I suspect many of these realtors are really just hobbyists, who don’t do this to make a living.
And is someone like this worth 6% of the sale price of the home? I don’t think so.
I don’t know the numbers but I know some Realtors.
Becoming a licensed real estate agent is not something you do just for fun. In my state there is a requirement of 60 hours of training, then you must pass a licensing exam. Then to actually work as an agent, you must have your license registered with a broker. Brokers are there to make money, not to support your hobby.
Just like any profession, there are good agents and not-so-good ones. I think most agents get new clients either through word-of-mouth from prior happy clients, or through the reputation of their brokerage. So the less-effective agents get weeded out through market pressure.
When I bought my condo in 1999 it was in a very hot market, and an agent was necessary. The problem was that by the time a property hit any public source (paper, a few new dangled web sites, etc) the place was already under contract.
At the time, as explained to me, a property was exclusive to real estate agents on the MLS for 2 weeks before showing up on the public MLS or other websites. I don’t know if that’s still the case today.
In every place I’ve bought or sold a house. Three states, seven transactions, 1998 to 2012, the listing is “public” the minute it is visible to ANYONE outside the office of the listing broker.
At one time only agents with access to MLS could see listings in MLS (there were no third-party websites that were available to non agents). But when those became available, as far as I know they had current listings, not two week old ones. Are you saying there is or was a private MLS and a public one?
I once bought a house BEFORE it went into MLS. My agent knew the sellers agent and they just happened to be talking about another deal, when my agent mentioned that she had a relocating client looking for a 3BR in a particular neighborhood. The other agent had a prospect who was considering listing her 3BR in that neighborhood. Deal was made in a few hours. They wanted a quick sale (divorce) and I wanted a quick move-in and had a large down payment and excellent credit. The listing never went into MLS.
This was 2003. And at that time I was already emailing listings to my agent daily that I wanted to see. Including listings that came on the market in the last 24 hours. In 1998, I believe the agent was the only source of listing information available to me.
I got caught in between those two times. I would contact the agent with listings that I wanted to see, but they were always under contract, even when it was something that showed up that day. I’m sure I was looking at some sort of early real estate web site. I recall that by 2010 when I was looking again, the sites I’d used were gone.
If I remember correctly, the agent explained that she got access 2 weeks prior to things showing up on the website. That might have been an outright lie, but it did match what happened, in that she would show me places that I didn’t find on my own.
She was the type of agent that can give the industry a bad name. She was professional, and seemed competent, but as soon as my pre-approval came in considerably higher than the range I was looking, it was all of the sudden, “let’s check out this place, I know it is 50% more than what you want to spend, but let’s just see it” and “you can afford better than this” etc.
The agent I used in 2010 was completely the opposite. He worked hard for me, the buyer, even when it was against his own interest–getting me a lower price, and him a lower commission. It was the great recession, and he worked very hard (or so it seemed) to feel out listing agents about how desperate sellers were, and what kind of offer they might take.
We bought out house in the early 90’s before pre-approval was a thing. Told the agent our price range, he worked with that. When the loan approval came through he commented that he could have found us a much nice house (our plan was always to buy something either salary could support).
Certainly. But that doesn’t mean there aren’t tons of people who are real estate agents who don’t do it full time, either because they have another full time job, are mostly homemakers, or just are terrible at finding clients. I know these people exist because I help prepare their tax returns. If there are people doing it in the northern Detroit suburbs, I’m sure people are doing it all over the country. So many people do it on the side because it’s a very lucrative thing to do - you can make a lot of money with very little work if you manage to recruit clients effectively.
Freakonomics covered that, I think the premium to realtors was something like 10%, and on their blog they have had subsequent studies supporting that.
I don’t get the continuing references to “cartel” as if there’s some cabal of agents conspiring to control supply of… house-selling skills? No, that’s ridiculous.
Are agents a ripoff? Sure, sometimes. But nobody’s forcing you to use an agent, you are 100% free to market and transact your own property if you want. Hire an attorney and whatever experts you provide. Don’t use the MLS service. Put it on Zillow. Answer your own contacts from incoming buyers. Quit your job and show the house 3x a day until it sells. Nobody’s preventing you from doing any of this! If you absolutely require an MLS listing for whatever reason, there’s an abundance of discount brokers that will charge you for that and nothing else. But again, it’s optional. All of it is optional.
Anyone who thinks realtors are a ripoff has an easy choice: don’t use one. Do it yourself. What’s that you say, you don’t feel comfortable marketing own your property and navigating large deals on your own? You don’t have time to do it because you already have a job? Then pay a professional. Your choice, nobody’s got a gun to your head, but if you feel a service is valuable to you, why believe you should get it for free?
People are referring to a cartel because in most states there is a virtual monopoly on the listing system by “professionals” who are somehow managing to command commission rates many times what they are in Europe.
And I say this as someone who is married to a Realtor. I can see that she spends at least 80% of her time trying to acquire clients and <20% of her time actually working for clients. That is another sign of a broken system. She can make a good living closing 5-10 deals a year. Her counterpart in the UK needs to close closer to a deal a week to make the same kind of money and house prices are higher in the UK and property ownership mulch more complicated.
If a builder was somehow able to charge $25,000 to change out a bathtub, but spent 75% of his time seeking clients and 20 days a year actually working on changing bathtubs, you’d recognize that as a problem. After all if he screwed up the install, you could have tens of thousands of dollars in losses, so the price must be worth it.
I don’t know of any other legitimate service industry where the ratio of client seeking time is so much higher than client servicing time.
Don’t like the listing system monopoly? Nobody’s forcing you to use it! Market your own home. Advertise it on Zillow. Someone on my street is doing their initial round of marketing by posting on Facebook asking “let us know directly if you know any buyers, no agents.”
People do it all the time. Nobody’s forcing you to get ripped off by agents.
The tools are all at your disposal, and people look at them and say:
- This is easy. Why should I pay an agent for something so easy I could obviously do myself?
- Also, I don’t want to do it myself. I want someone to do it for me, preferably for free.
People get upset at rip-offs by politically powerful industries all the time. What are you getting all defensive about?
I have done this. It wasn’t that hard and saved me a lot of money.
Can’t recommend it enough.
Sure. So is buying drugs from Canada. Doesn’t mean I can’t bitch about the healthcare financing system in the US.
I’m calling out the hypocrisy of people complaining about someone feeling aggrieved that they have to pay elevated prices for something, when the truth is that they don’t actually have to pay for it at all. They could do it themselves, but they don’t want to, so the argument reduces to “you should perform a service for me based on what I think your labor is worth, not what you think it’s worth.”
This hits a nerve with me as a computer professional who occasionally helps people on the side. My time and skills are worth money because I’ve spent years cultivating them. I can’t tell you how often someone hits me up to help with a problem, and I name a price, and they say
“you want $100 for THAT? That’s easy, I could do it myself.”
And I reply: “okay, then why did you call me instead of doing it yourself?”
“Because I’m busy, my time is worth money.”
“Ah, and my time isn’t?”
“Well you’re a computer guy, you do this all the time, it’s easier and faster for you.”
“Yes, because I invested in these skills for many years, and I’d like to get paid for it.”
This is the exact same energy and it’s infuriating.
If computer professionals in the UK or Germany made 1/4 per hour what they make in the US, your customer would have a legitimate suspicion that something rotten is going on.
You seem to be completely ignoring what I’m saying.
My reply would be “okay, if you’re suspicious that I’m charging too much, here’s an instruction manual, prove me wrong on your own time, have a nice day.”
Same deal with selling a house. If people truly believe the service isn’t as valuable as all that, then they have numerous options to cut the agents out of the deal. But they almost never do! Why don’t they save themselves tens of thousands of dollars by doing their own marketing? Because they really do understand that it’s a valuable service. Why do they complain about it? Because for some reason they feel entitled to get that value for less money.
Likewise.
I agree with that, if it wasn’t clear enough from my posting. Selling by-owner is a very realistic choice that’s available to everyone, and can potentially save tons of money.
But people don’t do it! Overwhelmingly they choose realtors when they could do it themselves! Their actions prove that they understand the service is very valuable to them, yet they turn around and claim that they’re being ripped off paying for a task that’s not that hard.
So hypocritical. If it really isn’t worth it, then put your money where your mouth is and do your own work.
Well said - people are paying you for your skills and your time, and to save themselves time and hassle. Personally I am glad to let a realtor handle the sale of my property. I value my time as much as, if not more than, my money. Some people are willing to put in more time to save more money, which is fine - that’s their prerogative. But if you’re not, market price is market price. The seller has options among options.
Agents bring in buyers they’ve vetted for their purchase power, that alone may be worth their 3% commission to sell a FSBO.
Cranks, crooks, tire kickers, will all knock at your door trying to get in, if you enjoy dealing with that crowd and some do like the thrill of the chase feel free to fsbo.