Wholesaler · Austin, TX · Member since 2015 · 37 posts · 13 votes
On average, most consumers only move once about every 7 years or so and for the typical consumer, a good real estate agent can be worth her weight in gold as far as the negotiation skills and technical experience brought to the table. However, if you are a professional real estate investor selling properties every month, you need lower cost options that will not eat into your profit margins. Many companies offer a flat-fee listing service that will substantially reduce the cost of marketing a property on the MLS which can add up to tens of thousands of dollars saved if you're flipping houses. As a business owner, your number one priority is to keep your eye on the bottom line. As Ben Franklin said, "A penny saved is a penny earned." In this case we are talking about a whole lot of pennies! If you can show up on time, dress professionally, and communicate well, you should list your property with a flat-fee listing service and pocket the commissions you'll save. With all that extra change in your pocket, you can invite me to lunch. Win-win!
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
10y
@John Ma your talking technical information.. the reason real estate agents are needed and are not going away is very very simple. Putting buyers and sellers together is a very bad idea... Sellers withhold critical information frequently ... And buyers puff their ability to buy.
Anyone who has actually been and agent will tell you.. how offended a seller can be when a buyer low balls them.. to the point they tell them to take the contract and stuff it were the sun don't shine... You need agents to keep them apart.. Just like if you have ever been in a legal mediation the two sides are in seperate rooms and the mediator works between the rooms... its a cardinal sin in RE sales to let the buyers and sellers communicate much more than a greeting.
think about the homeowner who loves there homes and their frilly wall paper.. young couple comes in and first thing out of the Mrs. mouth is this wall paper is gross ... seller is insulted deal never happens, this is real world RE sales.. not BP world
You need agents to control emotions.. you don't need agents to help the under 50 crowd work the internet.. and all the on line information.
Also this is an investing site so the slant is for investment properties which are different than 90% of transactions which are sellers selling to homeowners ( at least in the SFR realm) And commercial has different brokers who are much more intuned to the financial side of the transactions than your RE agent who is trying to find that certain look that the wife wants.
The reality is the wife if they have one will have the yes or no decision about 95% of the time.. Husbands huff and puff but at the end of the day its the wife that will make the final decision to pull the trigger and that decisions is based on female things IE how the house looks whats in the kitchen the bathrooms the master etc.
Wholesaler · Austin, TX · Member since 2015 · 37 posts · 13 votes
10y
@Brandon Hall I agree with your point that agents save time and let you focus. The issue is that while you don't think there's any analogy between a McDonald's kiosk and an agent, many consumers view agents as commodities with one being as good as any other or that our work is so easy they can just do it themselves. Consumers that think that way are being catered to by "daytrading" website brokerages offering flat-fee listings. If you buy distressed property, you know there are plenty of people that think their house is worth $150k while the comps reflect $100k. When the agent points this out to them, the seller tells the agent that they don't know what they're talking about and that they'll just wait until $150k comes through the door and they refuse to accept the value an agent can bring to the table besides data. Maybe we should just re-title this thread to "Ignorant Sellers and Their Cheap Cognitive Dissonance" :)
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
10y
The question is - will realtors become obsolete FOR YOU? They will never become obsolete as an industry I don't think. Tons of average Joe and Jill buyers and homeowners need them and good ones are worth even more than the commissions paid!
I am nobody from nowhere, but am under contract to sell another 3-family completely FSBO. My last 4 years worth of buys were all off-market. I haven't done business in any way with a realtor since 2011, when I bought my last listed property. It was a pain (inherited property - not the agents' fault), but we got through it and the LA earned both sides of the commission. She earned it!
With the internet and other MLS methods, I think they are becoming more obsolete for the DIY seasoned investors, yes. But that's a very small slice of the population pie, indeed!
PS- A penny saved is now more like a penny and a half earned. Good ol' taxes. Cheers!
Investor · Princeton, TX · Member since 2014 · 1k+ posts · 1k+ votes
10y
Believe me Google could easily get the data. Very quickly they would have more data than the MLS.
By the way... for anyone that does not believe me I know where you can get 100 Taxi Medallions at a great price. You can probably get them for 2010 prices.
Flipper/Rehabber · Greeley, CO · Member since 2013 · 2k+ posts · 1k+ votes
10y
Originally posted by @Account Closed:
Believe me Google could easily get the data. Very quickly they would have more data than the MLS.
By the way... for anyone that does not believe me I know where you can get 100 Taxi Medallions at a great price. You can probably get them for 2010 prices.
How could Google get the data? Zillow, Realtor.com and other sites get the data because the agents have agreements with them to give them the data. The agents agree to give them the data and the data is slow coming out and not all data is given. Many houses for sale are not listed on Zillow.
Google could get sold data from public records, but so can Zillow and the other sites. But a sold price tells you nothing of condition, loan type, sales type, features, amentities, etc. What you get is a bunch of data that can't be used accurately within 10 or 20 percent which is what Zillow has. There goes the money you were saving on the agent times five.
@Brandon Hall I saw the article online about reduced commissions for brokerages and wanted to put it out there for discussion. I found it interesting that people are protesting being paid less than $15/hour to work at McDonald's and McDonald's installs machines to take orders instead of giving raises. Labor costs have gone down since NAFTA; why is it unimaginable that costs should go down in this industry as well? I'm sure when cars became prevalent there were horse buggy manufacturers scheming on how to get congress to enact protection schemes. Many people have commented on here - if you have a superior skill as a top 1% or 10% agent you have nothing to worry about because you're providing value beyond data and so none of this would apply to them. The fact of the matter is that those top guys would have probably been successful in whatever industry they ended up in. Work ethic, reputation, and integrity carry the day. Yes I'm a licensed agent but I only work on distressed properties. We put properties under contract and close on them and sell them for a higher price as professional wholesalers.
Sorry about the licensing and ad comments then. The original post came off as a ploy :)
It's not unimaginable that costs will go down, and I never said that it was. What I did imply is that a realtor's value comes from the time I'm saving in a transaction. This "time" includes hundreds of hours of education/studying and thousands of hours of experience. What they can likely do in two hours may take me an entire day. All the while, I'm not winning more work or completing projects for my current clients. Huge opportunity cost there.
I get that in your example you are trying to illustrate price squeezes, but comparing McDonald's operating strategy to real estate isn't a good analogy. When I drive through McDonald's, I don't care who (or what machine) prepares my burger because it costs me $1.00 and I already know it's not the healthiest food anyway. My expectations are very low. McDonald's knows that it's customers don't have high expectations, so implementing automated serving systems will decrease their labor costs and boost their bottom line without taking a huge hit on the top line.
Now let's compare that to making the largest financial decision of one's life. When thousands of dollars are on the line, experts will always be consulted. I will pay an expert handsomely if it means I'm saving my own time and the transaction is going to be executed flawlessly.
Perhaps we should ask guys who purchase large buildings if they would have been comfortable doing so without a realtor/broker. Maybe I'm way off here. @Brian Adams@Ben Leybovich@Serge S. Brian Burke (I can never tag you, not sure why).
I feel the original argument should be rephrased so that it's not a blanket statement involving all realtors. If the argument was "50% of retail realtors will leave the industry" I feel you'd have better success substantiating your arguments.
I prefer when there is no agent involved. But, they will never give up their turf, which kinda makes this a silly conversation :)
real estate agent brings any value to the table whatsoever with the mountains of free data available on the internet.
The sold data in most of the country has always been free. The internet does make it easy to get to, but for all but 4 or 5 states it has always been available.
Also, you may want to use a REALTOR just for fraud protection. If you listen to podcast 109. The attorney points out that just sending an email could open you up to fraud. It maybe better to let your REALTOR do that.
I bet that we will see REALTORS used by those who have way to much money, and those who have no idea what they are doing. The educated middle who needs to save a buck will continue to try to find ways to DIY.
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
10y
@John Ma your talking technical information.. the reason real estate agents are needed and are not going away is very very simple. Putting buyers and sellers together is a very bad idea... Sellers withhold critical information frequently ... And buyers puff their ability to buy.
Anyone who has actually been and agent will tell you.. how offended a seller can be when a buyer low balls them.. to the point they tell them to take the contract and stuff it were the sun don't shine... You need agents to keep them apart.. Just like if you have ever been in a legal mediation the two sides are in seperate rooms and the mediator works between the rooms... its a cardinal sin in RE sales to let the buyers and sellers communicate much more than a greeting.
think about the homeowner who loves there homes and their frilly wall paper.. young couple comes in and first thing out of the Mrs. mouth is this wall paper is gross ... seller is insulted deal never happens, this is real world RE sales.. not BP world
You need agents to control emotions.. you don't need agents to help the under 50 crowd work the internet.. and all the on line information.
Also this is an investing site so the slant is for investment properties which are different than 90% of transactions which are sellers selling to homeowners ( at least in the SFR realm) And commercial has different brokers who are much more intuned to the financial side of the transactions than your RE agent who is trying to find that certain look that the wife wants.
The reality is the wife if they have one will have the yes or no decision about 95% of the time.. Husbands huff and puff but at the end of the day its the wife that will make the final decision to pull the trigger and that decisions is based on female things IE how the house looks whats in the kitchen the bathrooms the master etc.
Investor · Riverside, CA · Member since 2011 · 2k+ posts · 3k+ votes
10y
And they said there was no such thing as a dumb question. LOL
First off, there is a huge disconnect between your headline and your post. Your headline is far to vague in relation to what you intend to discuss.
Furthermore, you have probably never worked in sales. A good agent is a salesperson. If you own a company, and are not running a hobby, you'll need a good salesperson to sell your inventory. Doing it yourself is probably OK if you have 1 house a month or less in inventory. Try selling 5 or more homes. I just closed one sale side escrow last Friday, and have another closing next Friday. I have 2 in escrow on the buy side, and have 2 other properties for sale. Not to mention the several I am rehabbing. Where am I supposed to find the time to go stand around a vacant house and point out to some moron where the kitchen is located? Wouldn't my time be better utilized making offers, researching lists, or following up on old leads - the activities that actually bring money into my business, than acting like a salesperson and trying to move the inventory I have?
Maybe you've never worked with a great sales agent? An agent who actually knows the business is an invaluable tool in the purchase and sales process. I had a lady respond to my marketing materials. I offered to buy her house at my price. She said she couldn't sell it to me at that price because she was retiring and needed as much of her equity out of the property as possible to allow her to do what she needed to do.
We went back and forth and I insisted I was only interested in buying it and she insisted that I was going to list it and sell it for her. Well, she talked a good game and I eventually caved and went to see the house. I thought she had been disserviced by the agent community so I wanted to see how I might help her out so she could pass along the info to the next agent she hired. She had previously listed it, but it didn't sell. When I walked in the front door, I immediately knew why. I instructed her how to stage her house using her own furniture. I also pointed out all the crap she needed to box up and put into storage. I agreed to sell her house for her because I knew I could sell it and I stood to make $12,000+ in commission when I did. I wrote extremely marketable copy for the listing. I also took the photos used for showing the house. She did what I told her to do with the furnishings and other junk in her house.
I held an open house on a Saturday. We received an all cash offer above asking price Saturday evening and the house sold within 30 days. That is the kind of service a person with sales experience can provide. Unfortunately, most agents follow the "Put, Put, Pray" sales method; put a sign in the front lawn, put the property into the MLS, pray some other agent with a buyer comes along and makes an offer. They're more focused on listing volume and hope statistics will play out in their favor. I think one could make more money focusing on a lower volume of listings, only listing very marketable properties and putting in a full force marketing effort to get them sold.
No website is ever going to be able to analyze your property and tell you the best way to market it. It takes a marketing expert who either knows how to do it, or will hire the right talent to get it done. Every house is different. Websites don't understand that. A website can provide lots of raw data, but only a knowledgeable salesperson can pick up on the nuances of the individual house, flaunt its pros and talk down its cons.
Loan Officer · Tustin, CA · Member since 2015 · 3k+ posts · 713 votes
10y
Not sure how an agent would become replaceable. Some things need a human eye, touch and smell. I do think that flat fee for realtors could be around the corner!
l think the first thing that will happen is a company like Google (Alphabet) will decide to take over the MLS market. As someone that has used the Realtor Association controlled MLS, I can say they would do a much better job.
The problem with this idea is that google would need to enlist hundreds of thousands f people who have access to the data to get it for them and give it to them willingly. The MLS data is collected by agents for agents benefits. The only way to get the data for the transactions is to be a part of the transaction. Agents are not just going to allow the information to get out there. Even the information agents and the MLS allow to be public on sites like Zillow and Trulia is only a part of the transaction. Information like seller subsidies is typically only privy to MLS members.
Actually they could do what Amazon and other online retailers do. Which is use current systems as a spring board. People often check products out in person now, knowing the entire time they will order online from another retailer.
People could simply suggest that people ask an agent for a free brokers price opinion. Then set the price at whatever the agent says.
As people switched to the new system it would not take long for it to become more important than the old MLS.
Not sure how an agent would become replaceable. Some things need a human eye, touch and smell. I do think that flat fee for realtors could be around the corner!
Only the discount mill house types. A good Realtor knows his/her value and can command 7% easily. Go ahead and try to sell a $2M+ house. Where would you even start? What type of budget do you have to invest in marketing a deal like that? How about 20 houses from the same seller all at once. Just buying enough signs and lock boxes would BK an average agent. Agents aren't going anywhere and their commissions are always going to be negotiable, but the good ones will get paid their worth.
It's like escrow. You don't need to use an escrow. Just a bunch of prorations right? My escrow lady could charge me whatever she wants and I wouldn't balk (to a point). It is the little things she finds that saves me so much pain and frustration.
Besides, the government has so many restrictions when it comes to selling to owner occupied buyers who need a loan (pretty much the target market for the majority of investors that flip) that the average investor doesn't have the time to invest in staying abreast of the multitudes of red tape that need to be navigated. One false move and a decade of profits could be wiped out by a judgement.
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
10y
@Aaron Mazzrillo as you know in the retail resale game most sellers and buyers will do a few transactions in their lifetime.. they really dont have any experience at it or understand the process. FSBO happens but its not the norm. And any wholesaler who thinks having a license is a hinderance should read your previous post.. thats a great way to maximize your time and leads if your not going to buy it list and sell it.. I am sure this has happened to you but many clients you work with over the years end up being investment partners its the private money that so many of these folks on BP are desperately seeking.. When your an agent your in front of potential investors all the time.. You list and sell their home you see the hud you see they made 500k on the deal.... what does a smart entrepreneur do then.. ??? When I look at all the deals I am doing nationwide and its usually 100 plus at any one time... All of them have great agents involved at some level.. And or they are agents or their partners are agents... access to MLS is critical in my mind in the business .. but I digress... nice posts and perspective
Rental Property Investor · Asheville, NC · Member since 2015 · 307 posts · 127 votes
10y
I've heard this kicked around long before I ever got into the industry. My personal opinion is that REALTORs aren't going anywhere, but the current setup of our advertising is going to change. Drastically. Why should I put my listing into the MLS, for Zillow to pick up my information, and my photos, to market my listing across the internet, and charge some other schmuck 2,3,4 sometimes even $500 a month to have his face sitting next to my property? I honestly think we as agents are going to get fed up with working to provide a faceless entity like Zillow, Trulia, etc. the information they use to charge other REALTORs an arm, leg, and firstborn child! @Russell Brazil, I would GLADLY pay Google, or equivalent to set up an MLS system, rather than pay my board $1,000 a year, for them to turn around and sell my listing information to Zillow et al!
Investor · Granger, IN · Member since 2015 · 195 posts · 129 votes
10y
The system by which we buy and sell houses with the MLS is already obsolete. We do use two very good agents but it took a long time to work through others to get to them. It is a government sanctioned system which reduces competition and helps the people in the profession make better money (hence the general 6% commission). It does not protect buyers (though title companies do) and protects the realtors. I am not picking on realtors specifically. In Indiana I cannot buy a furnace unless I have a license although I can put in and out a hot water heater. I spent my working life as a CPA, which is also a licensed profession which protects CPA salaries more than clients and the investing public. Don't even get me started on inspectors. Holy crap what a scam that is. Enjoy the day! :)
In Indiana I cannot buy a furnace unless I have a license although I can put in and out a hot water heater.
To be fair, couldn't you blow your house up if you did an improper install on a furnace? I own an apartment building with steam heat. I ordered a few books to learn the system and there are some pretty hefty warnings about tinkering with the system.
Real Estate Investor · chicago, IL · Member since 2012 · 1k+ posts · 231 votes
10y
BP nation was going CRAZY over how a flat fee listing will not work. I paid my $250 to a flat fee agent anyways. :) We offered 2% to the buyer's agent (keep in mind this was just a $140k flip) and my phone lit up. The listing agents even left voice mails saying they were going to see the home and have the lock box code. I got an offer accepted in 10 days and had my attorney review the contract (agents are not legally qualified to review this stuff).
Guess what? the deal backed out. No worries, put it on the market and the next day, guess what? Another listing agent calls me, an hour later, we've got an offer. Deal closed and I save a ton of $ and barely any of my time wasted.
Thanks for the reply. I am thinking I could blow my house with a gas water heater or gas stove as well. They just have less resttictions. My point was that lobbyists got together to control furnace installation. That increase the costs of furnaces to everyone under the pretense of safety. But as a buyer of old homes. That safety standard is not reflected anywhere else in the house (electrical, plumbing etc that can be done by any home owner). So it makes no sense unless it is really designed to help the HVAC industry.
BP nation was going CRAZY over how a flat fee listing will not work. I paid my $250 to a flat fee agent anyways. :) We offered 2% to the buyer's agent (keep in mind this was just a $140k flip) and my phone lit up. The listing agents even left voice mails saying they were going to see the home and have the lock box code. I got an offer accepted in 10 days and had my attorney review the contract (agents are not legally qualified to review this stuff).
Guess what? the deal backed out. No worries, put it on the market and the next day, guess what? Another listing agent calls me, an hour later, we've got an offer. Deal closed and I save a ton of $ and barely any of my time wasted.
If you had that much action, there is a good chance you under priced the home and left money on the table. I see this all the time with FSBO's where they think because they sold their house in one day they save all this money, but really an agent most likely could have gotten them much more money then the commission they saved. Really you saved maybe $4,000, but might have lost 10k if it was priced better.
Real Estate Investor · chicago, IL · Member since 2012 · 1k+ posts · 231 votes
10y
spoken from a realtor. :) the house appraised at the listing price. I know this town really well and met the appraiser to give him the sold comps & work done to the home (hundreds of these same sized homes in this town so easy to comp).
spoken from a realtor. :) the house appraised at the listing price. I know this town really well and met the appraiser to give him the sold comps & work done to the home (hundreds of these same sized homes in this town so easy to comp).
wasn't under or overpriced. nice try though.
It sounds like you did your homework which is good. However, many homeowners dont or do the wrong honework. In my experience the sweet spot is three weeks for a house priced right. If I get offers right away it is usually priced a little low and more than a month too high. In a very hot market it could be quicker if inventory is very low.
The appraisal really means nothing. The job of the appraiser is to verify value. 95 percent of appraisals will come in right at or maybe within 2 percent of the contract value. Appraisers don't want to come in high, because it might raise red flags. Many appraisers got in trouble with appraisals too high before the housing crisis. They changed the system so that appraisers are very careful about not coming high. Even on incredibly awesome deals that are clearly below market, I see appraisals come right in at contract price.
Santa Barbara, CA · Member since 2015 · 75 posts · 17 votes
10y
@David. If only buyer's agents took their fiduciary duty seriously. Generally speaking, they do not because their interests are more aligned with the seller and his agent than his own client. The system as it now stands has a built-in conflict of interest. As a buyer, I am always looking for ways to better align the agent's interest with my own.
