It’s easy to get licensed I’m sure the industry relies on fresh blood for the ways their dues, brokers fees and requirements to purchase continuing education credits boosts the brokerages bottom line.
Even if you’re not making sales you still owe your broker a monthly fee and the national and local boards yearly fees. In addition that 3% per side first goes to the broker who takes their 30% or more, one may have to pay a transaction fee or make their client pay it.
Why don’t people walk in off the street in the U.S.? Back when I was looking for a condo, after I would see a place I would walk a round a bit and go into local agencies to see what they had available. Why not?
Does “walk in off the street” have some special meaning here? When I bought my house, I either walked into real estate offices off the street or called the agency mentioned in the advertisement I saw. Same thing for the people I know who sell houses or have apartments for rent.
I’m not sure what you mean here - it seems to me that if there is a 6% commission and a potential buyer walks into a real estate office that has the listing, that office and agent can keep the whole 6%- that’s certainly what happened when I bought my house as only one agent was involved.
And of course, if I walk into Smith Realty and they show me a house listed by Jones Realty , they will split the commission, but I still walked into Smith off the street
That seems a bit confused. You don’t have to be an agent to walk into another agency. If you want to buy a place and walk into any real estate office they will have someone on duty who would love you to be their customer. They can act as your buyer agent.
Yes, of course, if you are willing to sign them up as your buyer’s agent they are happy to have your business. I thought you were trying to only pay the 3% seller’s commission, and avoid paying the buyer’s commission.
In places where buyer’s agents are common, they represent the buyer not the seller. You don’t necessarily need a buyer’s agent - when I bought my house, there was only one agent involved and that agent represented the seller , not me. She couldn’t really help me negotiate since she represented them not me and had to keep their interests in mind. So she couldn’t tell me for example, that the listing price was $X more than the house was really worth so I should offer $Y. In my area, the custom is for everyone to have a lawyer at the closing and I suspect that some of what my lawyer did would have been done by a buyer’s agent in places where buyers don’t normally have lawyers ( reviewing the contract , arranging the inspection, getting title insurance)
As far as I can tell almost everyone who buys or sells a house uses an agent they either already know or are referred to by someone. So agents are engaged in a furious amount of networking to “be known” to as many people as possible.
When my wife had a regular job, she belonged to one book club that met once a month. Now she belongs to literally dozens of social or social service organizations. She’s going to some meeting or another 3-4 times a week. All of this is in aid of her being in the right place at the right time when someone is thinking of buying and/or selling. Being out and about and pretending not to be selling real estate is her full time job. Not to mention running “educational” events for first time home buyers at various social, religious and charitable organizations.
She is able to almost make a living spending at most 10-20 hours a MONTH actually working with clients. Because each deal is worth 5k to 10k in her pocket ($20k to $40k total commission split four ways).
Some houses are FSBOs (For Sale By Owner) and there aren’t agents and you would just hire a real estate attorney to handle the paperwork. An experienced and savvy buyer could probably pull that off but a newbie needs advice and assistance. The problem is that those don’t get listed and agents won’t show them. You need to do your own advertising. In a hot market in a highly desired neighborhood where the house is a teardown, you could probably put up a sign and have a couple of buyers the next day.
But as @puzzlegal said, it’s was a cartel and now it isn’t (hopefully).
I have only purchased one home (in 1993) and I will live here until I die so none of this really applies to me. My buyer’s agent was amazing. It was very much a buyer’s market here and she found the perfect house for me. It was a complete pain in the ass which is a very long story. She and I really hit it off and became friends. I was a little short of the down payment that I needed and she cut her commission to get me in. Worth every cent. I also recommended her to a number of people and she got at least five more commissions from friends of mine in the following few years.
I came to learn that she was very much an exception. In the last 30 years, the median price of a home here has gone up 700%. The median income has gone up 190% and realtors do a lot less than the old days. The old model needed to be adjusted.
I think that’s going to depend a lot on where you are and what sort of people you know. Sellers possibly can almost always use an agent they either know or are referred to. But nearly everyone I’ve known who has bought a house or condo in the past 20 or 30 years has been buying far enough away that they don’t know any agents. Say I live in NY. Maybe I know a couple of real estate agents who work in my area ( I don’t actually) . I’ll probably use one of them to sell my house. But imagine I’m retiring and I want to buy a house in North Carolina . I don’t know any agents there. In fact, I don’t know anyone there. I’m probably going to look on Zillow for something I like and call whichever agency listed it. Or I’ll drive around looking for for sale signs and call one of those agencies or just walk into the real estate agency on Main St .
It’s probably going to be very different if the people you know are looking for a larger house in the same school district.
Over here (Israel), usually only the seller hires an agent, and both the buyer and the seller pay their commission (between 1% and 2% each, so a total of 2%-4%). The agent advertises the apartment, shows it to people, and holds both the buyer and the sellers’ hands through the negotiations. Then both sides get lawyers, and when the money changes hands, each side pays the agent.
Buyer agents are rare, and are usually only hired by the rich or by people who are too busy to look at apartments. Most people consider them an unnecessary expense.
Yup. When i moved to this area, one of the perks i got from my employer was help buying a home, and that included that they referred me to two local agents who specialized in corporate moves. (One in each of the two areas i expressed interest in.) I ended up signing a buyer’s agent contact with one of them, which didn’t change the ultimate price i paid, since she was getting that money no matter who she represented (because cartel). She talked me into offering less when i was ready to say, “okay, I’ll take it”, and the difference between the final price and that was more than her commission, so i feel like she ended up being worth it. But that may make me an outlier.
I don’t understand the above “cartel” language. In the past, we certainly walked into RE offices cold off the street and asked to speak with an agent. That’s how we got the agent we used in buying our first home. So I really don’t understand why folk think a buyer could not walk into a RE office off the street, or contact them from seeing a listed property.
After that house, we decided instead to check which agents had the sorts of homes we were interested, or who seemed to do the most business in the areas we were interested in.
My understanding is that a “buyer’s agent” can refer to something slightly different than simply the agent who happens to represent the buyer. I thought a buyer’s agent involved signing an exclusive contract with that agent, generally for a period of time. But I’m far from expert.
I also have bouncing around in the grey matter some recollection of hearing that, “once the contract is signed, both agents represent the seller.” Or perhaps it is simply, “both agents’ interest is that the sale go through” - which might not be in the buyer’s interest should they wish to exercise a contingency. But I’m probably muddled.
That’s not where the cartel side of the business is. There’s plenty of articles going into detail about how the NAR is a cartel, here’s a random one I found at the top of Google. The cartel-like aspect is that it’s not really possible to be a non-NAR realtor because the NAR, through various means, enforced that NAR realtors could only work with other NAR realtors and that NAR realtors held the line at a 6% transaction cost because you couldn’t go outside of the system to compete on margin and bring the price down (there’s a ton of nuance I’m skipping over in the interest of brevity, read some articles to understand more).
So yes, you can walk into any realtor’s office but they’ll all be NAR realtors and yes, you can negotiate any price as long as it’s 6%. That’s where the lack of freedom comes from.
Rather it’s my understanding that the seller can always negotiate commission although they may get push back from an agent and broker but it’s done.
The seller pays commission to both sides in most contracts. Contracts are available that stipulate different terms for buyers agency and seller agent.
The so called cartel restricts access to the MLS. One can have a RE license without belonging to the local area board of realtors but you won’t be able to list on the mls or have access to the historical data of the mls on pricing disclosures etc. the mls is paid for by who? Cooperating brokers belonging to the area board of realtors.
Zillow has kinda cracked the cartel. Now agents use Zillow to boost their listing presence and pay for leads so if you ever ask for info in a Zillow listing a bazillion agents may call you begging for business.
Yeah, I’ve always thought of RE contracts somewhat as adhesion contracts - where the weaker/less experienced party has little/no opportunity to negotiate the terms.
I mean, you can strike out or modify some language, but getting the realtor to reduce their fee is not likely to be negotiable.