Real-Estate Commissions Could Be the Next Fee on the Chopping Block(wsj.com)
wsj.com
Real-Estate Commissions Could Be the Next Fee on the Chopping Block
https://www.wsj.com/us-news/law/real-estate-commissions-could-be-the-next-fee-on-the-chopping-block-4d8a68b
24 comments
We fired out first agent, he sucked. The jaggoff tried strong arming us into dropping our listing 20k because we didn’t get an offer the first weekend. He tried strong arming us into striking out the repair procedure clause on a purchase offer on a house with obvious signs of subfloor damage due to a water leak on a bathroom. Wanted to argue with me, a man with years of experience in plumbing, on the topic even.
Our second (seller) agent was a godsend. She managed to get a <24 turnaround hour repair after I fell through the ceiling in the kitchen to keep our inspection on sale on track. (Someone neglected to nail down a beam in the attic…)
Our third agent (buyer) saved the day, we woke up January 1 and our dream home went off market and we’d booked a trip for January 2 to visit the home 5 hours away. He tracked down the original owners and arranged for us to visit the now off market house, ultimately getting the owners to sell after they decided to throw in the towel. He also handled all the insanity while we prepared our move from afar.
If you’re a cash-investment buyer I’m sure a marketplace with minimal legal fees is the ticket. If you’re a random family stressed to death by the ordeal, I don’t necessarily mind paying the fee.
Our second (seller) agent was a godsend. She managed to get a <24 turnaround hour repair after I fell through the ceiling in the kitchen to keep our inspection on sale on track. (Someone neglected to nail down a beam in the attic…)
Our third agent (buyer) saved the day, we woke up January 1 and our dream home went off market and we’d booked a trip for January 2 to visit the home 5 hours away. He tracked down the original owners and arranged for us to visit the now off market house, ultimately getting the owners to sell after they decided to throw in the towel. He also handled all the insanity while we prepared our move from afar.
If you’re a cash-investment buyer I’m sure a marketplace with minimal legal fees is the ticket. If you’re a random family stressed to death by the ordeal, I don’t necessarily mind paying the fee.
I used different agents for different transactions and I can tell you that different agents offered wildly different services. There were agents who I felt really earned their commission and agents where I thought to myself, afterwards, that robbery would have been fairer.
Yeah, because lawyers are free.
There is already a marketplace for private sellers: https://www.forsalebyowner.com
There is already a marketplace for private sellers: https://www.forsalebyowner.com
I've never paid a real estate lawyer anywhere near what an agent demands for a fee.
Real estate attorneys are flat-rate for the transaction. Around $500, possibly a doc prep fee on top of $50-$100. If your employer offers legal services as a benefit home purchases are often included.
1. I've used https://www.homie.com/ (Mountain West) Perhaps there are other no-agent marketplaces where you live.
2. Look for "flat-fee" realtor services. They will legally be your realtor, post on MLS, but you have to do the legwork.
Both of these have service fees, but hundreds of dollars, not thousands/tens of thousands.
2. Look for "flat-fee" realtor services. They will legally be your realtor, post on MLS, but you have to do the legwork.
Both of these have service fees, but hundreds of dollars, not thousands/tens of thousands.
Sounds like you got a shit agent which isn’t so crazy since it’s not terribly hard to get a license.
If your time is worth $0 then sure, maybe FISBO or your private marketplace will work for you but I think you’re discounting the work involved, the value a good agent provides, and how beneficial it is to have a non-emotional party between you and the seller/buyer.
If your time is worth $0 then sure, maybe FISBO or your private marketplace will work for you but I think you’re discounting the work involved, the value a good agent provides, and how beneficial it is to have a non-emotional party between you and the seller/buyer.
The seller won't be 6% richer. It's unlikely they'll capture the entire fee. Still, the seller and the buyer splitting 6% is a lot of money.
It's absolutely insane that the realtor cartel has managed to maintain 6% fees in light of the internet and skyrocketing house prices. I'll vote for any politician who takes steps to breakup the cartel and empower the middle class to buy and sell homes without getting ripped off.
They're the worst parasites, but they've rigged the game so that people pay tens of thousands of dollars in commissions for someone to do a couple hours of paperwork and tell them whatever they need to hear to close the sale.
They're the worst parasites, but they've rigged the game so that people pay tens of thousands of dollars in commissions for someone to do a couple hours of paperwork and tell them whatever they need to hear to close the sale.
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My dad is an agent. He works with foreclosed homes, estate sales and other complex sales. He gets a lot of business referrals from lawyers.
Just talked with him about an estate sale where he had to get 17 signatures from various heirs to sell a house. One of the heirs was a 90 year old aunt of the original owner. The aunt had died during the real estate transaction which meant my dad had to track down her 5 children since they were now somehow part of the transaction.
In another sale, he had to sell off a bunch of farm equipment that owner and buyer wanted nothing to do with and that he couldn't find a way to deal with (without just eating the cost of having it scrapped)
In another one he had to navigate a three-way sale where a buyer also wanted the abutting land that a second owner was willing to sell but only to this buyer and it involved money in escrow for survey and sub parcel fees and multiple properties in limbo while three parties all worked it out.
For a lot of real estate transactions I imagine the premise of this article is true. But there is certainly value that can be added from a good agent.
Just talked with him about an estate sale where he had to get 17 signatures from various heirs to sell a house. One of the heirs was a 90 year old aunt of the original owner. The aunt had died during the real estate transaction which meant my dad had to track down her 5 children since they were now somehow part of the transaction.
In another sale, he had to sell off a bunch of farm equipment that owner and buyer wanted nothing to do with and that he couldn't find a way to deal with (without just eating the cost of having it scrapped)
In another one he had to navigate a three-way sale where a buyer also wanted the abutting land that a second owner was willing to sell but only to this buyer and it involved money in escrow for survey and sub parcel fees and multiple properties in limbo while three parties all worked it out.
For a lot of real estate transactions I imagine the premise of this article is true. But there is certainly value that can be added from a good agent.
Exceptions are exceptional
In NYC, the commission for sales is about 6% and 1-2 months rent for rentals. So I would welcome this.
Would this case affect rentals?
It should, as the rental fees affect the lower and middle income people (who rent) more than owners and buyers.
Paying someone 12-15 percent of year rent for doing absolutely nothing is borderline criminal.
It should, as the rental fees affect the lower and middle income people (who rent) more than owners and buyers.
Paying someone 12-15 percent of year rent for doing absolutely nothing is borderline criminal.
In most states you can go with a fee for service broker. We did that when we sold our last house. We paid a reasonable fee for an MLS listing and got to writeup the whole thing ourselves. Most real estate agents do a cursory job of that, and often do it incorrectly.
As long as you understand you're advertising to real estate agents and not buyers, its easy to sell a house. They need to see from the listing that they won't have to do any work to sell the house other than show it to a client. We offered the standard commission to the buyers agent.
We still had to get an agent to buy, though. Couldn't find a good one, so we held our nose and did the work ourselves, using the agent for house access.
As long as you understand you're advertising to real estate agents and not buyers, its easy to sell a house. They need to see from the listing that they won't have to do any work to sell the house other than show it to a client. We offered the standard commission to the buyers agent.
We still had to get an agent to buy, though. Couldn't find a good one, so we held our nose and did the work ourselves, using the agent for house access.
Why wouldn’t the sellers provide access to the house, it seems odd that the buyer side would handle that
Leasing agents are worse here in Romania.
They will take private listings and put their watermark on the photos and list it under their own number.
When you call them, they have to call the landlord to arrange a showing. Then we both stand outside the apartment waiting for the landlord to show up. Basically they're a third wheel in the whole transaction.
Half the time the thing is already leased and they didn't take it off their website.
On top of it all they take the commission from the buyer. It makes no sense.
At least leasing agents in the US do a lot more than playing phone tag with the buyer and the seller.
They will take private listings and put their watermark on the photos and list it under their own number.
When you call them, they have to call the landlord to arrange a showing. Then we both stand outside the apartment waiting for the landlord to show up. Basically they're a third wheel in the whole transaction.
Half the time the thing is already leased and they didn't take it off their website.
On top of it all they take the commission from the buyer. It makes no sense.
At least leasing agents in the US do a lot more than playing phone tag with the buyer and the seller.
Do they though? The last time I used a real estate agent they suggested a variety of properties that they had "personally looked at". One of them turned out to be an empty field. The photos were all renderings or depictions of what could be built on the land, and that tidbit was buried in an obscure part of the site. It was clear the agent had never been there and had no idea.
That would be wonderful but doubt that is happening. Real estate agents will fight this tooth and nail.
They make soooooooooo much money with current arrangement.
They make soooooooooo much money with current arrangement.
I would love to get into this field to disrupt it. The whole system is antiquated.
I believe it would take a lot of capital to kick it off, mainly trying to establish a 2 sided market place. The whole multiple MLS entities (per state) all seem to be cartels and realtors are scared off them (as they don't want to be booted off).
I've spent considerable time thinking about ways to create a wedge (I walk my dog a lot!), but it's hard without creating another MLS clone.
Can't read the FTA as it's pay-walled and archivePH thinks I'm not human.
I really don't understand how this can operate in a capitalistic/non-monopoly-favoring society.
I believe it would take a lot of capital to kick it off, mainly trying to establish a 2 sided market place. The whole multiple MLS entities (per state) all seem to be cartels and realtors are scared off them (as they don't want to be booted off).
I've spent considerable time thinking about ways to create a wedge (I walk my dog a lot!), but it's hard without creating another MLS clone.
Can't read the FTA as it's pay-walled and archivePH thinks I'm not human.
I really don't understand how this can operate in a capitalistic/non-monopoly-favoring society.
I think you’d need a hundred million in capital, mostly to advertise. Your average buyer and seller just want to hand it off to someone else and have it “get done,” the fees are mostly a drop in the hat for purchases of the size and duration. Starting your own platform with organic listings is pretty much a fools errand as no one will post property because no one is browsing, and no one is browsing because there is no inventory. This leaves you to either scrape, buy data feeds from companies like Listhub, or fill it with bullshit. Making it worse, is that you’re competing with individuals who are making millions of dollars a year. And they can easily outbid you for ad space, especially when they’re making more money per sale than you are. Unless you can raise a lot of awareness and outbid many competing agents you’re likely to lose; which, is why the initial capital to advertise is needed. Even then… most folks, agents included, are fairly happy with their local real estate cartels.
FWIW— I was the CTO of a real estate startup for five years where the whole mission was to get rid of the middle man (like the MLS). It didn’t work and in the end the company had to eventually pivot.
FWIW— I was the CTO of a real estate startup for five years where the whole mission was to get rid of the middle man (like the MLS). It didn’t work and in the end the company had to eventually pivot.
I know my response is a bit lengthy but, I feel like I have a lot to share that will help home buyers and sellers. It saddens me to read all this horrible real agent stories and I can say your not alone, my husband and I had similar experiences when we bought out home 9 years ago. In fact it inspired me to become an agent, thinking that I could make a difference and be an honest & caring agent in this pool of snakes. But, know there are good agents out there! Unfortunately, we are not always seen for the benefit we provide. I wish I knew what I know now about buying a home what to stay away from what to look for and how to make the best decision for one of the largest purchases of your life. I can tell you I there were a lot of things that our agent didn't help us with that I wish we had an honest agent to help us advise and navigate us through. I learned a lot since then and help my clients not make the same mistakes. I Tell them all the pros and CONS! I am often the person to tell them this isn't the home for you you can find better versus trying to make a quick sale for my own benefit. People need to realize that this is the largest purchase of their life not a pair of shoes that you can return tomorrow. I take pride and helping my clients find a great investment great home that will help elevate them in life. I also take great pride in knowing that my clients are happy and have become more than clients friends. It is what motivates me and drives me to be successful in this industry. I just wish people would not work with the agents they're not comfortable with they, that aren't helping them make the right decisions and are pushing them for a quick sale like a used car salesperson would do the day before rent is due. Report them, fire them, interview and search for an agent that will be loyal helpful and honest and be carrying enough to take your best interest at heart and help navigate you through this stressful & complicated process. Make sure your agent isn't willing to force you in to automatically giving away your rights by completely waving the inspection, appraisal and not explain all of the implications of each. I refuse to let my clients do either even if it will cost them losing the house. Because trust me they could lose more if they win the house and there's problems that they weren't aware of. Example you can limit an inspection but still do the major parts of the inspection. One that I will never allow a client to wave is the tank sweep. Even on an abandoned tank there could be soil contamination that could cost hundreds of thousands of dollars to remediate. What client deserves an agent to not advise them of this, this could cause them to be financially devastated for years if not life. I take this seriously and there are many good agents that do as well. If your agent doesn't fire them and look for one that will. The hardest part of my job is dealing with these type of agents on the other side of the transaction. But I am happy to do it to protect my clients. I hope this explains that not all agents are bad and you should always look for one that will do the right thing. You have the power too demand that your agent treats you better. I wish you all the best of luck.
I was buying a home in a desired neighborhood. My agent would call days after the property came on the market. I set up notifications on Redfin and was getting instant notifications. I would call him and request we see a home.
As someone knowledgeable about construction the shit agents say is often wrong. It’s in their interest to sell you the home.
Need a marketplace for private sellers. Someone comes out to take pics at fixed cost and maybe does the description. Lawyer helps will all the legal crap. And the seller is 6% richer.