I’m thinking that an agent could take a retainer just like a lawyer, with that retainer amount dependent on the agent’s assessment of a seller’s/buyer’s situation. Then, do hourly billing to work down (earn) the retainer. Seems like a fair way to earn the fee and avoid situations where for example a $1M listing is on the market for a few days, has no contract hiccups, yet costs the seller $50K in commission. The flip side is a buyer that wants to dick-around forever only costs themselves $$$ and the agent doesn’t have to worry about getting screwed. I’m just spit-balling here FWIW.
OT: For sale by owner ?
- Thread starter Plum Street
- Start date
Yeah Realtors are the paragon of virtue, lol.
When you go to try to get a Hoboken listing on Tuesday that will sell on Sunday, do you say “now listen I charge for this appraisal appointment”. No you say “I’ll will gladly come over, like right now and give you a free valuation “.
You do so because you know that you’ll get 50% of the 2.5% of that ****** $850,000 2 bedroom condo; if you’re lucky an offer will come in from a walk-in in your open house so you pocket $21,000 yourself (50% of the 5%) 60 days after they sign your listing agreement.
Spare me. Digital transformation is coming for you!
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I held a series 3 license for nearly 10 years without a single mark against it. I’ve had my realtor license for almost 7 years now without a single mark against it. What you’re saying you did, and are telling other people they should do, is as big of a scumbag move as I’ve ever heard anyone pull or suggest. SMDH.
BTW - there are “sleazy” people in EVERY industry. That doesn’t mean that everyone in the industry is sleazy, nor even close to being sleazy, yet you’re willing to go out and screw over three people who might be the most ethical realtors in your market? Unreal.
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Asset management business.
If we got 5% to manage money for people I would have retired 10 years ago. Managing equities maybe gets you 0.75% to 1.00% of assets managed, while fixed income is more like 0.05% to 0.50%. And those fees come down every year.
Real estate fees never seem to change despite prices going up. Basically the minute I buy my home I'm down 5% because if I need to sell, I'm paying 5%. Personally I think it should be a flat fee for real estate... let me pay some marketing expense to the agent (pictures, listing the property, etc) and a fee to the agent for their efforts that doesn't change based on price.
Yeah, this is basically where I was headed with my tech argument. Digital transformation hit the finance/asset management industry but has yet to catch up to realtors. Surprising and not sure how 5% has largely remained the norm.
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anon_0k9zlfz6lz9oy
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Why is your fee fair when historically index funds beat managed funds? Why should someone ever use you or your company?
Well we can provide customized solutions for clients. I manage a several billion dollar fixed income account for an insurance company. We charge roughly 0.05% which is comparable to passive fees. In return, we can manage to their guidelines (exclusion lists, duration targets, risk parameters, etc) and also (to the extent we are any good at our jobs) provide better than passive returns through active management.
Now you could argue that a bad investor isn't worth their fees if they trail their benchmark, and you are correct. But you should be willing to pay above passive fees for above passive performance. The challenge is knowing before you invest whether you will beat or trail the passive funds. Therefore, for the average investor, you should just put your money in a passive fund.
When it comes to real estate, it costs 5% to transact on your home whether an agent is good or bad. A few might be worth it but in my experience, my willingness as a seller to price the house properly is the biggest factor. No agent is so good as to sell a house worth 700,000 for 800,000. An agent ought to be able to make a living selling houses... they do add value...but I don't know why it shouldn't be something like $2,500 in expenses (photos, etc.) and a flat fee of $20,000 (or whatever the agent and seller agree is fair).
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anon_0k9zlfz6lz9oy
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If you managed $1,000,000,000 or $1,000,000 for a client isnt it the same work? Why isnt it a flat fee?
Definitely a benefit to scale in the business, with scale becoming more important as fees compress closer to zero. A decade ago, we would probably have gotten 0.20%, so my business is one where what we charge has come down. We need to manage 3x or 4x the assets to be flat from a fee perspective. Not really the case in real estate where the real estate agent costs rise with the costs of housing.
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Since I opened my brokerage this is exactly what I have shifted to. You start 50/50, after 5 deals you go to 80/20 with 16k cap and then after that you can go to 100% commission with 10k cap. I don't have franchise fees so I can beatout KW, Remax etc as I become a bigger name in NJ.
It's insanely competitive for recruiting realtors right now. The good ones basically make 90% commission after fees. If you run across a good realtor they're easily making 250-500K a year selling homes.
Also just to give an elbow drop off the top rope to @Morrischiano after @kyk1827 did most of the work....
I had a very foolish seller NOT want to list with me because he didn't want to pay 4% commission on a 2M property. Didn't want to list it on the MLS when I had a buyer ready to buy it. 80k was too much commission he said.
So he sold it a year later for 1.6M to a buyer as a FSBO. 2M asset and the guy does FSBO. Sad.
But hey, he lost $320k to save $80k...maybe he's your uncle @Morrischiano ?
I had a very foolish seller NOT want to list with me because he didn't want to pay 4% commission on a 2M property. Didn't want to list it on the MLS when I had a buyer ready to buy it. 80k was too much commission he said.
So he sold it a year later for 1.6M to a buyer as a FSBO. 2M asset and the guy does FSBO. Sad.
But hey, he lost $320k to save $80k...maybe he's your uncle @Morrischiano ?
If you read my original assessment, I said that I would list a $1M property in this market FSBO (which you can get into MLS for $300) A $2M is a different price point with a different market.
That being said, I don’t blame you for being defensive. The curtain is being pulled back on listing agent fees. Your time will come soon enough with technology replacing your $2.5% for listing a property (not finding the buyer, mind you).
BTW, if you valued a property at $2M and it sold in the market at 1.6 then I kinda think that maybe you kinda suck at property valuation (or maybe you blew smoke up his *** to try to get the listing).
Finally, a lot of house flippers and house builders act as their own listing agent. I guess less animus towards them than hard working American homeowners who want to hold onto as much of their biggest source of wealth as possible.
So take you elbow drop and GTFO. Go earn your money by finding a buyer.
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The contracts are standard forms. The agent does nothing but fill out the docusign with the offer amount and elected contingencies.
If you have someone you’re comfortable with handling that, than there is no need for an agent in this market. In a buyers market, or high/end/niche market, another story.
If you have someone you’re comfortable with handling that, than there is no need for an agent in this market. In a buyers market, or high/end/niche market, another story.
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anon_0k9zlfz6lz9oy
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Disagree. Theres a lot more to the deal than a contract form. See my posts above. In a low inventory, hot sellers market, this is not the time to not use a sellers agent.
and again, i say this as someone who is a realtor but its not my main source of income
I could be wrong, but at the very least I think most would agree that agents can add value in certain transactions. In my mind, the real issue boils down to the fact that in this digital age, where MLS is so important now, how is 5% still the standard? I firmly believe it’s driven by the power of the major brokers like Weichert, CB, KW, etc., and the NAR. Otherwise, why would a licensed real estate agent have to work under the umbrella of a “supervising broker”? That’s like telling a lawyer out of law school that he/she can’t hang a shingle and MUST work for one of a small handful of law firms. Sounds anticompetitive if you ask me and probably explains the 5%. If I’m a licensed real estate agent and meet the criteria I should be able to start Rutgers Real Estate Agency tomorrow if I feel like it.
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anon_0k9zlfz6lz9oy
Guest
I agree that its BS that agents have to hang their license with a brokerage however, there are some pros to it as a new agent could have zero clue what to do and just operate illegally.
However, i disagree that its major players keeping commission rates higher. Heres a break down of 5% commission on a $500,000 sale if youre on a 70/30 split at a franchise company
$12,500 to your brokerage in total
-$750 franchise fee
-$3,750 company keeps
-$150 admin fee
-$150 E&O fee
=
$7,700 to agent
-Taxes (state, federal, self employment)
Leaves the agent with about $4,000 after taxes
So, for argument’s sake, how much time, on average, is spent on a $500K sale? Because even if you told me that an agent spent an entire work week, 40 hours, on a single deal, that’s still almost $200 per hour. That doesn’t seem a bit crazy? We are talking mostly hand-holding especially when lawyers and title companies are in the mix. Again, I’m not anti-agent.
I would also guarantee that if they got rid of the broker affiliation requirement fees would go down because then agents would have the ability to negotiate their own commissions/fees. An agent may pursue a listing that is a slam-dunk and agree to 2% because they believe the house will sell in a day. On the flip side, the agent may only agree to 5% on a crappy house in a crappy location because they think the house could sit on the market for a while. The point is - the umbrella brokers seem to be the point of friction preventing the market to dictate fees and drive efficiency.
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anon_0k9zlfz6lz9oy
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For argument sake,
1) how much time does it take a financial advisor to throw millions or even billions into a fund that just tracks the s&p? A few hours of calls and consultations? And then they get millions in fees?
2) How long does it take a landscaper to do one lawn? 20 minutes and they charge $X a cut for those 20?
3) How long does it take to make a $15 sandwich? 1 minute?
im not saying the above to be defensive but rather to point out that your question is not really valid and this argument can be made for any job being overpaid.
time wise? Every client and listing is different. Some could require 5 hours of work, others hundreds
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anon_0k9zlfz6lz9oy
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2%? Nah. What are you gonna split it 1% and 1%? Haha. Agents wouldnt show it, waste of time for them
A landscaper doesn’t charge the same fee on every lawn. If a lawn has hills or features making it more time consuming the landscaper charges more.
This is precisely why trading/management fees have gotten slashed in the last 20 years through digital transformation…and why “stockbrokers” no longer exist.
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anon_0k9zlfz6lz9oy
Guest
Kinda sounds like the bigger the property the more they charge, sounds similar to something else… haha
That’s my point - some listings could be worth a 5% commission if the house is a disaster and impossible to sell. On the other hand, a well-maintained house in a good neighborhood in Northern NJ sells itself these days so perhaps a 2% commission is warranted?
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anon_0k9zlfz6lz9oy
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anon_0k9zlfz6lz9oy
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How is that similar? The argument one of the real estate agents made here yesterday was that 5% standard is fair whether the house is $1M or $500K because it’s the same amount of work. For a landscaper, the bigger the lawn equals more gas, more workers, more everything. That’s not true when it comes to selling houses. Big house, small house = pictures, marketing, open houses, etc.
You’re stretching here and getting too defensive. Banks don’t always post record profits - their business is completely cyclical. But I’m not a huge fan of the banking industry either but they have gone through a massive digital transformation that has helped all of us by reducing fees we used to pay.
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anon_0k9zlfz6lz9oy
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And what do you do for a living may I ask? And how are you and your company compensated? Your argument seems to be all sales jobs shouldnt be % commission based but rather flat fee. If it worked these companies who keep trying it wouldnt keep going bankrupt
First off, if you let brokers run their businesses instead of being slaves to the umbrella brokers someone would show the house. That’s not to say you wouldn’t get what you pay for. But that’s why the market should dictate what an agent’s time is worth in terms of fees/commissions instead of a handful of umbrella brokers. Second, brokers have an ethical and professional obligation - no? If so, why do brokers get a free pass because “human nature” somehow means a broker should push houses to their clients which make them the biggest commissions?
I’m definitely NOT pushing flat fee. I’m talking about giving a broker flexibility to charge a commission that fits the situation based on the broker’s analysis. For example, My house is in pristine condition in a great location in a great neighborhood. The last two times it sold there were bidding wars even when the market was soft in 2009. Brokers tell me it will sell in a day. So, why should I have to pay 5%, the same as the guy who’s house is a dump in a terrible neighborhood that is going to sit for 60-90 days unless they put money into it or massively reduce the price? Since my house is as close to a lay-up as it gets, and I’ve paid to maintain it over the years, and made smart choices, I’m still stuck at 5%?
The biggest scam is the title search. Lawyers in Trenton protecting and creating business for other lawyers. In the modern age, a title search should be as simple as pushing a button on your iPhone. Huge scam.
Finally we agree on SOMETHING!!! There is some crazy stat that says only 2% of title insurance premiums get paid to claims = meaning that NOBODY really needs it AND/OR there are much easier ways of dealing with property title like blockchain. And I know two people that own title insurance companies and they print $$$ - and will readily admit (privately) that it’s a joke.
How ignorant are you? This isn't a job making coffee at Dunkin Donuts. How long did it take for the agent to build a database of clients who are looking to buy? How long did it take the agent to become an expert of a town? How long did it take the agent to learn what it takes to successfully present a house for sale, whether that be construction concierge services, open houses, staging etc.
Then let's go to the actual contract where you have many people who think the house is falling down during the home inspection, then an oil tank is discovered and the buyer or seller have no idea what to do, then you have the attorneys screw up or take forever to answer emails, then the seller forgot to apply for the CO, oops the fire inspection was done but you have the wrong fire extinguisher.
I invite you to get your license. Go become a realtor since it's so easy and you just open a door and report back in a year.
Title insurance is a service, not insurance. Losses are about 5%of premiums, the rest goes to the cost of making sure the title is clear and profit.
You have to remember this is sales, and you can't just look at one successful sale. Homeowners may call multiple agents for a market analysis but only one will get the listing, the others spent 4 - 6 hours for no pay. Sometimes houses don't sell after six months and owners decide not to sell or try a different agent, even if not the agent's fault, probably more than 40 hours over the six months with not a dime, and even negative as many agents pay for listing fees and photographs and maybe other things like malpractice insurance. Many spend time on advertising and marketing. These things are a regular part of the business and need to be factored in when determining an hourly rate. Also remember agents get zero benefits, no medical, benefit days, etc. Many people don't realize what their actual hourly cost to their employer is when benefits are factored in, usually around 1.5 without even getting into overhead.
Yikes, could you be any more defensive? I never said agents don’t deserve to earn a living. But, if you want to get real, two of my friends are now real estate agents after spending half their lives doing other stuff. One of them was an esthetician/beautician for like 20 years, and the other one had a landscaping business forever. And now, in their early 40s, they are suddenly handling million dollar transactions in Northern NJ and pulling 5% commissions (and apparently doing quite well)! All the power to them! But, Let agents prove their worth just like other professions. Some lawyers charge $1000 p/hr and some charge $200 p/hr. Depends on factors like their area of expertise, experience, etc. Why should agents charge a blanket 5%? Let the agents and market dictate the commission instead of a bunch of legacy umbrella firms that are probably the most obvious instance of antitrust BS.
I’ll go with the 5% - but there is very little that goes into making sure the title is clear. It’s a cash cow. The guys I know that own title insurance companies are deathly afraid of blockchain but so far so good.
Lol I just opened my own brokerage this year. Agents do dictate their commission split and prove their worth by getting the listing. Industry average is just 5%. There are more agents than houses but of course you know that. I'm sure you also understand the larger the price point the tougher the sale because it's a smaller pool of buyers. My favorite listings are under 400k. Huge pool of buyers and we usually get the seller more than they expected.
So when are you getting your license? You can come work for me, real talk. Kyk has a school. Take the class, pass the exam and you can work for Skoolie.
All you do is open a door and charge 5% then go back to posting on rivals. You'll be making 250k in no time. Send your friends now making a killing as well you guys can have a team.