I don’t disagree - again, I’m just talking free-market and questioning why 5% has remained stable for what seems like eternity when digital transformation has made other industries cheaper and more efficient. If anything, I could see a model where agents purely service as local appraisers and marketing/sales, leaving the rest to real estate lawyers. But I’m not suggesting that’s perfect either. There are too many defensive real estate agents on this thread. For a great agent in a terrible market, 5% could be totally fair. On the other hand, when houses are selling themselves in a few days in North Jersey and buyers are waiving everything under the sun sand paying cash, I think the 5% is too high. That’s just me and I mean no offense or disrespect to anyone’s profession.
OT: For sale by owner ?
- Thread starter Plum Street
- Start date
But can you, unilaterally, decide that a house will be so easy to sell given condition, location, sellers, etc. that you only want to charge 2%? Or, are you basically locked into 4-5%?
I think the one time FSBO makes sense is when you're on a very niche block or very specific building/development where you know the demand is very high (COVID/interest rate environment aside). Essentially where there's always a standing buyer.
And even still I get a few notes under my door each year from realtors saying they have a client who wants in to my building.
I think people saying realtors "do nothing" are like people who say teachers "have it too easy" etc...walk a mile in their shoes.
And even still I get a few notes under my door each year from realtors saying they have a client who wants in to my building.
I think people saying realtors "do nothing" are like people who say teachers "have it too easy" etc...walk a mile in their shoes.
What would be the driving factor to stop the realtor from trying to just get you to accept the first offer?
My business is Digital Transformation. And this works great in the technical field as well as the finance world. As both are more about numbers then being very personal. Real Estate is very personal and I think you will still always need more of a personal touch than you do in finance or IT...You also run into a different issue as well. Sounds great to have house hunters just log into a zillow and then set up an appt to see your house and you show it to them. Well, so many people do not want every Tom dick and Harry walking through their home. Just how safe do you think that is? By using Agents- you have someone who has already met these people, checked their identification etc...
BTW- congrats on opening your brokerage! And you nailed it on the price of homes. It is funny- everyone thinks that the $1 million plus homes are flying off the shelf with no effort. Yes, many of these homes are having bidding wars but many of these homes are also +90 days listed. The under 500k homes do see to be the ones moving super fast.
Congrats agin
I literally had a guy cold call me this morning and wanted to make an offer for my parents house in VA that’s not for sale. Crazy market.
There are good and bad in every business. Even in my business, I have competitors as well as co workers who drop their pants as soon as there is a hesitation by a buyer.
In Real Estate- Seller's agents are very concerned on their personal "brand" and reputation of doing what is best for their client. Up here in northern Bergen Co...if you are listing your million plus home, you will do your research and ask other people that have sold recently in the area. There is a reason why you will tend to see a single agent that has most homes in a community.
When you say “own brokerage”, are you still affiliated with an umbrella broker. Meaning , for example, The Rutgers Team at Coldwell Banker…or simply Rutgers Real Estate without any umbrella broker in the mix?
Isn’t this sort of the point some of us are getting at? In real estate, the agents can’t, or won’t, drop their pants because the umbrella brokers and NAR have essentially mandated that 5% is standard? If licensed brokers had the entrepreneurial freedom to simply hang a shingle and open their own shop without interference of umbrella brokers like Weichert, I would bet my life savings that commissions on average would go down. Top agents would likely charge more than crappy agents (just like other professions) and the market takes care of the rest.
Not on the % but not fight for the best price. If it is a flat fee- why would they fight to get you more on the sale price
Huge scam. Searches should take seconds, but lawyers tried to pump thousands out of your wallet. Crooks in Trenton help other crooked make money.
I’m not suggesting flat-fee by any means although if a realtor is adhering to highest ethics/professional standards they should always fight for whatever is in their clients best interests. That’s one problem I find with some of the comments here - whether an agent’s cut is 2.0%, 2.5% or 3% they should be representing their client with the same vigor.
Regardless, I think an agent should be able to make the commission determination. E.g., perhaps a house is such a “lay-up” based on condition, location, market, etc. that 1% is fair. On the flip side, crappy houses with major black marks perhaps 6% or higher is fair?
Again, my point with FSBO is list the home yourself (if it is a $1M or less property in a desirable NJ town) once you get a proper market pricing on it. FSBO sites allow your home to appear on MLS for like $300-400.
Offer 2.5% to any buyers agent who brings an accepted offer. 2.5% is no different in the buyers agent compensation if that agent was not the agent that got the listing. So for a $800K house in Morris County, you'd pay $400 for a listing on MLS on a site like houzeo.com and pay $500 for a professional photographer.
If your house sells at ask you pay 2.5% to the buyers agent ($20,000) plus $400 plus $500 instead of $40,000 (2.5% to the buyers agent and 2.5% to the listing agent). $19,000 savings for a little bit more hassle.
Offer 2.5% to any buyers agent who brings an accepted offer. 2.5% is no different in the buyers agent compensation if that agent was not the agent that got the listing. So for a $800K house in Morris County, you'd pay $400 for a listing on MLS on a site like houzeo.com and pay $500 for a professional photographer.
If your house sells at ask you pay 2.5% to the buyers agent ($20,000) plus $400 plus $500 instead of $40,000 (2.5% to the buyers agent and 2.5% to the listing agent). $19,000 savings for a little bit more hassle.
2008 housing will 100% be happening again. The stupidity of people having bidding wars on houses that are essentially not worth the $$$ they are paying is pure insanity
So if there are good and bad real estate agents, why do they all charge the same price? Why don't the really good ones charge 7% and the bad ones charge 3%? That is the issue I have...there is no competition based on price. Basically an agent's job is to get the listing...once they do, they are pretty much locked in. A good agent (and smart one) will be well connected and work to get listings on desirable houses that will sell fast.
And as for what is the incentive for an agent getting a flat fee to not recommend taking the first offer...my guess is that they will be motivated by reputational issues to do right by their client. Sometimes that includes encouraging the buyer to take the first offer. Additionally, if it is a question of alignment of interests, squeezing an additional $25,000 out of a house by 'working the buyers hard' isn't that great a deal for them either as their cut of the incremental $1,250 commission is likely around $500 and they run the risk that the deal falls apart and that they don't get a better offer, lose the listing, etc.
But my main beef is that a bad agent gets paid the same as a good agent and there is an unwillingness by the industry to compete on price, because they know the minute they start competing on price, that their earnings potential drops tremendously. But as someone who has owned four or five properties over the past 20 years, I am fairly convinced that I haven't gotten great value out of the $100k plus in realtor fees i've paid.
I've mostly liked the agents I've worked with before, but that doesn't mean that I don't think they are overpaid (particularly the bad ones). When selling a home, I'm fairly obsessive about what the right market value is of our home, while also trying to balance getting fair value and a quick transaction. As such, my wife and I are the type that keep our home spotless for showings, encourage the agent to price the house properly to attract interest, and try and be reasonable in negotiating all offers to get to fair value. As such, our homes have always sold around where they should without too much hassle. I definitely value having someone I can call and run things by, and appreciate the help as we move through the selling process, but we are pretty easy clients as well.
Same here - my house is spotless 24/7, neutral colors, shows like a dream, has great exterior elevation, flat yard…point is, my house is a lay-up and previously sold twice with only private showings and bidding wars. Therefore, my struggle has always been why do I pay the same 5% like my neighbor down the street that hasn’t power-washed their house in 15 years and live on a cliff. I also have no interest in fighting over $2K on the home inspection and would compromise.
At best I am only making 3% unless I happen to find a buyer, then yes I can get 5%. So you're suggesting we list the house at 2% and share the split with the other agent? Lol. Make 1%? Might as well go serve fries at McDonalds when you factor in all the time spent on the deal.
I have my own brokerage in New Brunswick homie. RUskoolie realty. No REMAX, No C21, etc. 5% is what I do because I know my worth.
I'm not joking about my offer. If you want, get your license and walk into my office and we'll talk.
No it won't. No NINJA loans out there. FHA buyers will get hurt sure, but a lot of people putting 20% down too. They're not walking from that. Inflation is also very real and our current administration shows no signs of stopping it. Only thing that will help cool the market is the Fed raising rates and I personally think they don't have the balls to do it more than 100 bps. Should honestly be like 500 bps but that will never happen.
So if a house priced right sells in 24 hours, full price, no contingencies, for let’s say $750K, you’re saying 1%=$7500 no good?
You haven’t really answered the question. Why is 5% the magic number? IF you wanted to, could you take 1% because you knew you’d have to do very little work?
Let me ask an unrelated question. Someone buys a house for $1.25 - $1.5mm. What type of down payments are they putting down?
2008 housing occurred because banks drastically underpriced default risk insurance and as a result, bank financing seized up after catastrophic mortgage losses.
That’s not going to happen now, even though I agree the underlying asset is very overpriced.
It makes sense to only put down 20% given interest rates and corresponding equity market performance
Housing prices are like bonds. Higher rates, lower prices. Lower rates, higher prices. We've seen rates decline for almost 40 years, so housing prices have gone up. As others have said, underwriting this time around is quite a bit better, and affordability is helped by everyone locking in 30 year financing at 3% or lower. But housing isn't guaranteed to always go up, and it seems like we are pushing the bounds of what people can afford absent inflation pushing wages and thus housing higher.
It’s not about me not needing a realtor. I’ve used one in all of my deals. I find it interesting that the real estate industry has managed to maintain 5% and it’s not clear if the big umbrella brokers and NAR are making it so which would seem anti-competitive. I’m no expert in this area. Just strange agents don’t seem to have the ability to negotiate commissions.
I hear all sorts of bellyaching about how hard it is to be a real estate agent and I believe it to be true. You are dealing with all types of people, lots of money is at stake, people want to get paid for their sentimental attachment to their run down home, etc. But almost every industry has gotten harder over the years with fewer people doing the same work, more responsibility, more aggravation, more pricing pressure, etc. Many industries see work put in for no end result (in my business, we pitch business we don't get at times). There is nothing to say that real estate agents can't see pressure on their commissions as well...particularly as the underlying transaction values rise as housing prices go up.
Was that like Foxtons? If you read articles on Foxtons, which was a NJ company based in Long Branch, the indication is that the NAR was in seek and destroy mode because f’in with their commissions was sacred ground. And agents refused to show Foxton listed houses because it meant 1.5% instead of 2.5%. Whatever, I was mainly just trying to learn why 5% is the “standard” in a digital age. And why a new agent couldn’t charge 1% and a pro agent couldn’t charge 6%.
I understand your question now. The 5% is the standard but the distribution is not. Good realtors will get a larger share vs the bad or new ones. It is price fixing but it’s accepted. Not enough people are willing to do it themselves to change that.
I've answered your questions like 6 different times and at this point you lack intelligence I'm sorry. BTW - What do you do for a living?
People try to undercut all the time and fail miserably. FFS @kyk1827 already said that in this thread. Pay attention people!
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anon_0k9zlfz6lz9oy
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Sure. And the wrap I just bought for $14 couldve been sold to me for $4 as it required very little work. The arguments being made here are so foolish lol. Agents are allowed to negotiate their commission, anyone can start a company and charge whatever they want. My brokerage allows me to charge whatever I would like to as well, nothing says I have to charge X% but again, im a yugeeeee fan of data and numbers. In the 8 main towns I sell in during 2018. Offering buyers agents 2.5% or more (aka 5%+ listing), 98% of list price obtained, offering buyers agents 2% or less (aka 4% commission or less), 83% of list price