Why use a Real Estate Agent?

Member since 2019 · 17 posts · 24 votes

Hello BP!

I have a question for the group and was hoping to generate a discussion around this topic.

Disclaimer – I am an instructor pilot in the Navy and not a real estate professional – so take everything with a grain of salt.

I recently completed a real estate transaction (sold our home) and I couldn’t help but think to myself – Why am I paying our Real Estate Agent so much money? Why do they get an equity stake in this transaction? And what do they actually do to earn that stake?

**If you are a real estate agent or know a real estate agent and are offended then my sincere apologies. I am not trying to denigrate anyone’s profession. I am sure there are plenty of agents out there that work really hard and are great people. Just asking the question.**

This got me thinking. I took a serious look at the whole real estate transactional process and it left me scratching my head as to what the actual value add of the real estate agent is these days. Understandable during the days of yore when all the data was exclusively held on the MLS and you needed agents to get access to reliable information. But we don't live in that universe anymore. The majority of data is open source and we can get it by simply looking at Zillow, county websites or heaven forbid taking a trip down to the county clerk's office and actually pulling the documents. So I now have all the information I need to make informed valuation decisions at my fingertips. Why am I giving up an equity stake for someone to run the same comparative market analysis I can run to come up with roughly the same number I would?

Well maybe they are useful when it comes to contracts and negotiations. I can see the argument there. The problem with that is that I spoke with a bunch of Real Estate Attorneys that assured me they can and do perform the same services (contract negotiations, advising, etc…) and they do it for a fixed hourly rate as opposed to an equity stake. Bonus – they have a doctorate in jurisprudence.

To me it seems like the future is moving towards a more streamline process. But I am interested to hear what the far more experienced professional investors and members of the BP community think... What, if any, is your experience navigating the waters of the real estate transaction process without agents and what are your lessons learned/thoughts on the subject? And on the flip side - what are the arguments for hiring and agent and giving them an equity stake in the transaction?

Thank you for your time! And again, just asking the question. Seeking information/guidance/opinions on the subject. Not trying to upset anyone in the slightest!

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Corby GoadeBusiness Member

Investor · Boise, ID · Member since 2014 · 3k+ posts · 3k+ votes

It's silly to think you need an agent to sell a home. You don't. Anyone can sell a home all by themselves.

However- a GOOD agent's true value is in creating leverage for you. That leverage can result in less stress, better velocity of money, saved time and absolutely more money in your pocket.

I do deals directly with sellers all of the time who have the attitude that they don't need a realtor and they're going to "save" a bunch of money. Those are my favorite deals- they don't understand their rights within their own contract or state law when i comes to real estate transactions. They sell the house but have no idea that they've left tens of thousands of dollars on the table. 100% of the time they feel like they've won becuase they didn't pay an agent $10k, but they have no idea that they walked away from another $30k that they very easily could have had.

Here's the cold, hard facts: A good real estate agent is your business partner. When you work together as a team, you both win. That agent will bring you deals that no one else knows about, and you'll pay them for that.

If you treat them like a commodity and someone who is stealing from you, why on earth would they bring you any opportunities? People on these boards are always trying to network with wholesalers, but active real estate agents who work with investors see more deals, on and off market, than anyone else. Make friends with a good agent and you'll both prosper.

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Account Closed
Investor · TX · Member since 2018 · 38 posts · 28 votes
3y
Quote from @James Hamling:

Quote from @Account Closed:

Quote from @Wale Lawal:

@Billy Knox
The proliferation of services that help homebuyers and sellers complete their own real estate transactions is relatively recent, and it may have you wondering whether using a real estate agent is becoming a relic of a bygone era. While doing the work yourself can save you the significant commission rates many real estate agents command, for many, flying solo may not be the way to go--and could end up being more costly than a realtor's commission in the long run. Buying or selling a home is a major financial (and emotional) undertaking. Find out why you shouldn't discard the notion of hiring an agent just yet.

1. Better Access/More Convenience

A real estate agent's full-time job is to act as a liaison between buyers and sellers. This means that he or she will have easy access to all other properties listed by other agents. Both the buyer's and seller's agent work full time as real estate agents and they know what needs to be done to get a deal together. For example, if you are looking to buy a home, a real estate agent will track down homes that meet your criteria, get in touch with sellers' agents and make appointments for you to view the homes. If you are buying on your own, you will have to play this telephone tag yourself. This may be especially difficult if you're shopping for homes that are for sale by owner.

Similarly, if you are looking to sell your home yourself, you will have to solicit calls from interested parties, answer questions and make appointments. Keep in mind that potential buyers are likely to move on if you tend to be busy or don't respond quickly enough. Alternatively, you may find yourself making an appointment and rushing home, only to find that no one shows up.

2. Negotiating Is Tricky Business

Many people don't like the idea of doing a real estate deal through an agent and feel that direct negotiation between buyers and sellers is more transparent and allows the parties to better look after their own best interests. This is probably true--assuming that both the buyer and seller in a given transaction are reasonable people who are able to get along. Unfortunately, this isn't always an easy relationship.

What if you, as a buyer, like a home but despise its wood-paneled walls, shag carpet and lurid orange kitchen? If you are working with an agent, you can express your contempt for the current owner's decorating skills and rant about how much it'll cost you to upgrade the home without insulting the owner. For all you know, the owner's late mother may have lovingly chosen the décor. Your real estate agent can convey your concerns to the sellers' agent. Acting as a messenger, the agent may be in a better position to negotiate a discount without ruffling the homeowner's feathers.

A real estate agent can also play the “bad guy” in a transaction, preventing the bad blood between a buyer and seller that can kill a deal. Keep in mind that a seller can reject a potential buyer's offer for any reason--including just because they hate his or her guts. An agent can help by speaking for you in tough transactions and smoothing things over to keep them from getting too personal. This can put you in a better position to get the house you want. The same is true for the seller, who can benefit from a hard-nosed real estate agent who will represent their interests without turning off potential buyers who want to niggle about the price.

3. Contracts Can Be Hard To Handle

If you decide to buy or sell a home, the offer to purchase contract is there to protect you and ensure that you are able to back out of the deal if certain conditions aren't met. For example, if you plan to buy a home with a mortgage but you fail to make financing one of the conditions of the sale--and you aren't approved for the mortgage--you can lose your deposit on the home and could even be sued by the seller for failing to fulfill your end of the contract.

An experienced real estate agent deals with the same contracts and conditions on a regular basis, and is familiar with which conditions should be used, when they can safely be removed and how to use the contract to protect you, whether you're buying or selling your home.

4. Real Estate Agents Can't Lie

Well, OK, actually they can. But because they are licensed professionals there are more repercussions if they do than for a private buyer or seller. If you are working with a licensed real estate agent under an agency agreement, (i.e., a conventional, full-service commission agreement in which the agent agrees to represent you), your agent will be bound by common law (in most states) to a fiduciary relationship. In other words, the agent is bound by license law to act in their clients' best interest (not his or her own).

In addition, most realtors rely on referrals and repeat business to build the kind of clientèle base they'll need to survive in the business. This means that doing what's best for their clients should be as important to them as any individual sale.

Finally, if you do find that your agent has gotten away with lying to you, you will have more avenues for recourse, such as through your agent's broker, professional association (such as the National Association Of Realtors) or possibly even in court if you can prove that your agent has failed to uphold his fiduciary duties.

When a buyer and seller work together directly, they can (and should) seek legal counsel, but because each is expected to act in his or her best interest, there isn't much you can do if you find out later that you've been duped about multiple offers or the home's condition. And having a lawyer on retainer any time you want to talk about potentially buying or selling a house could cost far more than an agent's commissions by the time the transaction is complete.

5. Not Everyone Can Save Money

Many people eschew using a real estate agent to save money, but keep in mind that it is unlikely that both the buyer and seller will reap the benefits of not having to pay commissions. For example, if you are selling your home on your own, you will price it based on the sale prices of other comparable properties in your area. Many of these properties will be sold with the help of an agent. This means that the seller gets the keep the percentage of the home's sale price that might otherwise be paid to the real estate agent.

However, buyers who are looking to purchase a home sold by owners may also believe they can save some money on the home by not having an agent involved. They might even expect it and make an offer accordingly. However, unless buyer and seller agree to split the savings, they can't both save the commission.
All the best!

This is the best answer. The liability placed on agents and brokers definitely helps. The elephant in the room, though, is the bias and NAR's monopolization of the industry. It is very hard to get an unbiased answer on using an agent ... from an agent. It's like asking a barber if you need a haircut. Or asking a car salesman if you should buy a car (from them, of course). I'm sure that if I went through the process and got a license (I've actually taken the entire course, just decided against licensing due to the liability) that it would be hard not to switch my tune because of the incentives... That's just how human bias works.

A lot of this is just assumption, assuming a Real Estate Agent is ONLY arguing to defend there profit generation. The truth is it's a LOT more like a surgeon trying to share and explain why it's foolish to try and do your own surgery, yourself.
Look, in the vast majority of cases a real estate transaction is in the hundreds of thousands of dollars. It's a lot of money, years and years worth if not decades worth of income, right, the risks are BIG from screw-up's, one mess-up easily costs thousands and tens of thousands.
Reality is Real Estate Transactions are complicated. Yes, a person "can" do it "simple", and one "can" do a surgery with a chain-saw, doesn't make it correct.
The thing in Real Estate Transactions, and newer wholesalers run into this a lot, is finding out you only did the basics, and missed things, big things, expensive things. This is law were talking about, ever seen a law library? Ever try reading a legal statute? Yeah, it ain't easy. An agent's main thing isn't for the simple obvious stuff, any ya-hoo can do a fill-in-the-blanks basic PA. An agent, like an attorney, exists for all the sh#t that SINT commonly known, for the DETAILS. On average MOST transactions have no less than 7 addendums, if done correctly. Yup, and that's just basic 101. Most is "CYA" doc's so nothing comes back after the fact, months or years later, to bite one in the arse.
There is a mountain of variables to every transaction, and knowing which applies, which does not, how to best address it for the stance one is in, how it legally impacts, THATS what an agent exists for. This whole argument of doing it one-self has stood on an assumption "it's EASY" and "Anyone can do it", which NO, that's not true, it's NOT easy and no not anyone can do it, anyone can try and most likely do it really poorly, with lots of screw-ups, and get into litigation which there ya go, that's 10X the cost an agent would have been.
Look, I simply tell the truthy, that's it. About 15% of my client base is people who did try doing things themselves, and learned the hard way. They ask me often "how do you do it" when it seems so easy that I get done "the things". It's one simple fact, this is what I do, every day, FT, for years, decades. It's infantile to think a person with 0 experience can get same or similar results to one who does it FT day in and day out.
No person would argue they can cook ANYTHING as good as Gordon Ramsey, a chef. They don't say "well, anyone can cook, so Chef's are a waste of $, I can throw together whatever they do no problem". No, everyone would laugh at that. Why is it not equally as common sense about a complicated legal process involving hundreds of thousands of dollars, layers of regulatory over-sight from Federal, state, county and local.
Yes, SOME can, stress on SOME. Some CAN cook as good as a Chef. That sure as hell does not mean ANY can.

Most agents simply aren't that good. The good ones are worth their weight in gold, but does the license make them magically smarter? No. The knowledge? Yes. Can you have that knowledge without the state or government or TRELA or NAR stamping you with their approval? Yes.
That's the point.
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James Hamling
Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
3y
Quote from @Account Closed:

Quote from @James Hamling:

Quote from @Account Closed:

Quote from @Wale Lawal:

@Billy Knox
The proliferation of services that help homebuyers and sellers complete their own real estate transactions is relatively recent, and it may have you wondering whether using a real estate agent is becoming a relic of a bygone era. While doing the work yourself can save you the significant commission rates many real estate agents command, for many, flying solo may not be the way to go--and could end up being more costly than a realtor's commission in the long run. Buying or selling a home is a major financial (and emotional) undertaking. Find out why you shouldn't discard the notion of hiring an agent just yet.

1. Better Access/More Convenience

A real estate agent's full-time job is to act as a liaison between buyers and sellers. This means that he or she will have easy access to all other properties listed by other agents. Both the buyer's and seller's agent work full time as real estate agents and they know what needs to be done to get a deal together. For example, if you are looking to buy a home, a real estate agent will track down homes that meet your criteria, get in touch with sellers' agents and make appointments for you to view the homes. If you are buying on your own, you will have to play this telephone tag yourself. This may be especially difficult if you're shopping for homes that are for sale by owner.

Similarly, if you are looking to sell your home yourself, you will have to solicit calls from interested parties, answer questions and make appointments. Keep in mind that potential buyers are likely to move on if you tend to be busy or don't respond quickly enough. Alternatively, you may find yourself making an appointment and rushing home, only to find that no one shows up.

2. Negotiating Is Tricky Business

Many people don't like the idea of doing a real estate deal through an agent and feel that direct negotiation between buyers and sellers is more transparent and allows the parties to better look after their own best interests. This is probably true--assuming that both the buyer and seller in a given transaction are reasonable people who are able to get along. Unfortunately, this isn't always an easy relationship.

What if you, as a buyer, like a home but despise its wood-paneled walls, shag carpet and lurid orange kitchen? If you are working with an agent, you can express your contempt for the current owner's decorating skills and rant about how much it'll cost you to upgrade the home without insulting the owner. For all you know, the owner's late mother may have lovingly chosen the décor. Your real estate agent can convey your concerns to the sellers' agent. Acting as a messenger, the agent may be in a better position to negotiate a discount without ruffling the homeowner's feathers.

A real estate agent can also play the “bad guy” in a transaction, preventing the bad blood between a buyer and seller that can kill a deal. Keep in mind that a seller can reject a potential buyer's offer for any reason--including just because they hate his or her guts. An agent can help by speaking for you in tough transactions and smoothing things over to keep them from getting too personal. This can put you in a better position to get the house you want. The same is true for the seller, who can benefit from a hard-nosed real estate agent who will represent their interests without turning off potential buyers who want to niggle about the price.

3. Contracts Can Be Hard To Handle

If you decide to buy or sell a home, the offer to purchase contract is there to protect you and ensure that you are able to back out of the deal if certain conditions aren't met. For example, if you plan to buy a home with a mortgage but you fail to make financing one of the conditions of the sale--and you aren't approved for the mortgage--you can lose your deposit on the home and could even be sued by the seller for failing to fulfill your end of the contract.

An experienced real estate agent deals with the same contracts and conditions on a regular basis, and is familiar with which conditions should be used, when they can safely be removed and how to use the contract to protect you, whether you're buying or selling your home.

4. Real Estate Agents Can't Lie

Well, OK, actually they can. But because they are licensed professionals there are more repercussions if they do than for a private buyer or seller. If you are working with a licensed real estate agent under an agency agreement, (i.e., a conventional, full-service commission agreement in which the agent agrees to represent you), your agent will be bound by common law (in most states) to a fiduciary relationship. In other words, the agent is bound by license law to act in their clients' best interest (not his or her own).

In addition, most realtors rely on referrals and repeat business to build the kind of clientèle base they'll need to survive in the business. This means that doing what's best for their clients should be as important to them as any individual sale.

Finally, if you do find that your agent has gotten away with lying to you, you will have more avenues for recourse, such as through your agent's broker, professional association (such as the National Association Of Realtors) or possibly even in court if you can prove that your agent has failed to uphold his fiduciary duties.

When a buyer and seller work together directly, they can (and should) seek legal counsel, but because each is expected to act in his or her best interest, there isn't much you can do if you find out later that you've been duped about multiple offers or the home's condition. And having a lawyer on retainer any time you want to talk about potentially buying or selling a house could cost far more than an agent's commissions by the time the transaction is complete.

5. Not Everyone Can Save Money

Many people eschew using a real estate agent to save money, but keep in mind that it is unlikely that both the buyer and seller will reap the benefits of not having to pay commissions. For example, if you are selling your home on your own, you will price it based on the sale prices of other comparable properties in your area. Many of these properties will be sold with the help of an agent. This means that the seller gets the keep the percentage of the home's sale price that might otherwise be paid to the real estate agent.

However, buyers who are looking to purchase a home sold by owners may also believe they can save some money on the home by not having an agent involved. They might even expect it and make an offer accordingly. However, unless buyer and seller agree to split the savings, they can't both save the commission.
All the best!

This is the best answer. The liability placed on agents and brokers definitely helps. The elephant in the room, though, is the bias and NAR's monopolization of the industry. It is very hard to get an unbiased answer on using an agent ... from an agent. It's like asking a barber if you need a haircut. Or asking a car salesman if you should buy a car (from them, of course). I'm sure that if I went through the process and got a license (I've actually taken the entire course, just decided against licensing due to the liability) that it would be hard not to switch my tune because of the incentives... That's just how human bias works.

A lot of this is just assumption, assuming a Real Estate Agent is ONLY arguing to defend there profit generation. The truth is it's a LOT more like a surgeon trying to share and explain why it's foolish to try and do your own surgery, yourself.
Look, in the vast majority of cases a real estate transaction is in the hundreds of thousands of dollars. It's a lot of money, years and years worth if not decades worth of income, right, the risks are BIG from screw-up's, one mess-up easily costs thousands and tens of thousands.
Reality is Real Estate Transactions are complicated. Yes, a person "can" do it "simple", and one "can" do a surgery with a chain-saw, doesn't make it correct.
The thing in Real Estate Transactions, and newer wholesalers run into this a lot, is finding out you only did the basics, and missed things, big things, expensive things. This is law were talking about, ever seen a law library? Ever try reading a legal statute? Yeah, it ain't easy. An agent's main thing isn't for the simple obvious stuff, any ya-hoo can do a fill-in-the-blanks basic PA. An agent, like an attorney, exists for all the sh#t that SINT commonly known, for the DETAILS. On average MOST transactions have no less than 7 addendums, if done correctly. Yup, and that's just basic 101. Most is "CYA" doc's so nothing comes back after the fact, months or years later, to bite one in the arse.
There is a mountain of variables to every transaction, and knowing which applies, which does not, how to best address it for the stance one is in, how it legally impacts, THATS what an agent exists for. This whole argument of doing it one-self has stood on an assumption "it's EASY" and "Anyone can do it", which NO, that's not true, it's NOT easy and no not anyone can do it, anyone can try and most likely do it really poorly, with lots of screw-ups, and get into litigation which there ya go, that's 10X the cost an agent would have been.
Look, I simply tell the truthy, that's it. About 15% of my client base is people who did try doing things themselves, and learned the hard way. They ask me often "how do you do it" when it seems so easy that I get done "the things". It's one simple fact, this is what I do, every day, FT, for years, decades. It's infantile to think a person with 0 experience can get same or similar results to one who does it FT day in and day out.
No person would argue they can cook ANYTHING as good as Gordon Ramsey, a chef. They don't say "well, anyone can cook, so Chef's are a waste of $, I can throw together whatever they do no problem". No, everyone would laugh at that. Why is it not equally as common sense about a complicated legal process involving hundreds of thousands of dollars, layers of regulatory over-sight from Federal, state, county and local.
Yes, SOME can, stress on SOME. Some CAN cook as good as a Chef. That sure as hell does not mean ANY can.

Most agents simply aren't that good. The good ones are worth their weight in gold, but does the license make them magically smarter? No. The knowledge? Yes. Can you have that knowledge without the state or government or TRELA or NAR stamping you with their approval? Yes.
That's the point.

Yeah, that is the rub of it isn't it.

I would say from my experience;

- 50% of agents are absolute garbage, 0 value what-so-ever from that agent ALTHOUGH the 1 value point is, there under a broker, so any f-up after the fact a person can throw that agent under the bus, cite broker must make things right, and via laws and licensure, yup there is a liability. So it still holds value over self-agency because there is a party to hold accountable. One has to weigh the agent cost vs benefit, make sure there in-line.

- 30% of agent are "meahh". Now, take this with a grain of salt because I consider net-0 to be "meahh" and if the value an agent brings covers there entire fee's, well there is value in fact they did everything, you saved your time, that's valuable, and you completely removed risk as they ate that. So it's worth it, but it's not some "big win" it's just a "yeah, that makes sense".

- 15% of agents are great. They not only get the job done but better, faster, and every once in a while surprise with a off-market deal, something one didn't expect. It's a profitable relationship, one where a person says "I am luck to have found ___".

- 5% of agents "walk-on-water". What else do you say of them, they are nothing short of God like powers of Real Estate. They seemingly do the impossible or improbable, and do it weekly. They dig up deals that make a head spin ("what, where the F did you find this?"). They actually KNOW things. You ask them on inflation, with total calm they have the answers, not just for today but tomorrow and all the tomorrows. They knows what's happening where, when, why, how. You wonder some days if there secretly a cyborg, some special DARPA top secret project putting chatGPT into a human looking body to see how quickly ai can take over an industry, lol. Your consistently blown away by the ready answers to everything and, a bit intimidated, maybe feel almost stupid in comparison but right then they even know that and give relief that it's ok, it's why you got them, there here for you.

So yes, that IS the reality of agents out there. So what does this all mean? Does it mean since it's easy to find crap service one should do it themselves to assure crap or "meahh" results? Because that's all your doing, your assuring with 100% certainty you will NOT get to "amazing" results.

OR....... To understand this breakdown and focus energy to finding and hiring that 5%.

It's just not complicated in my mind, there is a ton of time energy and effort spent trying to do it oneself, more than it takes to find a hire a 5%'er. So it's not even a case of "but James, I can't find a 5%'er" because applying that effort of doing it via self WILL find and retain a 5%'er.

So everything actually comes back to 1 thing, FINDING AND BUILDING THE RIGHT TEAM.
1 Reply
Account Closed
Investor · TX · Member since 2018 · 38 posts · 28 votes
3y
Quote from @James Hamling:

Quote from @Account Closed:

Quote from @James Hamling:

Quote from @Account Closed:

Quote from @Wale Lawal:

@Billy Knox
The proliferation of services that help homebuyers and sellers complete their own real estate transactions is relatively recent, and it may have you wondering whether using a real estate agent is becoming a relic of a bygone era. While doing the work yourself can save you the significant commission rates many real estate agents command, for many, flying solo may not be the way to go--and could end up being more costly than a realtor's commission in the long run. Buying or selling a home is a major financial (and emotional) undertaking. Find out why you shouldn't discard the notion of hiring an agent just yet.

1. Better Access/More Convenience

A real estate agent's full-time job is to act as a liaison between buyers and sellers. This means that he or she will have easy access to all other properties listed by other agents. Both the buyer's and seller's agent work full time as real estate agents and they know what needs to be done to get a deal together. For example, if you are looking to buy a home, a real estate agent will track down homes that meet your criteria, get in touch with sellers' agents and make appointments for you to view the homes. If you are buying on your own, you will have to play this telephone tag yourself. This may be especially difficult if you're shopping for homes that are for sale by owner.

Similarly, if you are looking to sell your home yourself, you will have to solicit calls from interested parties, answer questions and make appointments. Keep in mind that potential buyers are likely to move on if you tend to be busy or don't respond quickly enough. Alternatively, you may find yourself making an appointment and rushing home, only to find that no one shows up.

2. Negotiating Is Tricky Business

Many people don't like the idea of doing a real estate deal through an agent and feel that direct negotiation between buyers and sellers is more transparent and allows the parties to better look after their own best interests. This is probably true--assuming that both the buyer and seller in a given transaction are reasonable people who are able to get along. Unfortunately, this isn't always an easy relationship.

What if you, as a buyer, like a home but despise its wood-paneled walls, shag carpet and lurid orange kitchen? If you are working with an agent, you can express your contempt for the current owner's decorating skills and rant about how much it'll cost you to upgrade the home without insulting the owner. For all you know, the owner's late mother may have lovingly chosen the décor. Your real estate agent can convey your concerns to the sellers' agent. Acting as a messenger, the agent may be in a better position to negotiate a discount without ruffling the homeowner's feathers.

A real estate agent can also play the “bad guy” in a transaction, preventing the bad blood between a buyer and seller that can kill a deal. Keep in mind that a seller can reject a potential buyer's offer for any reason--including just because they hate his or her guts. An agent can help by speaking for you in tough transactions and smoothing things over to keep them from getting too personal. This can put you in a better position to get the house you want. The same is true for the seller, who can benefit from a hard-nosed real estate agent who will represent their interests without turning off potential buyers who want to niggle about the price.

3. Contracts Can Be Hard To Handle

If you decide to buy or sell a home, the offer to purchase contract is there to protect you and ensure that you are able to back out of the deal if certain conditions aren't met. For example, if you plan to buy a home with a mortgage but you fail to make financing one of the conditions of the sale--and you aren't approved for the mortgage--you can lose your deposit on the home and could even be sued by the seller for failing to fulfill your end of the contract.

An experienced real estate agent deals with the same contracts and conditions on a regular basis, and is familiar with which conditions should be used, when they can safely be removed and how to use the contract to protect you, whether you're buying or selling your home.

4. Real Estate Agents Can't Lie

Well, OK, actually they can. But because they are licensed professionals there are more repercussions if they do than for a private buyer or seller. If you are working with a licensed real estate agent under an agency agreement, (i.e., a conventional, full-service commission agreement in which the agent agrees to represent you), your agent will be bound by common law (in most states) to a fiduciary relationship. In other words, the agent is bound by license law to act in their clients' best interest (not his or her own).

In addition, most realtors rely on referrals and repeat business to build the kind of clientèle base they'll need to survive in the business. This means that doing what's best for their clients should be as important to them as any individual sale.

Finally, if you do find that your agent has gotten away with lying to you, you will have more avenues for recourse, such as through your agent's broker, professional association (such as the National Association Of Realtors) or possibly even in court if you can prove that your agent has failed to uphold his fiduciary duties.

When a buyer and seller work together directly, they can (and should) seek legal counsel, but because each is expected to act in his or her best interest, there isn't much you can do if you find out later that you've been duped about multiple offers or the home's condition. And having a lawyer on retainer any time you want to talk about potentially buying or selling a house could cost far more than an agent's commissions by the time the transaction is complete.

5. Not Everyone Can Save Money

Many people eschew using a real estate agent to save money, but keep in mind that it is unlikely that both the buyer and seller will reap the benefits of not having to pay commissions. For example, if you are selling your home on your own, you will price it based on the sale prices of other comparable properties in your area. Many of these properties will be sold with the help of an agent. This means that the seller gets the keep the percentage of the home's sale price that might otherwise be paid to the real estate agent.

However, buyers who are looking to purchase a home sold by owners may also believe they can save some money on the home by not having an agent involved. They might even expect it and make an offer accordingly. However, unless buyer and seller agree to split the savings, they can't both save the commission.
All the best!

This is the best answer. The liability placed on agents and brokers definitely helps. The elephant in the room, though, is the bias and NAR's monopolization of the industry. It is very hard to get an unbiased answer on using an agent ... from an agent. It's like asking a barber if you need a haircut. Or asking a car salesman if you should buy a car (from them, of course). I'm sure that if I went through the process and got a license (I've actually taken the entire course, just decided against licensing due to the liability) that it would be hard not to switch my tune because of the incentives... That's just how human bias works.

A lot of this is just assumption, assuming a Real Estate Agent is ONLY arguing to defend there profit generation. The truth is it's a LOT more like a surgeon trying to share and explain why it's foolish to try and do your own surgery, yourself.
Look, in the vast majority of cases a real estate transaction is in the hundreds of thousands of dollars. It's a lot of money, years and years worth if not decades worth of income, right, the risks are BIG from screw-up's, one mess-up easily costs thousands and tens of thousands.
Reality is Real Estate Transactions are complicated. Yes, a person "can" do it "simple", and one "can" do a surgery with a chain-saw, doesn't make it correct.
The thing in Real Estate Transactions, and newer wholesalers run into this a lot, is finding out you only did the basics, and missed things, big things, expensive things. This is law were talking about, ever seen a law library? Ever try reading a legal statute? Yeah, it ain't easy. An agent's main thing isn't for the simple obvious stuff, any ya-hoo can do a fill-in-the-blanks basic PA. An agent, like an attorney, exists for all the sh#t that SINT commonly known, for the DETAILS. On average MOST transactions have no less than 7 addendums, if done correctly. Yup, and that's just basic 101. Most is "CYA" doc's so nothing comes back after the fact, months or years later, to bite one in the arse.
There is a mountain of variables to every transaction, and knowing which applies, which does not, how to best address it for the stance one is in, how it legally impacts, THATS what an agent exists for. This whole argument of doing it one-self has stood on an assumption "it's EASY" and "Anyone can do it", which NO, that's not true, it's NOT easy and no not anyone can do it, anyone can try and most likely do it really poorly, with lots of screw-ups, and get into litigation which there ya go, that's 10X the cost an agent would have been.
Look, I simply tell the truthy, that's it. About 15% of my client base is people who did try doing things themselves, and learned the hard way. They ask me often "how do you do it" when it seems so easy that I get done "the things". It's one simple fact, this is what I do, every day, FT, for years, decades. It's infantile to think a person with 0 experience can get same or similar results to one who does it FT day in and day out.
No person would argue they can cook ANYTHING as good as Gordon Ramsey, a chef. They don't say "well, anyone can cook, so Chef's are a waste of $, I can throw together whatever they do no problem". No, everyone would laugh at that. Why is it not equally as common sense about a complicated legal process involving hundreds of thousands of dollars, layers of regulatory over-sight from Federal, state, county and local.
Yes, SOME can, stress on SOME. Some CAN cook as good as a Chef. That sure as hell does not mean ANY can.

Most agents simply aren't that good. The good ones are worth their weight in gold, but does the license make them magically smarter? No. The knowledge? Yes. Can you have that knowledge without the state or government or TRELA or NAR stamping you with their approval? Yes.
That's the point.

Yeah, that is the rub of it isn't it.
I would say from my experience;
- 50% of agents are absolute garbage, 0 value what-so-ever from that agent ALTHOUGH the 1 value point is, there under a broker, so any f-up after the fact a person can throw that agent under the bus, cite broker must make things right, and via laws and licensure, yup there is a liability. So it still holds value over self-agency because there is a party to hold accountable. One has to weigh the agent cost vs benefit, make sure there in-line.
- 30% of agent are "meahh". Now, take this with a grain of salt because I consider net-0 to be "meahh" and if the value an agent brings covers there entire fee's, well there is value in fact they did everything, you saved your time, that's valuable, and you completely removed risk as they ate that. So it's worth it, but it's not some "big win" it's just a "yeah, that makes sense".
- 15% of agents are great. They not only get the job done but better, faster, and every once in a while surprise with a off-market deal, something one didn't expect. It's a profitable relationship, one where a person says "I am luck to have found ___".
- 5% of agents "walk-on-water". What else do you say of them, they are nothing short of God like powers of Real Estate. They seemingly do the impossible or improbable, and do it weekly. They dig up deals that make a head spin (what, where the F did you find this?". They actually KNOW things. You ask them on inflation, with total calm they have the answers, not just for today but tomorrow and all the tomorrows. They knows what's happening where, when, why, how. You wonder some days if there secretly a cyborg, some special DARPA top secret project putting chatGPT into a human looking body to see how quickly ai can take over an industry, lol. Your consistently blown away by the ready answers to everything and, a bit intimidated, maybe feel almost stupid in comparison but right then they even know that and give relief that it's ok, it's why you got them, there here for you.
So yes, that IS the reality of agents out there. So what does this all mean? Does it mean since it's easy to find crap service one should do it themselves to assure crap or "meahh" results? Because that's all your doing, your assuring with 100% certainty you will NOT get to "amazing" results.
OR....... To understand this breakdown and focus energy to finding and hiring that 5%.
It's just not complicated in my mind, there is a ton of time energy and effort spent trying to do it oneself, more than it takes to find a hire a 5%'er. So it's not even a case of "but James, I can't find a 5%'er" because applying that effort of doing it via self WILL find and retain a 5%'er.
So everything actually comes back to 1 thing, FINDING AND BUILDING THE RIGHT TEAM.

The same statistic can break people down by IQ, work ethic, talent, skill, practice, or in any other profession... Wholesalers, FSBOs, business owners, you name it. The top 1% of FSBOs sell just as good if not better than the ones listed with an agent... The top 1% of wholesalers run circles around agents... And so on... The real estate license isn't magic. I'll stop quote replying to drive this point home.
0 Reply
James Hamling
Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
3y
Quote from @Account Closed:

Quote from @James Hamling:

Quote from @Account Closed:

Quote from @James Hamling:

Quote from @Account Closed:

Quote from @Wale Lawal:

@Billy Knox
The proliferation of services that help homebuyers and sellers complete their own real estate transactions is relatively recent, and it may have you wondering whether using a real estate agent is becoming a relic of a bygone era. While doing the work yourself can save you the significant commission rates many real estate agents command, for many, flying solo may not be the way to go--and could end up being more costly than a realtor's commission in the long run. Buying or selling a home is a major financial (and emotional) undertaking. Find out why you shouldn't discard the notion of hiring an agent just yet.

1. Better Access/More Convenience

A real estate agent's full-time job is to act as a liaison between buyers and sellers. This means that he or she will have easy access to all other properties listed by other agents. Both the buyer's and seller's agent work full time as real estate agents and they know what needs to be done to get a deal together. For example, if you are looking to buy a home, a real estate agent will track down homes that meet your criteria, get in touch with sellers' agents and make appointments for you to view the homes. If you are buying on your own, you will have to play this telephone tag yourself. This may be especially difficult if you're shopping for homes that are for sale by owner.

Similarly, if you are looking to sell your home yourself, you will have to solicit calls from interested parties, answer questions and make appointments. Keep in mind that potential buyers are likely to move on if you tend to be busy or don't respond quickly enough. Alternatively, you may find yourself making an appointment and rushing home, only to find that no one shows up.

2. Negotiating Is Tricky Business

Many people don't like the idea of doing a real estate deal through an agent and feel that direct negotiation between buyers and sellers is more transparent and allows the parties to better look after their own best interests. This is probably true--assuming that both the buyer and seller in a given transaction are reasonable people who are able to get along. Unfortunately, this isn't always an easy relationship.

What if you, as a buyer, like a home but despise its wood-paneled walls, shag carpet and lurid orange kitchen? If you are working with an agent, you can express your contempt for the current owner's decorating skills and rant about how much it'll cost you to upgrade the home without insulting the owner. For all you know, the owner's late mother may have lovingly chosen the décor. Your real estate agent can convey your concerns to the sellers' agent. Acting as a messenger, the agent may be in a better position to negotiate a discount without ruffling the homeowner's feathers.

A real estate agent can also play the “bad guy” in a transaction, preventing the bad blood between a buyer and seller that can kill a deal. Keep in mind that a seller can reject a potential buyer's offer for any reason--including just because they hate his or her guts. An agent can help by speaking for you in tough transactions and smoothing things over to keep them from getting too personal. This can put you in a better position to get the house you want. The same is true for the seller, who can benefit from a hard-nosed real estate agent who will represent their interests without turning off potential buyers who want to niggle about the price.

3. Contracts Can Be Hard To Handle

If you decide to buy or sell a home, the offer to purchase contract is there to protect you and ensure that you are able to back out of the deal if certain conditions aren't met. For example, if you plan to buy a home with a mortgage but you fail to make financing one of the conditions of the sale--and you aren't approved for the mortgage--you can lose your deposit on the home and could even be sued by the seller for failing to fulfill your end of the contract.

An experienced real estate agent deals with the same contracts and conditions on a regular basis, and is familiar with which conditions should be used, when they can safely be removed and how to use the contract to protect you, whether you're buying or selling your home.

4. Real Estate Agents Can't Lie

Well, OK, actually they can. But because they are licensed professionals there are more repercussions if they do than for a private buyer or seller. If you are working with a licensed real estate agent under an agency agreement, (i.e., a conventional, full-service commission agreement in which the agent agrees to represent you), your agent will be bound by common law (in most states) to a fiduciary relationship. In other words, the agent is bound by license law to act in their clients' best interest (not his or her own).

In addition, most realtors rely on referrals and repeat business to build the kind of clientèle base they'll need to survive in the business. This means that doing what's best for their clients should be as important to them as any individual sale.

Finally, if you do find that your agent has gotten away with lying to you, you will have more avenues for recourse, such as through your agent's broker, professional association (such as the National Association Of Realtors) or possibly even in court if you can prove that your agent has failed to uphold his fiduciary duties.

When a buyer and seller work together directly, they can (and should) seek legal counsel, but because each is expected to act in his or her best interest, there isn't much you can do if you find out later that you've been duped about multiple offers or the home's condition. And having a lawyer on retainer any time you want to talk about potentially buying or selling a house could cost far more than an agent's commissions by the time the transaction is complete.

5. Not Everyone Can Save Money

Many people eschew using a real estate agent to save money, but keep in mind that it is unlikely that both the buyer and seller will reap the benefits of not having to pay commissions. For example, if you are selling your home on your own, you will price it based on the sale prices of other comparable properties in your area. Many of these properties will be sold with the help of an agent. This means that the seller gets the keep the percentage of the home's sale price that might otherwise be paid to the real estate agent.

However, buyers who are looking to purchase a home sold by owners may also believe they can save some money on the home by not having an agent involved. They might even expect it and make an offer accordingly. However, unless buyer and seller agree to split the savings, they can't both save the commission.
All the best!

This is the best answer. The liability placed on agents and brokers definitely helps. The elephant in the room, though, is the bias and NAR's monopolization of the industry. It is very hard to get an unbiased answer on using an agent ... from an agent. It's like asking a barber if you need a haircut. Or asking a car salesman if you should buy a car (from them, of course). I'm sure that if I went through the process and got a license (I've actually taken the entire course, just decided against licensing due to the liability) that it would be hard not to switch my tune because of the incentives... That's just how human bias works.

A lot of this is just assumption, assuming a Real Estate Agent is ONLY arguing to defend there profit generation. The truth is it's a LOT more like a surgeon trying to share and explain why it's foolish to try and do your own surgery, yourself.
Look, in the vast majority of cases a real estate transaction is in the hundreds of thousands of dollars. It's a lot of money, years and years worth if not decades worth of income, right, the risks are BIG from screw-up's, one mess-up easily costs thousands and tens of thousands.
Reality is Real Estate Transactions are complicated. Yes, a person "can" do it "simple", and one "can" do a surgery with a chain-saw, doesn't make it correct.
The thing in Real Estate Transactions, and newer wholesalers run into this a lot, is finding out you only did the basics, and missed things, big things, expensive things. This is law were talking about, ever seen a law library? Ever try reading a legal statute? Yeah, it ain't easy. An agent's main thing isn't for the simple obvious stuff, any ya-hoo can do a fill-in-the-blanks basic PA. An agent, like an attorney, exists for all the sh#t that SINT commonly known, for the DETAILS. On average MOST transactions have no less than 7 addendums, if done correctly. Yup, and that's just basic 101. Most is "CYA" doc's so nothing comes back after the fact, months or years later, to bite one in the arse.
There is a mountain of variables to every transaction, and knowing which applies, which does not, how to best address it for the stance one is in, how it legally impacts, THATS what an agent exists for. This whole argument of doing it one-self has stood on an assumption "it's EASY" and "Anyone can do it", which NO, that's not true, it's NOT easy and no not anyone can do it, anyone can try and most likely do it really poorly, with lots of screw-ups, and get into litigation which there ya go, that's 10X the cost an agent would have been.
Look, I simply tell the truthy, that's it. About 15% of my client base is people who did try doing things themselves, and learned the hard way. They ask me often "how do you do it" when it seems so easy that I get done "the things". It's one simple fact, this is what I do, every day, FT, for years, decades. It's infantile to think a person with 0 experience can get same or similar results to one who does it FT day in and day out.
No person would argue they can cook ANYTHING as good as Gordon Ramsey, a chef. They don't say "well, anyone can cook, so Chef's are a waste of $, I can throw together whatever they do no problem". No, everyone would laugh at that. Why is it not equally as common sense about a complicated legal process involving hundreds of thousands of dollars, layers of regulatory over-sight from Federal, state, county and local.
Yes, SOME can, stress on SOME. Some CAN cook as good as a Chef. That sure as hell does not mean ANY can.

Most agents simply aren't that good. The good ones are worth their weight in gold, but does the license make them magically smarter? No. The knowledge? Yes. Can you have that knowledge without the state or government or TRELA or NAR stamping you with their approval? Yes.
That's the point.

Yeah, that is the rub of it isn't it.
I would say from my experience;
- 50% of agents are absolute garbage, 0 value what-so-ever from that agent ALTHOUGH the 1 value point is, there under a broker, so any f-up after the fact a person can throw that agent under the bus, cite broker must make things right, and via laws and licensure, yup there is a liability. So it still holds value over self-agency because there is a party to hold accountable. One has to weigh the agent cost vs benefit, make sure there in-line.
- 30% of agent are "meahh". Now, take this with a grain of salt because I consider net-0 to be "meahh" and if the value an agent brings covers there entire fee's, well there is value in fact they did everything, you saved your time, that's valuable, and you completely removed risk as they ate that. So it's worth it, but it's not some "big win" it's just a "yeah, that makes sense".
- 15% of agents are great. They not only get the job done but better, faster, and every once in a while surprise with a off-market deal, something one didn't expect. It's a profitable relationship, one where a person says "I am luck to have found ___".
- 5% of agents "walk-on-water". What else do you say of them, they are nothing short of God like powers of Real Estate. They seemingly do the impossible or improbable, and do it weekly. They dig up deals that make a head spin (what, where the F did you find this?". They actually KNOW things. You ask them on inflation, with total calm they have the answers, not just for today but tomorrow and all the tomorrows. They knows what's happening where, when, why, how. You wonder some days if there secretly a cyborg, some special DARPA top secret project putting chatGPT into a human looking body to see how quickly ai can take over an industry, lol. Your consistently blown away by the ready answers to everything and, a bit intimidated, maybe feel almost stupid in comparison but right then they even know that and give relief that it's ok, it's why you got them, there here for you.
So yes, that IS the reality of agents out there. So what does this all mean? Does it mean since it's easy to find crap service one should do it themselves to assure crap or "meahh" results? Because that's all your doing, your assuring with 100% certainty you will NOT get to "amazing" results.
OR....... To understand this breakdown and focus energy to finding and hiring that 5%.
It's just not complicated in my mind, there is a ton of time energy and effort spent trying to do it oneself, more than it takes to find a hire a 5%'er. So it's not even a case of "but James, I can't find a 5%'er" because applying that effort of doing it via self WILL find and retain a 5%'er.
So everything actually comes back to 1 thing, FINDING AND BUILDING THE RIGHT TEAM.

The same statistic can break people down by IQ, work ethic, talent, skill, practice, or in any other profession... Wholesalers, FSBOs, business owners, you name it. The real estate license isn't magic. I'll stop quote replying to drive this point home.
A drivers license does not make one a great driver does it? No, and we all know this. This is a pointless point in this thread, nobody said a license = anything other than authorization to do a thing. Everyone knows this.
0 Reply
Account Closed
Investor · TX · Member since 2018 · 38 posts · 28 votes
3y
Quote from @James Hamling:

Quote from @Account Closed:

Quote from @James Hamling:

Quote from @Account Closed:

Quote from @James Hamling:

Quote from @Account Closed:

Quote from @Wale Lawal:

@Billy Knox
The proliferation of services that help homebuyers and sellers complete their own real estate transactions is relatively recent, and it may have you wondering whether using a real estate agent is becoming a relic of a bygone era. While doing the work yourself can save you the significant commission rates many real estate agents command, for many, flying solo may not be the way to go--and could end up being more costly than a realtor's commission in the long run. Buying or selling a home is a major financial (and emotional) undertaking. Find out why you shouldn't discard the notion of hiring an agent just yet.

1. Better Access/More Convenience

A real estate agent's full-time job is to act as a liaison between buyers and sellers. This means that he or she will have easy access to all other properties listed by other agents. Both the buyer's and seller's agent work full time as real estate agents and they know what needs to be done to get a deal together. For example, if you are looking to buy a home, a real estate agent will track down homes that meet your criteria, get in touch with sellers' agents and make appointments for you to view the homes. If you are buying on your own, you will have to play this telephone tag yourself. This may be especially difficult if you're shopping for homes that are for sale by owner.

Similarly, if you are looking to sell your home yourself, you will have to solicit calls from interested parties, answer questions and make appointments. Keep in mind that potential buyers are likely to move on if you tend to be busy or don't respond quickly enough. Alternatively, you may find yourself making an appointment and rushing home, only to find that no one shows up.

2. Negotiating Is Tricky Business

Many people don't like the idea of doing a real estate deal through an agent and feel that direct negotiation between buyers and sellers is more transparent and allows the parties to better look after their own best interests. This is probably true--assuming that both the buyer and seller in a given transaction are reasonable people who are able to get along. Unfortunately, this isn't always an easy relationship.

What if you, as a buyer, like a home but despise its wood-paneled walls, shag carpet and lurid orange kitchen? If you are working with an agent, you can express your contempt for the current owner's decorating skills and rant about how much it'll cost you to upgrade the home without insulting the owner. For all you know, the owner's late mother may have lovingly chosen the décor. Your real estate agent can convey your concerns to the sellers' agent. Acting as a messenger, the agent may be in a better position to negotiate a discount without ruffling the homeowner's feathers.

A real estate agent can also play the “bad guy” in a transaction, preventing the bad blood between a buyer and seller that can kill a deal. Keep in mind that a seller can reject a potential buyer's offer for any reason--including just because they hate his or her guts. An agent can help by speaking for you in tough transactions and smoothing things over to keep them from getting too personal. This can put you in a better position to get the house you want. The same is true for the seller, who can benefit from a hard-nosed real estate agent who will represent their interests without turning off potential buyers who want to niggle about the price.

3. Contracts Can Be Hard To Handle

If you decide to buy or sell a home, the offer to purchase contract is there to protect you and ensure that you are able to back out of the deal if certain conditions aren't met. For example, if you plan to buy a home with a mortgage but you fail to make financing one of the conditions of the sale--and you aren't approved for the mortgage--you can lose your deposit on the home and could even be sued by the seller for failing to fulfill your end of the contract.

An experienced real estate agent deals with the same contracts and conditions on a regular basis, and is familiar with which conditions should be used, when they can safely be removed and how to use the contract to protect you, whether you're buying or selling your home.

4. Real Estate Agents Can't Lie

Well, OK, actually they can. But because they are licensed professionals there are more repercussions if they do than for a private buyer or seller. If you are working with a licensed real estate agent under an agency agreement, (i.e., a conventional, full-service commission agreement in which the agent agrees to represent you), your agent will be bound by common law (in most states) to a fiduciary relationship. In other words, the agent is bound by license law to act in their clients' best interest (not his or her own).

In addition, most realtors rely on referrals and repeat business to build the kind of clientèle base they'll need to survive in the business. This means that doing what's best for their clients should be as important to them as any individual sale.

Finally, if you do find that your agent has gotten away with lying to you, you will have more avenues for recourse, such as through your agent's broker, professional association (such as the National Association Of Realtors) or possibly even in court if you can prove that your agent has failed to uphold his fiduciary duties.

When a buyer and seller work together directly, they can (and should) seek legal counsel, but because each is expected to act in his or her best interest, there isn't much you can do if you find out later that you've been duped about multiple offers or the home's condition. And having a lawyer on retainer any time you want to talk about potentially buying or selling a house could cost far more than an agent's commissions by the time the transaction is complete.

5. Not Everyone Can Save Money

Many people eschew using a real estate agent to save money, but keep in mind that it is unlikely that both the buyer and seller will reap the benefits of not having to pay commissions. For example, if you are selling your home on your own, you will price it based on the sale prices of other comparable properties in your area. Many of these properties will be sold with the help of an agent. This means that the seller gets the keep the percentage of the home's sale price that might otherwise be paid to the real estate agent.

However, buyers who are looking to purchase a home sold by owners may also believe they can save some money on the home by not having an agent involved. They might even expect it and make an offer accordingly. However, unless buyer and seller agree to split the savings, they can't both save the commission.
All the best!

This is the best answer. The liability placed on agents and brokers definitely helps. The elephant in the room, though, is the bias and NAR's monopolization of the industry. It is very hard to get an unbiased answer on using an agent ... from an agent. It's like asking a barber if you need a haircut. Or asking a car salesman if you should buy a car (from them, of course). I'm sure that if I went through the process and got a license (I've actually taken the entire course, just decided against licensing due to the liability) that it would be hard not to switch my tune because of the incentives... That's just how human bias works.

A lot of this is just assumption, assuming a Real Estate Agent is ONLY arguing to defend there profit generation. The truth is it's a LOT more like a surgeon trying to share and explain why it's foolish to try and do your own surgery, yourself.
Look, in the vast majority of cases a real estate transaction is in the hundreds of thousands of dollars. It's a lot of money, years and years worth if not decades worth of income, right, the risks are BIG from screw-up's, one mess-up easily costs thousands and tens of thousands.
Reality is Real Estate Transactions are complicated. Yes, a person "can" do it "simple", and one "can" do a surgery with a chain-saw, doesn't make it correct.
The thing in Real Estate Transactions, and newer wholesalers run into this a lot, is finding out you only did the basics, and missed things, big things, expensive things. This is law were talking about, ever seen a law library? Ever try reading a legal statute? Yeah, it ain't easy. An agent's main thing isn't for the simple obvious stuff, any ya-hoo can do a fill-in-the-blanks basic PA. An agent, like an attorney, exists for all the sh#t that SINT commonly known, for the DETAILS. On average MOST transactions have no less than 7 addendums, if done correctly. Yup, and that's just basic 101. Most is "CYA" doc's so nothing comes back after the fact, months or years later, to bite one in the arse.
There is a mountain of variables to every transaction, and knowing which applies, which does not, how to best address it for the stance one is in, how it legally impacts, THATS what an agent exists for. This whole argument of doing it one-self has stood on an assumption "it's EASY" and "Anyone can do it", which NO, that's not true, it's NOT easy and no not anyone can do it, anyone can try and most likely do it really poorly, with lots of screw-ups, and get into litigation which there ya go, that's 10X the cost an agent would have been.
Look, I simply tell the truthy, that's it. About 15% of my client base is people who did try doing things themselves, and learned the hard way. They ask me often "how do you do it" when it seems so easy that I get done "the things". It's one simple fact, this is what I do, every day, FT, for years, decades. It's infantile to think a person with 0 experience can get same or similar results to one who does it FT day in and day out.
No person would argue they can cook ANYTHING as good as Gordon Ramsey, a chef. They don't say "well, anyone can cook, so Chef's are a waste of $, I can throw together whatever they do no problem". No, everyone would laugh at that. Why is it not equally as common sense about a complicated legal process involving hundreds of thousands of dollars, layers of regulatory over-sight from Federal, state, county and local.
Yes, SOME can, stress on SOME. Some CAN cook as good as a Chef. That sure as hell does not mean ANY can.

Most agents simply aren't that good. The good ones are worth their weight in gold, but does the license make them magically smarter? No. The knowledge? Yes. Can you have that knowledge without the state or government or TRELA or NAR stamping you with their approval? Yes.
That's the point.

Yeah, that is the rub of it isn't it.
I would say from my experience;
- 50% of agents are absolute garbage, 0 value what-so-ever from that agent ALTHOUGH the 1 value point is, there under a broker, so any f-up after the fact a person can throw that agent under the bus, cite broker must make things right, and via laws and licensure, yup there is a liability. So it still holds value over self-agency because there is a party to hold accountable. One has to weigh the agent cost vs benefit, make sure there in-line.
- 30% of agent are "meahh". Now, take this with a grain of salt because I consider net-0 to be "meahh" and if the value an agent brings covers there entire fee's, well there is value in fact they did everything, you saved your time, that's valuable, and you completely removed risk as they ate that. So it's worth it, but it's not some "big win" it's just a "yeah, that makes sense".
- 15% of agents are great. They not only get the job done but better, faster, and every once in a while surprise with a off-market deal, something one didn't expect. It's a profitable relationship, one where a person says "I am luck to have found ___".
- 5% of agents "walk-on-water". What else do you say of them, they are nothing short of God like powers of Real Estate. They seemingly do the impossible or improbable, and do it weekly. They dig up deals that make a head spin (what, where the F did you find this?". They actually KNOW things. You ask them on inflation, with total calm they have the answers, not just for today but tomorrow and all the tomorrows. They knows what's happening where, when, why, how. You wonder some days if there secretly a cyborg, some special DARPA top secret project putting chatGPT into a human looking body to see how quickly ai can take over an industry, lol. Your consistently blown away by the ready answers to everything and, a bit intimidated, maybe feel almost stupid in comparison but right then they even know that and give relief that it's ok, it's why you got them, there here for you.
So yes, that IS the reality of agents out there. So what does this all mean? Does it mean since it's easy to find crap service one should do it themselves to assure crap or "meahh" results? Because that's all your doing, your assuring with 100% certainty you will NOT get to "amazing" results.
OR....... To understand this breakdown and focus energy to finding and hiring that 5%.
It's just not complicated in my mind, there is a ton of time energy and effort spent trying to do it oneself, more than it takes to find a hire a 5%'er. So it's not even a case of "but James, I can't find a 5%'er" because applying that effort of doing it via self WILL find and retain a 5%'er.
So everything actually comes back to 1 thing, FINDING AND BUILDING THE RIGHT TEAM.

The same statistic can break people down by IQ, work ethic, talent, skill, practice, or in any other profession... Wholesalers, FSBOs, business owners, you name it. The real estate license isn't magic. I'll stop quote replying to drive this point home.
A drivers license does not make one a great driver does it? No, and we all know this. This is a pointless point in this thread, nobody said a license = anything other than authorization to do a thing. Everyone knows this.

Bingo! So, other than an arbitrary law granting permission to do a thing, you can find any competent, skilled person to help you do the thing, or if you are competent and skilled, you can always do it yourself
0 Reply
James Hamling
Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
3y
Quote from @Account Closed:

Quote from @James Hamling:

Quote from @Account Closed:

Quote from @James Hamling:

Quote from @Account Closed:

Quote from @James Hamling:

Quote from @Account Closed:

Quote from @Wale Lawal:

@Billy Knox
The proliferation of services that help homebuyers and sellers complete their own real estate transactions is relatively recent, and it may have you wondering whether using a real estate agent is becoming a relic of a bygone era. While doing the work yourself can save you the significant commission rates many real estate agents command, for many, flying solo may not be the way to go--and could end up being more costly than a realtor's commission in the long run. Buying or selling a home is a major financial (and emotional) undertaking. Find out why you shouldn't discard the notion of hiring an agent just yet.

1. Better Access/More Convenience

A real estate agent's full-time job is to act as a liaison between buyers and sellers. This means that he or she will have easy access to all other properties listed by other agents. Both the buyer's and seller's agent work full time as real estate agents and they know what needs to be done to get a deal together. For example, if you are looking to buy a home, a real estate agent will track down homes that meet your criteria, get in touch with sellers' agents and make appointments for you to view the homes. If you are buying on your own, you will have to play this telephone tag yourself. This may be especially difficult if you're shopping for homes that are for sale by owner.

Similarly, if you are looking to sell your home yourself, you will have to solicit calls from interested parties, answer questions and make appointments. Keep in mind that potential buyers are likely to move on if you tend to be busy or don't respond quickly enough. Alternatively, you may find yourself making an appointment and rushing home, only to find that no one shows up.

2. Negotiating Is Tricky Business

Many people don't like the idea of doing a real estate deal through an agent and feel that direct negotiation between buyers and sellers is more transparent and allows the parties to better look after their own best interests. This is probably true--assuming that both the buyer and seller in a given transaction are reasonable people who are able to get along. Unfortunately, this isn't always an easy relationship.

What if you, as a buyer, like a home but despise its wood-paneled walls, shag carpet and lurid orange kitchen? If you are working with an agent, you can express your contempt for the current owner's decorating skills and rant about how much it'll cost you to upgrade the home without insulting the owner. For all you know, the owner's late mother may have lovingly chosen the décor. Your real estate agent can convey your concerns to the sellers' agent. Acting as a messenger, the agent may be in a better position to negotiate a discount without ruffling the homeowner's feathers.

A real estate agent can also play the “bad guy” in a transaction, preventing the bad blood between a buyer and seller that can kill a deal. Keep in mind that a seller can reject a potential buyer's offer for any reason--including just because they hate his or her guts. An agent can help by speaking for you in tough transactions and smoothing things over to keep them from getting too personal. This can put you in a better position to get the house you want. The same is true for the seller, who can benefit from a hard-nosed real estate agent who will represent their interests without turning off potential buyers who want to niggle about the price.

3. Contracts Can Be Hard To Handle

If you decide to buy or sell a home, the offer to purchase contract is there to protect you and ensure that you are able to back out of the deal if certain conditions aren't met. For example, if you plan to buy a home with a mortgage but you fail to make financing one of the conditions of the sale--and you aren't approved for the mortgage--you can lose your deposit on the home and could even be sued by the seller for failing to fulfill your end of the contract.

An experienced real estate agent deals with the same contracts and conditions on a regular basis, and is familiar with which conditions should be used, when they can safely be removed and how to use the contract to protect you, whether you're buying or selling your home.

4. Real Estate Agents Can't Lie

Well, OK, actually they can. But because they are licensed professionals there are more repercussions if they do than for a private buyer or seller. If you are working with a licensed real estate agent under an agency agreement, (i.e., a conventional, full-service commission agreement in which the agent agrees to represent you), your agent will be bound by common law (in most states) to a fiduciary relationship. In other words, the agent is bound by license law to act in their clients' best interest (not his or her own).

In addition, most realtors rely on referrals and repeat business to build the kind of clientèle base they'll need to survive in the business. This means that doing what's best for their clients should be as important to them as any individual sale.

Finally, if you do find that your agent has gotten away with lying to you, you will have more avenues for recourse, such as through your agent's broker, professional association (such as the National Association Of Realtors) or possibly even in court if you can prove that your agent has failed to uphold his fiduciary duties.

When a buyer and seller work together directly, they can (and should) seek legal counsel, but because each is expected to act in his or her best interest, there isn't much you can do if you find out later that you've been duped about multiple offers or the home's condition. And having a lawyer on retainer any time you want to talk about potentially buying or selling a house could cost far more than an agent's commissions by the time the transaction is complete.

5. Not Everyone Can Save Money

Many people eschew using a real estate agent to save money, but keep in mind that it is unlikely that both the buyer and seller will reap the benefits of not having to pay commissions. For example, if you are selling your home on your own, you will price it based on the sale prices of other comparable properties in your area. Many of these properties will be sold with the help of an agent. This means that the seller gets the keep the percentage of the home's sale price that might otherwise be paid to the real estate agent.

However, buyers who are looking to purchase a home sold by owners may also believe they can save some money on the home by not having an agent involved. They might even expect it and make an offer accordingly. However, unless buyer and seller agree to split the savings, they can't both save the commission.
All the best!

This is the best answer. The liability placed on agents and brokers definitely helps. The elephant in the room, though, is the bias and NAR's monopolization of the industry. It is very hard to get an unbiased answer on using an agent ... from an agent. It's like asking a barber if you need a haircut. Or asking a car salesman if you should buy a car (from them, of course). I'm sure that if I went through the process and got a license (I've actually taken the entire course, just decided against licensing due to the liability) that it would be hard not to switch my tune because of the incentives... That's just how human bias works.

A lot of this is just assumption, assuming a Real Estate Agent is ONLY arguing to defend there profit generation. The truth is it's a LOT more like a surgeon trying to share and explain why it's foolish to try and do your own surgery, yourself.
Look, in the vast majority of cases a real estate transaction is in the hundreds of thousands of dollars. It's a lot of money, years and years worth if not decades worth of income, right, the risks are BIG from screw-up's, one mess-up easily costs thousands and tens of thousands.
Reality is Real Estate Transactions are complicated. Yes, a person "can" do it "simple", and one "can" do a surgery with a chain-saw, doesn't make it correct.
The thing in Real Estate Transactions, and newer wholesalers run into this a lot, is finding out you only did the basics, and missed things, big things, expensive things. This is law were talking about, ever seen a law library? Ever try reading a legal statute? Yeah, it ain't easy. An agent's main thing isn't for the simple obvious stuff, any ya-hoo can do a fill-in-the-blanks basic PA. An agent, like an attorney, exists for all the sh#t that SINT commonly known, for the DETAILS. On average MOST transactions have no less than 7 addendums, if done correctly. Yup, and that's just basic 101. Most is "CYA" doc's so nothing comes back after the fact, months or years later, to bite one in the arse.
There is a mountain of variables to every transaction, and knowing which applies, which does not, how to best address it for the stance one is in, how it legally impacts, THATS what an agent exists for. This whole argument of doing it one-self has stood on an assumption "it's EASY" and "Anyone can do it", which NO, that's not true, it's NOT easy and no not anyone can do it, anyone can try and most likely do it really poorly, with lots of screw-ups, and get into litigation which there ya go, that's 10X the cost an agent would have been.
Look, I simply tell the truthy, that's it. About 15% of my client base is people who did try doing things themselves, and learned the hard way. They ask me often "how do you do it" when it seems so easy that I get done "the things". It's one simple fact, this is what I do, every day, FT, for years, decades. It's infantile to think a person with 0 experience can get same or similar results to one who does it FT day in and day out.
No person would argue they can cook ANYTHING as good as Gordon Ramsey, a chef. They don't say "well, anyone can cook, so Chef's are a waste of $, I can throw together whatever they do no problem". No, everyone would laugh at that. Why is it not equally as common sense about a complicated legal process involving hundreds of thousands of dollars, layers of regulatory over-sight from Federal, state, county and local.
Yes, SOME can, stress on SOME. Some CAN cook as good as a Chef. That sure as hell does not mean ANY can.

Most agents simply aren't that good. The good ones are worth their weight in gold, but does the license make them magically smarter? No. The knowledge? Yes. Can you have that knowledge without the state or government or TRELA or NAR stamping you with their approval? Yes.
That's the point.

Yeah, that is the rub of it isn't it.
I would say from my experience;
- 50% of agents are absolute garbage, 0 value what-so-ever from that agent ALTHOUGH the 1 value point is, there under a broker, so any f-up after the fact a person can throw that agent under the bus, cite broker must make things right, and via laws and licensure, yup there is a liability. So it still holds value over self-agency because there is a party to hold accountable. One has to weigh the agent cost vs benefit, make sure there in-line.
- 30% of agent are "meahh". Now, take this with a grain of salt because I consider net-0 to be "meahh" and if the value an agent brings covers there entire fee's, well there is value in fact they did everything, you saved your time, that's valuable, and you completely removed risk as they ate that. So it's worth it, but it's not some "big win" it's just a "yeah, that makes sense".
- 15% of agents are great. They not only get the job done but better, faster, and every once in a while surprise with a off-market deal, something one didn't expect. It's a profitable relationship, one where a person says "I am luck to have found ___".
- 5% of agents "walk-on-water". What else do you say of them, they are nothing short of God like powers of Real Estate. They seemingly do the impossible or improbable, and do it weekly. They dig up deals that make a head spin (what, where the F did you find this?". They actually KNOW things. You ask them on inflation, with total calm they have the answers, not just for today but tomorrow and all the tomorrows. They knows what's happening where, when, why, how. You wonder some days if there secretly a cyborg, some special DARPA top secret project putting chatGPT into a human looking body to see how quickly ai can take over an industry, lol. Your consistently blown away by the ready answers to everything and, a bit intimidated, maybe feel almost stupid in comparison but right then they even know that and give relief that it's ok, it's why you got them, there here for you.
So yes, that IS the reality of agents out there. So what does this all mean? Does it mean since it's easy to find crap service one should do it themselves to assure crap or "meahh" results? Because that's all your doing, your assuring with 100% certainty you will NOT get to "amazing" results.
OR....... To understand this breakdown and focus energy to finding and hiring that 5%.
It's just not complicated in my mind, there is a ton of time energy and effort spent trying to do it oneself, more than it takes to find a hire a 5%'er. So it's not even a case of "but James, I can't find a 5%'er" because applying that effort of doing it via self WILL find and retain a 5%'er.
So everything actually comes back to 1 thing, FINDING AND BUILDING THE RIGHT TEAM.

The same statistic can break people down by IQ, work ethic, talent, skill, practice, or in any other profession... Wholesalers, FSBOs, business owners, you name it. The real estate license isn't magic. I'll stop quote replying to drive this point home.
A drivers license does not make one a great driver does it? No, and we all know this. This is a pointless point in this thread, nobody said a license = anything other than authorization to do a thing. Everyone knows this.

Bingo! So, other than an arbitrary law granting permission to do a thing, you can find any competent, skilled person to help you do the thing, or if you are competent and skilled, you can always do it yourself

Are you kidding me? Do you have a TBI?
I covered all of this in GREAT detail. And again, your making 0 sense at all. 0. Bill Murray was right, again.
0 Reply
Michael K.
Investor · Chicago, IL · Member since 2018 · 352 posts · 176 votes
3y
I'm an agent and investor and one of the reasons I got into the business was because after working with an agent on my first deal, I was left thinking "wow, I could definitely provide better service than that guy". As I see it, the role of the agent is essentially one of service, consulting, and marketing. We need to make ourselves available to conduct showings, hold in-person and phone meetings, write contracts, coordinate inspectors, appraisers, attorneys, etc, negotiate contracts and pricing, coach people on the process and do what we can to present the home in a way - whether in photos and in-person - so that it will sell in a reasonable amount of time at a fair price.
You sound like you are a pretty DIY type of guy, and I can resonate with that, but there are plenty of people who are not. Some people really do not understand the market and could get taken advantage of. A lot of people become emotional or unreasonable during the transaction process (you wouldn't believe how many times I have to talk people off a ledge over little things). It helps to have a trusted voice there to tell you that you are not getting screwed over. There is also a lot of risk in the job as an agent, we often work with clients for months who ultimately decide against buying or selling and we never get paid anything. For each transaction that is successful, there are one or two that die on the operating table.
Side note, I think talking about the "average broker" is a bit misleading because I tend to see extremes more frequently than the average. You have your part-time agents and new licensees who might only sell a few houses in a year. Then you have your top producers who have been in the business for many years and conduct 10x the business of the "average agent".
I think the business has changed and there is pushback against the traditional commission structure, and I think that's healthy. I would agree that when I am buying or selling a 250k home at 2.5% there is little room for me to negotiate my fee, but with more expensive homes we as agents need to work harder to justify our value.
0 Reply
Billy Knox
OP
Member since 2019 · 17 posts · 24 votes
3y
Wow. What a plethora of great responses! Thank you everyone for engaging and sharing your thoughts on the subject. These are some of my take aways:
Like everything in life there are bad apples in the bunch. Don't let the bad apples spoil it for everyone else. I can see some very salient points made for why it could be important and beneficial to partner with a good agent and the value that they can add to the transaction. I think this especially rings true when you have neither the time or the inclination (or possibly ability) to invest in the process yourself.
That being said, I do believe in the fundamental American ideal of rolling up your sleeves and doing the hard work yourself. A 3% commission on a $400K home is $12K. That is a lot of money to most people. The realization that I came to is that it was well worth my time and effort to learn the inns and outs of the real estate transaction in order to preserve that equity to be put to use elsewhere. $12K passively invested in the S&P (literally just buy the index and do nothing else) yields an 11% annual historical return. In 18 years (the time it will take for my daughter to grow up and go off to college) that $12k I saved by putting in a bunch of work will yield $78K. That is half of my kid's college education paid for. When put into a context like that it shows that sometimes investing your time and effort and energy is worth it. A lot of the arguments for why it is absolutely imperative to use an agent were fear based and hinged on the principle that the individual did not have the capacity to conduct the transaction without the 'trained professional'. I don't agree with that. People are incredibly resilient and intelligent and I find that more times than not they can rise to the occasion. Especially if we can create tools to empower them to do so! The landscape is changing in that there are so many resources available and so much knowledge accessible by the click of a hyperlink. In addition, much of the dramatic catastrophic effects that were highlights can absolutely be avoided by using a real estate attorney. That is a much more efficient structure for dealing with those issues and I believe is ultimately more cost effective and safeguards the principal parties interest more closely.
So what does the future look like? There is no doubt that great agents provide a value add to the transaction. Everyone on here has highlighted that. Exceptional people do exceptional things no matter where they find themselves. For me the question is really about the structure of it all. Maybe it is time we take a look at the stake based compensation structure. I know there are lots of operations out there already doing this. The market seems to be moving in that direction. The role of the agent is really that of a consultant and I think as a consultant you should get paid for your time - no matter if the transaction closes or not. That is where the real fundamental misalignment occurs in my mind. If you have an equity stake then closing the deal is always the best option, even if that might not be the best option for the principal parties. If the compensation structure was shifted to a fixed system then the agent could operate as an advisor and get paid for their time (which they should be!) no matter what. Furthermore if agents were paid on a fixed hourly scale then the thing driving that rate would be the quality of the product they produced. It would also force the individuals utilizing agents to get their sh*t together and be respectful of their time and skills. You don't waste a lawyers time by talking about the weather if you know you are on the clock. If you are good at what you do and you take time out of your day to show me a property or consult with me about valuation you should be paid for that regardless of if a deal closes or not.
Please keep the comments and thoughts coming!
2 Reply
James Hamling
Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
3y
Quote from @Billy Knox:

Wow. What a plethora of great responses! Thank you everyone for engaging and sharing your thoughts on the subject. These are some of my take aways:
Like everything in life there are bad apples in the bunch. Don't let the bad apples spoil it for everyone else. I can see some very salient points made for why it could be important and beneficial to partner with a good agent and the value that they can add to the transaction. I think this especially rings true when you have neither the time or the inclination (or possibly ability) to invest in the process yourself.
That being said, I do believe in the fundamental American ideal of rolling up your sleeves and doing the hard work yourself. A 3% commission on a $400K home is $12K. That is a lot of money to most people. The realization that I came to is that it was well worth my time and effort to learn the inns and outs of the real estate transaction in order to preserve that equity to be put to use elsewhere. $12K passively invested in the S&P (literally just buy the index and do nothing else) yields an 11% annual historical return. In 18 years (the time it will take for my daughter to grow up and go off to college) that $12k I saved by putting in a bunch of work will yield $78K. That is half of my kid's college education paid for. When put into a context like that it shows that sometimes investing your time and effort and energy is worth it. A lot of the arguments for why it is absolutely imperative to use an agent were fear based and hinged on the principle that the individual did not have the capacity to conduct the transaction without the 'trained professional'. I don't agree with that. People are incredibly resilient and intelligent and I find that more times than not they can rise to the occasion. Especially if we can create tools to empower them to do so! The landscape is changing in that there are so many resources available and so much knowledge accessible by the click of a hyperlink. In addition, much of the dramatic catastrophic effects that were highlights can absolutely be avoided by using a real estate attorney. That is a much more efficient structure for dealing with those issues and I believe is ultimately more cost effective and safeguards the principal parties interest more closely.
So what does the future look like? There is no doubt that great agents provide a value add to the transaction. Everyone on here has highlighted that. Exceptional people do exceptional things no matter where they find themselves. For me the question is really about the structure of it all. Maybe it is time we take a look at the stake based compensation structure. I know there are lots of operations out there already doing this. The market seems to be moving in that direction. The role of the agent is really that of a consultant and I think as a consultant you should get paid for your time - no matter if the transaction closes or not. That is where the real fundamental misalignment occurs in my mind. If you have an equity stake then closing the deal is always the best option, even if that might not be the best option for the principal parties. If the compensation structure was shifted to a fixed system then the agent could operate as an advisor and get paid for their time (which they should be!) no matter what. Furthermore if agents were paid on a fixed hourly scale then the thing driving that rate would be the quality of the product they produced. It would also force the individuals utilizing agents to get their sh*t together and be respectful of their time and skills. You don't waste a lawyers time by talking about the weather if you know you are on the clock. If you are good at what you do and you take time out of your day to show me a property or consult with me about valuation you should be paid for that regardless of if a deal closes or not.
Please keep the comments and thoughts coming!

In this vein, let me run this by you Billy.
On the buying side, that's a non-starter for such adjustment because of the prevailing system in place where a seller is expected to present that buyers broker payment and reducing such DOES absolutely result in agents "ghosting" that listing. Not supposed to but it does. So change has to start at listing side.
What would you think to a listing agreement that stated a flat rate, say $1,750, which covers all items associated with building that listing. The initial CMA, property photos, videos, and creating the listing. Now keep in mind this is just creating the listing colterol, not the actual activities of such. And photo's videos can be a pretty penny themselves, for good pro ones that is. And maybe there would be tiers, a good - better - best kind of thing.
Next for the actual listing, a 1% selling brokers commission WITH a per hr consulting rate fee, just like attorneys do it, with a stated retainer amount as billing comes from that retainer/escrow.
You do want a listing agent to have a "dog in the fight" and, a "more" property will denote "more" marketing/advertising activities, hence that 1% is reflective of the both. But this structure helps to keep it to a significant minimum vs prevailing standard today, and with the per hr billing rate known and structure for agent time, that defends on those activities.
The only alternative to this, would arguably end up costing a lot more because it would mean breaking down every function into a billable and than tiered options on each and all of this add's a whole ton more administrative and accounting measures just to track and manage, thus adding more admin impact and there in, more cost. For example an advertising and marketing budget, to track every spend on that and not to mention having to educate every client on what is and is not appropriate because as it stands today, people are clueless what we spend on such. My organization burns thousands weekly on such and I am 100% certain our clients take it for granted.
And than I'd have to point out every Listing Transaction actually has 4 sales made to get 1 closing. FIRST we have to sell a buyer on the desire of the property via the marketing colterol. We gotta get them interested enough to come out, but ideally come out with urgency, because that's how you drive multiples, and that's the goal in EVERY listing. SECOND is the obvious sell, getting a buyer to make an offer, selling them on the property but with that THIRD selling the buyers agent on the purchase also. Yeah, how many overlook that one?! If person(s) love the home and want to make an offer it can get killed real fast by a buyers agent poo-poo'ing it, you ALSO gotta sell that buyers agent on it AND if you can sell that buyers agent on it they often sell there buyer son it also and all the more. And FOURTH but MOST IMPORTANT is you gotta sell that appraiser on the value of it. Yeah, again, near to none talk about or focus on this but as someone of a bit of fame in getting "above market" sale prices, this is a major component of my "how". It's actually the bank who's buying it, facilitated by the desire of the "buyers", so this is the important sale, the appraiser. And it has to be done very intelligently because there is no direct selling allowed. It's all about correctly listing, having all the right details, knowing potential appraisal issues before they happen and solving them before they happen.
This process can consist of a lot of agent interaction and hours outside of direct consulting with clients. I am not sure how one addresses this via a per hr billable. In my experience the sale after the sale is the heavy lift, where the hours really come into it, seeing things through inspection, re-negotiations, appraisal and closing process. The most hours I have ever lost on transactions is in this "time-suck" not on the actual listing side most see. It's the invisible majority of time and importance.
0 Reply
Gary Lucido
Real Estate Agent · Chicago, IL · Member since 2017 · 53 posts · 48 votes
3y
Quote from @James Hamling:

On the buying side, that's a non-starter for such adjustment because of the prevailing system in place where a seller is expected to present that buyers broker payment and reducing such DOES absolutely result in agents "ghosting" that listing. Not supposed to but it does. So change has to start at listing side.
What would you think to a listing agreement that stated a flat rate, say $1,750, which covers all items associated with building that listing. The initial CMA, property photos, videos, and creating the listing. Now keep in mind this is just creating the listing colterol, not the actual activities of such. And photo's videos can be a pretty penny themselves, for good pro ones that is. And maybe there would be tiers, a good - better - best kind of thing.
Next for the actual listing, a 1% selling brokers commission WITH a per hr consulting rate fee, just like attorneys do it, with a stated retainer amount as billing comes from that retainer/escrow.
You do want a listing agent to have a "dog in the fight" and, a "more" property will denote "more" marketing/advertising activities, hence that 1% is reflective of the both. But this structure helps to keep it to a significant minimum vs prevailing standard today, and with the per hr billing rate known and structure for agent time, that defends on those activities.
The only alternative to this, would arguably end up costing a lot more because it would mean breaking down every function into a billable and than tiered options on each and all of this add's a whole ton more administrative and accounting measures just to track and manage, thus adding more admin impact and there in, more cost. For example an advertising and marketing budget, to track every spend on that and not to mention having to educate every client on what is and is not appropriate because as it stands today, people are clueless what we spend on such. My organization burns thousands weekly on such and I am 100% certain our clients take it for granted.
And than I'd have to point out every Listing Transaction actually has 4 sales made to get 1 closing. FIRST we have to sell a buyer on the desire of the property via the marketing colterol. We gotta get them interested enough to come out, but ideally come out with urgency, because that's how you drive multiples, and that's the goal in EVERY listing. SECOND is the obvious sell, getting a buyer to make an offer, selling them on the property but with that THIRD selling the buyers agent on the purchase also. Yeah, how many overlook that one?! If person(s) love the home and want to make an offer it can get killed real fast by a buyers agent poo-poo'ing it, you ALSO gotta sell that buyers agent on it AND if you can sell that buyers agent on it they often sell there buyer son it also and all the more. And FOURTH but MOST IMPORTANT is you gotta sell that appraiser on the value of it. Yeah, again, near to none talk about or focus on this but as someone of a bit of fame in getting "above market" sale prices, this is a major component of my "how". It's actually the bank who's buying it, facilitated by the desire of the "buyers", so this is the important sale, the appraiser. And it has to be done very intelligently because there is no direct selling allowed. It's all about correctly listing, having all the right details, knowing potential appraisal issues before they happen and solving them before they happen.
This process can consist of a lot of agent interaction and hours outside of direct consulting with clients. I am not sure how one addresses this via a per hr billable. In my experience the sale after the sale is the heavy lift, where the hours really come into it, seeing things through inspection, re-negotiations, appraisal and closing process. The most hours I have ever lost on transactions is in this "time-suck" not on the actual listing side most see. It's the invisible majority of time and importance.
With buyers having online access to all listings it's pretty much impossible for buyers' agents to ghost a listing. Today's buyers are driving the process, telling their realtors what they want to see. However, an unscrupulous agent could discourage their buyers from pursuing a low co-op property but then they risk losing credibility with their client.

We do offer sellers a service where they pay for our out of pocket costs plus our hourly fee. And we charge for all our time, including driving and phone calls. Most people don't take us up on this alternative because of the perceived risk to them should the sale become complicated but the ones that do almost always come out ahead.
0 Reply
James Hamling
Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
3y
Quote from @Gary Lucido:

Quote from @James Hamling:

"an unscrupulous agent could discourage their buyers from pursuing a low co-op property"
Exactly, and that's what I am speaking to, and it happens VERY regularly.
It's not supposed to, warnings and telling's galore not to do it, but it does, far more often then not.

There is data proving this point that the vast majority of agents DO discriminate and steer of listings that have substantially downgraded commission offerings. While there is risk IF an agent is caught, that's the crux, near to none are ever caught. Look up enforcement #'s of such, it's all but non-existent.

Given your comments it seems your far to biased on your Discount Brokerage model to look at things in a unbiased manner when it comes to such. Your opinions are noted, you think your Discount Broker model is the best, as you should. But taking such opinion and than translating it as fact, because it's your opinion, is a falsification of data.

Reality is many buyers do rely on there agent, and follow there lead and advisory actions. Just look to Zillows suffering of this. There listings were "black-balled" and by a coordinated effort of NAR agents, very literally ran out of business. Everyone knows it, it's illegal, and here it stands, not 1 prosecution for such. Every "pro" buyer's agent out there knows exactly what I am speaking of. There is a un-written "rule book" of R.E. Agency as much as a written one.
0 Reply
Jonathan R McLaughlin
Rental Property Investor · Boston, Massachusetts (MA) · Member since 2016 · 2k+ posts · 2k+ votes
3y
@Billy Knox
You said: $12K passively invested in the S&P (literally just buy the index and do nothing else) yields an 11% annual historical return.
Careful man, that is only with reinvested dividends...actual historical return is closer to 7% with more volatility than people think. Long turn average doesnt do you much good if you have to take the money out in a down cycle. Oh...and half the investors make less than the average :) Bringing this up because you are using the stock market as an example of how easy it is, and even your example contains innacuracies.
As to your larger point about self education...agreed. It is possible and laudable to take the knowlege into you own hands. And it might save you money.
Taking a step back from real estate, though, skilled middlepeople (brokers) have been sought after since literally the beginning of civilization in all avenues of trade. People have been complaining about their fees since then too :) Occasionally the ground shifts and a particular area of skill becomes obsolete but the skill set has proven its worth over centuries.
1 Reply
Gary Lucido
Real Estate Agent · Chicago, IL · Member since 2017 · 53 posts · 48 votes
3y
Quote from @Jonathan R McLaughlin:

@Billy Knox
You said: $12K passively invested in the S&P (literally just buy the index and do nothing else) yields an 11% annual historical return.
Careful man, that is only with reinvested dividends...actual historical return is closer to 7% with more volatility than people think. Long turn average doesnt do you much good if you have to take the money out in a down cycle. Oh...and half the investors make less than the average :) Bringing this up because you are using the stock market as an example of how easy it is, and even your example contains innacuracies.
As to your larger point about self education...agreed. It is possible and laudable to take the knowlege into you own hands. And it might save you money.
Taking a step back from real estate, though, skilled middlepeople (brokers) have been sought after since literally the beginning of civilization in all avenues of trade. People have been complaining about their fees since then too :) Occasionally the ground shifts and a particular area of skill becomes obsolete but the skill set has proven its worth over centuries.

Reinvested dividends is the correct way to look at it. That is part of your return and you have to account for it.

Since the beginning of time middle people have basically exploited inefficiencies in the market but eventually get eliminated or their role is drastically reduced: travel agents, stock brokers, floor traders, money changers, banks with tellers, cashiers, book stores, etc...
0 Reply
Brie SchmidtBusiness Member
Moderator
Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
3y
I have been an agent for 19 years, when I started people told me my job would be taken over by technology, obviously it has not.
First, you need to understand that most people buy/sell a handful of times in their life. They are not going to learn a profession that they would barely need when they can hire a professional. Can I learn to change my brake pads, sure. Do I want to DIY something like that? No
Second, like others have mentioned that percentage of great agents is small, but they are worth it. I specifically work with house hackers on the north side of Chicago. My experience and advise defiantly comes into play with first time investors. Things like running numbers, estimating renovation costs, determining market rents are not things you can read a book and learn.
Third, I think selling is the easiest part of my job. If the property is priced right it will sell, if it is sitting it is overpriced. No amount of marketing can sell an overpriced house
Fourth, my job isn't necessarily to find you a property. It is, but my job is to get you to the closing table. When you have zoning, tenants, and a plethora of issues that can come up, you need someone experienced that knows how to handle them. If it is a run of the mill transaction any agent can do that, problem is you don't know what you are going to get into you are knee deep in it. I have literally sledgehammered walls the day before closing to get the deal done. I have overturned zoning certificates when the seller's agent/attorney said it couldn't be done. I was pregnant in February half in a catch basin trying to figure out a flooding problem for a client.
Getting licensed is easy, but it teaches you nothing about being an agent. That is why half of agents don't make it past their first year
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0 Reply
Jonathan R McLaughlin
Rental Property Investor · Boston, Massachusetts (MA) · Member since 2016 · 2k+ posts · 2k+ votes
3y
@Gary Lucido you make an excellent point about various middlepeople going obsolete, for real. I undersold that one It is not automatic though, and at the high end the role is VERY sticky. Investment banks, personal wealth advisors and so and so on are essentially brokers that have flourished even as the market has accommodated automation in the low end. And bookstores are making a comeback :) But, again, you make a good point.
I was initially surprised by how well the real estate brokers held on in the internet age but they have been very strategic about their positioning. The NAR lobby is very skilled. And the very volume of information has helped them preserve their expert status. The industry doesn't really have to be geared around investors, we don't do the volume homeowners do, and they want the handholding. And those people gravitate towards the trusted and known.
Certainly the current system is breakable, but I don't think the disruptors are close yet.
2 Reply
Account Closed
Investor · TX · Member since 2018 · 38 posts · 28 votes
3y
Quote from @Jonathan R McLaughlin:

@Gary Lucido you make an excellent point about various middlepeople going obsolete, for real. I undersold that one It is not automatic though, and at the high end the role is VERY sticky. Investment banks, personal wealth advisors and so and so on are essentially brokers that have flourished even as the market has accommodated automation in the low end. And bookstores are making a comeback :) But, again, you make a good point.
I was initially surprised by how well the real estate brokers held on in the internet age but they have been very strategic about their positioning. The NAR lobby is very skilled. And the very volume of information has helped them preserve their expert status. The industry doesn't really have to be geared around investors, we don't do the volume homeowners do, and they want the handholding. And those people gravitate towards the trusted and known.
Certainly the current system is breakable, but I don't think the disruptors are close yet.

I agree, and the ironic thing is this : the homeowners have less money, and less knowledge, than investors, but homeowners are the biggest clients and the lion's share of business for agents and brokers. It's kind of a no-brainer, right?
So if anyone is going to "figure the closing process out for themselves," it's probably going to be the guy who already learned enough to become an investor, too. Because they already know how to find good investments, do their due diligence, and on and on... some even go on to become developers... Most agents and brokers aren't even 1/10th of the way to that kind of knowledge.
1 Reply
Dave Skow
Lender · Seattle, WA · Member since 2014 · 2k+ posts · 899 votes
3y
@Billy Knox- thanks - was there a realtor representing the buyer for your sale ? if so - that agent likely had a lot to do with the transaction being completed ...if there wasnt - then you and your buyer did a great job . If a transaction goes 100% smoothly I can somewhat understand your comments but if anything unexpected occurs - having an agent involved to assist righting the ship can prove to be priceless . Every transaction is different . I think you are already seeing many models dowing exactly what you are saying the future holds ( eg. the redfin agent credit back to the buyer is a pefect example )
0 Reply
Billy Knox
OP
Member since 2019 · 17 posts · 24 votes
3y
It seems that the argument for the agent is they are important to have around in case anything goes sideways. I agree that it is good to have a contingency plan, but my thought on that is that we should be hiring a Real Estate Attorney to function in that capacity. They are far more educated and in-tune to the nuances and pitfalls of real estate law and you can pay them on an hourly basis vs a percentage equity stake. This addresses one of my fundamental arguments with real estate agents in that their interests and yours are fundamentally at odds. The attorney is going to give you the best legal advice because that is how they ensure their survival in the market. If they give you good advice they get recommended to other individuals and keep practicing. The agent's interest, in my opinion, are fundamentally misaligned from that of the buyer or seller. They are all about transaction volume and closing deals. The more volume they do the more they get paid.
Consider this - you go to sell your home. You do the market research yourself and think it is worth a certain amount. It might not move on the first day, but when the right buyer comes along that is what they will pay. An agent tells you that the goal is to move your property quickly and to drop the price so that it does so. They tell you things like you can get into a bidding war which will drive the price up (which is the worst argument I have ever heard). So you go with the agent. You price your home 30K lower than what you thought it was worth. It does sell quickly, but you are out the 30K you could have had if you were just a little more patient. The agent is only out and extra $900, but they will make up for that by repeating the process and moving properties as quickly as they can. A home isn't something we buy at a flea market or a discount retailer. If you get multiple offers and it sells on the first day all that tells me is that you priced your asset too low and you could have got more out of it.
I digress. Back to the issue at hand. It is both more economical and in my opinion a far better use of resources to hire an attorney for the CYA portion as they are they actual experts when it comes to the legal pitfalls and trouble you can get in when conducting a deal. It is just a much more efficient model and saves the buyer and seller a lot of money in the process. And that is what we are here for, right? Saving people money and helping them build their wealth through real estate?
0 Reply
Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
3y
Why use a lawyer? Why use a general contractor? Why use an insurance broker? Why use a mortgage broker? Why use an electrician? Why use any professional?
Anything can be done by an individual themselves. You typically hire a professional to do something for you, and hopefully do it much better than you. And because those professionals carry insurance to do those jobs, it additionally will reduce your liability for screw ups. But the professional is much less likely to screw up anyways.
But like all professions, whether lawers, dentists, carpenters, plumbers.....there are people really good at their profession, and there are people really bad at their profession. So whatever professional you are hiring, hire a good one and not a doofus.
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1 Reply
Henry ClarkPro Member
Developer · Member since 2020 · 4k+ posts · 4k+ votes
3y
We love paying our realtor fees. I actually pay realtor fees even when we don’t have to. 5 different realtors and all 5 have been great. Probably dumb luck. Probably have paid out about $250,000 all told.
I’m a controller, cfo, cpa, phi beta kappa, entrepreneur, construction worker, kaizen leader, willing to jump off the cliff into a deal, etc, etc. Have no problem saying I could do all of our real estate deals without researching what it would take.

We like making money and the hunt. I want a team to do the things I don’t enjoy. Bring experience that I will never seek out. Who can attend an auction and buy land while I’m eating dinner on vacation in Italy. Who can bring me land deals out of the blue where we make $1mm when we weren’t looking. Who can have a dead snake which is smelly taken out of a garage for a house for sale while traveling.
Who I can ask for team members they recommend. Sign companies, plumbers, electricians, concrete, etc. Or will take care of it with their in house team.
What I really love is I don’t have to have them on payroll and keep them busy. Yet they are always looking for deals for me.
To me it is a matter of scale. What am I good at and what do I enjoy? With one property I can do it all. As you start to scale you could do it all, but then I would t do it, since I wouldn’t enjoy it anymore. Plus I would be losing money since I would not be doing what I enjoy the most, which is the Hunt.
My son is in the Navy at Signorella, Sicily. Moving up to E 5 and will get BAH.
My brother who is retired AirForce and is civil service is moving to Livorno, Italy for a new Army position and will get BAH. He was getting $50,000 BAH in Korea and you walk in and get handed the cash once a year, so you got your downpayment. Italy he will get less.
Both of them should make about $50,000 and $150,000 tax free from Uncle Sam using their BAH money if they choose to. Even if they buy and sell their houses for the same price.
If they were to follow REI strategies on BP they should double that. Interest rates are 2% to 6% depending on the town. 30% down and 30 year amort.
You're in the military. Consider your realtor as both part of your REI team and your military family team while you are overseas. Focus on the Hunt or the big dollars with your BAH money.
This is a house we are building in Belize. Our realtor down there is acting as our Buyer agent. He was going to do the current deal for free on a new piece of land, but I’m willing to pay his half which is 5% of the normal 10% commission down there. He will get about $10,000. His ReMax firm will get half of that. $175,000 piece of land. Will be $1.2mm in 12 years.
But in the meantime he will be looking for other similar situations.
I love paying realtors.

If you can do the work and don’t plan to scale, you don’t need a team. Don't pay them.
1 Reply
Billy Knox
OP
Member since 2019 · 17 posts · 24 votes
3y
Quote from @Henry Clark:

We love paying our realtor fees. I actually pay realtor fees even when we don’t have to. 5 different realtors and all 5 have been great. Probably dumb luck. Probably have paid out about $250,000 all told.
I’m a controller, cfo, cpa, phi beta kappa, entrepreneur, construction worker, kaizen leader, willing to jump off the cliff into a deal, etc, etc. Have no problem saying I could do all of our real estate deals without researching what it would take.

We like making money and the hunt. I want a team to do the things I don’t enjoy. Bring experience that I will never seek out. Who can attend an auction and buy land while I’m eating dinner on vacation in Italy. Who can bring me land deals out of the blue where we make $1mm when we weren’t looking. Who can have a dead snake which is smelly taken out of a garage for a house for sale while traveling.
Who I can ask for team members they recommend. Sign companies, plumbers, electricians, concrete, etc. Or will take care of it with their in house team.
What I really love is I don’t have to have them on payroll and keep them busy. Yet they are always looking for deals for me.
To me it is a matter of scale. What am I good at and what do I enjoy? With one property I can do it all. As you start to scale you could do it all, but then I would t do it, since I wouldn’t enjoy it anymore. Plus I would be losing money since I would not be doing what I enjoy the most, which is the Hunt.
My son is in the Navy at Signorella, Sicily. Moving up to E 5 and will get BAH.
My brother who is retired AirForce and is civil service is moving to Livorno, Italy for a new Army position and will get BAH. He was getting $50,000 BAH in Korea and you walk in and get handed the cash once a year, so you got your downpayment. Italy he will get less.
Both of them should make about $50,000 and $150,000 tax free from Uncle Sam using their BAH money if they choose to. Even if they buy and sell their houses for the same price.
If they were to follow REI strategies on BP they should double that. Interest rates are 2% to 6% depending on the town. 30% down and 30 year amort.
You're in the military. Consider your realtor as both part of your REI team and your military family team while you are overseas. Focus on the Hunt or the big dollars with your BAH money.
This is a house we are building in Belize. Our realtor down there is acting as our Buyer agent. He was going to do the current deal for free on a new piece of land, but I’m willing to pay his half which is 5% of the normal 10% commission down there. He will get about $10,000. His ReMax firm will get half of that. $175,000 piece of land. Will be $1.2mm in 12 years.
But in the meantime he will be looking for other similar situations.
I love paying realtors.

If you can do the work and don’t plan to scale, you don’t need a team. Don't pay them.

Best argument I have heard on that side of the fence yet! Totally agree when it comes to scaling a large operation! Appreciate the different perspective!
0 Reply
Billy Knox
OP
Member since 2019 · 17 posts · 24 votes
3y
As it pertains to this line of questioning I would love to solicit feedback and opinions about the ongoing class-action lawsuits:

Moehrl vs. NAR

Burnett V NAR

I think this brings to light the deep fundamental flaws in the "way business is conducted" and makes the resounding argument that the entire industry is due for major disruption and change. If the agent really does bring solid value to the transaction then why would there be any issue with having buyers pay their agents and sellers pay theirs? That is the most balanced and transparent approach as each party would pay directly for the support they utilize or need.

Robert Hahn's White Paper on the case for a decentralized auction mechanism is fascinating and I think where the market is ultimately headed. If buyers had to turn and write a check to the agent they utilized at the end of a transaction it would fundamentally alter the landscape overnight.
0 Reply
Kevin Hintz
Investor · Tacoma, WA · Member since 2021 · 97 posts · 28 votes
2y
Good agents are irreplaceable when it comes to spotting issues with the properties which might end up costing you way more than the commission fee. As an agent myself, I always try to improve, and at https://smartagentalliance.com/ I get the guidance I need.
1 Reply

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