What is Digg?85 Comments
- gaberowe, on 10/11/2007, -4/+34anybody who capitalizes Realtor must be a realtor...
- inactive, on 10/11/2007, -8/+24HI MY NAME IS PATTY AND I'M YOUR AGENT!
I'm going to speak really loudly and get real excited about whatever over-priced piece of cr@p house I try to shove down your throat! Did you notice my makeup and perfume? I put WAY too much on. It's my way of trying to cover up the 45 pounds I gained after I gave birth to my kid. My husband then lost interest in me and now has sex with Thai hookers when he goes on business trips for his WIlly Lomanesque sales trips! Can I interest you in this split-level Colonial which has gone 500% in the past six months? The markets fueled by low interest, interest only loans which will entrap you like an 18th century negro south of the Mason Dixon Line!
-hi, I'm Patty! - dt40, on 10/11/2007, -6/+20OK, let's do a little math.
Let's suppose that you're selling a $1MM home. 6% of that is $60,000.
What's a reasonable hourly rate for a real estate agent? $200/hour seems fairly generous. So do the seller's and buyer's agents spend a total of 60,000/200 == 300 hours selling your house? Hmmm, that is 7.5 weeks working ONLY on selling your house. NFW are they spending that much time working for you in nearly all cases.
Heck, a rich dude could get divorced for less than that in legal fees.
Sure, real estate agents do provide value, but they are radically overcompensated for that value on an hourly basis. - Livewired, on 10/11/2007, -0/+12Commission is set at 3% for buyer's agent and 3% for seller's agent. If you're paying 9% to anybody, you need to do a little homework.
- dt40, on 10/11/2007, -2/+12Indeed $1MM houses do not sell overnight. They take a while.
During that time, how many hours is the real estate agent actually working to sell the house? It is definitely not full time on any given house. - trajomoreno, on 10/11/2007, -4/+14@dt40
A. If you list a home, you're only going to get the 3%, unless you bring in a buyer on your own.
B. The home will be listed for a good 60-90 days (depending on the market) before it goes into escrow (and probably spend another 45 days in escrow for a property like that). You won't work full time to sell it, but I would spend a good portion of each day trying to sell it (that's $30k in the bank when it sells!).
C. You're not even taking into account the support staff (showing agents, admins, marketing team, etc) that goes into the sale of a home. They get paid out of that $30-$60k as well.
Nobody wants to pay 6% of $1MM for anything, but they also don't want to spend every waking moment trying to move a piece of property on top of finding another property to buy. - inactive, on 10/11/2007, -6/+16Our first real estate agent.
- AstroZombie138, on 10/11/2007, -4/+12I personally think that the future of real estate agents will be to represent you through the legal process of the deal and that people will turn to flat fee brokers. So much searching is done online now that the real estate agent is going the way of the travel agent.
- Gottschalk, on 10/11/2007, -1/+8Digger, please.
- trajomoreno, on 10/11/2007, -1/+7The smart ones do invest.
- KenOh, on 10/11/2007, -2/+7"diggers"? Please, it's Diggers.
- Tmacman, on 10/11/2007, -6/+11Realtors HATE low cost real estate websites. They boycott showing website listed houses, and they are trying every legal and political maneuver they can pull off to squash this business model. But guess what Realtors? The genie is out of the bottle and your 6% - for doing next to nothing - ***** listing fee is about to become a dinosaur.
- Marc39, on 10/11/2007, -1/+5>>>Realtors are a class of people, making it a common noun, just like electricians, gamblers, scientists
Don't be so ignorant ,theblacknight. All Realtors are real estate agents but not all real estate agents are Realtors. Realtors is a proper noun; members of a specific trade association. You think if you bothered to give the definition of a proper noun you'd at least get it right. - laserjobs, on 10/11/2007, -4/+8There really is no reason to use a seller agent now you can list on the MLS for free in most states at Iggys House.
http://www.iggyshouse.com - jeet404, on 10/11/2007, -4/+8Hey I live in Madison Wisconsin...oh great article just dug it for Wisconsin lol :)
off topic digg down please...a little tipsy or something with random notes - Charlotte_Web, on 10/11/2007, -1/+5A lot of Realtors will refuse to show your house if it's listed with a service like this.
they're just boycotting the inevitable, though. It doesn't matter if they offer more value; the market always leans towards lowest cost. - Charlotte_Web, on 10/11/2007, -1/+5@tweekster:
My neighbors just sold their house. It was a starter home, but very well maintained, and with a lot of upgrades. At first, they tried to list it with a For Sale By Owner website. It sat there for three or four months, with very little interest.
Then they found a discount broker who agreed to put it on MLS (and do nothing else) for a flat fee, plus (IIRC) 1% if the house sold. Lots of people looked at it, and the house sold within three weeks.
I agree with you that the FSBO sites are garbage; however, getting listed on MLS is what's important. That's why I think that sites like iggyshouse.com are going to revolutionize the industry. - Iconwolf, on 10/11/2007, -1/+5Realtor - A good example of why many agents get the rap they do. I know a lot of cocky, arrogant, egotistical lawyers, doctors, and cops, but I don't see very many of them capitalizing their profession. It gives the illusion of being pompous and self important.
Secondly, yes they do provide a service, one that can save time, effort, and experience that can people from making certain mistakes. One that's well worth compensating for to some people, However, for the time, effort, and value of service that compensation is deemed by the majority to be far excessive compared to compensation of the time, effort, and value of other service professionals like a teacher or a fireman (it may, in fact, not be in some cases, but that's still the common perception). - nickdngr, on 10/11/2007, -1/+5you mean Domainer, i'm sure it's a proper noun...
- theblacknight, on 10/11/2007, -3/+7"Proper nouns (also called proper names) are nouns representing unique entities (such as London or John), as distinguished from common nouns which describe a class of entities (such as city or person)." [from Wikipedia]. Realtors are a class of people, making it a common noun, just like electricians, gamblers, scientists, teachers, professors, plumbers, lawyers, actors, etc. If you want to capitalize realtor, you need to capitalize all of those too.
- TDot1980, on 10/11/2007, -1/+5Actually, the way they want us to write it is REALTORS® because it's a registered trademark. Yes, capitalized.
- imcquill, on 10/11/2007, -3/+7Wow. Those figures are before they took off the 6%.
- juniorlikespie, on 10/11/2007, -1/+5maybe in places like madison wisconsin it is a good idea to list your own property. but in markets like l.a. or just california for that matter it really helps to have an agent. there's a reason the markets in l.a. is kind of insular. as someone pointed out most agents don't take the 6% it's usually 3% i think the benifits of having an agent far outweight the negatives. but even if you are gonna list your own property don't even dare trying to buy a property without an agent. remember a house is probably going to be one of the largest investments you'll ever make.
- hipRealtor, on 10/11/2007, -0/+3Actually, the +$600K market is extremely difficult and it truly is harder to sell high-end homes than it is to sell a $100K fixer to an investor. Which customer requires and expects more - the custom-fitted suit shopper at Nordstrom or a dude who needs a t-shirt at Wal-Mart?
- dt40, on 10/11/2007, -1/+4For the high end, I think it would be compelling to have a much more graduated fee structure. For example, on a $1MM house, have the commission be:
$10K flat fee
10% of anything over $900K that the agent gets for the house
Sell the house for $900K, they get $10K. Sell it for $1.1MM, $30K
This would much more effectively align the seller's and agent's interests. Steven Levittt's work demonstrated how the current flat fee structure does not encourage the agent to maximize the sales price but rather to sell it with as little time invested as possible. - nomojunkscience, on 10/11/2007, -5/+8The percent system is flawed which is why flat fee service is way better.
- fuzzynyanko, on 10/11/2007, -2/+5Century 21 recently released an ad basically saying "There are things agents can do for you that a computer never could", so I guess the websites ARE making an impact.
- dt40, on 10/11/2007, -1/+4A. Yes, understood. (Note from my first posting, “do the seller’s and buyer’s agents spend a total…”). The point is that that the total amount of time spent is nowhere near enough to justify the commission.
B. While there is lots of calendar time involved ,the agents are not working full time on the house sale during that time. They are only working a small fraction of their time on the sale.
C. Yep, there is some value added by those folks as well. Again, how many hours do they spent *actually working on the house sale* and to what hourly rate does this correspond?
I’ve read (sorry, cannot quote source…) that real estate agents 10% or less of their time on the aspects of home selling that directly benefits clients; the rest is spent on activities such as marketing themselves to future clients. If true, this demonstrates structural issues in the compensation structure of the industry. - corvin, on 10/11/2007, -3/+6"Realtors HATE low cost real estate websites. They boycott showing website listed houses, and they are trying every legal and political maneuver they can pull off to squash this business model. But guess what Realtors? The genie is out of the bottle and your 6% - for doing next to nothing - ***** listing fee is about to become a dinosaur"
The 6% gets divided between the buying and selling agent, which gets split again between the broker and the agent. So the agent is technically only make $1500 for selling a $100000 house. Note that the agent has to pay for all of the for sale signs, flyers, advertising, everything. And after the home sells and the agent gets their share, they have to put some away for taxes at the end of the year.
So, if an agent sells one house a month that's $18000 a year they're making. And that's before taxes or spending money on marketing.
And I can't believe you say they do next to nothing. I know a Realtor out here that works 14 hours a day 6 days a week, and he only gets paid when he makes a sell. So maybe you had a bad experience with a Realtor, but that's your fault for not doing your research and asking the Realtor questions....
It's sad that people have such a bad perspective on this career.
"A lot of Realtors will refuse to show your house if it's listed with a service like this."
Yes a lot of inexperienced agents. Because if they show you the house there is a chance you will buy it and they will make a commission. Like I said, I personally know an agent, and he'll show his buyers anything they want to see. It all depends on whether you hire a good or bad agent. - joaob, on 10/11/2007, -3/+6dildoreilly completely ripped "Hi My Name is PATTY" off from another digg
http://digg.com/business_finance/Bernanke_Fannie_Freddie_threaten_economy
plagiarist - norman619, on 10/11/2007, -5/+8You gotta love it. The new realter commercials preaching how selling your own home is a bad idea and how better off you are selling it through a realtor only add weight to these findings. I never really understood what teh big deal was in selling your own home vs. having some realtor sell it for you and take a percentage. The only thing they have access to that you don't is their listing service. The commercials make it sound like brain surgery. LOL!!!
- yunus, on 10/11/2007, -2/+5I used a Realtor when I bought my townhouse. It was my first home purchase and the Realtor offered some good advice on things to look out for, how to spot things the seller is likely trying to hide, informed me on the little things to look for that many first time home buyers would overlook, like the condition of the plumbing, roofing, water damage, making sure in the contract it clearly states what appliances convey. The best part was she was not afraid to say, "You dont want this house we can find a better one for a better price." Also she gave me good contacts of reliable people to get things fixed in the house when they broke. I now rent that home and still use the handyman she recommended for repairs. I used her carpet guy to replace the carpet when I moved out.
Realtors and Travel Agents are different. A vacation is something that requires a plane ticket, hotel, rental car, maybe tickets to local attractions. If you make a bad decision it lasts a week, if you buy the wrong house, it can cost you for years to come. Having a Realtor wont stop you from buying the wrong house but a good Realtor can really help you make an informed decision. - cdthompso1, on 10/11/2007, -1/+4The problem with real estate agent fees is proportionality. In many industries, commission rates are on a graded scale, with higher ticket items paying a lower commission rate. Real estate is not this way, and it is economically unjustifiable. Think of it this way: does it take less effort to sell a $1MM home (6% commission split between two agents: $60K) than a $100K home (6% commission: $6). The answer is a resounding no. Real estate agents, who have no authority to offer legal advice and primarily act as a marketer for a property, perform a couple simple services: market analyses to determine what other houses in your neighborhood have fetched recently, hold open houses, and, through what some would argue is a monopolistic grip, serve as the gatekeeper to get your home listed in the coveted MLS. Let's look at where technology can affect these three services. Market analyses are basically database searches; open the database, and this becomes an easy task. Holding open houses primarily entails having a graphic designer (maybe) put together a nice brochure listing the basic features of your home with some flattering pictures of the highlights. Listing a house in the MLS is truly the only piece that, today, real estate agents can do that you generally cannot do yourself, but even that is changing with for-sale-by-owner services, Iggy's House, and agents like this guy in the Washington, DC market (http://www.100dollarmls.com) who realize the game is changing.
But as we await the changes, please remember that real estate agents are business people and will negotiate their rates. They would simply rather make 2% on a house that than see their closest competitor down the street get that 2%. - Tweekster, on 10/11/2007, -1/+3If you think just dropping a property into MLS is how it gets sold you are sadly mistaken
- maseratij, on 10/11/2007, -0/+2Here is another good article that was published by the NYT earlier in the year. This details what is wrong with the commission structure and where a real estate brokers interests are aligned in a typical transaction. ( Also details the development of redfin and buyside)
http://www.nytimes.com/2006/09/03/business/yourmoney/03real.html?ex=1339041600&en=90b3f26c1fb83b0c&ei=5124&partner=permalink&exprod=permalink
Conceding the point above, as a real estate agent and Realtor, there is a lot that goes on in the business life of a real estate agent that goes under the radar. Several of the options have been mentioned above. Due diligence includes the historical interiors of 1,000's of homes, not just the database. The database sucks some folks enter rooms as bedrooms, and include sq ft in a finished basement, others inflate the condition of the home, omit negative exterior features in photography. A full time professional Realtor can eliminate 25% of most listings by "reading the data". The interior condition of homes though is the highest asset a real estate agent offers. That is how an agent knows something better is out there.
As an agent I agree that the fees are exorbitant, it is the Brokers like Coldwell Banker, Sotheby's and Regionals that feed the most off the system. They easily suck 50% of all the fees right off the top. A fee based system might work, my concern would how all the Pro Bono stuff would be dealt with. Would there be charges for Market Analysis, Data extracts, home showings, marketing dollar compensation/
The system is working and it would change quicker if the larger brokers were weakened somehow, otherwise just like the power elite in an industry ie. Autos, Oil, Telecommunications they will protect the status quo and inhibit innovation. - Crazytree, on 10/11/2007, -1/+3Buying and selling a house is a complicated legal process and often ends up in court.
Having a Realtor walk you through the statutory disclosure requirements, find you a a a loan, etc. can save you a lot of money down the road.
Plus you can always point the finger at your Realtor if you get sued. - harlowsmonkeys, on 10/11/2007, -4/+6Taking a look at Iggy's House, they explain how they do it for free, and their model actually makes sense. The people behind it have another service, aimed at buyers, rather than sellers. That service acts as a buyer's agent, and so gets a commission from the seller. They give some of that to the buyer, keeping the rest for themselves. They believe that sellers also tend to be buyers, and so by helping sellers get their houses sold, those people are then potential users of the buyer's side of their business, where they do make money.
- brandiniman, on 10/11/2007, -1/+3Yes but how did your house sell compared to your neighbors with fewer or more features of their home? You haven't a CLUE. It's called a CMA, Comparative Market Analysis and an agent and pull one up to make sure you don't short-sell the home. I hope you didn't...
- Tweekster, on 10/11/2007, -1/+2This is actually pretty common knowledge. A realtor will get your house sold faster on average. and often times for more money. BUT if you are willing to let it sit on the market, you will most likely get your price, eventually.
That study basically says that.
Madison is a flooded market, it caught the housing boom at the end, there was a lot of new construction and the market is saturated with homes. My sister is currently trying to sell and the term "buyers market" does describe the situation.
For many sellers price is a secondary factor, speed is the primary. Price determines speed.
2 years ago in madison, you could simply put a piece of cardboard up saying "For sale" and you would have a half dozen offers in a week. - rorys32, on 10/11/2007, -0/+1Just to illustrate my point on how the MLS data isn't some closed off secret: http://www.rorysiems.com/search.asp
- morninglorii, on 10/11/2007, -1/+2also, please put a landlord hat on the landlord.
- ElGstr, on 01/09/2009, -0/+1Why Don’t Realtors Support A Real Estate Degree For Realtors?
http://digg.com/business_finance/Why_Don_t_Realtor ...
Maryam, I digg getting lost in women's breasts. - hipRealtor, on 10/11/2007, -1/+2 "2 years ago in madison, you could simply put a piece of cardboard up saying "For sale" and you would have a half dozen offers in a week."
Exactly - and this study was conducted during that Seller's Market time. The family's cat could sell a home back then, it was just that easy. People were camping out for new homes here in California, for the love of pete!
::sigh:: Those were good times :D Fast forward to today, sellers are paying people to buy their homes, in many cases.
In a Buyer's Market, a seller needs all the exposure, expert advice, and good old fashioned hard work (door-knocking, cold-calling) to get their home sold or it'll languish with the rest all drowning in mortgage payments they can't afford anymore in a sea of inventory. - schwnj, on 10/11/2007, -4/+5When selling a house by myself, I've had realtors flat out lie to me and say that it was "illegal" to sell without a realtor, or that it was "illegal" to offer less than the standard commission. I'm sure not all are like that, but those realtors' behavior made me vow to never use a realtor again (and, in fact, I am now selling another house and I am going to great lengths to get the buyers to go without an agent (I will reimburse them for a lawyer's fees, and kick in a few thousand for their trouble).
- trajomoreno, on 10/11/2007, -14/+15The fact of the matter is that people who use a Realtor are hiring them for a specific purpose. Whether it is due to a lack of time, experience with real estate practices (a surprisingly big deal when selling a home), or in hopes of making more of a profit from a lower purchase price or a higher selling price, most people weigh the options and consciously decide to employ a Realtor for their real estate investment needs. Time still equals money, and if I can hire someone to do something more quickly than I can for a fee, then I will do it. Often times, your listing agent will provide services such as home staging, an extensive advertising plan, and market research data at no charge above their fee (which is only 3% for each side of the deal, in most cases). Realtors are business-people, and they do earn their pay.
Here in California, the market is extremely competitive. A good Realtor is well-worth the investment. - sapan, on 10/11/2007, -3/+4One more thing I'd like to add, do you really think that a Realtor (I am pointing at the flat fee ones) who can't even negotiate his or her own commission can really negotiate a real estate deal for you? If you think that, you are kidding yourself.
- rorys32, on 10/11/2007, -2/+3I'm a real estate agent, and I regularly deal in properties above the 1M price range, as well as above the 2M price range.
Some things that have been mentioned here by the diggers are great comments. The 6% is divided in half, 3 to buyer side and 3 to the seller's side. The reason I repeat that, is because before the agents see that 3% it is yet divided again. It can be divided as much as 50% more, leaving the agent with 1.5% to pay taxes, insurance, and overhead and keep whatever may be left over. Most agents work strictly on commissions, and if they do a bad job their seller client can go list with another agent. This ensures that the bad ones get better, and the better ones reap the larger share of the business. Critics can breathe a heavy sigh of relief knowing that the rejects slum around the bottom of the market share and make the least amount of money.
I'm in Southern CA, and I have to guess the market is at least 100 times more completive here than in Madison Wisconsin. There are 22,000 licensed agents in my county alone. Anyone choosing not to use a real estate agent, now is drownining in the competition against thousands of these people who do it full time, and are trying to sell their buyer clients something that IS listed with another real estate agent simply because that is the easiest way to do it.
If you want to search the MLS here, you can see that the information is freely available. Agents aren't trying to hide their information is some secret conspiracy-based database designed to keep it out of the hands of the consumer. The only reason that an agent would try to do that is because someone gave them bad advice about their website, and decided to turn it into a lead generation machine.
Websites have helped evolve our business, agents who don't understand them are getting increasingly frustrated, and they will retire. I use the internet to my advantage to market the hell out of listings.
At the end of the day, the reason that people want to list their home with a full-service real estate agent is because they want their home to have a high marketing profile. The reason people go to starbucks in droves, is because starbucks is on every corner. A full service agent tries to do the same thing with your listing, by putting out into as much marketing as possible. This includes getting it onto as many high-ranking websites and high traffic websites as possible. - brandiniman, on 10/11/2007, -2/+3My advice for Indian people, stop cooking curry and you'll sell your house faster.
- Tweekster, on 10/11/2007, -0/+1Well I dont know how the mortgage situation is around madison, but housing prices are actually quite reasonable in Sun Prairie and other areas around madison.
Granted there was a bit of a housing boom and prices got driven up but they have adjusted and even at the "high" points were pretty reasonable for the type of people looking to buy. -
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