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It's the DIY/HGTV mentality.
I compare it to the guy who buys the FSBO rundown shack, does all the work himself. Hey, it's all cosmetic, right? Slap a coat of paint on, replace some cabinets and appliances, maybe some flooring and other updates, only to find out the foundation is crumbling, there's mold in the walls. Not to mention that the cabinets aren't level, that hardwood flooring is now separating and not level, and that new front door "just doesn't close right". He skimped on the stuff that would make a difference and spent mucho cash on the things that are irrelevant.
The next call is to the Agent (who the guy said "No, I don't need your help" to during the original purchase): Can you sell this for me? It's going to cost me a lot more than I thought. What a mess.
I declined.
Everything's negotiable. Why should a real estate commission be any different?
Besides, the real estate community's monopoly of the MLS (realtors' main purpose) will eventually crumble, just like the full service brokerage business did back in the 70s.
It's the DIY/HGTV mentality.
I compare it to the guy who buys the FSBO rundown shack, does all the work himself. Hey, it's all cosmetic, right? Slap a coat of paint on, replace some cabinets and appliances, maybe some flooring and other updates, only to find out the foundation is crumbling, there's mold in the walls. Not to mention that the cabinets aren't level, that hardwood flooring is now separating and not level, and that new front door "just doesn't close right". He skimped on the stuff that would make a difference and spent mucho cash on the things that are irrelevant.
The next call is to the Agent (who the guy said "No, I don't need your help" to during the original purchase): Can you sell this for me? It's going to cost me a lot more than I thought. What a mess.
I declined.
Anyone that buys a property without a thorough inspection, including mechanicals, foundation, and pests gets exactly what they deserve.
Guess what? We all do WORK FOR FREE . . . at least occasionally.
Yep, you heard right. Think about it:
Scenario A
1) Take a listing at your normal commission rate
2) Seller insists on pricing a little high (to have some negotiation room)
3) Agent markets listing with upgraded Virtual Tour, Enhanced Realtor.com Listing, beautiful full color print ads, postcards, mailers, high-quality color flyers, sign & riders, etc, etc
4) Offer comes in. It's lower than what seller wants. Agent negotiates contract - gets offer increased by $20,000 but still $6,000 less than asking price. Seller balks - no deal.
5) Listing expires. Seller blames agent for not selling his house. Relists with Agent #2 for $10,000 less than house was listed for with Agent #1.
6) Agent #1 walks away shaking his head and several $1,000's poorer.
Scenario B
Items 1-3 remain the same.
4) Offer comes in. It's lower than what seller wants. Agent negotiates contract - gets offer increased by $20,000 but still $2,000 less than what the seller wants. Seller asks agent to reduce his commission.
5) House goes into escrow. Agent works hard to coordinate everthing, including stayiing on top of buyers loan progress, which is shaky.
6) Buyer asks for a laundry list of repairs. Agent negotiates repair list to reasonable requests, saving Seller much money.
7) House finally closes escrow.
8) By the time the buyer's agent and his broker get their split, and the agent splits with the broker and pays franchise fees, transaction fees and subtracts his commission recudtion promised to the seller - the agent realizes he barely broke even considering his marketing costs and time spent on this transaction.
Scenario C
1) Agent works with buyers for months.
2) Agent sends listing updates frequently.
3) Agent previews homes of interest. Takes pictures. Uploads pictures and emails comments to buyer.
4) Buyer visits area several times. Each time agent drives buyers to tour homes.
5) Agent takes buyer to lunch on each visit.
6) Each time, buyer is not "quite ready to buy", or can't quite find "the perfect" house.
7) After a year, buyer has decided to purchase a home in a different locale.
8) Unfortunately buyer didn't let agent know he was considering another town. Agent was unable to recommend a colleague in new town - thus no referral fee.
9) Agent is out gas money, time and energy. Agent cannot recoupe any expenses.
Be realistic here. Housing prices have doubled in the last 6-8 years. That means if your percentage stayed the same, your salary would double.
Just my opinion of course.
not true in Colorado.
Housing prices had basically remained unchanged since 2001. But the liability, costs of doing business and the workload has definitely increased.
I think some folks don't understand what is meant by 6% or 3% commission, example-if you sell your home for $200K, the realtor listing your home pays out of his own pocket the expenses for marketing/advertising, cost for brokers open houses and general public open houses in the form of newspaper advertisements and refreshments for the open houses and let's not forget the realtors time and knowledge in drafting contracts and negotiating the sale has value.
Once the home is sold, your listing agent will split the 3% commission on the sold price with his broker (leaving your listing agent with 1.5% to 2% commission), then reduce this amount by the expenses incurred in listing your property. Typically, your listing agent will be lucky if he ends up with 1.5% commission on the sale price.
If you want to sell your home you have to be willing to attract the interest of the other 10,000 plus realtors/and their buyers, in your community which means you also have to be willing to pay those buyers agent to bring their clients to your home.
I think the thing that people have the hardest time with is that you're dealing with a percentage, not a rate.
Your advertising costs, fuel, time and all those other things have a set value. Pulling an ad doesn't costs what the space costs, not the value of what you're selling.
The costs of listing a $100K home are no less than those on a $300K home, yet the homeowner pays a difference of $12000 for the same service.
Ultimately REALTORS are the best socialists. You get charged based upon your ability to pay, not on the value of the service delivered.
I think the thing that people have the hardest time with is that you're dealing with a percentage, not a rate.
Your advertising costs, fuel, time and all those other things have a set value. Pulling an ad doesn't costs what the space costs, not the value of what you're selling.
The costs of listing a $100K home are no less than those on a $300K home, yet the homeowner pays a difference of $12000 for the same service.
Ultimately REALTORS are the best socialists. You get charged based upon your ability to pay, not on the value of the service delivered.
Completely untrue.
For each home there are specific areas you target your marketing.
For a higher end home your target marketing is generally higher.
Higher end magazines targeting the correct market are much more expensive than your normal real estate magazine.
We work for commission, the higher the sale price the higher the paycheck, no sale , no paycheck.
For each home there are specific areas you target you marketing.
Boy, are you ever right -
Let's see - I'm going to advertise a 100K condo the same way I would a 5 million dollar estate -
Yep, Homes Illustrated versus Town and Country Magazine - those rates are the same, aren't they?
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Anybody else?
