Me vs. the local Real Estate Cartel
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Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
7yThis is a waste of oxygen; 9 out of 10 times there's more to be gained by focusing on maximizing one's own gain than by being focused on minimizing someone else's.
35 Replies
- Rental Property Investor · Galveston, TX · Member since 2018 · 49 posts · 29 votes7y
Do you think 6% is too high or too low? Lots of “developed” countries have commissions higher and lots have lower. Are you suggesting an imposed rate should be the norm?
Well personally I prefer not to think in 'norms' or dictate how the rest of the world should behave. If I were selling a Million dollar house, and someone wanted $60,000 to list it on the MLS, and sadly, negotiate deals that were not in my favor(in many cases, not all of course), I surely would ask for a smaller amount.
But in life we don't get what we deserve, we get what we negotiate for.
Thank you for the link. Although not a comprehensive list of developed countries, I didn't realize that Mexico(the only one) had a higher standard commission rate than the US, and that Japan had the same one. But in your link surely you see how low they are in the rest of the world, and more interestingly, the change between 2002 and 2015. Looks like consumers are the better hagglers in most of the world, realtors are better at it in US, Mexico, and Japan. I make no judgements. Especially since these are up front negotiated terms.
The article I posted cited quite a few practices that are the norm(or at least common) in the US that are far more distasteful. So I you have a point. @J Chad Davis
- 7yMike CumbieBusiness MemberREALTOR® · Brockport, NY · Member since 2015 · 3k+ posts · 4k+ votes
My state has very strict rules about price fixing (antitrust) and believe it or not if I could afford to sell houses for 2%, a flat fee of $500 or moms baked apple pie, I would do it and slit the throat of every other brokerage around. If you honestly believe that I keep inflated prices and am not "competitive" because I somehow want to keep that rate vs dropping and getting more business than I can handle (and pay for some overseas call center or part time minimum wage employees to deal with all the calls) I will say you are mistaken.
In one hand the complaint is that getting licensed is easy, however the next complaint is that no licensee has figured out how to make a more competitive brokerage and take all of the business over. It's like saying that all lunchtime cart vendors are agreeing to sell hot dogs for $32 a piece. Also nobody else can figure out how to cook a dog and stand at the next corner selling them for $2.00. Everyone is just a slave to starve at lunch or pay for a $32 hot dog. **Shake fist violently**
There are new brokerages that pop up all the time. They offer rebates, they offer flat fees, they offer 9-5 chat assistance with a rep from a country with very cheap labor. They always fail. They fail because when someone is sitting across from their spouse and they are selling an asset worth $125,000 they don't like "The cheapest advice available from a script".
MR_SMITH: The form says check "I have actual knowledge of", does that mean if there ever was a problem but I fixed it?
REP_09: Please wait while I do the needful. Thank you for your query. I think that it is OK to say "yes" if the knowledge is some that is found to be known. Is there anything else I can help you with?
I would say the average yearly compensation of an agent in my market is about $30K (For agents that sell more than 3 houses a year). Good ones make a whole lot more. Good ones also make their clients a whole lot more. If you are putting a $250,000 house on the line do you want the $12.00 an hour 9-5 agent or the agent making 6 figures preparing your contract or marketing plan?
@Mike Cumbie My sincerest apologies for the accusations you feel may have been directed at you?
The purpose of my thread was to gather the good guys, which clearly you are one, and address the nationwide epidemic. Do I need to bring up not just studies, reports, civil and criminal procedures, but even legislation addressing , or attempting to address, matters of say legal Dual-Agency, Designated Agency, Pocket Listings, etc. etc.
Listen, if you were sitting in front of me, asking for 6% commission, I'd hear you out. If someone up front signed with you for 50% commission, that's ok with me! lol. Realtors are the more honest side of the industry anyway.
(aside: (And a big Trophy popped up saying Congratulations when I clicked 'Post'. Just the 50th, it was funny though.)
- 7yJoseph ODonovanPro MemberProperty Manager · Ridley, PA · Member since 2017 · 427 posts · 449 votes
@Greg Kristy I admit, I'm not the sharpest tool in the shed therefore I'm confused by your post. Are you serious when you ask "does anyone on BP make money on RE"?
Re: the caare website you reference, are you looking for BP members to validate their allegations?
And it you don't like the commission based system, you can always go FSBO, Craigslist or Ebay
Oh I apologize if I miscommunicated. To be clear: Does anyone make money in RE while trying to improve it's image and condition as an industry. Just this thread is a great demonstration of what fun time that would be to attempt. @Joseph ODonovan
But, in truth @Joseph ODonovan. Actually your other question is valid. I am in fact wondering what people have to say about the allegations made by that organization. I'm always open to change my mind. That's the true reason I've posted this.
edit: To reiterate, I have absolutely no problem with the commission structure. Just as you say, it's a matter of taste. If someone wants to pay 6%, that's their choice. If someone prefers zillow or craigslist, let them have at it.
And I'm not a moralizer. I see it as a sport. When I was comparing those countries, it's like watching a soccer match between 'Realtors' and 'Consumers'. I say: may the best haggler win!
- 7yJoseph ODonovanPro MemberProperty Manager · Ridley, PA · Member since 2017 · 427 posts · 449 votes
@Greg Kristy I can't speak for other BP'ers, but yes I make money in RE and I boost the image of the industry by doing wonderful things. I buy ugly houses in need of work and my GC rehabs the house into a beautiful home. I then find some very nice tenants who prefer renting over owning. I then offer them this beautiful home and they pay me to live there. Win win, right. But I go a step further by continuing to care for and upgrade the house as needed and I am very responsive to my tenants needs. All this while building equity and increasing the value of homes nearby. I build relationships with my tenants and my neighbors. I do this for each and every property. And my name is not George Bailey.
Ha I catch your drift with the reference. I am a self-help, self-made, sovereign entity, and the sheeple hate one me for it all the time. Let them.
And indeed, You are a good landlord, and you are a crucial asset to your community. Where I live, I've met a few of these. They are heroes.
I spent some time renting out some residential college space. Compared to the world of real estate, Professional Tenants are the devil himself. Don't even get me started. I will admit, I admire that at least, the sour side of the RE world don't make a living crying victim and preying on pity. Sharks they may be, but I enjoy there laughter 100 times more than the whining and complaining of the professional victims=D
- 7yMike CumbieBusiness MemberREALTOR® · Brockport, NY · Member since 2015 · 3k+ posts · 4k+ votes
No implied offense taken. The site referenced though just misses the mark and in my mind, misrepresents reality to the consumer to push their "advertisers"
Consider interviewing some of the below service providers that we believe offer savings and better protection. We have compiled this list through research and only those vendors with a CAARE member emblem have made a donation to us.
They complain about using a REALTORS title company or lawyer, mortgage rep or inspector (Which legally we can make not one single cent from without full disclosure from all sides for any of them). However they have a full list of recommended sponsors that donated to them. I would lose my license if I offered "top billing" to a "sponsor". I give 3 names if asked for a lawyer or a home inspector etc. They are all people who I respect in the industry who will take care of their client. I have had to argue with each one of them, but they are professionals and they have never given me any preferential treatment (except actually answering my calls when our client needs something,).
Discount Seller Brokers: Sure, flat fee list it for $99, nothing wrong with that, hire a person to send forms and upload it to the MLS and send all inquiries to you. Go for it. I have zero problems with that. Saying "commissions are far too expensive" here is our list of companies that will sell for less (Which of course all paid a "donation" to be listed). Is lying to the consumer under the guise of "protection". The consumer can choose to go to the local dentist school for a root canal, they can go to a private practice, a big corporate dentistry or they can go to a Beverly Hills type place. Pay for what you want. However having schools say "You pay too much come to us for equally good service as a Beverly Hills dentist with 22 Years and the most cutting edge equipment available" is not being honest to the consumer.
Like I said I take no offense at all (Heck I even programmed in an award to pop up when you responded to me..... :)
But I just submitted an offer for a client at midnight on a Thursday, I spent 2 hours with buyers on a flip making sure they were comfortable between 6-8PM, Met with a tree guy, 2 sets of drywall guys, helped a new agent with a property we joint listed and some offers she received. All after I would have "Punched out at 5". It's the link you posted I don't respect, not you.
- Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes7y
This is a waste of oxygen; 9 out of 10 times there's more to be gained by focusing on maximizing one's own gain than by being focused on minimizing someone else's.
- Contractor · Jacksonville, FL · Member since 2017 · 1k+ posts · 2k+ votes7y
@Chris Mason
Agreed...what a waste of a post. If these are the things keeping you up at night than you are going to be doomed in REI.
@Greg K. I think that the organization provides a basic idea that is the core of the problem. I disagree with their message overall because I think they're over-complicating the solution. Like you, I don't have a problem with the 6% structure. A good realtor is worth their weight in getting you what you need. They will understand that, work toward that, and do the best job they can, tapping into their network of resources and knowledge to assist a person in the biggest single purchase of their life. They'll guide in negotiations, understand the customs of the local market, and have a pulse on what the market is doing to know which way things should go during the negotiations. Holy crap I sound like a walking, talking realtor advertisement.
Anyway, I think the biggest issue is that people know they need help but don't take the proper steps to make sure they get the right help. If you (or any consumer) was going to be starting a $200,000 renovation job on their home they would be interviewing builders, General contractors , checking references, looking at the experience level of the potential hires, etc. That's a lot of money to spend and a huge amount of responsibility. Yet, when they are spending the same amount of money on purchasing a home they will use Aunt Millie's friend from work who is a part time agent and think it is OK. The due diligence is 0 for a lot of people. With a profession that has a low barrier to entry you are going to find people who jump in and are terrible at their job. You wouldn't hire Aunt Millie's friend from work who is a part time plumber to handle handle all the plumbing of the $200,000 constructions project. If you did, you wold be setting yourself up for a big problem. Same holds true for any contractor you hire. A realtor, in my opinion, is just another contractor.
Even the message from CAARE addresses this but glosses over it a bit" Consider interviewing some of the below service providers that we believe offer savings and better protection.
I liken this to a lot of the laws that are passed to regulate landlords. There are slumlords who go to the class D and F properties and skirt the decency of habitability. There are landlords who are good at their job and know what they are doing. In general passing regulation makes it harder on those who are good, and very rarely does anything to reign in the problems. The people who have the mentality to skirt the laws aren't going to suddenly perk up and say "oh, this new regulation was passed so I better stop being a slumlord".
Feedback deeply appreciated!
@Mike Cumbie The trophy! , now that won me over. It's time we got some serious hackers into this business!
Hey, I can only take you at your word in regards to unbiased and arms length choosing of Title companies, attorney's, etc.
But Adam Smith, an absolute genius IMO, kind of nailed it on the head with these words:
"Men of the same profession gather only to conspire against the general public"
Getting involved in the RE business has taught me to think in a much more elastic way than before.
No one can deny, it's a high stakes game.
And because this is a BP thread, sorry I will say it: I learned the hardest meanest lessons via trial by fire. And the most valuable of all these lessons:
Keep things light hearted. People speak truth through lies, and lies through truth. It takes a certain type of intelligence to learn to do this. Something a college professor probably wouldn't grasp.
I recently used a flat free broker to list. Simply because MY contact info was put on the listing, not his. That's the deal breaker(winner) for me. Paying waaaay less was just a convenient bonus.
I won't be endorsing any companies here, but this 'brokerage', made up of one broker, a few programmers, and an MLS admin, with 1000's of sold listings, in 7 neighboring states, it's a sign that things are changing.
I'm sure respect is mutual around the table here. I absolutely respect everyone's feedback and experience.
@Chris Mason I live and breath by those words. And yes, I did get the vibe that this site was angry and preachy.
@Mark Fries Noted! Your comment, in my eyes however, was not a waste of a few taps of the keyboard. You make a valid point, and I'm sure you see that I'm not some whistle blowing hater. I'm trying to be forward thinking and find a solution C.
@PJ M. Lol. I sometimes slip into sales-pitch mode without realizing it. I wake up, not knowing where I am, or why my friends have left. ;)
Ah yes, the incompetence routine=D It's close enough, sure.
Personally I don't think legislation is the solution. I'm Libertarian to the bone.
My Business background is IT Support. In our industry, there are some sharky practices that are next-level twisted(Companies IT provider makes system so complicated that no other provider could possibly make sense of it. Provider triples their rate, and goes home, coming in once or twice a year for emergencies. Cute eh?)
But there's good money to be made on flat out honesty. Observe the trend of the internet itself. Why has google dominated the search engine war? Simple answer: It's the only honest search engine. It took a while for people to notice this, but now google runs the world.
I was providing support for networking and data for scientists trying to cure a disease. Huge money in that. Real Estate is a rush for sure, but in that world(BioTech + Data Security), literally, no one ever lies about anything. One lie, and you're DONE. I'm not judging, but I can't deny how good it feels to do work like that. A feeling no money will ever buy.
Upward and Onward. Thank you all for the insight
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
That site is pretty lame frankly.. you cant as a licensed agents pay referral fees to non licensed folks.
and at the core commissions are negotiable.. There are all sorts of discount brokerages out there.
and on the flip side with low value assets that sell for say 10 to 20k who is going to work for 6% on those then split the commish with the house and another agent.
95% of sales are co brokered IE split. very rare is an agent double ending the deal and making 6%.
on higher end homes for sure we lower the rate..
really depends on the asset.. like for land 10% has always been the norm in CA.. and I used to charge up to 25% for land back in the boonies that I knew would take me well over a year to sell. and each showing was a whole day and a 40 to 60 mile drive one way back into the national forest .. plus very few agents could even find the property.. its a specialty.
For Vanilla SFR primary residence transactions there are all sorts of new companies coming in and going out.
I mean Help U sell franchise came on the scene in the early 80s.. so not a new concept.
Was waiting for you to chime in! You might realize which site this is REALLY about. That one was just perfect for this post=D
@Mike Cumbie Your words here are the most important words of this whole thread.
"Saying "commissions are far too expensive" here is our list of companies that will sell for less (Which of course all paid a "donation" to be listed)."
(Of course, it's not really about amount of commission. But like I said, I'm not looking to do charity work here.)
Maybe some of you catch my drift. Elasticity = the ultimate survival trait.
@Greg Kristy
I don't actively think about improving the industry image. However, as a landlord I seek to rent my property slightly below FMV to avoid turnover which I consider a win-win for me and the tenant. I'm very responsive any time and every time something needs to be fixed or repaired. In my lease I have late fees like everyone else, not in hopes of generating more income but to encourage timely payment. I didn't read the article but I wonder if they mention that property owners pay a late fee to their mortgage company should they decide to pay late and ultimately they face a foreclosure for non-payment.
- Rental Property Investor · Lake County, IL · Member since 2016 · 34 posts · 11 votes7y
@Greg Kristy I didn't read the link, but based on your statement you can avoid the commission. I buy with out an agent. I'm not against using one , I just haven't found one that can do more for me than I can do for my self. There is no exchange of power without the exchange of money.
@Hutcherson Yearwood This is precisely where I am. Though perhaps a little bold due to few actual transactions under my belt.
The link mostly stressed things like Dual-Agency, Listing agents keeping offers from their client in hopes of a double dip. Or more subtly, skewing their portrayal of the property to all except those they have a back room deal with, etc.
ALso bad a big fuss about what a terrible idea it is to have an open house. Since it invites these sorts of definitely-not-arms-length-anymore transactions
- 7yMatthew Irish-JonesBusiness MemberReal Estate Agent · Buffalo, NY · Member since 2017 · 2k+ posts · 2k+ votes
@Greg Kristy it’s a free market. Agents can charge 6,7,8,10,4% etc.
Most charge 6 because so far that is what the market allows. Lots of discount brokers that offer a discount and less services.
Irish Jones Realty4.948 Reviews - 7yDave FosterBusiness MemberQualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
Just some Libertarian musings but Wasn't it Atlas Shrugged where the good steel providers were required by legislation to slow production so the bad steel producers wouldn't be dis-advantaged?
And I wonder if GE wouldn't have been allowed to build Jet airplane engines because they were so good at dish washers where would we be?
I have friends buying new cars all the time. They go in one door and meet the salesman, the closer, the financier, and the servicer, drop a big check and then walk out the same door. Seems to work for them?
IDK was it predatory lending or borrowers not wanting to be accountable for their decisions that led to the last crisis? All I know is I had a root canal experience without anesthesia using conventional federal guidelines lending to buy my new primary residence last week thanks to the knee jerk reaction to the last crisis.
The 1031 Investor5140 Reviews - Real Estate Broker · Cleveland, OH · Member since 2017 · 719 posts · 658 votes7y
Originally posted by @Hutcherson Yearwood:
@Greg Kristy I didn't read the link, but based on your statement you can avoid the commission. I buy with out an agent. I'm not against using one , I just haven't found one that can do more for me than I can do for my self. There is no exchange of power without the exchange of money.
Very cute statement. If you buy without an agent, you are denying freebies - the buyers agent doesn't cost you anything.
If you go with a listing agent, you don't get anyone by your side but the seller still pay both sides of comissions. Really funny how people think.
Comissions are negotiable but great agent do not decrease their comissions. If they can't negotiate their own comissions, how they are going to negotiate anything for their client?!?
In each area comissions kind of expected, like these proverbial 6% (3%+3%).
However, it's 7% on first $100K, 5% on next $400K, 4% on next $500K etc.
Sometimes it's 6% flat, 6/5/3......listing agent could get themselves 5% and leave 2% to the selling agent (and try to find a buyer by himself). There are plenty of structure in comissions, however, any market %% or $$ are acceptable - just try to negotiate. Only fixing the comissions are illegal (agreement to keep them fixed to avoid competition).
- 7yBjorn AhlbladPro MemberInvestor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
When I was a salesman-software and computer systems-I never would have dreamed of giving up a penny of my commissions to anyone. Later when I hired and did comp plans for salesmen/women I made sure they made as much money as they possibly could. Money is the only way to motivate good salespeople; I don't want my agent making less when they represent me. If I am paying 2 and others are paying 4 my stuff won't get done with the same urgency. Make sure you have the best possible agent on your side and pay them the going rate. Don't try to pay less; just get someone who will work more effectively instead.
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