Point-Counterpoint: Is Zillow a Valuable Tool?

Anyone who has read this site for any length of time knows that I am not exactly Zillow’s biggest fan (to put it lightly). However, I like to keep an open mind, and I don’t want Seattle Bubble to become an echo chamber.

Therefore, I’m happy to present a point-counterpoint on the topic of Zillow’s value in the real estate marketplace. Rather than participating myself, I’ve invited two long-time Seattle Bubble regulars and local real estate professionals to debate the subject for us all.

Presenting the “anti-Zillow” position: Kary Krismer. Kary is an attorney and Managing Broker at John L. Scott/KMS Renton. Kary is also an occasional guest author here on Seattle Bubble.

Presenting the “pro-Zillow” position: Craig Blackmon. Craig is an attorney in Seattle, where he has practiced real estate law for over a decade. He owns and operate his law firm, the FSBO Law Center, where he helps people buy and sell homes without an agent (as well as handle other legal issues relating to owning a home). He is also the founder, designated broker, and managing broker of Quill Realty, a new model real estate firm.

Full disclosure: Craig is a Seattle Bubble advertiser, but no money or other consideration was exchanged for participation in this post.


Point: Zillow is Inaccurate and Adds No Value

by Kary Krismer

Kary KrismerPeople who dislike Zillow probably do so for many different reasons, but my primary complaint regarding Zillow is inaccurate listing information.

While not true for every MLS, Zillow does not receive direct feeds from the NWMLS. This has several drawbacks for buyers using Zillow. Some listings will never appear on Zillow, some will only appear after another buyer is in contract, and some will remain on Zillow weeks or even months after a listing is pending.

There is a simple solution to all of these problems. Seattle is a tech city where the regional broker sites are significantly better than those of most national firms. Broker sites like Redfin.com, JohnLScott.com, Windermere.com and Estately.com will give buyers both better data and better search options. Those sites will be updated multiple times per day and contain every NWMLS listing. As to which site is best, that would largely be personal preference, but it would also likely depend on a buyer’s needs.

This is not to say there are not some things Zillow does well in its search functions. Zillow is certainly better than some of the national brokerage websites, which is probably the reason Zillow even exists! But in the NWMLS area Zillow is not better than the local options, and thus would not be a likely first choice of informed buyers even if their data was accurate.

I have other complaints regarding Zillow. The most significant is that the reason Zillow exists is not to help buyers find homes and owners sell homes, but instead to provide a medium for agents to advertise. While that is also true to some extent for the broker sites, the broker sites are also trying to sell their clients’ listings. A buyer picking an agent based on advertising on either type of site is hardly desirable, but that is Zillow’s primary purpose.

Does this mean buyers should ignore Zillow? No. Zillow has other uses, including allowing FSBO listings (Trulia and Realtor.com do not) and has some limited information on foreclosures (although better sources probably exist). Also, “Zestimates” is a source of automated valuations, although those are of limited use. And clearly sellers should not avoid Zillow—they should pick an agent whose listings appear on Zillow, as well as all the other major sites. That Zillow is desirable for sellers does not make Zillow good. It just means some buyers are looking in the wrong place!


Zillow Provides an MLS Alternative – A Very Good Thing

by Craig Blackmon

Craig BlackmonThe data provided by Zillow is of lower quality than the data available via the NWMLS. Kary is correct on that point. Zillow is a good thing for a very different reason.

There is widespread recognition that real estate needs innovation. Because of Zillow, new and more efficient business models in real estate are possible.

Here in the Northwest, literally every licensed broker is also a member of the NWMLS (but one, my firm, Quill Realty). As with any MLS, to list on it a seller must hire two brokers: one to list the property, and one to “sell” it. This “selling commission,” paid to the buyer’s agent, is inefficient and bad for buyers.

Until the Internet, buyers had to hire brokers just to know what was for sale. Today, most buyers search the listings themselves.

As result, there has been price pressure on the listing commission, and today there are lower-cost alternatives. Sellers can list the house themselves on the MLS (essentially paying one broker instead of two) for a few hundred bucks, or get full service from Redfin for 1.5%. Yet the typical selling commission remains stuck at 3%.

It will remain there as long as brokers maintain their monopoly on market data. Unlike other industries disrupted by the Internet, real estate brokers create and maintain the electronic marketplace. This allows brokers to set the rules. The biggest – and unofficial! – rule: Sellers gotta offer the full 3% selling commission.

Theoretically, the “buyer rebate” model popularized by Redfin should have led to a reduction. The initial value proposition – rebates well into the thousands of dollars – should have been enough to disrupt real estate. Large numbers of buyers should have turned to Redfin, leading large numbers of sellers to reduce the selling commission accordingly.

But it didn’t happen. Perhaps the rebate model is too complex. Or perhaps market and price pressure must be applied directly by the consumers that actually pay the inefficient fee. Regardless, the “Redfin Lesson” is clear: Buyer rebates will not lead to widespread innovation or a reduction in the selling commission.

So innovation must be driven on the listing side. Thought-leaders have for a long time believed the MLS would be “replaced” by technology.

Zillow allows both owners and non-MLS member brokers the ability to effectively market a home online. This gives consumers the opportunity to sell without offering a selling commission.

The seller may be asked to pay one by the buyer in the offer. It is then a negotiated term. Because it is negotiated, the commission will be reduced and the seller ends up paying less than 3%. Plus, the cost is effectively passed through to where it belongs, the buyer, via the negotiations over price.

Yes, the MLS works well, better than Zillow. At a cost. Specifically, the 3% selling commission. Zillow gives all consumers an alternative. That means Zillow is a good thing.


Response: A False Sense of Empowerment for Buyers

by Kary Krismer

Craig is correct that the Internet has allowed buyers to more easily search for listings, but he is mistaken thinking a different form of advertising will somehow drive innovation that impacts commissions. The Internet has merely replaced the Sunday newspaper for real estate advertising. The information available on the Internet may make consumers feel more empowered, but for most buyers that is a false sense of empowerment. Making buyers feel good is the goal of Internet sites, because they want viewers to come back to their sites.

Although Internet listings are undoubtedly better than newspaper listings, the better information does not allow anyone to adequately judge a house. That requires an on-site visit. Even when a buyer sees a property in person, most buyers generally still need significant help beyond just “opening a door.” It takes experience to understand the pros and cons of each property, and most non-flipper buyers lack that experience. Buyers need that experience and it does not come for free. Having buyers deal directly with sellers without expert guidance would only lead to problems.

As to Zillow changing commission structure, the first mistake is thinking finding listings is a significant or difficult part of an agent’s job. That is easy, and many buyers are not good at it, making their agent’s job more difficult. But Zillow’s underlying purpose is selling advertising to agents, so Zillow is not attempting to change the industry; they are part of the industry. Zillow is merely trying to capture clients for agents.


Response: Zillow Allows Fundamental Change in Real Estate

by Craig Blackmon

According to Kary, the Internet is just “a different form of advertising.” He could not be more mistaken.

The Internet has fundamentally changed the way the world works. As to information-based industries in particular, there are two types: those that have changed fundamentally as result of the Internet, and those that will eventually. Real estate falls into the latter category (travel agents and stock brokers fall into the former). Real estate has yet to see fundamental change driven by the Internet.

Today, Zillow allows for that fundamental change to occur. Will change result? I hope so, but it may not. Maybe it just isn’t time for change, or Zillow for some unknown reason isn’t the right catalyst. Perhaps someone else will find the right combination of data and service that will lead to change. In the meantime, though, Zillow provides an opportunity for widespread and long-needed improvement.

Do buyers need to tour a home before they buy it? Duh. Of course. Do buyers benefit from having an agent represent them? Again. Duh. Of course. Do agents need to be compensated for this service? Yep, there is a pattern here….

The question is, who should pay the buyer’s agent? The seller-paid commission creates a classic conflict of interest. It is a significant flaw in the traditional model that undermines the modern expectation of representation.

Regardless of Zillow’s income stream, it provides an opportunity for sellers to pay the listing agent, and buyers to pay the buyer’s agent. The terms “selling agent” and “selling commission” can be relegated to where they belong, the dustbin of history. Zillow is a very good thing.


About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

149 comments:

  1. 1
    ronp says:

    Great post! I still do not understand why the commission model works so well, I mean doesn’t selling a $400,000 often take more hours of work than an $850,000 house?

  2. 2

    RE: ronp @ 1 – Thanks! You’re hitting on yet another archaic aspect of real estate, working on a percentage. Those payment terms are consistent with its “sales” past, but not with its “representation” present and future. There is a lot to change in real estate, and it has to start with the SOC. Everything flows from that.

    In other words, right now we have the wrong person paying it (the seller). If we fix that, then the amounts paid will come down. I promise.

  3. 3
    greg says:

    Here is my take on ONE way that could fix the distorted real estate fees…

    Make the fees separate to the sales price . Just like sales tax.
    (don’t worry it could even be phased in to ensure no sudden surprises)

    instead of a home selling for 100K inclusive of fees it would be listed as the price PLUS fees.
    (yes of course it would look like the home costs more, that is the whole point)

    home finds a buyer at 500k so they pay 500K PLUS the fee of 30,000….
    ( seeing the fee up front and center that would get people fighting for lower fees.)

    Within a very short time buyers would start to demand lower transaction fees.

    Now to be frank there is no way in hell any MLS cartel would agree to this fix. They would spend themselves into bankruptcy to avoid buyers directly seeing they are paying such massive fees.

    We all know this would work. putting the fees up front , forcing the fees out of the loan where the sting would be felt and instead of burying them inside the price would result in actual reductions.

    the mighty Real estate industry would spend billions to prevent this ever happening, the last thing they would want is for their fat fat fees to seen for what they are.

    When I first sold a home in the EU I paid 1.25% RE fee, in total! I was shocked when I return home to the USA and went to purchase a home only to find out agents were charging up to 7% !

    Now some folk (like Kary) like to pretend that I am making up those low numbers. SO lets take a look at some fees from the EU….

    http://hoa.org.uk/advice/guides-for-homeowners/i-am-selling/how-much-should-i-pay-the-estate-agent/ (Our recent mystery shopping research of agents willing to disclose their standard fee indicated the average fee for a sole agency contract was 1.5% + VAT, similarly, a survey for Which? found the national average was 1.8% + VAT) (btw the UK has been buying and selling homes for almost a thousand years, so they have a rough idea how to do this stuff)

    http://www.moneyguideireland.com/estate-agent-fees-for-selling-a-house.html
    (The rate of commission charged can sometimes vary depending on the value of the house. The commission on a house below say €500,000 may be 1.5 per cent – while a property worth a Million euro may be charged at 1.25 per cent . You can (should) try to negotiate the fee downwards .)

    ALL FEES below are TOTALS not split, so 2% means a total combined RE fee of 2%

    NORWAY Real estate agent’s fee is around 1% to 2.5% (plus 25% VAT).

    SPAIN Real estate agents fee is around 2.5-3%

    Italy Real estate fees are based on value and bargaining from 2-8% and are commonly shared by buyer and sellers.

    Portugal it is 3-5% again the higher the sale price the lower the fee……

    Germany it is 3-6% again the highe the sale price the lower the fees….. (it is a shared fee each side pays 50%)

    What we find is that in OPEN competitive markets where cartels do not control the market Agent fees are FAR less than half of what we pay in the USA.

    In countries such as france which have insane costs for virtually very aspect of life fees can be as high as the us and even higher at times, but mostly less….(france can go as high as 10%, but is normally a lower than ours)

    when one looks across the EU (closest thing we have to a “peer”) we find that most developed countries have tiered fees that quickly drop as the sales price increases. there is very little reason for an agent to receive more money for selling a 1 M dollar home and less for selling a home across the street for 900,000 or 700,000.

    It is only when a market is broken do we find fixed fees like the 3% buyers fee.

    I would simply love to see what would happen if we put the costs directly in the face of the buyer. I strongly doubt they would be willing to sign a check to their buyers agent for $25,000 just to buy an average house seattle.

    If you would like to see fees lowered, don’t allow your agent to charge you full price. Remember despite what they would have you believe the real competitive part of being an RE agent is simply finding and binding clients. That is the hard part. So before you sign anything, get some kind of deal. The more of us that demand a fair price the sooner we will not have to demand at all

  4. 4

    By ronp @ 1:

    Great post! I still do not understand why the commission model works so well, I mean doesn’t selling a $400,000 often take more hours of work than an $850,000 house?

    It can, particularly on high end listings over the prices mentioned. And there’s also more risk (wealthy people tend to be more litigious). . But contrary to Craig’s claim in the main piece, the rates are not set in stone.

  5. 5
    greg says:

    RE: Kary L. Krismer @ 4

    from a seller point of view the buyers agent fee is indeed set in stone. What the buyers agent chooses to do with that fee is a completely different matter. yes some of them “kick back ” monies to their clients, but when you cut that 3% buyers agents steer clients away from your home.

    Even the dogs on the street know if you reduce the 3% fee for the buyers agent you kiss goodbye to a lot of buyers …

    The whole point of dual agents is to ensure clients have greatly reduced bargaining power and to camouflage the fee by spitting amongst members.

    The idea that it takes two agents to provide full service is just nonsense.

    Example…

    INDIA 1.2 BILLION PEOPLE paying from 2 to 4 % ( 1-2 % each)

    Most of the people on this planet pay much less than we do , and they somehow manage to have property rights , protection of law etc.

    WE are sold a BS myth by the RE industry , they use lobbying and misdirection to maintain the status quo.

  6. 6

    RE: greg @ 3

    Without going out of Country, we have seen several attempts at some of these changes tried and failed.

    When Buyer Agency became the norm more Nationally (as opposed to sub-agency where all agents worked for the seller) we tried to separate the Buyer Agent fee and make it the buyers’ and Buyer Agent’s issue and not the sellers. Problems we ran into.

    1) The buyer had to sign a Buyer Agency Agreement to establish a contract for the fee outside of the Listing Contract signed by the seller. Buyers did not want to sign them and preferred the fee to be “free” and paid by the seller and not their concern. Perhaps if we tried this again it might work now better than it has in the past, but usually only in the high end where the buyer has something to gain (a discount) than in the lower price ranges where “free” just sounds a whole lot better. Generally every single seller signs a contract with their agent, but getting every single buyer to do the same to split the fees apart has been tried and in many parts of the Country is still being tried without as much success as getting a seller to sign a Listing Contract where the buyer agent fee now resides.

    2) We tried (we being people in the industry Nationally vs locally) stating the Buyer Agent Fee as $1 or something nominal. Someone is doing that here, but it didn’t work well as a full industry change. Somewhat for the reasons noted above but also because it created problems with Lenders and Appraisers (and not the “mls cartel”).

    Lenders had a problem adding the buyer fee back into the financing as a “buyer closing cost”. When the buyer fee is on the seller side than lenders are not reviewing that as part of the buyers financing. Some exceptions. But when you try to shift it to the buyer side vs the seller side, lenders may not allow the expense as part of the buyers closing costs because change in lending is more difficult than on the seller side. Largely the buyer fee is on the seller side so it can be financed vs paid out of pocket without it causing issues with the financing when it is part of the price vs a stated, separate fee.

    Appraisers, and honestly this is mind-boggling to me, absolutely refuse to note commission differences as part of the appraisal. This is even more crazy because they DO note pidly seller concessions that are a fraction of the commission issue. An appraiser will not alter the Appraised Value if one seller paid $60,000 in commissions while another paid none BUT they will alter the Appraised Value if a seller paid $1,500 of the buyer’s closing costs. Odd…insane…but true. If appraisers adjusted for differences in commission then comps would be more fair. At present there is ZERO transparency as to whether that comp paid $40,000 less in commissions and the appraiser only uses sold price minus seller concessions as to cash paid differences and not commission differences. Changing this ONE issue, adding commissions paid as a net of sold price, would add a ton of transparency to the market.

    3) We are not allowed to talk to each other about what we charge. Oddly only “Alternative Models” seem to be able to say what they charge and pretend everyone else charges “6%”. Supposedly because if traditional agents talk about the fact that it is not always 6% in any detail outside of to their clients, we are told it is “price fixing” and against the law. I have to admit that I sometimes wonder if NAR is saying it is against the law to preserve the myth that everyone charges 6% rather than to prevent price fixing. The net result of NOT talking about the 6% of not being allowed to talk about the 6% (and it is one of the first warnings when you become a “member” and we are told it is against Anti-Trust Laws) the NET RESULT has been that the price stays fixed instead of the opposite result. Yes, in many ways and I agree with Kary that perhaps “fixed in people’s minds” is more true than fixed in reality. But still, not talking about it has NOT helped consumers. That is for certain.

    Having been in the industry since before there were buyer agents and tracked this issue nationally, I have seen “a la carte” fees. I have seen flat fees. I have seen 3% total models vs 6% total models. I have seen 4% total models. I have seen No offering of a buyer fee (well $1).

    It really isn’t true that there is a cartel that controls fees in any way. It is true that they seem to refuse to add true transparency to who the agent works for, and I fought that battle unsuccessfully for many years. They want to say “Listing Agent” and “Selling Agent” instead of “Seller’s Agent” and “Buyer’s Agent”. Mainly because they want to do an Open House and not have to disclose “Hello, I am the Seller’s Agent” as a form of disclosure to the buyer. That ticks me off to no end. I can’t tell you how many times a buyer has asked me why the contract says I am the “selling agent” vs the “buyer’s agent”. But when it comes to how much money agents are paid, NEVER ever in 5 different States or in National Conferences do we EVER talk about charges for our services. In fact it is against the law to have such a topic come up at a National Conference.

    The problem with coming up with ways, as an industry topic, to reduce commissions is it comes under the same laws as not being able to talk with each other about how to raise them. :)

    If you think everyone is paying 6% not matter what the price, you are not well informed. It is just not the case…except we aren’t allowed to talk about that publicly and more than we can talk about raising them to 8%. We cannot “collude” on the upside or downside with one another in public places or private rooms either.

  7. 7

    By greg @ 5:

    The idea that it takes two agents to provide full service is just nonsense.
    Most of the people on this planet pay much less than we do , and they somehow manage to have property rights , protection of law etc.

    WE are sold a BS myth by the RE industry , they use lobbying and misdirection to maintain the status quo.

    I’m going to ignore the part of your post that is either totally ignoring reality, or just ignorant of it. Other than to say not all listings offer 3% to the buyer’s agent.

    I’m not familiar with the level of service offered in other countries, and since you’re not even familiar with this country I’ll assume you’re not either. But the bottom line is very few agents are getting rich, or even making a decent living, offering the level of service provided using our commission model. That you think 3% is a lot for the services rendered just shows that you’re ignorant of what’s going on in this country.

    But posting what rates are in other countries without understanding the services offered is like saying there are cars in that other country that sell for $10,000, $8,000 and $6,000 without disclosing what model/make the cars are or how old they are.

    Finally, yes it does take two agents for both parties to be represented. If you’re just talking about facilitating a transaction, that can be done with one agent, but that is something entirely different.

  8. 8

    RE: Kary L. Krismer @ 4 – Kary, I don’t have access to the NWMLS anymore, but when I did I found that 85% or so of the median priced homes offered a 2% SOC, and another 13% or so offered 2.5%. So 98% of median priced homes offer or essentially offer 3% SOC. You’re right, it’s not carved in stone. But it is in fact a rule – likely informal, but universal – that is enforced.

    RE: Ardell DellaLoggia @ 6 – Same comment applies to you Ardell. You say: “It really isn’t true that there is a cartel that controls fees in any way.” Yeah, OK, “cartel” isn’t the right term because the RE industry is far more diffuse and unorganized than a cartel. But something is going on to keep the SOC at 3%.

    Apparently, you believe it is the NAR’s interpretation of anti-trust laws. An interesting theory. Ironically, your supposition is correct, the issue is far more nuanced than what is conveyed to front-line brokers and consumers. The notion that you literally cannot talk about fees with a potential client until you are hired? Absurd, and I promise not what the DOJ requires.

    For a long time, I have intended on doing a lengthy piece analyzing this supposed Golden Rule of Real Estate (“Don’t talk about the SOC!”). But then I just withdrew from the MLS, so it’s no longer a concern of mine. Because only MLS member-brokers have to worry about the SOC in the first place.

  9. 9
    greg says:

    RE: Kary L. Krismer @ 7

    Nice try Kary , but once again you resort to slander rather than facts.

    the facts are very plain and simple, you don’t want them to be but they are.

    Here in WA you and your cartel friends (yes you are part of a legal cartel that dominates the market)
    charge about 5-6 % each time a home sells.

    In the UK the exact same transaction, with the same levels of consumer protection has a fee of 1-2%.

    There you go.

    Now unless you wish to start lying and pretending that in the UK people do not have the protection of law then there is very little to dispute here.

    I know you want to protect that fat margin you are charging you clients and as long as you can hide the truth and as long as your members are allowed to spend hundreds of millions lobbying to protect your interests little will change.

    But as long as Tim allows me and I can be bothered I will continue to remind people just how much your cartel and other cartels are over charging them.

    You and your buddies are charging 6% for a sevice that is conducted in …

    CHINA 0.5- 3% Real estate fee.

    India 2- 4%

    UK 1-3%

    Kary , I fully understand that many RE agents don’t make good money, but that is NOT beucase they do not make a large profit from each sale, it is becaue they don’t get enough sales. With agents averaging about 7 deals a year and most of those only getting 25% of the fee, of course they are not doing great.
    But that is only because your cartel is designed to funnel the monies up to the agencies. Which is why we have so many when we only need a fraction of the number of agents.

    And once again Kary, I say shame on you. You fling mud and call people ignorant in place of a rebuttal. Shame on you Kary, show some professionalism for goodness sake.

  10. 10

    RE: greg @ 9 – Again, you don’t understand transactions in this country, so your just repeating the same thing over and over again about what occurs in other countries is hardly compelling. But I can tell you one thing, there is not the “exact same level of consumer protection” in any country as in the United States (ignoring US Territories). That you make such a claim just shows the falsity of your argument. But I’ll counter your nonsense by making the equally absurd claim that those other countries only have 1/3 the consumer protection as the US. That nonsense blows your nonsense out of the water! /sarc

  11. 11

    RE: Craig Blackmon @ 8 – I don’t believe that Ardell said she can’t talk about fees with clients. She just can’t discuss them with other agents.

    As to the term “Selling Agent” that has nothing to do with open houses. It just reflects the fact that sometimes the agent on the selling side is not the buyer’s agent. If an unrepresented buyer makes an offer on a house, the listing agent would also be the selling agent, but not the buyer’s agent.

  12. 12
    greg says:

    RE: Ardell DellaLoggia @ 6

    Ardell , very nice , very informative .

    You say agents can not discuss fees, but who says you can’t… well the privately held club that you are part of makes that rule. Your post reads to me, as if the problem lies outside the cartel , but it is the cartel itself that decides what agents can and cannot do.

    MLS groups around the nation have spent hundreds of millions if not billions ensuring local laws maintain the status quo, then the group hide behind the very rules they so heavily fought to get in place , all the while claiming they are “only following the rules” .

    So we end up with MLS cartels guiding and crafting laws, then using those laws to justify the status quo. At the same time your club crafts its own internal rules that ensure members do not openly compete. And prevent unfettered competition when it comes to pricing.

    I find it interesting that billions of people can buy and sell homes across the globe and do it successfully for far longer than we ever have and manage to do it for much less than we do here in the supposed free market of the USA.

    And the only defence any agent in the USA can come up with, is to claim that the many billions of people paying less than half the amount we are don’t get good service.

    Frankly if we look at the numbers it is clear that people in the USA are paying over twice as much as the majority of people on this planet.

    While it might be hyperbole to some to me this speaks volumes and cuts through the noise.

    the idea that somehow we have better laws , better client protection better service is hubris. What we have is simply a cleverly crafted system that distributes the fees among many people in order obfuscate , and create the illusion of competition. Where as the truth is that ALL the money remains with members . ALL of it. each time a home is sold your MLS members pocket about 6% of the sales prices, meanwhile each time a UK home is sold their version of a MLS gets about 1-2%.

    Both provide a service level that ensures people can buy and sell homes with relative ease. We have no secret sauce , no magical protections , but we do have Real estate groups spending hundreds of millions of dollars to ensure nothing changes.

  13. 13

    By greg @ 12:

    RE: Ardell DellaLoggia @ 6

    Ardell , very nice , very informative .

    You say agents can not discuss fees, but who says you can’t… well the privately held club that you are part of makes that rule. Your post reads to me, as if the problem lies outside the cartel , but it is the cartel itself that decides what agents can and cannot do.

    Google anti-trust law. It’s not the NWMLS that keeps us from discussing our rates with competitors, it’s the same federal law that keeps any other competitors from discussing what they charge.

  14. 14
    greg says:

    RE: Kary L. Krismer @ 10

    and Kary, you have failed to provide a rebuttal instead you pretend we in the USA have some magical protection, or service level

    you are right in that consumer protection varies, but here is a hint, we are NOT top of the pile, and I find your ignorance on this topic amusing. And again Kary , please remember this is a public forum, you soil your reputation by slinging mud in place of argument.

  15. 15

    RE: greg @ 14 – My point was your arguments are not worth responding to because you don’t understand what’s going on, but just make a bunch of wild totally unsupported claims. So I made up my own wild claims. That was sort of obvious. But here’s a clue. “/sarc” means I’m being sarcastic.

  16. 16

    RE: Kary L. Krismer @ 11 – You can’t discuss commissions with other agents. OK. But why can’t you discuss commissions on a public blog??? Like Ardell, I suspect because real estate prefers to keep the SOC tucked well behind the curtain and out of view.

  17. 17

    By Craig Blackmon @ 16:

    RE: Kary L. Krismer @ 11 – You can’t discuss commissions with other agents. OK. But why can’t you discuss commissions on a public blog???

    You’re an agent, Ardell is an agent, I’m an agent, there are probably other agents here. How would discussing commissions here not be discussing commissions with other agents?

    I don’t know why SOC isn’t disclosed to the public on listings. I used to ask clients if they wanted to know, but few did so I stopped asking.

  18. 18

    RE: Kary L. Krismer @ 17 – Because there are a half dozen agents and several thousand consumers who read this site. Do you honestly believe you can’t discuss commissions with ANY other agent EVER, even in a clearly public conversation?

  19. 19

    RE: greg @ 12

    Greg: “You say agents can not discuss fees, but who says you can’t… well the privately held club that you are part of makes that rule. Your post reads to me, as if the problem lies outside the cartel , but it is the cartel itself that decides what agents can and cannot do.”

    Not really. It’s Anti-Trust Law. I have been an agent-broker for 3 or 4 times longer than Kary and/or Craig (I think) and so have a longer perspective on this. For most of it’s 100+ year history, when brokerages got together to discuss fees it was to simultaneously raise them. It is only in the last 10 to 12 years or so that brokerages (individually) have publicly talked about lowering them in whole or in part. So you really are incorrect that the reason this comes up in NAR orientation is to keep fees high. It was clearly so that a brokerage could RAISE their fees without creating a market-wide increase by colluding with other brokerages when deciding to raise them. I have worked in markets where the common market fee was 5% (all high priced property) and where the common market fee was 7% (all very low priced property) and where land commissions (extremely low priced property) was 10%. There truly is no “6% cartel”. While maybe no one would get sued for talking lower commissions the LAW is in place so we can’t collude to make them higher, and that law goes both ways. NAR did’t make the law nor is Real Estate the only US industry to which that Law applies. In fact, there is a NAR video and they may still use the same one where “lady” agents wore little white gloves, that shows a broker of one Company picking up the phone and calling his long-time friend who is a broker of a different Company saying “I’m thinking about raising our fees and was wondering if we can meet for drinks or lunch so I can run this idea by you before doing it”. The video stops and a big warning goes up saying NO! You can’t go to lunch with your friend to talk about commission charges!”. He could be your brother! It clearly was about consumer protection. It is only recently that it is applied in the opposite direction, and it does apply either way.

    Since you appear to value my opinion more than Kary’s, and thank you for that, I will respectfully tell you that you are 95% incorrect. I am happy to meet for a drink or coffee to answer any and all questions you may have so you are starting from a better start point. Your reference to MLS services is completely invalid. If you were talking about “The REALTOR Member Trade Association” which governs many but not all MLS system (but NOT ours here), you might have some basis. But “the mls” is not at all what you think it is.

    Let me give you my most recent example to hopefully add some clarity to your knowledge base.

    I just met with a seller who was interviewing several agents. I don’t pick a final list price until after I stage the house, as I final price it based on the market at that time as to other homes on market and most recent closings and condition at time of listing. But I’m pretty sure I’m going to list it in mid June for $450,000 to $500,000.

    I tell her my charge is 2% including staging for that house (not always the case) or $10,000 flat fee, whichever is less. I further tell her the FACTS regarding the “in mls offering” as to what the seller should offer as Buyer Agent compensation. I have of course pulled all area “comps” to come up with the price and on these is the “buyer agent offering” on each and every one of those. We call it an SOC (selling office commission). IF every FAILED sale had 1% and every successful sale had 3%, then those are the facts. Yes, it is true that we do usually end up at 3% and sometimes less. BUT!!! Very big but…

    I DO in fact recommend the seller offer 3% almost always and follow up with IF the Buyer Agent Fee is going to be less than 3%, that is between the buyer and THEIR agent. We are only offering “up to 3%” so that the Buyer Agent Fee can be financed by the buyer. If it is going to be less than 3%, that is a negotiation between the buyer and their agent and if the buyer pays less it does not come back to the seller.

    There are many reasons for this including what is called “variable rate commission”. There are hundreds of rules and laws and considerations in the home buying and selling process. Your mind would completely explode to know them all as I do and most agents don’t. :) They know what they can and can’t do and try not to vary and trip over a rule or law unknowingly. It is very difficult to “think out of the box” in real estate. We are not selling computers or shoes or exercise equipment. Kary is correct in that regard, though they are not all protecting “consumers” as in buyers of homes. Many protect the seller given we are traipsing in and out of their homes and we are strangers and we are bringing in strangers. It’s not like going to Best Buy. We are IN people’s houses with strangers all the time. Lots and lots and lots of rules. And we ARE pretty much a huge monopoly when it comes to everything that is not about commissions. We do have the same laws and rules governing the purchase and sale of homes and there are indeed many.

    Your talking about other Countries just doesn’t play anymore than the Mom who walks into the School Board Meeting and starts with “In California we always did it this way…” to which everyone turns around and says “Well then move back to California if you like that better.” :)

    Arguing from the standpoint of somewhere else that is not in this Country just doesn’t make a lot of sense. Even I who tries to be completely open-minded and progressive hear “In German blah, blah, blah.”

    Here is the reality. Redfin started on the basis that there didn’t need to be an agent separate from the Agent for the Seller/Listing Agent to show the buyers houses. They set their fees at roughly 1.5% both for buyers and for sellers. I say “roughly” because they did and still do have a minimum fee where that did not apply. I don’t have a minimum but I do have a “cap” on the high side. They tried it and different things and made changes and are where they are today.

    They ARE part of the mls and the mls had NO bearing on their trying out this charge or that and coming up with the need to increase their price or rearrange their model. It is THAT model and models like them that helped change the world. Other “traditional” companies DO in fact change based on their competition that is also in the very same MLS. So you are not correct that an mls has any impact on high or low fees.

    There are a few basic rules regarding minimum standards of service, but that again has to do with seller protects. For instance a company can’t reduce their fee by handing a buyer an access key and telling them to go see the property. That in fact has been tried by some in some markets and the mls has very strict rules disallowing that. Yes, it was a cost cutting brainy idea…but no. You don’t get to go in people’s houses without an agent present. LOL!

    I hope that helps and again I’d be happy to have a face to face chat if it is near me anytime. Just because a seller “offers” 3% does not mean the fee IS 3%. That is between the buyer and their agent. It is just a notice that the 3% or some other % is included in the price. It doesn’t mean it is what the buyer is in fact going to agree to with his agent. Though if the buyer won’t sign an agreement with his agent so as to change it, and many buyers do NOT want to sign agreements with their agents as sellers do, then likely it will become the default payment.

    The buyer IS in control as is the seller and the mls has not a thing to do with what you are talking about.

  20. 20

    RE: Ardell DellaLoggia @ 19 – That’s a lot, Ardell, so I’ll focus on just one of the larger points you try to make:

    “Just because a seller “offers” 3% does not mean the fee IS 3%. That is between the buyer and their agent.”

    You’re dead wrong and you know it. The SOC is set by the listing agreement signed by the seller with the listing broker. If the seller agrees to offer a 3% SOC – which they invariably do – then the MLS-member selling agent is entitled to a fee of 3%. Right???

    And the notion that the buyer is somehow in control of this fee has been disproven by Redfin. Technically you are correct. But clearly – a word I don’t use often – Redin proves that a rebate doesn’t actually lead to a widespread reduction in the SOC. And a rebate is the ONLY tool available to a buyer in terms of “reducing” the SOC (not actually reducing it, but re-capturing some of it via the rebate).

    Absent widespread adoption of the rebate model – which ain’t gonna happen – consumers who are buying have no control at all over the SOC. However, if a buyer finds the home on Zillow, and there is no SOC so the buyer must negotiate the fee directly with the buyer’s agent….

  21. 21

    This discussion is getting far off topic from Zillow, and whether it’s a good thing or a bad thing.

  22. 22

    By Craig Blackmon @ 20:

    However, if a buyer finds the home on Zillow, and there is no SOC so the buyer must negotiate the fee directly with the buyer’s agent….

    Many if not most the houses listed on Zillow have a SOC. I think you’re confusing Zillow with Craigslist! ;-) (But at least you’re discussing Zillow!)

  23. 23

    RE: Craig Blackmon @ 20

    You are not correct Craig. You have no idea what other agents do and do not charge. MOST EVERY brokerage does not SET FEES for their agents.

    I have worked for many companies since 1990 and NO BROKER has ever told me what I can and cannot charge, small and big companies alike in 5 different states.

    If I want to pay all of my buyer’s closing costs, I in fact do. I do not wait for a seller OR a buyer to talk me down in price. I present my price to each and every client and sometimes it is “whatever the seller offers” in a low price range when we don’t know the house yet and have no access to “the specific SOC”. Who is waiting until the buyer finds a house to have a commission discussion with their client?

    In fact the SOC changed more often in different market conditions BEFORE the buyer was able to get the difference than today. When the SOC changes IN the mls then the seller gets the savings and not the buyer. The change to a more standard higher SOC as the norm regardless of market conditions is because the buyer and not the seller is to reap the savings.

    Seriously. You are just dead wrong on this.

    It’s basically a “retainer”. Think of it this way. Divorce. Husband has to pay the wife’s attorney fees. Husband pays a $5,000 “retainer” to the Wife’s lawyer. The SOC is “the retainer”. What the actual charge is going to be is an unknown at the beginning the same as a real estate transaction. BUT the “retainer” has to be set high enough to likely cover the cost. If there is a savings at the end, the only change recently is that the buyer usually gets it and not the seller.

    What you don’t get to see does not make it what you think it is.

    When I quoted a seller 2% including staging or $10,000 whichever is less…I had no idea what every other agent before or after me quoted to that seller. That doesn’t mean they all quoted higher than me. It means I don’t know what they charge. Same with SOC and Buyer Agent Fees. Just because Redfin shows on their website what their charge is doesn’t mean everyone else’s is higher. In fact sometimes mine is lower than theirs. It just means you do not now what other people charge for their services.

    We do not know what other agents charge because we are supposed to decide what to charge INDEPENDENTLY without basing it on what other people charge. That’s pretty much the point. I charge based on the work at hand and my own model and you yours. We don’t get to compare notes. Because you don’t get to see mine doesn’t make mine 6%.

  24. 24

    RE: Kary L. Krismer @ 22 – Sure, I use craigslist too to sell my listings!! :-)

  25. 25

    RE: Kary L. Krismer @ 21

    OK…I’ll give my Zillow. :)

    Relating it to commissions at the same time just because it happens to apply. I had a buyer who lived in Homes Point and needed a bigger house due to a 3rd “surprise” baby. They didn’t want to leave the immediate area because they had won “the lottery” to go to the “Choice” school next to Sandburg. Low inventory market. Lots of bidding wars market. They couldn’t go to “temp” housing by selling first with three kids, a dog and 4 chickens in the chicken coup.

    We met. I quoted a flat fee price of $20,000 for both the sale of their house (roughly $600,000) and the purchase of their new house (roughly $850,000…no house yet to buy so price unknown. A guesstimate). I used to have a “it shouldn’t cost a family more than$20,000 to move locally” cap back then.

    They basically couldn’t find a house or win one in a bidding war without selling first, which they could not do.

    I went back about 3 years in the mls and found some homes that sellers tried to sell in 2008 or so when the market tanked and for a couple of years after that. I found the ones that expired or cancelled and were rented out instead of being sold. I contacted the owners to see if they were willing to sell when the leases expired.

    One owner did not answer me but rather put the property up for sale on Zillow. (Owner happened to be an agent before you go on about the owner not knowing the disadvantages of doing that.) I helped the buyer buy it for about $850,000 with no commission on the Zillow FSBO side and charged the full $20,000 on the Sale of their home side.

    Worked perfectly. They are thrilled to tears, love their home, wouldn’t have gotten it without Zillow at that time.

    Zillow is a tool. It’s a great tool. It’s not “the mls”. It’s not a “Brokerage Site”.

    It does different things…and if you think we are better, well great. BUT if you think only “we” and not “they” should exist or be considered of benefit…then you are Greg’s Cartel. LOL!

  26. 26

    RE: Ardell DellaLoggia @ 23 – Do some digging yourself Ardell, it’s easy. Run a search for homes priced $540-560k in King Co. – i.e. median price. Then start looking at the SOC for each. Don’t worry it’s easy because almost all will be 3%! :-)

    Seriously and as I already said, I have done that analysis and found that 98% of listings offer essentially a 3% SOC (85% at 3%, 13% at 2.5%). Yeah, I get it, NOBODY confers about that number, everyone deciders on it for themselves. But you gotta admit, it’s a hell of a coincidence…

    The SOC is 3%, please stop denying it. And it will remain there as long as sellers pay it, not buyers.

  27. 27

    RE: Craig Blackmon @ 26 – I think what you’re really missing is that the MLS system is setup the way it is because it benefits sellers.

    The sellers who use MLS systems want agents who know qualified buyers to bring them offers from such buyers. The sellers who use other systems such as Zillow and Craigslist don’t see the benefit in doing that, and/or are more willing to deal with unqualified buyers. Your focus on the buyer is misplaced. It’s the seller who controls things in the MLS system.

  28. 28
    Hamlet says:

    When house-hunting, I look first to Redfin. I love their interface. But Zillow is better on price histories. For some reason, Redfin removes previous list prices.

    So I begin on Redfin. Then if I like a house, I’ll go to Zillow and Trulia for supplemental info (e.g., previous list prices, neighborhood crime maps).

  29. 29

    By Hamlet @ 28:

    Then if I like a house, I’ll go to Zillow and Trulia for supplemental info (e.g., previous list prices, neighborhood crime maps).

    I forget if it’s Trulia or Zillow that has the crime mapping–or maybe it’s both now, but keep in mind their data may be suspect. Either that or crime just magically changes at certain city lines!

    It’s generally better to go to source material if it’s available–police and sheriff.

  30. 30

    RE: Kary L. Krismer @ 27 You are a living dinosaur.

    “The sellers who use MLS systems want agents who know qualified buyers to bring them offers from such buyers.”

    Today – and even more tomorrow – buyers find homes themselves. Agents then help them buy the home of their choosing. Yet you honestly think houses sell because of MLS agents who know qualified buyers….

  31. 31

    By Craig Blackmon @ 30:

    RE: Kary L. Krismer @ 27 You are a living dinosaur.

    “The sellers who use MLS systems want agents who know qualified buyers to bring them offers from such buyers.”

    Today – and even more tomorrow – buyers find homes themselves.

    I already covered that in the main piece. Buyers can the homes themselves, but very few do a really good job of that, and then once they find the house most non-flippers still need a ton of help moving forward (or not moving forward if that is better). I found this on Amazon, but that doesn’t mean either of us could get the rest of the job done. http://www.amazon.com/EXEDY-08022-OEM-Replacement-Clutch/dp/B001B5DCO4/ref=sr_1_1?ie=UTF8&qid=1463106269&sr=8-1&keywords=clutch+plate

    You’re focusing on the part of an agent’s job that takes maybe 30 minutes to learn and thinking that the client should pay less because they did the easy part. Guess what? Buyers could do that 20 years ago too going through the Sunday Times. Although I’ve had several buyers who were good at finding listings, only one stands out as being really good. And then there are the others who are not good at it at all, increasing the work that I had to do. Should I be able to charge them more?

    But it doesn’t matter. That’s not a major part of the process–particularly in this market where there aren’t that many listings to find and when you do find one you won’t likely be the only buyer making an offer.

  32. 32

    By Craig Blackmon @ 30:

    Yet you honestly think houses sell because of MLS agents who know qualified buyers….

    Do you honestly think there are a lot of experienced agents out there showing houses to buyers who are not qualified buyers? That’s sort of Agent 101.

  33. 33

    RE: Kary L. Krismer @ 31 – We are in agreement!

    “Buyers can [find] the homes themselves, but very few do a really good job of that, and then once they find the house most non-flippers still need a ton of help moving forward (or not moving forward if that is better).”

    Exactly!! So the value you provide benefits the BUYER. You represent the BUYER. Your job is to protect the interests of the BUYER. Call me crazy, but I think we’re all better served if the BUYER pays your fee directly. When that happens, the quality of the services will improve, and the cost will decrease. Basic economics.

    “And then there are the other [buyers] who are not good at it at all, increasing the work that I had to do. Should I be able to charge them more?”

    F-YEAH!! Maybe you’re starting to get it after all…

  34. 34

    RE: Craig Blackmon @ 26

    Craig,

    Again. If overnight the SOC went to $2,500, Redfin would go out of business overnight.

    I explained this in detail and either you didn’t read it or you just want to argue for argument’s sake.

    3% is NOT the charge a buyer and a buyer’s agent “agree to”. That amount is not visible to you. On lower priced homes and condos, yes, often it is and less than 3% would not be enough. In higher prices (Redfin uses a base price of $200,000 last I looked, mine is higher) there is more room for the buyer and their agent to come up with a fair price to their situation.

    Remember a Buyer Agent fee is based on the relationship between a buyer and the buyer’s agent. Only they know if it took 13 offers to “get there” or one. Only they now if they got lucky the first day they met and got the first house the buyer wanted. The seller can not know these things about every buyer. The Seller does NOT get to choose the buyer’s fee to their agent. They only set an upper cap of 3% to help the buyer finance their buyer agent fee.

    This is the future of real estate. A 3% SOC negotiated between the buyer ad the buyer’s agent. Not a lower SOC so the seller can keep the money the buyer agent is forfeiting. The buyer gets to keep that now…not the seller. The buyer gets to decide how much of the 3% SOC is going to go to their agent, not the seller.

    I did explain this before and sorry for repeating myself, but think about it. Buyer’s would lose all rights to negotiate that fee if the seller did it “for” them and kept the change. Not good for buyers for the seller to keep it.

    Hell, it took decades for the buyer to get to keep it! Decades and Decades for buyers to have this right! You want to turn back time to where the seller got to keep it and not the buyer??? Holy Crap.

  35. 35

    RE: Ardell DellaLoggia @ 34 – I don’t understand.

    “Buyer’s would lose all rights to negotiate that fee [the SOC].”

    They DON’T negotiate the fee. It is set by the seller. And for whatever reason, it is always set at 3%.

    I want a world where buyers REALLY DO negotiate the fee they will pay their agent. That is not the world we live in today. But it will be when sellers stop paying that commission. When buyers start paying it. Right? If the actual client is paying the fee, won’t market pressure bring it down? And it hasn’t come down yet….

  36. 36
    I'm just here so I won't get fined says:

    I too prefer Redfin over Zillow, infant I bought my house using Redfin in 2013. The seller of our house was using Redfin as well, but I do wish Redfin had links directly to the county website like Zillow does.

    As far as buyer and seller commissions go, I know that typically the paperwork says that the seller is paying a commission to the sellers agent and offers a commission to the buyers agent. However I felt like in reality I as the buyer was paying for all of the commissions. I was the one bringing the money for the 20% down payment to closing. I was the one getting a mortgage. I was providing almost all the money at closing and then it was being split among all the parties. I’m sure I will feel differently one day when I go to sell my house and I see that large chunk of change going to the buyers agent.

  37. 37

    RE: I’m just here so I won’t get fined @ 36 – You’re right, in a sense. All money originates with the buyer. And I want a world where buyers have DIRECT control over the fee the buyer’s agent earns and is paid by the seller. That will reduce transaction costs for everyone’s benefit.

  38. 38

    By Craig Blackmon @ 35:

    They DON’T negotiate the fee. It is set by the seller. And for whatever reason, it is always set at 3%.

    They can negotiate a rebate with their agent! But quite frankly in this market they probably don’t have a lot of negotiating power because being a buyer’s agent right now takes a lot of work and a lot of skill.

    I think your timing is a bit off if you think buyer’s agents should be doing their jobs for less money right now.

  39. 39
  40. 40

    RE: Kary L. Krismer @ 38 – This is probably my last attempt to get my point across.

    Some buyers make their agents work harder than others, right? Shouldn’t those buyers pay more? If you do 10x the work for one client compared to another, your pay should reflect that to some extent, right?

    It will, just as soon as you start asking the buyer to pay your fee – which never happens. You’ll be able to negotiate a fair fee in every instance, maybe more than 3% and maybe less. But the point is the CLIENT will be paying the fee, creating for the first time market pressure on the SOC.

    Redfin and the rebate model hasn’t disrupted real estate. The vast majority of buyers do NOT get any sort of rebate, whether from Redfin or any other agent. REBATES DON’T WORK as a widespread method of reducing costs in real estate. How do I know? The SOC remains stuck at 3% which would not be the case if rebates created market pressure.

  41. 41

    RE: Craig Blackmon @ 40 – If you really want to reduce the cost of buyer side commissions they need to become non-contingent. That’s not likely to happen because buyers would not like that.

    The thing about contingent fees is sometimes the professional makes a killing and sometimes they lose their shirt. But a contingent fee for a service will always be higher than a non-contingent fee. Your old firm WaLaw sort of recognized that where they make all or part of their fee non-contingent.

  42. 42
    steve says:

    Redfin home comps are much more accurate than Zillow. Always use Redfin now.

  43. 43
    Blurtman says:

    Zillow is fine for RE porn surfing. It popularizes RE like People does celebrities. I like the interface. If I want accurate info on something I might see on Zillow, I go to other sources. If I were to be a serious buyer, Zillow would not be my go-to tool, but it may have helped with a general understanding of the regional market. I should be using Redfin more as it consistently values my home much higher than the Zillowmeter.

    The truth is out there. Trust no one.

    Go Bernie!

  44. 44
    greg says:

    RE: Kary L. Krismer @ 13

    Sorry Kary, that is simply untrue.

    You are pretending that discussing fees, amongst agents is in itself against the law. So either you don’t understand the law or you are trying to misdirect.

    Price fixing , or colluding to set prices is against the law. But it is completely 100% legal for you to discuss your pricing with the public and with agents.
    This is just another red herring thrown in to obfuscate.

    Just as when I provide links to lower fees outside the USA you pretend that in the US we are somehow providing “more”. if your industry was providing a service that supported 6% fees, you would not need to form cartels , nor fund lobbying in excess of 100 million per year…

  45. 45

    RE: greg @ 44

    The key points as to how “we” (my clients and I) use both Redfin and Zillow do not seem to be mentioned yet.

    Sellers: When I list a property I have a glimpse into what to expect of the market via the “stat counters” on Redfin and Zillow. I have them in the MLS as well, but only from the day upload the property. While they are not necessarily accurate, I have over several years calculated the margin for error and the key stat counts for knowing if there will be multiple offers, if there will be an offer at all, if there will be 1-3 offers or 3-6 offers or more than 6 offers. This is only accurate within the first 24 to 72 hours of the new listing. Some exceptions of course.

    Also as to sellers, every public site will repeat only what I can “fit” into the prescribed mls data fields…except Zillow as long as I do a manual upload to Zillow. There are some things the mls does not allow that I can put on Zillow. For instance fairly recently for a specific property I wanted to show the nearby grocery markets. Actually I did it twice recently. They were both properties that would benefit from this type of map as a photo because I could draw in Lake Washington to the photo showing a “walk to” proximity that was not immediately obvious except to people who know the area well. The MLS does not allow “QFC” on a map in a photo. They do allow these maps and I altered the map to comply with MLS rules BUT I did not have to alter the map for the Zillow photo display.

    Of course back when the mls offered limited space for photos ad we could put many more photos on Zillow, this was an added value for a Zillow display. For those saying Zillow (or Redfin) has not caused change, there are at least 50 ways they led to change in tiny doses. Would the mls have expanded to 20 or 25 photos being allowed if agents weren’t complaining that they “had to” use Zillow to get more photos up? What you are not seeing is the changes that were made over the last 10 years. Did they ever give Zillow, or Redfin, any credit for making these “improvements” for agents? Of course not. But trust me. There were many. Maybe not 50 as the Paul Simon song was kind of the impetus for that number. But clearly many.

    When you look at the differences of “added value” by comparison today, do not forget all of the changes that were made to other sites and the mls over the last decade that WERE in fact instigated by both Zillow and Redfin.

    I was going to go on to Buyers and how we use these two sites, but this post is already getting long. Suffice it to say that not only have these sites BOTH instigated change but they did so in a way where you need some historical perspective to know which changes have been made in other sites and systems vs comparing them as they exist today after those changes.

    As to Tim not liking Zillow, sometimes it’s like a person not liking a Church or a Religion because of a bad minister they met once. I liked Zillow a lot more in the early days. Remember Zillow was hugely popular before there was ever a house “for sale” on it! So judging it by it’s house for sale portion is a bit short sighted. 3 agents were picked from around the Country to put the first ever “for sale” properties on it, live while people were watching and asking questions from around the Country. Mostly IT guys and Zillow staff and the agents were interactive in the comments so people could watch the initiation to “homes for sale” being on Zillow unfold. Only two of the 3 agents asked agreed as the 3rd thought his fellow agents would hate him if he did. I was 1 of the 2 that did.

    It was something that someone said publicly that turned The Tim against Zillow, as I recall and I absolutely agree with him. But I did not interact with that person in the early days and I have learned over time to not totally judge a business or a church by the people who say stupid shet.

  46. 46

    RE: greg @ 44 – How many credit hours have you taken in anti-trust law?

    You really are becoming the new pfft of this board. Someone who doesn’t know squat about anything, but has an opinion on everything.

  47. 47

    Changing the topic back to Zillow, good or bad, one thing I see a lot on agent sites is agents hate Zillow because they think it means they don’t get calls from buyers. They basically want to use their listing to troll for buyer clients and would rather have their listing not appear on Zillow because they think it wouldn’t be bait there.

    I really don’t understand that for two reason. First, the agents’ primary interest should be in getting their clients’ listings sold, not in attracting buyer clients. Second, at least locally Zillow does give information on who the listing agent is, but maybe that’s not the case everywhere. Sure it shows three other agents to contact, but locally the broker sites will also be promoting their agents. Seems like a non-issue, but many agents are very vocal about it.

  48. 48

    And on the topic of reasons not to like Zillow, one thing I cut from the first part of this piece was not liking how Zillow allows agents who pay them money to post “Coming Soon” ads even though they know that the NWMLS will fine agents for doing so.

    http://seattlebubble.com/blog/2014/10/06/nwmls-levys-big-fine-for-using-zillows-coming-soon/

    They even use animation of the Seattle area in a promotional video for Coming Soon. On the bright side, the NWMLS is getting so much in fines that pretty soon being a member will be free! ;-)

  49. 49
    Erik says:

    I don’t give a rats a$$ about these house search tools or real estate law. Next topic please…

    It appears these lawyer-agent hybrid suits bought the Tim off. Great…

  50. 50

    RE: Kary L. Krismer @ 48

    Isn’t that like saying you don’t like McDonald’s as a company because they have a shop in a neighborhood whose residents aren’t supposed to eat beef?

  51. 51
    SFraz says:

    From the Housing Bubble Blog
    2016-05-13 06:24:42
    Add another major city where rental rates are cratering.

    “After Years Of Building, Seattle Gets A Holiday Gift: Falling Rents”
    The big warning sign for landlords is what the report says is “price resistance” in the most expensive submarkets: the downtowns of Bellevue and Seattle, including Belltown and South Lake Union, and Sammamish/Issaquah. After increasing during the first three quarters, rents dropped this quarter in all but South Lake Union, with the average decline hitting $59 a month. Further, when all of these submarkets are considered, the average vacancy rate increase was nearly a full percentage point.

    Meanwhile, across all markets, more landlords are offering tenants sweeter incentives, such as free rent. The average value of incentives is $15 a month this quarter, which is nearly double what it was last quarter, when 16 percent of landlords were offering incentives. Now 20 percent are.

    http://bikeportland.org/2016/01/04/after-years-of-building-seattle-gets-a-holiday-gift-falling-rents-171524

  52. 52

    By Ardell DellaLoggia @ 50:

    RE: Kary L. Krismer @ 48

    Isn’t that like saying you don’t like McDonald’s as a company because they have a shop in a neighborhood whose residents aren’t supposed to eat beef?

    Hardly. It would be more like Uber operating in a city where they know their drivers will be arrested and have their car impounded.

    Zillow knows that the agents–agents who pay them money–will get fined if they post Coming Soon ads. But in fairness, it probably is beyond the ability of their programmers, who despite being located in Washington state have a website that doesn’t recognize “WA” as a location.

    OOPS, YOU ENTERED A REGION THAT WE CAN’T PRECISELY IDENTIFY.

    Showing: WA

    Did you mean one of these?:

    http://www.zillow.com/advice/Washington/all/question-discussion-guide/

  53. 53
    ronp says:

    Hey, this is a great educational discussion! Thank you Kary, Craig, Ardell et al! And thank you to all the professional and caring realtors too. We have sold one house and bought two houses over the past 20 years with an excellent Windemere realtor, — sure I wish the fee was lower but she gave great advice and over time our home equity increased considerably (maybe not matching the stock market, but it has been an easy way to put some money away). Ya gotta live somewhere…

  54. 54
    SFraz says:

    I always sell my own. FSBO. Never had a problem and saved mucho dinero.

  55. 55
  56. 56

    By SFraz @ 54:

    I always sell my own. FSBO. Never had a problem and I think I saved mucho dinero.

    Fixed your post.

    Not specific to you, but the problem I have with studies which compare this kind of sale method to that kind of sale method is that unless you’re dealing with fungible items you don’t really know what the relative results were. With houses in this market you could easily have a 3% (coincidental number) difference in price just depending on what week you happen to list. There are too many variables to account for, beyond just the mix.

  57. 57
    Blurtman says:

    No one said “You ignorant slut.”

  58. 58

    RE: Kary L. Krismer @ 56 – Exactly wrong, Kary!! A point you go on to make yourself.

    Ultimately, one can never know the “maximum price” for any house, as you note there are too many variables. But if you sell FSBO, you KNOW FOR A FACT that you are not paying a broker.

    In other words, who knows if SFraz ended up making more money on the sale as a result of selling FSBO. But we know for certain he saved on his transaction costs. Assuming he used the traditional and stil-by-far most common type, SFraz saved 6% . A fact that can be known with utmost certainty.

    Unlike the anti-FSBO “analysis” that is generated by the NAR. Those are the studies to which you are referring, right? ;-)

  59. 59

    By Craig Blackmon @ 58:

    RE: Kary L. Krismer @ 56 – Exactly wrong, Kary!! A point you go on to make yourself.

    Ultimately, one can never know the “maximum price” for any house, as you note there are too many variables. But if you sell FSBO, you KNOW FOR A FACT that you are not paying a broker.

    In other words, who knows if SFraz ended up making more money on the sale as a result of selling FSBO. But we know for certain he saved on his transaction costs. Assuming he used the traditional and stil-by-far most common type, SFraz saved 6% . A fact that can be known with utmost certainty.

    Unlike the anti-FSBO “analysis” that is generated by the NAR. Those are the studies to which you are referring, right? ;-)

    Exactly wrong! You don’t know how much he saved because you don’t know what the sales price would have been if he had sold via another means. Saving X% on sales costs is not a good thing if your sales price is Y% lower and Y > X.

    And I’m not just referring to NAR studies on the topic–they are all BS, which was my point.

    But in this particular market you’d be a complete and utter fool to not list your house in the manner that would get the greatest exposure, because you want to get the chance of having multiple offers. In a more balanced market it might not make so much difference. In a horrible market you’d again want the greatest exposure.

  60. 60

    By Blurtman @ 57:

    No one said “You ignorant slut.”

    I had a draft of the third part that started that way. ;-) (Not really, but I did think about it when Tim first suggested this idea.)

  61. 61
    greg says:

    By Ardell DellaLoggia @ 19:

    RE: greg @ 12

    Your talking about other Countries just doesn’t play anymore than the Mom who walks into the School Board Meeting and starts with “In California we always did it this way…” to which everyone turns around and says “Well then move back to California if you like that better.” :)

    Arguing from the standpoint of somewhere else that is not in this Country just doesn’t make a lot of sense. Even I who tries to be completely open-minded and progressive hear “In German blah, blah, blah.”

    The buyer IS in control as is the seller and the mls has not a thing to do with what you are talking about.

    Sorry Ardell, but it does “fly”.

    When most people on the planet, are being charged about 30-50% LESS than us (RE agent/agency fees) It most certainly does “fly”.

    Your attempt to dismiss the many billions of people who pay about 1-3% in total , is simplistic.
    There is no additional complexity to showing, buying selling, listing a home in the USA than there is in the UK, yet people there pay as low as 1%.
    Are you suggesting that when someone buys a $10,000,000 home in London they will not have full service, full protection of law?

    So yes, “COMPS” do matter, and comps show that we as consumers are paying tens of thousands more than we should have to.

    “Well then move back to California if you like that better.”

    Wow , Ardell… I thought you were better than that. (presenting it as someone elses argument to distance does not “fly”)

    Love it or leave it is a false dichotomy, it is a ruse to distract. No real point discussing the stupidity of it, as an argument, I am sure you knew it before you even typed it. :)

    Now to my point.

    You have done much to express the complexity of the system, and the reasons why the rates remain as they are. You talk of attempts to fix it , and about how fees are open to competition , not set in stone etc.

    But you fail to see the primary issue. Neither the buyer nor the seller has the ability to truly negotiate fees. You claim they do but in fact they do not.

    The seller CAN , discuss their side of the fee and work it up or down, come to as arrangement . But only to a degree. Most agents will have to split their share with an agency that is going to want its cut.
    But if the seller wants to try and work down the other 3%, they receive the same message time and again. “IF you offer less than 3% commission , buyers agents will avoid your property”. I have heard this from every agent on every listing , pretty much everyone who posts here knows this is true. Sellers must offer the full 3% or they will see a huge drop off in viewers, and very few offers compared to a comp with the full 3%. Frankly if one attempts to go below 2.5 you may as well list it off the MLS and avoid all fees, because your buyer pool will be about the same.

    Again , a seller can only hope to truly discuss one side of the fee, not both. As such even a 50% discount is only a 25% as they end up paying the full amount of the “otherside” no matter what deal is made between the other parties…

    BUYER

    A Buyer is in the same boat as the seller, except worse because they cant even discuss the rates set by the seller/lister….
    They can only discuss HOW the buyers agent fee is split, and of course they too face the additional burden of the buyers agent having to pay a share to the agency.

    (and of course it matters not whether the buyer or seller ultimately pays the fees, we can view it either way, as in both cases they can only alter their half and one or other of the consumers ends up paying the monies)

    It is my view that the system is intentionally divided into such factions exactly to ensure that members of the public are limited in their ability to reduce fees through negotiations.

    We can argue about details, we can fight over nonsense , over who said what ,when and why. But what is not debatable, what is patently clear to every mildly informed member of the public, is that it costs them far too much money to buy or sell property when compared to their peer groups in many other nations.

    Simply put there is no valid justification for the additional 2-4% fee/tax levied on the American public just to trade property. Realtors, NAR, NWMLS are the ultimate trolls. They levy a high tax to cross the RE bridge. NAR etc are the gatekeepers , and they charge their heavy toll, day in and day out. Almost nobody crosses with letting one MLS or another “wet its beak”.

    I have to say , that RE in the USA is perhaps the most elegant , most beautifully crafted distortion of a market i have ever seen in my life. No other group has managed to build the illusion of external competition while ensuring all true competition remains completely internal.
    The fake complexity, the deep moat and division of monies is simply inspired, one can’t help but be awed at the slight of hand. But best of all is the invisible barrier to competition that embraces all who are willing to maintain the status quo, while repelling any and all new competitors to the model. My hat is off to the people that devised such a bullet proof system.

    RE will be Ubered, there is no doubt. The incumbents could prevent it, and could even retain strong margins if they could muster the will . But with so much easy money being made, and with so many members vested in maintaining the status quo i don’t think you guys will . In fact i think you will end up hastening your own demise as the parlor trick of dual rep and fee splitting has worn thin with consumers who have trouble seeing why they should give away the dollar equivalent of a shiny new car just to sell a home

  62. 62
    Ying says:

    Hi, I am about to list my house for sale, and am thinking of a SOC of 2.5%.
    How will a lower than 3% SOC affect the final sale price or showing activities?

    My house is $500k-$600k range, move in ready.

    Thank you.

  63. 63

    RE: greg @ 61

    There is nothing that blocks a seller from posting their home for sale on Zillow for free. There is nothing that blocks a seller from hiring a “FSBO IN the mls” service paying $1,000 or less.

    So let’s agree that there is no issue on the seller side as to the amount paid by the seller for the seller’s agent. There is no reason why there are not 10 different companies who offer this service. Maybe there are, and I just don’t know them all.

    MLS4Owners one of the originals has the upgraded “Classic” package for $499. All the benefits of being IN the mls. So no…the mls system does not in and of itself create any barriers to entry based on the amount a seller pays.

    http://mls4owners.com/

    Redfin is 1.5% to list.

    My Secret Agent $495 similar to MLS4Owners.

    http://mysecretagent.com/

    Shop Prop has a $2,995 flat fee from what I can see on their site. More about them on the buy side. They do on their site recommend the 3% SOC BECAUSE the buyer negotiates that, not the seller. THEY have a lower fee on the buy side, but the buyer gets the difference NOT the seller.

    Understand that is the issue. The Listing Agent is the Agent for the seller and the seller can be IN the mls with most support services for as little as $99 to $499 depending on the list package they choose from the services above and readily available.

    Agree here…there are options to be IN the mls for less than $1000 regardless of the price of the property you are selling.

    So NO…”the mls” is not blocking alternative biz models that offer lower and lowest cost options.

    In fact “the mls” has very little, if anything, to do with commission amounts. I can charge nothing and still put the property in the mls. They don’t even ask me what I am charging a seller. They don’t know; they don’t care.

    Buyer side in next comment.

  64. 64
    boater says:

    Not at all related to Zillow vs redfin but related to how useful are online ranking tools.

    Goodschools has dropped many of the 10 ranked eastside public schools to 5 and under recently. It has to do with high opt out rates for state testing in these otherwise high performing schools. US News still rates many of these schools as tops in the state.
    Do you think this will impact home prices in those areas?

  65. 65

    By greg @ 61:

    RE will be Ubered, there is no doubt.

    Yep, no doubt, because understanding real estate transactions, valuation, construction, etc. takes no more knowledge than knowing how to drive a car. /sarc

  66. 66

    RE: greg @ 61

    First: Love it or leave it is a false dichotomy, it is a ruse to distract. No real point discussing the stupidity of it, as an argument, I am sure you knew it before you even typed it. :)

    I put it in quotes because I have heard it many times, not because I have ever said it. If I were the one saying it, it would not be in quotes. However I can’t imagine Microsoft saying they are going to start paying their employees the same salary they would be making in their prior home country. What people make outside of this Country is never the basis for minimum wage discussions, or salary discussions or commission discussions or …you name it. It doesn’t play.

    When I started in real estate there was no such thing as “a buyer’s agent” or a buyer agent fee. So no. That there are two agents representing different parties did NOT add a dime to the cost. What it did do is change that all agents represented the seller. Agents did NOT want that change. The change was not brought about from inside the industry so we could charge more. I was there. Buyer Agency was forced on the industry for the most part, it was not instigated or initiated by the industry. While I am not old enough to have been around before the mls, I do know some people who started the first mls. They did not up the cost when they did it. That there are two agents is NOT what many in the industry wanted or want. They want to keep the whole thing and sell it themselves. There are two agents serving different people because buyers and consumer protection activists demanded it. Buyer Representation was written into the Agency Laws of every State as an option and NO the industry was not the impetus for that change.

    You say: “Simply put there is no valid justification for the additional 2-4% fee…”

    Where do you get the idea that it is “additional”? It was a split…not an add on. In fact originally if the fee was 6% then the first idea was to pay 3/3 if the agent “with” the buyer represent the seller but 5/1 if the agent “with” the buyer represented the buyer. In the beginning the seller wanted to pay agents that represented the seller the full 6, and honestly most still would like that better. They don’t like offering money to pay people to work AGAINST their best interests.

    But do know the fees did NOT increase when the seller’s representation was diluted? Nor did the industry conjure up a way to make more money. Nor did the seller want to pay the same money to have someone beat them up on price and terms and repairs.

    The buyer WON, the seller LOST, the agents LOST the battle that created this system you think was contrived by “the mls” or “the industry”.

    The buyers won the right to negotiate with their agents. The buyers don’t want to lose that right.

    Does that help explain the history a bit? Sure…if you can’t find anyone willing to work for what you are willing to pay, well that can happen anywhere with anything. But the reality is that most people can not pay their own agent if the seller doesn’t place it into the sale price to accommodate the buyer being able to negotiate and finance it.

    Now tell me what you want? How does it help a buyer to offer NOTHING, OR NOT ENOUGH for them to pay their agent?

    You can list your home for sale right now paying as little as $99 to your agent and offering an extremely low amount to the agent for the buyer. Where are your rights or options “impaired” by “the mls” or “the system”? Who is blocking you?

  67. 67

    RE: Ardell DellaLoggia @ 63 – If all this was true, then the SOC wouldn’t be stuck at 3%. 98% of median-priced listings on the MLS offer 2.5% or more SOC.

    Ardell, you’ve created a myth that the rebate model has led to a lower SOC. It obviously has not – see the bold comment above. As a result, commissions in the USA are much higher than anywhere else. Because only in the USA does the seller pay the buyer’s agent.

    Options are impaired because – for whatever reason, and by whatever mechanism – there has been no meaningful reduction in the SOC. At least as far as MLS firms are concerned…

  68. 68
    ARDELL says:

    RE: Craig Blackmon @ 67

    No. The rebate model led to a stabilization of the SOC on the high side to allow room for the rebate. Never have I said otherwise. A lower SOC serves the seller, not the buyer is what I am saying. The progress made on the buy side would be lost.

  69. 69

    RE: ARDELL @ 68 – Progress? You must be hitting some of that legal stuff!! There has been virtually no progress. Rebate models are a very, very small percentage of the marketplace. Redfin – the biggest of them all – has now reduced its rebate to $500, and its market share is about 3%. In its home market. After 10 years of promoting the “revolutionary” model.

    The vast majority of sellers still offer 3%. The vast majority of buyers don’t get a rebate. There has been virtually no progress, obviously.

  70. 70

    By Craig Blackmon @ 67:

    As a result, commissions in the USA are much higher than anywhere else. Because only in the USA does the seller pay the buyer’s agent.

    That does not follow. Everything is more expensive in the United States. Even if you assume the services in the other countries are the same (which is extremely unlikely), you would expect them to cost more here.

    But again, your timing is really off. You’re fighting the market. This is not a point in time when buyers would be likely to get reduced price services because this is a strong seller’s market.

    I’ve said this before, but one of the reasons our current system survives is it works in all markets. Individual agents may suffer if they are too focused on representing either buyers or sellers, but the firms and system tend to survive. There are exceptions at the firm level, and I’ve noticed even Redfin has an issue trying to shift from focusing on listings, to focusing on buyers and then back again. But some system where buyers agents make less is only going to work in a buyer’s market where putting buyers into properties is easy.

  71. 71

    By Craig Blackmon @ 69:

    RE: ARDELL @ 68 – Progress? You must be hitting some of that legal stuff!! There has been virtually no progress. Rebate models are a very, very small percentage of the marketplace. Redfin – the biggest of them all – has now reduced its rebate to $500, and its market share is about 3%. In its home market. After 10 years of promoting the “revolutionary” model..

    I’m not sure if that’s correct, but if it is, what does that tell you? There’s a message or two there, but you don’t seem to be seeing it. Ask yourself–if the SOC is so high, why has Redfin been steadily reducing the rebate?

  72. 72
    SFraz says:

    RE: Kary L. Krismer @ 56 – Don’t change my words to what you wish them to be. I KNOW I made hefty profits. Repeat. I KNOW. I sell my autos the same way. I got my mind on my money and my money on my mind. And I’m not giving it to someone when I can do the same thing.

  73. 73
    SFraz says:

    The established REs don’t want the system to change. Why should they? Their jobs depend on the industry remaining the same. F.I.RE economy rules. Why would their lobby try to undermine itself? The same with the automobile dealership lobby. They prevent auto manufacturers like Tesla from selling directly to consumers, forcing them to go through local dealerships. The same here.

  74. 74

    RE: Craig Blackmon @ 69

    OMG Craig! That is so not true! Holy Caboley! How can you say things like that without checking first?

    https://www.redfin.com/why-redfin-how-you-save

    It’s a sliding scale.

  75. 75

    RE: SFraz @ 73

    I have for more than 15 years supported a progression to a point where all people have multiple choices, including no agent at all. I agree with you that people like to see the real numbers saved and I check that from time to time, anecdotally.

    A few weeks ago a seller interviewed several agents and chose me to list her mother’s condo. Estate Sale. The day after she chose me she popped into a nearby Open House. The Open House agent approached my future seller client as if she were an agent or prospective buyer (it was a during the week. A Broker’s Open House.) My future seller client relied “Oh, I’m just taking a look because I am putting my Mothers condo on market soon.”

    A buyer couple and their agent followed her home and made her an offer. I wished her luck and continued to answer her questions to the end. It didn’t turn out as well as she first thought and she had a lot of stress, but in the end she was happy and I was happy for her. She paid no commissions. She didn’t get as much as they first promised her, but she was still happy to save real commission dollars.

    My reply “That’s good!!! I’m glad!!!”

    My hope is real estate agent will be the same as an accountant to do your taxes. Some people need someone else to do their taxes, and some people don’t. Real Estate should be the same. There should be different fees for different needs, many options to choose from including none at all.

    It is a free market right now. There is no reason per my previous comment that HALF of the industry can’t be DIY models, unless people don’t want that.

    Most people still want scads of agents coming in and out showing their property and bringing them offers, the more the better. But there is nothing wrong with their being as many options as possible. The “old way” doesn’t have to ever disappear entirely, some people still want it and need it. More and many choices is the best answer, and no one is blocking that from happening.

    Like cereal…lots of options is good. :)

  76. 76

    RE: Kary L. Krismer @ 71

    I hate that the way that quote appears it looks like I said that stupid thing when Craig said it. It’s an actionable quote for crissake.

  77. 77

    RE: Kary L. Krismer @ 70 – The World According to Kary: “Everything is more expensive in the United States. Even if you assume the services in the other countries are the same (which is extremely unlikely), you would expect them to cost more here.”

    Yeah. Tough to argue with that. This debate is definitely over.

  78. 78
    Ross says:

    By Kary L. Krismer @ 70:

    By Craig Blackmon @ 67:

    As a result, commissions in the USA are much higher than anywhere else. Because only in the USA does the seller pay the buyer’s agent.

    That does not follow. Everything is more expensive in the United States. Even if you assume the services in the other countries are the same (which is extremely unlikely), you would expect them to cost more here.

    That’s not true. A lot of categories of items are cheaper in the US: Food/alcohol, energy, gasoline, media (books/movies/video games), (most) cars/trucks, (most) technology, (most) financial services. (By no means complete) things that cost more in the US are: medicine, some services, housing (though there’s a big depends on this one), many forms of insurance, legal risk.

    On the whole, things cost less in America compared to most western countries.

    The cost of real estate services is unjustifiably higher in US than most other countries, in my opinion — especially when rates are low and housing prices tend to rise, magnifying the real estate industry’s real take home.

  79. 79

    By SFraz @ 72:

    RE: Kary L. Krismer @ 56 – Don’t change my words to what you wish them to be. I KNOW I made hefty profits. Repeat. I KNOW. I sell my autos the same way. I got my mind on my money and my money on my mind. And I’m not giving it to someone when I can do the same thing.

    No you don’t know. You’re only pretending you know. You don’t know how much it would have sold for if you had sold it via some other method.

  80. 80

    By SFraz @ 73:

    The established REs don’t want the system to change. Why should they? Their jobs depend on the industry remaining the same.

    That’s basically my argument about why Zillow doesn’t drive change. They exist selling advertising to agents. Some alternative system risks their existence.

  81. 81

    By Ross @ 78:

    By Kary L. Krismer @ 70:

    By Craig Blackmon @ 67:

    As a result, commissions in the USA are much higher than anywhere else. Because only in the USA does the seller pay the buyer’s agent.

    That does not follow. Everything is more expensive in the United States. Even if you assume the services in the other countries are the same (which is extremely unlikely), you would expect them to cost more here.

    That’s not true. A lot of categories of items are cheaper in the US: Food/alcohol, energy, gasoline, media (books/movies/video games), (most) cars/trucks, (most) technology, (most) financial services..

    Source please. Prices are driven by demand. Not only does the US have one of the highest per capita GDPs, but it also has additional demand for some of the items mentioned for other reasons. For example, food there is food stamps. Cars, extended term financing. But others just seem to be made up–for example check out smartphone pricing in India and China.

  82. 82
    greg says:

    By Kary L. Krismer @ 70:

    By Craig Blackmon @ 67:

    As a result, commissions in the USA are much higher than anywhere else. Because only in the USA does the seller pay the buyer’s agent.

    That does not follow. Everything is more expensive in the United States. Even if you assume the services in the other countries are the same (which is extremely unlikely), you would expect them to cost more here.

    .

    RE: Kary L. Krismer @ 81

    Kary I get the feeling you just don’t know very much about the world outside your little corner.

    When you make sweeping silly statements such as the one quoted above, you are exposing your gross ignorance to the whole world.
    Many durable goods and services are in fact much cheaper in the USA and for a whole slew of reasons .

    I am not going to waste my time and try to teach you basic econ, there are schools for that. But I would suggest to you that fact check before making such a grandiose claim.

    The USA comes in at about 20th on the cost of living index, thus there are 20 countries with higher cost of living than the USA.

    See you could have just looked that up in the time it takes to type a few words.

    And while you are at it you should look up RE fees in the UK , China , India, because a week or so ago you were claiming that nobody could live on 1% yet in the UK (higher cost of living) they do just fine on 1-3%…. (total not split)

  83. 83

    RE: greg @ 82 – LOL, the person who just says things repeatedly without any sources is calling me out!

    Believe me, I know more about economics than you do. How many quarter hours of economics credits do you have? I’m going to guess it’s the same as the number of hours of anti-trust courses.

  84. 84
    Justme says:

    RE: Kary L. Krismer @ 81

    I think Ross is talking about Europe when he is comparing prices. I have quite a bit of experience with European prices, and what Ross said is correct: Food/alcohol, energy, gasoline, media (books/movies/video games), (most) cars/trucks, (most) technology, (most) financial services, are all more expensive in Europe, and sometimes a LOT more expensive.

    What is cheaper in Europe: Healthcare and pharmaceuticals, and real estate sales commissions. Can’t think of anything else, off the top of my head.

    Houses in Europe used to be cheaper until about 2004. Since then, housing inflation has been just as crazy as in the US in most countries, but not all countries. This is because European central banks largely follow the interest policy lead of the US FRB (“The Fed”).

    (Yes, there is still more than one central bank, ECB is just for the Eurozone. The UK/England, Denmark, Sweden, Norway, Switzerland, Poland and more have “independent” central banks. But ECB and the independents have nevertheless followed/copied the US FRB interest rate reductions, and thereby ignited massive amounts of asset inflation.)

    Why do they copy interest rates? Partly because countries try to maintain the same exchange rates, so that their exports remain competitive. And partly because European central banks are playing the same nasty game that FRB is playing here: They are actively INTENDING to generate asset inflation and enrich the banks and the 1%, and screw over the 99% . Quite a few of the 99% also THINK they are getting “rich” via asset inflation, although in reality all they are achieving is to impoverish their own children, who cannot afford houses. Another motivation is to make it more expensive for China to buy up US and European assets (again owned by the top 1% mostly) with their trade surplus. The US top 1% will sell assets high and buy them low, after the interest rates get cranked up again (cf. Japan “buying the US” in the 1990s).

    I expect someone to pipe up about how low interest rates are there to “help the economy”. Don’t be naive. The FRB only gives a very small crap about jobs, and in the balance with wage inflation, wage inflation will always be deemed more important to suppress than the need to enable more jobs. Low interest rates is the ultimate “trickle down economics” swindle. Hardly anything will trickle down from the top 1% to the 99% because of low interest rates.

  85. 85
    greg says:

    By Kary L. Krismer @ 83:

    RE: greg @ 82 – LOL, the person who just says things repeatedly without any sources is calling me out!

    Believe me, I know more about economics than you do. How many quarter hours of economics credits do you have? I’m going to guess it’s the same as the number of hours of anti-trust courses.

    Your responses are that of a man who knows he is wrong , but far too childish to accept it. So instead you sling mud, make fallacious appeals to authority .
    Sorry Kary, but nobody is buying your nonsense .

  86. 86

    RE: greg @ 85 – How about doing us all a favor and only post something here when you have something useful to say? In other words, quit being a troll.

  87. 87
    I'm just here so I won't get Fined says:

    RE: Kary L. Krismer @ 86

    Hey Kary. If we only let people comment when they had something useful to say Software engineer would have nothing to fill his day, and if we kept all the trolls away Erik would have to find a new hobby. You are really asking a lot I think.

  88. 88
    greg says:

    RE: Kary L. Krismer @ 86

    Kary your OM is to go for personal attacks when you fail to find a valid counterpoint.
    But in the end all your mud flinging and name calling has achieved is to define you as somewhat of an internet bully with weak critical thinking skills.

    in fact if you doubt me, just google yourself and you will find thread after thread where you attack the messenger instead of the message.

    Troll? I think it is pretty clear who is trolling.

  89. 89
  90. 90
    Ross says:

    By Justme @ 84:

    RE: Kary L. Krismer @ 81

    I think Ross is talking about Europe when he is comparing prices. I have quite a bit of experience with European prices, and what Ross said is correct: Food/alcohol, energy, gasoline, media (books/movies/video games), (most) cars/trucks, (most) technology, (most) financial services, are all more expensive in Europe, and sometimes a LOT more expensive.
    […]

    I was thinking of Europe, but also Canada, Japan, Australia. Just about any country from the G20.

    Source: I lived in Canada and Europe and visit both regularly. US prices range from a little to extremely cheaper in just about all these categories. As others mentioned, you can look at cost of living indexes, big mac index etc. and find that US usually isn’t the most expensive, except for medicine and legal risk. Healthcare, anyways, is so much more expensive and such a large portion of GDP that it significantly pushes up the overall cost of living.

  91. 91
    Irrational Exhuberance says:

    If real estate agents put more time and thought into actual homes than trying to manipulate people’s perceptions into thinking this or that agent is more knowledgable as on this thread, maybe the housing market would be better for all than a select few. Until then we are just paying higher prices because of the egos manufacturing higher selling prices to cash in on a low inventory market to support their ego-driven lifestyles.

    Can you guys get a grip? Didn’t you guys watch Thank You for Smoking? An argument is to sway the observers not each other; public relations my friends.

    Keep it up and we’ll all be out of work as the public views our business as semi-public, disrespectful and replaceable by more “fair and objective” machines that aren’t hyping the market.

  92. 92
    Erik says:

    RE: I’m just here so I won’t get Fined @ 87
    Nothing wrong with a good troll like myself. I make good comments sometimes. Sometimes my comments are not so good. The posts that talk about home searching tools are not the posts I like. I like to see things that help me decide when to buy and sell.

    This website helped me go from broke to feeling financially comfortable, so this is a good hobby. Now I need to figure out how to retire early.

  93. 93

    By Ross @ 90:

    By Justme @ 84:

    RE: Kary L. Krismer @ 81

    I think Ross is talking about Europe when he is comparing prices. I have quite a bit of experience with European prices, and what Ross said is correct: Food/alcohol, energy, gasoline, media (books/movies/video games), (most) cars/trucks, (most) technology, (most) financial services, are all more expensive in Europe, and sometimes a LOT more expensive.
    […]

    I was thinking of Europe, but also Canada, Japan, Australia. Just about any country from the G20.

    Source: I lived in Canada and Europe and visit both regularly. US prices range from a little to extremely cheaper in just about all these categories..

    I suspect a lot of that is probably their system of taxation, particularly on gasoline where historically they’ve had very high taxes to limit use (something I wish we would do). But at least in Europe they generally use a VAT system instead of an income tax system. So that would make price comparisons to the US difficult, since we buy things with after-tax dollars and they buy things with pre-tax dollars.

  94. 94
    Justme says:

    RE: Kary L. Krismer @ 93

    >>But at least in Europe they generally use a VAT system instead of an income tax system. So that would make price comparisons to the US difficult, since we buy things with after-tax dollars and they buy things with pre-tax dollars.

    There is VAT **and** income taxes in most (if not all) European countries. People do NOT get to buy anything with pre-income-tax funds.

  95. 95
    greg says:

    By Kary L. Krismer @ 93:

    I suspect a lot of that is probably their system of taxation, particularly on gasoline where historically they’ve had very high taxes to limit use (something I wish we would do). But at least in Europe they generally use a VAT system instead of an income tax system. So that would make price comparisons to the US difficult, since we buy things with after-tax dollars and they buy things with pre-tax dollars.

    Wow Kary

    Every post you dig yourself a deeper hole and expose the huge gaps in your knowledge.

    The very idea that people in the EU buy goods with “pre-tax” dollars is so damn funny it almost makes me feel sorry for you. (Tell me again about your econ credits, did you get them inside a box of crackerjacks?)

    Denizens of the EU buy goods and services with after tax dollars exactly the same as we do here. I don’t know why you would think it is any different. If it helps to understand the system better, just remember that in most of the EU tax payers are taxed at source just as we are here in the USA. And VAT is just a fancy sales price .

    But the very best bit is where you display complete and utter ignorance of taxation policies in the EU.

    “””””But at least in Europe they generally use a VAT system instead of an income tax system. “””

    So again let me help figure out this highly complex issue… In the EU taxpayers pay income taxes mostly higher than in the USA. They also pay a sales tax on some goods and services. Value Added Tax is like state sales taxes , but it is scaled to the class of item or service being purchased. thus in some EU countries the VAT rate is zero for food, clothes , books, and over 20% for anything considered a luxury. Lots of services fall in the middle.

    So in short.
    NO in the EU people do not purchase goods with pre-tax monies, that is simply wrong.
    NO in the EU VAT is not used in place of income tax, that is completely wrong. VAT is in fact just a more nuanced version of sales tax. It is presented to the buyer as part of the price, just as your RE fees are built into the sales price of a home…. VAT ranging from 0% -25% mostly but in fact can go a little higher in some parts for some goods/services.

    honestly Kary, each time you try to defend this silly stance you have taken , you end up making yourself look more and more foolish. I suggest you either stop or start fact checking your posts before you hit that button.

  96. 96

    By Justme @ 94:

    RE: Kary L. Krismer @ 93

    >>But at least in Europe they generally use a VAT system instead of an income tax system. So that would make price comparisons to the US difficult, since we buy things with after-tax dollars and they buy things with pre-tax dollars.

    There is VAT **and** income taxes in most (if not all) European countries. People do NOT get to buy anything with pre-income-tax funds.

    Yes, that is true, at least for some of the countries, but the VAT tax is much higher than anything we use here as a sales tax. So I should have said they rely more on VAT than income tax. rather than instead of. I believe the VAT tax rate is at least 15% and up to 25%, so unless there’s a state with sales tax at those rates, it’s not comparable.

    Also, I’m not sure about this, but from memory I think the tax is built into the price rather than added on, unlike our sales tax system. If so that would also affect price comparisons.

    And I’ll note no one has refuted my claim that gas taxes are higher in Europe and Canada.

    But the point remains that difference in tax systems make price comparisons difficult. It’s similar to the argument I’ve made in the past regarding Texas prices and their high real estate taxes depressing their property prices.

    Finally I’ll note that this originated with my claim that prices are higher in the US due to our increased earnings. Such a distinction would probably not apply to some of the more advanced Euro countries like Germany.

  97. 97
    Ross Jordan says:

    By Kary L. Krismer @ 96:

    By Justme @ 94:

    RE: Kary L. Krismer @ 93

    >>But at least in Europe they generally use a VAT system instead of an income tax system. So that would make price comparisons to the US difficult, since we buy things with after-tax dollars and they buy things with pre-tax dollars.

    There is VAT **and** income taxes in most (if not all) European countries. People do NOT get to buy anything with pre-income-tax funds.

    Yes, that is true, at least for some of the countries, but the VAT tax is much higher than anything we use here as a sales tax. So I should have said they rely more on VAT than income tax. rather than instead of. I believe the VAT tax rate is at least 15% and up to 25%, so unless there’s a state with sales tax at those rates, it’s not comparable.

    Also, I’m not sure about this, but from memory I think the tax is built into the price rather than added on, unlike our sales tax system. If so that would also affect price comparisons.

    And I’ll note no one has refuted my claim that gas taxes are higher in Europe and Canada.
    […]

    Well, it’s true that most of the world (except a few oil producing countries) have higher gas taxes than the US. And of course, higher energy costs feed down throughout the economy, impacting construction, transportation, agriculture and many other areas. But that nuance really doesn’t matter. We’re talking about the cost that consumers pay for products, whether they be food, media, energy or real estate. That means the final, out-the-door-price. Not the pre-tax wholesale cost of an item.

  98. 98

    RE: Ross Jordan @ 97 – My mistake was in thinking that Europe didn’t have a significant income tax on top of that rather high VAT tax. I knew Greece had an income tax, because there were reports of them not paying it, but I had no idea it was so significant in so many countries! I didn’t research the income levels where the income tax starts to kick in, or it’s initial rates (only the high rate and where it kicks in), but it seems like they are really over-taxed in a lot of the countries over there!

    I’d disagree with you on the last point though, because with the high VAT taxes the “final, out-the-door price” will be higher, just like it is with gasoline. Gasoline is probably more extreme, but the effect is the same.

  99. 99
    greg says:

    By Kary L. Krismer @ 83:

    RE: greg @ 82 – LOL, the person who just says things repeatedly without any sources is calling me out!

    Believe me, I know more about economics than you do. How many quarter hours of economics credits do you have? I’m going to guess it’s the same as the number of hours of anti-trust courses.

    Your hubris is an endless source of amusement . Fallacious arguments, slanderous insults, and public displays of ignorance.

    it really does not need to be this way.

  100. 100

    RE: greg @ 99 – Hey, it sounds like you’re describing J.L. Scott and his regular comments in the NWMLS press releases – at least according to Tim!! :-)

    Perhaps there is a much bigger and much better analogy. Maybe Kary represents the traditional real estate industry and its reliance on the selling office commission. They say the darndest things in defense of the indefensible. And you’re right, it doesn’t need to be this way.

  101. 101

    By Craig Blackmon @ 100:

    Maybe Kary represents the traditional real estate industry and its reliance on the selling office commission. They say the darndest things in defense of the indefensible.

    No, instead we should listen to the agent who tries to implement a really stupid idea at a really stupid time.

    http://seattlebubble.com/blog/2015/05/28/quill-leaves-nwmls-dramatically-slashes-listing-cost/

    Here’s a slogan you can use if you want to turn that shipwreck around: “Quill Realty–for the seller who doesn’t like the hassles of bidding wars.”

  102. 102

    RE: Kary L. Krismer @ 101 – You misspelled “stoopid”…

  103. 103

    RE: Craig Blackmon @ 102

    Craig,

    Have been meaning to ask. Why no MLS? Why not do a minimum type flat fee SOC like Surefield? What’s the point of not being “in” at all?

    You complain that the SOC doesn’t change enough, and yet you don’t do something to change that inside the system, as others have. Why?

  104. 104

    By Ardell DellaLoggia @ 103:

    RE: Craig Blackmon @ 102

    Craig,

    Have been meaning to ask. Why no MLS? Why not do a minimum type flat fee SOC like Surefield? What’s the point of not being “in” at all?

    An even better question is if he’s so upset about how the SOC system works, purportedly due to the interests of buyers, why did he set up a system where he would mainly represent sellers? The sellers are the client, not the buyers.

  105. 105

    RE: Ardell DellaLoggia @ 103 – Because change will not happen from within the existing system. The vested interests are way too large to expect change from within that will disrupt the industry. This foundational change – elimination of the SOC as we know it – must happen from the outside.

  106. 106

    RE: Craig Blackmon @ 105 – But even accepting that and your entire theory about how this is somehow bad for buyers, the SOC is a good one for sellers and your system is mainly set up to represent sellers.

    Do you have a written disclosure to all your listing clients that your system has significant disadvantages for them? Or is it just the misleading marketing BS that is on this page? http://quillrealty.com/sell-a-home/1-single-broker-listing/

    Such a great deal! /sarc You only charge 2% LOC, but require $250 of that to be paid in advance. You make that sound like it’s a 4% savings, when even using your assumptions it’s really only 1%, but then you make them pay $250. So you apparently have so little confidence in your system that you make them pay something upfront? Wow.

  107. 107

    RE: Kary L. Krismer @ 106 – I’ll make this as simple as I can:
    1) My seller signs a listing agreement for 2%, with listing costs paid up front. Tell us, Kary, without hiding behind that anti-trust baloney, what your last listing agreement said?
    2) The SOC creates serious conflicts of interest that undermine the entire notion of “representation” (but not “salesmanship”).
    a) The problem is obvious on the buy side. Right????
    b) On the sell side, the listing agent has a strong personal incentive to favor one offer (with no buyer’s agent, or as a dual agent) over another. Do you understand that?

    Let’s start with those basic points, Kary. If you want to a discussion about my model, I am happy to engage. But I am not interested in re-re-hashing points well hashed out already.

  108. 108

    RE: Craig Blackmon @ 107 – We didn’t hash the points before. You largely ignored my concerns about your model.

    1. Knock off the anti-trust baloney comments. When you said that in the earlier thread I questioned whether you were really an attorney!

    2. No conflict of interest at all. An attorney representing an insurance company has on a negligence claim for an insured has a much larger conflict. When I represent a buyer on a transaction that arguably the seller is paying the money creates no conflict greater than if my client had a contingent fee arrangement with me, because I’ll have no further transactions with them.

    3. The only problem obvious on the buy side is that the buyer doesn’t get to set the compensation of their agent, but that can be dealt with through rebates. Also, sort of a silly concern in this market where great buyer’s agents should be well compensated.

    4. On the listing side, no I don’t understand that. What Ardell was talking about above (a variable commission) is unethical for Realtors unless they disclose it in the listing (unclear whether it also violates NWMLS rules). But in any case, I go out of my way to avoid a buyer on one of my listings not having their own agent. The legal risks are way too high, both for me and my client. And true dual agency (unlikely as opposed to an unrepresented buyer) removes the very reason the seller hired me in the first place. On one of my recent listings I had an attorney bring in an offer, expecting to get favored due to a reduction in commission and/or my keeping it. I told her to get her own agent, and she did.

    But on the listing side, don’t you have a huge conflict of interest? The buyer is paying all but $250 of your commission! How can you possibly represent your seller when the buyer is paying your commission! I think you should get your entire commission up front so that doesn’t occur! /sarc

    But you haven’t begun to address my argument. Your non-MLS system reduces the exposure of listings so that you can take on some personal war with SOC. Do you disclose to your clients the negative consequences of their going with your model beyond the marketing BS of “92% of all buyers” nonsense?

  109. 109

    Connecting up my criticism of Craig’s model with the current topic, I left my first RE firm largely because they were not doing anything to feed their listings to Realtor.com. This was after the NWMLS stopped direct feeds to Realtor.com. I don’t remember the specifics–if it was just difficult to get my listings on Realtor.com or impossible to get them there. But the point was I considered my listings getting as broad of exposure as possible to be very important, and my repeated prompting to the firm didn’t result in any action on their part. So I left looking specifically for firms that did push to Realtor.com. Still later I would typically pay extra to the third party sites for better exposure of my listings. I no longer do that due to their current layouts not making it that beneficial, but with their prior systems I considered that expenditure of funds to be well worthwhile to benefit my seller clients.

    That Craig doesn’t seem to understand the importance to sellers of their of listings having wide exposure, and create a system with minimal exposure of his listings just seems bizarre.

  110. 110

    RE: Kary L. Krismer @ 108 – You are the trolliest of trolls Kary. Only you would hammer me on my fees while remaining safely ensconced behind your assumed anti-trust shield. Which is of course, like most of what you spout, total BS. The next time I engage you it will be to “blow up” your mistaken understanding of anti-trust restrictions in RE.

  111. 111
    greg says:

    RE: Craig Blackmon @ 110

    Ref: Anti-trust and discussing fees.
    But it is not in Kary’s interest to understand this so he does not. If he were to “understand” anti-trust he would of course have to admit that there is no issue. So instead he simply deflects, goes off topic , makes personal attacks etc.

    There are a dozen ways NWMLS , NAR etc could fix this distorted market for RE services. There is little point laying them out as the likes of Kary will cry foul no matter what solution is presented. He is married to the status quo and is completely unable to come to terms with change.

    (hint to you agents out there, the faster you lower the fees the more likely you and your agencies will avoid disruption , right now you have a bright flashing red “X” on your entire industry. this is one of those things you very much want to be ahead of)

  112. 112

    RE: Kary L. Krismer @ 108 – Or maybe you’re willing to concede your error here:

    True or False: Antitrust price-fixing rules do not allow a real estate company to engage in a public advertising campaign that highlights the commission rate it charges to consumers.

    Correct Answer: False
    The prohibition on price fixing forbids agreements among competitors on prices, such as real estate listing commission rates, including commission splits. The law does not preclude a competitor who establishes its commission rate unilaterally and without agreement with other companies from advertising that commission rate. The law also allows that competitor to engage in competitive advertising, in which the company explicitly compares its stated commission rate to the rates publicly promoted or advertised by other firms, provided that the advertising was truthful and not misleading. In fact, the policy underlying antitrust laws — promotion of vigorous and healthy competition — would tend to favor and encourage such comparative advertising since it helps consumers easily compare and contrast prices offered by various companies.
    REALTOR Magazine

    So, Kary, what do you typically charge to list a home? Consumers want to know…

  113. 113

    By Craig Blackmon @ 110:

    RE: Kary L. Krismer @ 108 – You are the trolliest of trolls Kary. Only you would hammer me on my fees while remaining safely ensconced behind your assumed anti-trust shield. Which is of course, like most of what you spout, total BS. The next time I engage you it will be to “blow up” your mistaken understanding of anti-trust restrictions in RE.

    You can advertise your rates on your website. United Airlines can advertise their rates on their website. I could advertise my rates if I wanted to compete on price rather than ability. And Delta Airlines can advertise their rates on their website.

    United and Delta cannot discuss their rates with each other without violating anti-trust laws. The same goes for us.

    But in any case, I’m going to just accept NAR’s advice on the topic and assume they’re right, because that’s the least risky thing to do.

    But if you want to discuss value, my services are much more valuable than yours because my listings get shown on all the broker sites, Trulia, Zillow, Realtor.com and a number of smaller ones. Based on exposure I should probably be charging about 10x what you charge.

    Edit: I just saw your second post. That’s discussing advertising.

  114. 114

    Maybe the Federal Trace Commission is a good enough source for you:

    Antitrust scrutiny may occur when competitors discuss the following topics:

    Present or future prices
    Pricing policies
    Promotions
    Bids [Emphasis supplied]

    https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/dealings-competitors/price-fixing

  115. 115

    By greg @ 111:

    (hint to you agents out there, the faster you lower the fees the more likely you and your agencies will avoid disruption , right now you have a bright flashing red “X” on your entire industry. this is one of those things you very much want to be ahead of)

    Finally something to bring this back to Zillow. Yep, really worried about others like Zillow who don’t have a clue about real estate coming in to disrupt it. People who think it is easily changed don’t have a clue about what is involved in buying and selling real estate. It’s a lot more complex than just getting a hotel reservation for Disneyland.

  116. 116

    RE: Kary L. Krismer @ 113 – Right. So advertise your own rate here and now. What do your clients pay you to list???

    Answer it, Kary. Fair is fair. If you rail on my model, you need to disclose what your model charges for the same service. Or the conversation is horribly one-sided and unfair to me.

    Surely you can appreciate that….

  117. 117

    That would not be advertising. And as I stated in my prior post, I compete on ability. Also, I do very little “advertising,” but when I have done it I’ve not focused on being less expensive than others, I’ve focused on being better than others.

  118. 118

    RE: greg @ 111

    I’m safer talking to you than another broker. LOL!

    The truth is that a traditional agent is an independent contractor and as such not bound to any stated rate. Whether I am on my own or with Coldwell Banker or ReMax or other firms I have worked “under” over the last 26 years, I can have my own fee schedule. THAT is the main reason why “traditional” companies don’t post their “fees”. Because they can’t dictate that rate to their “independent contractors”. This part is not about “anti-trust”. Has more to do with “independent contractor status vs employee status” which is an IRS issue.

    But Craig is right. Fair is fair. While Kary and I and Craig can’t discuss this among one another, I can tell you that no “stated” rate does not mean it must be the highest available on the market.

    Generally mine are $10,000 to $20,000 regardless of price of home and regardless of whether buyer or seller. Under $10,000 is when the price is lower than $300,000 or so. Sometimes I do two for $20k regardless of price if it is the same client buying and selling. Dealing with one client on two things is easier than dealing with two different clients with two things. So there are often “multiple transaction” discounts. That is not uncommon generally. The better you know the person, the easier it is to work with them from start to finish.

    I tend to do flat fees most of the time, even when the % and flat fee is about the same. Just more transparent to use dollar amounts most of the time. One of the reasons the industry likes to use% is because 1% sounds like a lot less than $15,000 as in “you are only paying 1% ” vs “You pay me $15,000”.

    I agree with Kary that I don’t like to advertise my rates, because I don’t like people choosing me based on cost. But they don’t have to “negotiate” with me to get a lower rate, whether it is a buyer or seller. I price by the work at hand within that range of $10,000 to $20,000 most of the time. If I don’t have to stage someone’s house then it will be less than when I do. But the client doesn’t dictate whether or not I need to do that, the product does.

    If a buyer knows they only want to live in X neighborhood, then the price is less than if they have very little idea where they want to live and will live in 5 different Cities…depending.

    I once had an arrangement with a buyer who would pay me 1% if he bought in X neighborhood and double if I found something better for him to buy in a different neighborhood. It was the best neighborhood and we went with the 1%. I didn’t try to convince him some place else was better so I could get double, when we both knew he was right and that neighborhood was where I met him. Worked out great. He still lives there.

    I give lower costs to places that are closer to me as to listing because I go back and forth with some staging and the shorter distance is easier for me.

    There are many different reasons why the work is different from one job to the next, and cost changes accordingly.

    Why the public thinks everyone who doesn’t “advertise” a rate is automatically higher just boggles my mind. It’s not about “negotiating”. You just ask what their fee is. Just had three different clients ask me that question and I would have charged them the same whether they asked it or not. It’s just that I don’t charge everyone the same amount. I usually don’t quote a seller until I see the product. The price depends on the work at hand. I don’t quote a buyer unless I know them already or I meet them first to determine the level of difficulty.

    Working for each product or person is not equal.

    The failure of the system is when the price is not adjusted for the work at hand merely because no one asked for that. I do it whether they ask or not. BUT…back to the topic of alternative models, those alternative biz models like Zip and Redfin and some others made it easier for traditional agents, as they do serve as a guide by testing how low is too low and how high is too high. They clearly helped pave the way for traditional agents to have a new yardstick to go by.

    But Kary is right, someone choosing me by my cost primarily is usually bad. Better for me to choose them and vice versa and then determine price of service. Just works out best that way.

  119. 119

    By Ardell DellaLoggia @ 118:

    I’m safer talking to you than another broker. LOL!

    I don’t think that’s true when you’re doing it on a public forum like this. But if you were in your car or on the phone, sure.

  120. 120
    ARDELL says:

    RE: Kary L. Krismer @ 119

    I actually agree but Craig pulled out the “no fair” card. :)

  121. 121

    On the topic of Zillow, this just came out.

    http://www.geekwire.com/2016/zillow-ceo-spencer-rascoff-sold-home-40-less-zestimate-1-75-million/

    There’s a link in there to an earlier Inman article on the same topic.

  122. 122
    C. Brown says:

    I’ve been looking at property for others and, lately, for a possible investment. Hubby likes to consult Zillow to see how much our house’s value is rising. And, yes, besides I’m just one of those people who enjoys looking at houses for sale. (I liked when a previous poster used the term real estate porn.)

    In one case, I found that Zillow had incorrectly listed my niece’s house as the house next door and also, probably subsequently, had given it a lower property value. Redfin correctly identified the house and gave an estimate over $100k higher than Zillow’s. Trulia also correctly identified the house and gave an estimate about $50k over Zillow’s.

    When looking for property on Redfin awhile ago, I do remember having to sign something saying it was my realtor. I tried to opt out, but, for whatever reason, still have emails sent to me about properties in the area I was looking (for my kid, buying in DC).

    I don’t remember what Zillow and Redfin uses for crime, but one of the reasons I like Trulia was because it rates the amount of crime in a particular area along with citing exact crimes and dates. Trulia also has a map with some demographic data, like age and marital status.

  123. 123

    By C. Brown @ 122:

    I don’t remember what Zillow and Redfin uses for crime, but one of the reasons I like Trulia was because it rates the amount of crime in a particular area along with citing exact crimes and dates.

    Again, I think you’re better off going to source data–the police or if not that the sites Trulia cites as its sources. If you look around 99 in north King County/south Snohomish, the crime just magically disappears at the border. While that is possible (e.g. Seattle police vs. King County Sheriff), it’s unlikely.

  124. 124
    Craig says:

    RE: Kary L. Krismer @ 108 – “Anti-trust baloney”? Doubt my basic competence as a practicing attorney (which you are not)? Get up to speed here: RCG

    Now will you tell me what you charge a seller for the SOC on your listings? You know, so you can fairly compare your fee to mine?

  125. 125
  126. 126

    RE: Craig @ 124 – Wow, Craig. Over at RCG I ask what training Inman has in anti-trust law and you respond that I am “weird?” Then you respond with a bunch of non-relevant information about Inman that has nothing to do with his [non-existent] expertise on anti-trust. That your response to my comment questioning Inman’s ability is that I am weird only more causes me to question your abilities as a lawyer. Do you cite Inman in court? How about the National Enquirer?

    I question whether you’re an attorney because you don’t have a clue what a good source of information is on a legal issue. In post 114 I post to an FTC link. You post to an Inman article. Thank you for proving the reason why I made the comment.

    I don’t want to compare my fee to yours because I do remember what I learned of anti-trust in law school, when I actually took a course on the topic. That and the fact that I don’t have any confidence at all in your opinion on the topic. Fair enough? But if I were to compare our real estate abilities, I am confident I would stand far above you. I certainly wouldn’t hire you, and that is based on my understanding of your abilities and services in an industry I am very familiar with. Fair enough?

    And that gets to the point I would actually like to make. A consumer can certainly ask what an agent charges. And you are free to advertise your rate. That’s how things are supposed to work. Not by two competitors (to use the term loosely) discussing what they charge.

    But a consumer should not overly focus on commission. That is being penny wise and pound foolish. They should focus on ability, because ability will get them the highest price for the lowest risk.

    If you want to take on practices in the real estate industry, how about taking on some listing agents having their clients accept offers without the buyer having a right to an inspection (or the buyer’s agents who write such offers)? The risk to the seller there could far exceed their total closing costs, and all to only make a listing agent’s job easier. That disgusts me.

    Or how about those agents who list a property without making any provision at all to at least get through the first weekend? I love seeing that when I represent a buyer, but it’s clearly not in the seller’s interest.

    Take on some real issues rather than post links here to RCG “articles” that start out as advertising for your services.

  127. 127
    Craig says:

    RE: Kary L. Krismer @ 126 – And the question remains unanswered. Undoubtedly because… of antitrust concerns. Right.

    And the lawyer shtick? Kary, I’ll put this as gently as I can: You’re an idiot. Please respect the fact that I am a licensed and practicing attorney. You are not, and have not been for some time. I’d do the research myself and draft a nice legal memo for you explaining in detail just how far you have your head up your keister on this issue. But why? You’ll remain blissfully unaware of reality, and I will have wasted time.

    I’m more than satisfied with accepting this article as an accurate statement of the law. You? Of course not….

  128. 128

    Craig, I am still a licensed attorney and I was a full time practicing attorney longer than you have been a part time practicing attorney. And my area of practice covered many more areas of the law than your very limited area of practice. Based on what you post I would put both my legal skills and real estate skills above yours by a wide margin. That you have to resort to insults shows I’ve hit a bone. You realize the truth in what I say. Thank you for demonstrating your insecurities.

    I can hardly wait for your legal memo. Will it cite Judge Judy? The Magna Carta? But don’t bother. We both know how bad the work product will be.

    Now go hide with your tail between your legs for another few months until you get the courage to make up some other stupid argument. You really are pathetic.

  129. 129

    RE: Craig @ 127 – Hey Craig, a few questions.

    I see in August you started yet another new real estate firm. How many is that now? I guess the last one didn’t last too long, did it?

    But you now advertise that you are full service “agents.” Seemingly your firm only has one agent–you. You list someone else on your webpage, but unless I’m missing something, they are not a licensed agent. Seems a bit deceptive. But hey, I’m just an idiot. Please explain it to me in a way my tiny brain can understand. Singular and plural is so confusing.

  130. 130
    Craig says:

    RE: Kary L. Krismer @ 129 – The most accurate and insightful comment of yours in a long time. It will be corrected.

    Please keep this discussion on topic, however. What do you charge your clients to sell a house?

  131. 131

    By Craig @ 130:

    Please keep this discussion on topic, however. What do you charge your clients to sell a house?

    What makes you think that is the topic? Just because you want to interject something into a thread does not make it a topic. I did not agree to do this piece about Zillow so that we could discuss my commissions. That would be incredibly stupid. Unlike you, I don’t do incredibly stupid things, such as this: http://seattlebubble.com/blog/2015/05/28/quill-leaves-nwmls-dramatically-slashes-listing-cost/

    Did it make it a year before you shut down? The Department of Licensing doesn’t give out that information.

  132. 132
    Craig says:

    RE: Kary L. Krismer @ 131 – Kary, c’mon. The whole point of my “pro-Zillow” argument is that it allows me to sell homes for less than other agents. To prove that point, it would be helpful if other agents told us what they charge. But you, THE ANTI-ZILLOW PRESENTER, won’t do exactly that. Just like most – every? – other agents.

    My issue is directly related to our conversation. Yours isn’t. But I get it, I was mean first…

  133. 133

    RE: Craig @ 132 – Actually that was related more to the other thread I just linked where you were trying to claim that your now defunct service was just as good because 92% of buyers look for properties on the Internet, or some such thing. Even more deceptive than using the word “agents” to describe just yourself. ;-)

    And in any case you’re confusing value and cost. What consumers should pay is the value of something. What it costs is what the producer of the service pays. The two are necessarily not that well correlated. Your now defunct service was less valuable to consumers (sellers) because your listings only appeared on Zillow and maybe Craigslist, etc., and not on any of the broker sites. You would expect them to pay less for a less valuable service, and even then they probably were not getting good value given the limited exposure.

    The most valuable agents to sellers have their listings appear on the broker sites and the third party sites like Zillow, Trulia and Realtor.com, not that all such agents are of high value. That’s something a seller should always ask an agent before signing a listing agreement, because a seller needs to know their listings are getting as wide of exposure as possible. It’s amazing how many sellers don’t know that, but it’s quite frequent you see sellers asking on Zillow why their listing is not appearing.

  134. 134
    Craig says:

    RE: Kary L. Krismer @ 133 – Tell us in this public forum what you charge to sell a house. So I can show that I charge less. Thanks to Zillow. That is the topic!!

    Or instead, admit nothing and hurl a few more unrelated insults. That’s really what you do best.

  135. 135

    RE: Craig @ 134 – Wow, you called me “weird” and an idiot and you’re accusing me of hurling unrelated insults?

    Here, I’ll keep it related.

    You are so focused on the commission system they you have completely lost focus of the big picture. The WaLaw system of representing buyers, of which you were a part was very good, because it was good for buyers–your clients! Your current system (to the extent it’s the same as the defunct Quill system) is a system only aimed at sellers which is not good for sellers–your clients! You’re not trying to help your clients, you’re just trying to sucker in people who are hyper-focused on commission.

    Let me use a similar situation. There are a couple of banks that ask for buyers to pay the real estate excise tax. Presumably someone very stupid at such banks thinks that benefits them when really it does not. A buyer who is willing to pay $300,000 for a bank owned property is not going to agree to pay $300,000 plus 1.78% for that property, because they are only willing to pay $300,000. But beyond that, by asking the buyers to pay that the bank gets fewer buyers making offers because either: (1) They don’t have the additional cash funds to make such an offer and still have funds for a down payment; or (2) They just don’t want to deal with the bank’s BS. Your system in one way is very much like that, but it goes far beyond that in being bad for sellers.

    I know you posted over at RCG and here this week to try to gather up more suckers to be your clients. I’m here to tell your potential clients how your system is not in their interest at all and that they really need to be very wary of a person who has some strange agenda that is hyper-focused on one issue. Undoubtedly you will gather up some clients as a result of your efforts because quite frankly some people are stupid and do focus on one thing rather than the big picture. They will ignore the fact that you probably only reach about 20% of potential buyers (if that) and that many of those you do reach will be put off by your terms. They will just focus on the questionable claim that they will save money with your system. I hope you can sleep at night doing that. I don’t see how you can. As I said earlier, I think you are pathetic.

  136. 136

    By bingo @ 125:

    RE: Craig @ 124

    Good Luck with your latest venture, Craig.

    http://news.theregistryps.com/seattle-real-estate-startup-looks-disrupt-real-estate-industry-unique-value-proposition/

    I didn’t bother to check the link when I saw this, thinking it was probably about Quill. It’s not and it’s hilarious! Craig knows his model works because his defunct brokerage sold 6 houses! He claims they sold at “market value.” What more proof do you need that the system works? An agent said he sold houses at market value!

    But I notice a slight change. He’s now offering $500 to buyers agents to “trigger” a legal obligation for buyer’s agents to show the property. That’s all well and good, but his whole reason for leaving the NWMLS was so that he wouldn’t have to offer even a nominal SOC like some of the other alternative models do. That and the fact that there really is no “trigger” to show a listing that a buyer’s agent never learns about! Apparently Craig never watched Dr. Strangelove.

  137. 137

    More deception from Craig. The article linked above is apparently just a press release from Craig. A seemingly identical article can be found here: http://www.prnewswire.com/news-releases/seattle-real-estate-startup-looks-to-disrupt-real-estate-industry-with-unique-value-proposition-300335479.html

    Both articles say: “Added Equity is not a member of the Northwest Multiple Listing Service. As a result, it is not required to offer a 3% commission to a buyer’s agent. Both sellers and buyers benefit from this new, simple model.”

    I wrote that off reading the first article thinking the reporter didn’t understand. But Craig apparently wrote that knowing well and good that there’s no requirement to pay 3% SOC on a NWMLS listing. See post 8 in this thread for evidence of that. This is very similar to his press release for Quill where he made the misleading claim that 92% (or whatever) of buyers start their search on the Internet. It’s a pattern of being incredibly misleading and again I find trying to deceive consumers to be pathetic.

  138. 138
    Craig says:

    RE: Kary L. Krismer @ 137 – My goodness, you do deliver on the insults! You’re like Tim Kaine – on steroids!!! Or is it Donald Trump….

    I didn’t post that press release and never pretended it was anything but just that, a press release.
    Yes, the model has evolved. I learn and grow. You don’t understand, I know.
    And for the final time:

    PLEASE TELL THE PUBLIC WHAT YOU PAY A BUYER’S AGENT.

    If you were to ever answer that question – Antitrust! Antitrust! – I am sure you would say “… and 3% to a buyer’s agent.” I pay $500. Do you see the savings to the consumer, Kary? For a DIFFERENT selling experience, i.e. on Zillow rather than the MLS?

    So simple. And yet so difficult to discuss with real estate brokers. Even ones who used to be lawyers, a long time ago.

    Signing Off this Thread for Now (i.e. won’t be taking Kary the Troll’s bait further – at this time!): -CB

  139. 139

    RE: Craig @ 138 – No, you didn’t post that press release (I’ll note that doesn’t mean you’re not denying writing it), but you did just happen to post something here at the same time as when you were trying to start up yet another new brokerage. I’m not so gullible and naive to think that was just coincidence. But what happened? Couldn’t get Inman to republish your press release this time? Or did you just elect not to do that since the comments posted on that piece were hardly flattering (and incredibly accurate)?

    Not sure what you think is insulting though.

    Is it insulting to note that you have a misleading webpage which infers that your firm has more than you as an agent?

    Is it insulting to note that your press release falsely claims that NWMLS listings have to have a 3% SOC?

    Sorry I rained on the self-promotion of your new firm on this site though. Next time you try that though you might start out by avoiding insults like “weird” and “idiot” and also try to develop a new system which actually benefits your client and isn’t promoted in a way that is extremely deceiving to consumers. Oh, I get it! You find the fact that I find your behavior pathetic to be an insult! That’s not an insult–it’s the truth.

    Finally, I know you have a problem with singular and plural, but note that I don’t have that problem and purposefully used the term “client.” ;-)

  140. 140
    Craig says:

    RE: bingo @ 125 – Thanks bingo! I appreciate the support. As you can see, the traditional agents will either adapt or – like dinosaurs – go down screaming. It’s nice to know that I’m not crazy in thinking there is a better way in real estate.

    Kary, you’ve read this far, how about telling bingo: What do you pay a buyer’s agent on your listings?

    :-)

  141. 141
    bingo says:

    RE: Craig @ 140

    Craig,

    I can’t believe the traditional brokerage system has lasted this long. I laud anyone with the guts to take on the system. Keep the faith Craig. Expedia crushed the existing travel agent commission system. Etrade crushed the existing stock broker commission system. Amazon is crushing the brick & mortar system. Uber is crushing the existing licensed taxi system. Maybe….just maybe….Added Equity is the next to crush the system.

    Can I get in before the IPO?

  142. 142

    RE: bingo @ 141 – Here’s a crazy idea! What if Craig advertised his system by trying to appeal to people who for one reason or another don’t like MLS systems, and left out the deceptive and misleading BS which goes well beyond mere puffery and tries to convince innocent consumers that his system is just as good for them when it isn’t. Something like:

    Tired of the dinosaur that is the MLS? Well I am too and I’m trying to do something about it. Give me a chance and I’ll make every effort to give you the best results selling your property without using the MLS system.

    So . . .

    No misleading claims that nearly as many buyers will see the listing.
    No misleading claims about what will be saved in commission.
    No misleading claims about how many agents will be working for the seller.

    But more importantly that way it will be less of a conflict of interest [Craig likes that term] that exists because Craig has a system for sellers which benefits buyers only because he personally does not like the MLS/SOC system. He will be starting a system for people who simply don’t want to use the MLS system but still want to use a licensed agent. He could even mention he is also an attorney.

    I really don’t care whether or not Craig is part of the NWMLS, or whether he offers buyer’s agents $0 or $500. He can do what he wants in that regard. What gets me is the deception he goes to in order to try to convince innocent consumers to use his system, particularly in this market where every seller should try to obtain multiple offers. Although now that I say that, Craig’s system also wouldn’t work to well for normal sellers in a normal or weak market either. He really needs to appeal to those who simply don’t like MLS systems and don’t care so much about whether or not that hurts them.

  143. 143
  144. 144
    Craig says:

    RE: Kary L. Krismer @ 139 – “No, you didn’t post that press release (I’ll note that doesn’t mean you’re not denying writing it)…”

    Honestly, Kary, that’s weird. Why on earth would I deny writing the press release???

    In any event, your one solid criticism in this thread has now been addressed. Solid feedback, and much appreciated.

    OK, fair is fair, your turn. So we can fairly compare my model to yours, what do you charge a seller in your listing agreement? I charge 2%. You?

  145. 145

    Wow, you really don’t take no for an answer do you?

    But seriously, you’re going to ask why I think you might deny writing a misleading press report?

    For those who don’t remember, Craig’s press release said “Added Equity is not a member of the Northwest Multiple Listing Service. As a result, it is not required to offer a 3% commission to a buyer’s agent.” There is no requirement to offer a 3% commission to a buyer’s agent. To put that in a press release is misleading.

  146. 146
    Craig says:

    RE: Kary L. Krismer @ 145 – No requirement, but clearly “required” because everyone – including you – offers that amount. All evidence indicates that it is an informal “requirement” of participating in the MLS. Not illegal, and not formally required, but a universal practice imposed upon members.

    My model is under no such compulsion. It undeniably reduces a seller’s transaction costs. How much of a reduction? Well, we’ll never get an answer to that from you…

    You’re right, time for the thread to end. Thanks Kary! See ya’ round the blogosphere.

  147. 147

    By Craig @ 146:

    RE: Kary L. Krismer @ 145 – No requirement, but clearly “required” because everyone – including you – offers that amount. All evidence indicates that it is an informal “requirement” of participating in the MLS. Not illegal, and not formally required, but a universal practice imposed upon members. .

    Wrong. There was even an alternative model, and if I recall correctly one by a brokerage you held open houses for as a buyer’s agent, where they only offered a fairly nominal SOC (with the understanding that it was negotiable, which otherwise wouldn’t be allowed under NWMLS rules). But in any case, there are clearly different SOCs offered.

    So yes, your press release was deceptive. Making false claims about the facts doesn’t change that.

  148. 148
    Craig says:

    RE: Kary L. Krismer @ 147 -Can’t. Not. Reply…

    Wow. You’re right. I should have said “NEAR universal” – which is accurate, correct? You yourself have slammed Surefield – the firm you reference – for doing a tiny, tiny slice of business. Fact: The great majority of listing agents offer 3%, and almost all the rest offer 2.5% (maybe a half point less at upper price points). Refusing to confirm that fact doesn’t change it.

  149. 149

    RE: Craig @ 148 – But it’s not required, as your press release claims.

    BTW, as long as we’re going to talk deceptive, your focus on commission and reduction in commission resulting in savings is extremely deceptive too (although not as bad as claiming 3% is required). If one firm charges a total commission of 3% less than another firm, that does not mean the seller saved 3%. That would depend on the sales price. Just this morning over on Zillow, before this conversation today started, I said:

    The median time in many areas is 7-10 days and that’s because the most sellers don’t review the offers until maybe 5 days out. And what that means is a seller who accepts a full price offer in 3 days is probably making a mistake and losing out on maybe 5% or more of value. And I’ve seen that done to sellers by listing agents who sell a ton of houses in a neighborhood. They’re about volume, not about doing what is best for their client.

    So there I was talking about different agent strategies making a 5% difference, and I used that number being conservative if a bidding war did result on a property. As I said earlier this month, picking an agent with a focus on saving on commission is penny wise and pound foolish. A seller should focus on what an agent can do for them, not on how little the agent values their own services.

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