Question Details

Richard, Home Buyer in Philadelphia, PA

Realtors, Prepare to Lose Your 6 Percent!

Asked by Richard, Philadelphia, PA Wed Jun 4, 2008

That's the title of an interesting, though fairly vitriolic editorial by Jeff Jarvis, available online at:…

It's my belief that the truly talented realtors will continue to make similar incomes, but that they'll have to do it, in part, by handling a larger number of transactions in a more efficient manner. Further, I think that the increase in competition will come largely from existing Realtors who use the opportunity to create and implement more innovative and efficient business models within the industry.

Here's to hoping that a decrease of "easy money" will get rid of the bad seeds, for everyone's sake.

What are your thoughts on this editorial, and the likely effects of NARs losses in court?

Help the community by answering this question:


We could not agree more - we've been providing an alternative model for clients to market their properties through the MLS while maintaining their 'by owner status' and taking total control in their sale. We have found that our listings are selling faster with less time on market because sellers take a pro active approach to selling their homes.

The 6% commission is a thing of the past, its a matter of educating the general public that they now have an alternative method to selling their homes. Great article.
2 votes Thank Flag Link Wed Jun 4, 2008
Richard (,

My mom and dad taught me to believe half of what I see and none of what I read. That lead me to understand that unless a diatribe is written with a balanced perspective for both sides of the story, the writer has an axe to grind, which leads them to do exactly what they are complaining the other side does. That is, speak not the truth, speak not about all the facts, generalize to the point of prejudice, denigrate, and generally state the sky is falling, or state that the writer has miraculously figured out how to stop the sky from falling (the one that wasn’t falling in the first place). Fact: there are no facts about the future, yet predictors like to write about the future as if it were going to be fact, hoping and praying that everyone forgets what they wrote about when the future doesn’t turn out the way they predicted. Wouldn’t it be considerably more valuable to the rest of us if instead of writing about the future, they helped create it.

Markets, that is free markets, will decide for themselves, what the outcome is. Everyone gives way too much credit to NAR for the current “marketplace” of buying and selling of homes. Bad apples in this business waste away into the night, good apples do really, really well, and their clients come back to them time and time again, not because they are forced to, but because they believe the good apples create good results, better than the results the clients could do on their own. Hmmm, you could say that about almost any profession couldn’t you?

I’ll ask one last question, does the writer write about anything optimistically? I read his bio and 20 of his latest articles. I think the score is 19 pessimistic, against 1 sort of, almost, kinda close to being somewhat middle of the road. Oh, yes, and by the way, all predict the future…anyone want to keep score so that we could trace the reliability of the source?


3 votes Thank Flag Link Wed Jun 4, 2008
The article is rife with half truths and vitriol, draws insupportable conclusions and lumps the semi professional in with professionals to draw generalized conclusions about the whole based on the part. There is much more to this business than access to information. Knowledge and experience across a spectrum of skill sets will continue to make our services valuable.

Further, the trend in the business has been that cut-rate services have either gone out of business, or adjusted their compensation upward to stay in business. Moreover, they have no motivation to engage in marketing activities that involve expenses beyond the bare minimum. As in any other business, you get what you pay for.

I'll add as well, that our commissions are not steep, as stated. By comparison to the 20% + that literary agents, and those who represent actors and athletes demand, 5%, 6% and even 10% is cheap.

I also feel that anyone who is not ready to give up 20%, 30%, 50% or more of their income has a lot of gall asking me to do so. After all, I'm pretty certain that what they do is not worth what they are paid.
3 votes Thank Flag Link Wed Jun 4, 2008
That is a very interesting article written by Jeff Jarvis. It seems to be kind of a rant with all the "ha has" and profanity. Maybe he has had a bad experience??? The facts are the facts... 85%+ of all home sellers/buyers feel that their knowledge about the process of selling (or buying) is inadequate and CHOOSE to hire a realtor.

What the article implys is that the public's limited access to information through an MLS type database is what sets a Realtor apart from a home owner being able to sell their own home. Jarvis suggests that once all MLS information is made public (this will be changing in the near future) there won't be any need for a realtor. I agree with Jarvis that some agents will no longer make their 6%... The hobbiest real estate agent will go away as the information becomes more readily available to the public being that was all they had to offer.

Information is out there, always has been, always will be... where a realtor makes their money is by pricing the home effectively, marketing the home and obtaining a buyer. Then the work REALLY begins by getting that contract to close. Most of the contracts I see are almost 20 pages, full of loopholes, contingent timeframes and actions that must happen to keep that agreement alive. Did I mention liability??? Our contracts are constantly changing and there is more an more knowledge an agent must have. Foreclosures, distressed properties and such are becoming more main stream in real estate which creates a need for even more knowledge to get those homes sold and closed. There will always be a place for a realtor... a "professional" in the field. If it were only about listing and marketing a home... NONE of us would be paid. I will see you at the CLOSING table!
1 vote Thank Flag Link Wed Jun 4, 2008
The article is pretty vicious especially the part about "It couldn't happen to a nice group of people." My experience with now 8 realtors over the course of my lifetime has only had 1 positive experience, 6 with little or no value added, and 1 truly horrific one so I'm not running at 90% his article states.

My only real comment is with Jim Johnson's comment below. The comparison to sports agents is ridiculous, not exactly as ridiculous as when someone says, "You wouldn't operate on yourself." but still ridiculous. Nearly everyone in the country will buy/sell a house, usually more than once, a miniscule fraction will be successful enough at sports to need an agent and even less that make any real money.

Also, this, "I also feel that anyone who is not ready to give up 20%, 30%, 50% or more of their income has a lot of gall asking me to do so. After all, I'm pretty certain that what they do is not worth what they are paid."

This is a lot of what is wrong with this country today. Everyone has a sense of entitlement. He's entitled to his full commission because it was there in the past, and if competition comes along, well they have a lot of gall. If someone can do what you do, or find many other people that can do what you do, then they don't have any gall asking you to take less money for what you do, you're replaceable.
1 vote Thank Flag Link Wed Jun 4, 2008
A good experience real estate professional is now more than ever worth their weight in gold so to speak. Without a well experienced realtor and real estate broker working for you and promoting your property, chances are you will not ever sell your property without the realtor.
1 vote Thank Flag Link Wed Jun 4, 2008
I typically wouldn't waste my time answering this but perhaps you had a bad experience with a Realtor? Like any busienss there are some who work very hard and others who do not. Those who work hard and in the best interest of their clients, will succeed. The majority of my business is repeat and referral business.
Your perception that realtors receive 6% is a bit off. The norm is 2.5-3% to the broker and than the agent/broker split.
Like any product, housing prices follow the economic laws of supply and demand. What type of business are you involved? Are you willing to take a pay cut?
0 votes Thank Flag Link Sat Dec 13, 2008
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0 votes Thank Flag Link Mon Oct 27, 2008
Keith Sorem, Real Estate Pro in Glendale, CA
Real estate sales is the same as any other industry. A 30% decline in sales will reduce the sales force by 30%.
0 votes Thank Flag Link Mon Oct 27, 2008
I'm sorry but I had to laugh at the title. I find it so funny when someone who is NOT a Realtor puts their hand into my pocket or tries to tell me how much I should make for my hard work that "I" do! Do I call up my plumber and say "hey Mr. Plumber be prepared to lose your $150 per hour that you charge for fixing my toilet" or do I call my doctor and say "yo doc be prepared to lose your nice big home that you purchased for saving lives." Until you walk a mile in my shoes, please do not tell me how much I should or should not make. I went to school, I earned the credits and I passed the state exams for both Realtor and Broker. I take my continuing education classes, I work in my client's best interests to make sure I get them the best possible deal I can get them. I put out all of the fires that come up during each and every transaction. I solve all of the problems that arise right before settlement. I work my butt off to earn every single dollar that I make. Perhaps I should pick apart what this Jeff Jarvis does and tell him how much money he should make for his easy job.
0 votes Thank Flag Link Mon Oct 27, 2008
My guess is that the folks paying those huge commissions are the same folks who have seen a 200-400% increase in the value of their properties in the last 10 yrs. Now they want to complain because it cost them more to sell it. I think this guy should have gone back to bed and gotten out the other side. I agree with an earlier post who said, "walk a mile in my shoes". Put a few $80 a tank trips on driving buyers from one house to another for 6mos and then have them say " we are going to wait, because the economy is so bad". Working with sellers who refuse to take my suggestions to make their homes more pleasing to potential buyers, who insist that asking another $10K for their home won't hurt their sale at all. I have been in sales all my life and I have worked harder, put in more hours, all for LESS money than ever before. Why? Not because I am stupid, but because I need a flexible schedule AND because I do like helping people. Everyone wants a bargain these days, fine, let those who want to do it themselves, more power to them. My business comes from happy clients and I do everything in my power to keep them that way. If you hire an agent to sell/buy a house for you and they aren't doing their job, its simple, change agents!
0 votes Thank Flag Link Wed Jun 4, 2008
Ultimately - what this boils down to - and i've said this before - is that technology and the way people access information is changing the real estate industry (about time!).
Does the current commission model provide long-term viability for the agents in the market today? no, it does not. That does not however mean the agent is a dinosaur on the verge of disappearing.
What that does mean - is that agents will need to learn to adapt to a changing market like everyone else. Buyers and sellers are changing the way they approach these transactions. The agents who can make similar adaptations will be successful - and a change in the commission model will ultimately have very little impact on them.
The people who are going to feel a crunch, are the ones who want to run around and continue to do business as if it's 1988 - not 2008. There have been tremendous advances in technology that should allow a capable agent of reducing overhead considerably. Those who have already adopted it - are enjoying much larger profit margins today then those who have not.

The bottom line is the market is changing whether people like it or not. If they can remain change with the market, they will be fine. If they cannot - they will not be fine. I'm okay with that.

The reason why people get so frustrated with this, is because buyers and sellers are driving these changes. We're looking for ways to conduct these transactions faster, easier, cheaper. It's the agents on the whole that still want to run around conducting themselves "as they always have". Well - that's not good enough anymore. There's a better way to do things.
0 votes Thank Flag Link Wed Jun 4, 2008
Wow! What a sexist blog! He assumes that all real estate agents are overpaid women. Further, he obviously does not understand what a Realtor goes through for anyone transaction. I'd like to invite him to spend a day (that begins at 5AM and often ends at 10PM) in my shoes.
Web Reference:
0 votes Thank Flag Link Wed Jun 4, 2008
The Hagley G…, Real Estate Pro in Pleasanton, CA
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