quote their professional associations. I would certainly not expect the Natl Association of Realtors to say anything differently. They are protecting themselves and their high paid commissions. No one has offered up a disinterested third party study of this realtor friendly claim. If so let it be posted here.

The future of the 10 million Realtors is the same as the 10 million travel agents we once had. The internet has shown that their services are overvalued and sellers and buyers are willing to do extra marketing and searching online vs paying full 6% commissions. The real estate equivalent of Expedia.com and Travelocity.com is coming around the corner.

No disrespect to you agents, but it is just that the real estate industry is on the verge of great change to the benefit of the consumer.

Mb get yourself a good team - lawyer, appraiser, banker friend and you'll do fine with flat fee listings as long as they market your property on the local and national MLSs and you're willing to pay the buyer rep a 2%-3% commission for bringing you buyers. Good Luck ! Art - Thu Jul 24 2008, 22:00