Poll: ____ real estate agents perform services worth paying a 3% commission for.

____ real estate agents perform services worth paying a 3% commission for.

  • All (0%, 0 Votes)
  • Most (3%, 6 Votes)
  • Some (25%, 52 Votes)
  • Few (48%, 101 Votes)
  • Zero (25%, 53 Votes)

Total Voters: 212

This poll was active 12.04.2011 through 12.10.2011.

0.00 avg. rating (0% score) - 0 votes

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. Tim also hosts the weekly improv comedy sci-fi podcast Dispatches from the Multiverse.

53 comments:

  1. 1
    David Losh says:

    I’ll be the first to say that a very few Real Estate agents provide services worth 3%. It has always been that way.

    I guess the bigger problem today is the online Brokerages who made big promises, then delivered repeated sales hype. It’s lowered the standards significantly, but they do fill a void left by the exhuberance they created. These folks have people convinced that if you just watch on line they will be able to chose the perfect home for themselves, and the family.

    What I see is a lot of people paying way too much for pretty pictures on the internet.

    So I agree, that in today’s market place there are probably fewer agents worth the 3% than in the past. Also the agents who are worth the 3% have to work ten times harder to fight the propaganda machines that are still at work.

  2. 2

    By David Losh @ 1:

    I’ll be the first to say that a very few Real Estate agents provide services worth 3%. It has always been that way.

    . . .

    So I agree, that in today’s market place there are probably fewer agents worth the 3% than in the past..

    I don’t know about the “very few” comment, but it’s certainly not all. I would disagree with the last point though. The average quality of agent is much better now than 3 years ago.

  3. 3

    By David Losh @ 1:

    I guess the bigger problem today is the online Brokerages who made big promises, then delivered repeated sales hype. It’s lowered the standards significantly, but they do fill a void left by the exhuberance they created. These folks have people convinced that if you just watch on line they will be able to chose the perfect home for themselves, and the family. .

    As to the last sentence, I’ll point out you just claimed today that you could determine how much it would cost to repair an on-line REO listing by looking at it on-line. ;-)

    As to the first part, I think you’re hitting on something. When picking an agent you can pick one based on:

    1. Who and what they are; or
    2. Who and what brokerage they work with.

    Those who go the latter route are the very definition of naive.

  4. 4
    Ben says:

    Buyer’s agent or seller’s agent? They both seem to want 3% and yet they do very different work.

    The value of houses in an area dictates how much it is worth it as well. A $2M house does not cost twice as much to sell as a $1M house.

  5. 5
    WillyNilly says:

    Unfortunately it is not 3% it is 6. I put zero because there was not an option for
    No Fu@*ing way in He$$. Bless you all, now must be a stellar time to buy, (complete a transaction so i can carve off my big chunk o’ fat).

    –Exploitation of the high dollar, infrequent transaction–

    Real estate agents make lawyers look like altruistic saints. Perhaps someone could genetically engineer a Pimp/Payday loan/Real Estate Agent – a super scum soldier!

  6. 6

    By Ben @ 4:

    The value of houses in an area dictates how much it is worth it as well. A $2M house does not cost twice as much to sell as a $1M house.

    As far as out of pocket expenses, it might. As far as time, it could take over twice as long.

    Just as an example, we had a listing once that took well over 10 hours of photographer time. Thankfully we didn’t pay of all of that time (one of the three considered it a project), but it did take that much of our time.

    Also, for a listing in that price range you very well may be looking at the listing agent going out to the listing after each showing if the house is no owner occupied.

  7. 7

    Many homes that are priced at 50k or less now the Agent does INDEED deserve the 3%. In fact the last one we did at 21k the Agent even got 5% and they deserved it because at close they had to go to the home and bag up all the personal property and ship it to the elderly owners in California…

    The Bubbleheads are far too saavy to PAY 6% when they sell or LOSE 3% of THEIR money when they BUY…If they STILL commit this error (after being here for awhhile) they are simply WITHOUT HOPE:

    http://www.youtube.com/watch?v=0iqFO-Udq6s

  8. 8
    Scotsman says:

    RE: raymond pepper @ 7

    Raymond???

    Did I miss something? Are you all grown up now? ;-)

    Hey Raymond- I got a bluie- eat your heart out. ;-)

    https://seattlebubble.com/blog/2011/11/28/washington-state-budget-woes-wheres-the-beef/comment-page-1/#comment-149686

  9. 9
    David Losh says:

    RE: Kary L. Krismer @ 3

    $50K was an average. The lowest was at least $20K, but you have also hit the very detail that makes an agent worth the money you spend.

    You can’t tell anything from the pictures. I can make guesses based on experiences that I have had by working on a thousand propereties, but you never know until you see it.

  10. 10
    Scotsman says:

    Raymond makes a good point in #7. Since the fee varies so much with the value of the home I’d say we need to factor that in. I always wonder how the agents who are selling $100K homes all day long in Spokane, Wenatchee, etc. feel about agents in Bellevue knocking out four to six times the pay per transaction.

  11. 11
    David Losh says:

    RE: raymond pepper @ 7

    From what I saw online today a lot of people needed professional help in the purchase, and sale of a property.

    Here in Seattle it is absolutely crazy what people pay for property, and multiple offers to boot!!!

    I saw one that might be a GEM, but I have a sneaking suspicion it’s a tear down. I don’t know because I had to do Christmas stuff today.

    What you are saying Ray is that every one will look at as many properties as you do before they buy. Would you say that’s correct?

    I also think every one should go to the foreclosure auctions before they buy. I think people need a lot more reality in their lives before they buy today, other than the constant hype, hype, hype they get from online Real Estate people who are telling them to buy, buy, buy.

  12. 12

    RE: Scotsman @ 8

    nice job!! Hard to get! Have to be on the same brain-length as The Tim!

  13. 13

    RE: David Losh @ 11

    “From what I saw online today a lot of people needed professional help in the purchase, and sale of a property”

    Very True in the past and today! But, what makes you think an Atty or a Real Estate Agent is the source for such “professional” knowledge?

    If I were purchasing ANYTHING the last person I would rely on for “PROFESSIONAL HELP” is a person who has a large financial interest in me making one decision over another..

  14. 14

    I think very few agents are worth a 3% commission. I have seen a few listing agents who were geniuses in making a property look attractive, and price it low enough to attract buyers.
    But 3% of the average Seattle home price is a ton of money, and I just don’t see that most agents deserve that kind of commission, they just don’t generally put in the kind or quality of work that justifies it.
    Still, if I didn’t like, respect, and trust The Tim, I’d be suspicious. He’s working for Redfin, which is well known as a brokerage that charges less than 3%, and we all know the results of the poll question before it’s complete. We tend to not like real estate agents very much around here, and I tend to not like them very much either, even though I am one.
    I think it’s just a matter of time before WillyNilly’s genetic engineering fantasy comes true. The genetically engineered pimp/payday loan/real estate agent/used car salesman/linebacker will get that 3% commission. It may be the only way that compensation model survives.

  15. 15
    Jonness says:

    “Poll: ____ real estate agents perform services worth paying a 3% commission for.”

    Since many of this website’s posters are agents, isn’t that a little bit like asking politicians to vote on whether or not they should be allowed to legally partake in insider trading?

    I’ve worked with about a dozen agents in the past. The only one worth more than 0% was a discount agent who works for Ray Pepper. I believe his services are worth far more than he charges, but so far, I haven’t bought a house. When I do buy a house, he will charge much less than 3%.

    Personally, I believe the only fair way to reward both the client and the agent is to work on a per hour basis with the ability for either party to walk away (within certain rules and restrictions). No agent should ever be compensated 3% just because he first led a client to a house that the client eventually purchased. In such a case, the agent should be compensated an hourly amount equivalent to his/her skills, experience, capability, expertise, and necessary education to perform the job that was performed.

    I think the better question is, what hourly amount (range) are RE agents worth, and would you be willing to pay for their services at the time the services are rendered?

  16. 16
  17. 17
    gardener1 says:

    Sometimes I don’t think Tim asks the right questions. He bases a lot of his posts on the presumption that everyone is chomping at the bit ready to buy a house. The market is up, the market is down. Case-Schiller is this, Case-Schiller is that. Ballard is hot, Puyallup is cold. Interest rates are blah whatever blah, up/down/blah

    If prices go lower or higher would you buy? Condo or townhouse or split level, which is your favorite? How much would you be willing to pay a real estate agent? All of these questions include the presumption that everybody wants to buy.

    What if that fundamental assumption is erroneous? Everybody has to live somewhere, but why the assumption that for the right house at the right interest rate, in the right neighborhood, in the right school district, at the right time of year, ultimately every single one of us really wants to buy a *home*.

    What if we don’t? What if we could give a crap less about being homeowners and investing in the neighborhood? What if we don’t care about being able to paint the walls orange or getting a pit bull puppy or putting up a swingset in our very own back yard?

    I think the entire real estate industry is myopic in this regard. Perhaps they [you all] have been drinking the government Kool-Aid about the American Dream of home ownership?

    The very last thing I want to do at this time of my life in this country is tie myself to a piece of government controlled real estate that’s going to cost me an arm and a leg for the rest of my days and keep me in a place I may not always want to be. No matter what the local market or the mortgage interest rate or the color of counter tops, thank you, but no thanks.

    I wonder how many more people like me are out there in America? I would guess many many. You can’t sell us something we don’t want.

  18. 18

    By Jonness @ 15:

    “Poll: ____ real estate agents perform services worth paying a 3% commission for.”

    Since many of this website’s posters are agents, isn’t that a little bit like asking politicians to vote on whether or not they should be allowed to legally partake in insider trading?

    Personally, I believe the only fair way to reward both the client and the agent is to work on a per hour basis with the ability for either party to walk away (within certain rules and restrictions).

    For the record, I didn’t vote in the poll, and seldom vote in any of the polls here.

    As to the second comment, almost no buyers are interested in paying by the hour. As we’ve discussed before, that would lead to lower fees, just the same as paying an attorney by the hour would typically be less expensive that paying them on a contingent fee. The contingency raises the cost, as should be obvious.

  19. 19

    By gardener1 @ 17:

    If prices go lower or higher would you buy? Condo or townhouse or split level, which is your favorite? How much would you be willing to pay a real estate agent? All of these questions include the presumption that everybody wants to buy.

    What if that fundamental assumption is erroneous? Everybody has to live somewhere, but why the assumption that for the right house at the right interest rate, in the right neighborhood, in the right school district, at the right time of year, ultimately every single one of us really wants to buy a *home*.

    What if we don’t? What if we could give a crap less about being homeowners and investing in the neighborhood? What if we don’t care about being able to paint the walls orange or getting a pit bull puppy or putting up a swingset in our very own back yard?

    I think the assumption is based on the nature of the website. If you have no interest in ever buying a home, why would you frequent this website?

  20. 20

    Realtors can Serve a Good Purpose

    Having said that and considerring the lack of experience and educational level of many of them, perhaps the $/hr rate would be better based in the low paid service sector area, not a skilled professional.

  21. 21

    RE: gardener1 @ 17

    Yes, I can sell you something you do NOT want because if the price is right we Americans buy!

    Look at Walmart on Black Friday……..

    As prices continue to drop and more people choose to rent so many more will continue to buy to invest. They are ALL coming back and there will ALWAYS be a Buyer for each one so be ready gardener…It may take a decade for you to find YOUR GEM but always look.

  22. 22
    David Losh says:

    Real Estate is a skilled profession.

    There are several over educated people in Real Estate that you can choose from. You want an engineer to open doors, and have a chat? There are probably thousands of them in today’s Real Estate market place. Financial Planners, attorneys, MBA, doctorates, any kind of degree you want. If you want people who do thousands of transaction, you got it. There are thousands of a thousand Real Estate transaction agents. redfin is churning ’em out every day.

    None of that changes the fact that “in the business” of Real Estate there are a few people who know what they are doing.

    There are agents I greatly admire who have set up business models for the benefit of the consumer. They work for different Brokerages. They chose who to work with because life is too short, and the demand for services is too great.

    Most agents never get a clue about the business, or what they are doing. Brokerages have no mentoring, or weeding process that makes sense to any one other than the Brokerage.

    I’ve never been a big fan of the 6% compensation model. It’s just not enough money.

    I’ll go a step further. The difference between a $1 Million purchase and a $2 Million purchase is a $1,000,000. It takes a lot of positioning to be involved with a transaction over a million. You have to have deeper pockets, an ability to negotiate, and the where with all to walk away.

    The bigger mine field is between $500K and a million. There you should have some one who knows the value of the property you are looking at. There is a lot of money left on the table or lost completely in this price range.

    Under $500K it is hit or miss. There are ways to come out ahead, and ways to lose.

    Real Estate is a business. Every property you buy is an asset, or a liability. It is to your benefit to know which, is which.

    The 3%, to me, is never enough. It’s cheap if you get a person who knows the business, and very, very expensive if you hire people who don’t know the business, inside, and out.

  23. 23

    By softwarengineer @ 20:

    Realtors can Serve a Good Purpose

    Having said that and considerring the lack of experience and educational level of many of them, perhaps the $/hr rate would be better based in the low paid service sector area, not a skilled professional.

    Hey man, that’s not fair! Real Estate agents now have to be high school graduates, fergawdsakes. Would you like fries with that?
    But seriously, a burger flipper gets his hourly wage whether or not the customer chooses to get the double burger with cheese or not, and believe me, there are plenty of real estate agents who, if they were paid by the hour, would make less than burger flippers.
    Which is why the system of compensation sucks. Many real estate agents will disagree with me, but in order to make a lot of money as a real estate agent, you have to work hard “selling”, and that is usually counter to the best interests of the client.
    When promoting themselves, some agents cite how many thousands of deals they’ve done. To me, that suggests that they’re merely successful at sales. McDonald’s has sold billions of burgers. Would you like fries with that?

  24. 24

    RE: Jonness @ 15
    While there are certainly more agents posting here than there used to be, I still think there are way more non agents posting and voting. Yes, some agents post frequently, but that doesn’t increase the ratio of agent to non agent posters.
    So, of the recognizable agents who post here, if they’re not lying(and who ever heard of a lying real estate agent?), it goes something like this:
    Ira voted few, David voted few, Kary doesn”t vote or make predictions, Ray didn’t really say, but since he owns a discount brokerage wuddya think?, and Ardell now believes we’ve reached a bottom in real estate commissions. Anybody else?

  25. 25
    Hugh Dominic says:

    I would like the bubble’s opinion on this agency fee model for sellers:

    The agent and seller agree on an “expected” sales price, maybe that’s the original list price. When the sale closes, the agent is paid nothing on the first 70% of the expected price. The agent receives a 10% commission on every dollar over that. Thus the agent’s fee is based on the marginal impact they have on the sales price.

  26. 26
    Jon says:

    Hugh – So if an agent meets with a buyer and they expect the price to be $500k, but the agent finds a house that meets the buyer’s demands at $300k, they make nothing? That doesn’t seem to make sense. Further, every dollar the agent helps the buyer save now becomes that much less the agent earns. I don’t see this being productive.

    Further, I think the idea of what is being proposed is much too complicated for the layman. You’ll spend more time explaining the fee structure than you will on the execution of the contract.

    Hourly fees are an interesting concept and one I would like to explore. In order for this to be effective there has to be an algorithm… anyone interested in working with me on it (lots of smart people here) please contact me! The algorithm must incorporate experience, skill, negotiation, client testimonials, area and follow through. It also must be universal. An agent that makes $500k a year is much better (usually) than the agent that makes $30k per year. Part of that is the number of hours they put into the pot, but the other part is everything I mentioned in the algorithm above.

    There is much to be said about marketing a $2M house vs marketing a $1M dollar house. Not only is it probably twice as much work, but it’s twice as much upfront costs, money spent on marketing, etc.

    There are bad agents out there. No doubt. But a few bad apples don’t make the whole industry bad… do your research, focus on the micro, not the macro.

  27. 27
    ChrisM says:

    This poll also hints around a problem – how does an uneducated consumer (or even an educated consumer!) choose an agent, especially if they are new to the area? Asking friends/relations for advice seems less than helpful, as the friends/neighbors may not be in a position to correctly assess the performance of *their* agent.

    The Redfin post-sale agent surveys are interesting, but again all we really know is how happy the possibly ignorant consumer was w/ the transaction. We’ll never know if they were steered into a bad loan, overpaid for PMI, didn’t walk when they should have, etc. From the selling perspective, yes the selling agent may have a bunch of sales, but you really have to investigate to see if the properties were effectively given away.

    I’ve asked this question, and really am not satisfied w/ any answers I’ve received.

  28. 28
    m-s says:

    RE: Hugh Dominic @ 25
    Of course, what the agent would try to do is get the seller to agree to a low-ball expected price, so when the property goes for “more”, the agent gets a larger cut. Sounds fine to me…

  29. 29

    By ChrisM @ 27:

    This poll also hints around a problem – how does an uneducated consumer (or even an educated consumer!) choose an agent, especially if they are new to the area? Asking friends/relations for advice seems less than helpful, as the friends/neighbors may not be in a position to correctly assess the performance of *their* agent.

    The Redfin post-sale agent surveys are interesting, but again all we really know is how happy the possibly ignorant consumer was w/ the transaction.. . ..

    I’ve asked this question, and really am not satisfied w/ any answers I’ve received.

    I think I’ve probably answered you with this before, about a former client who thought her divorce attorney was great, when he was really an idiot. People often are not in a good position to understand–they just like or dislike based on personality and perceived results.

  30. 30

    RE: Ira Sacharoff @ 23

    Don’t Get me Wrong Ira

    There’s a multitude of “educated idiots” out there with degrees, book worm straight “A” students who couldn’t invent anything if we handed them the patent idea….my proof, how many of ya technicals and engineers invented something big and brand new out there lately [miniaturization, reverse engineering or using known software code is not a big invention or innovation, unless you invented the software code].

    The good ole “B” students BTW make the best CEOs too [that’s always been a known fact]….gosh we need more Yankee Ingenuity again in the Seattle area, not more book worms….

  31. 31

    RE: Kary L. Krismer @ 29
    On the other hand, if there were something like a Yelp for real estate agents, and one agent got 150 reviews, with zero stars, and comments like ” slimeball”, “manipulator”, “makes me very uncomfortable”,”liar”,”ripoff,”sleazy”,”disgusting”, “criminal”, and “dangerous”, you think it might be a good idea to stay away from him?

  32. 32

    RE: softwarengineer @ 30
    Like my sister. Masters degree. Deans list at a prestigious university. She can prattle on endlessly about instructional design, but ask her to cook an egg and she’ll manage to screw it up.

  33. 33
    ARDELL says:

    My clients and I have had lots of fun with “commission experiments”. My favorite was the client who knew exactly where he wanted to live, it was a townhome community selling at $450,000 at the time. We agreed to $4,000 flat fee if he did buy there…and double that if I found something better elsewhere. A year later he spent $350,000 in the Community he liked in the first place. I liked it too…in fact I had two listings there when I met him.

    There is no “one way” to negotiate commissions. Have fun! I usually move to flat fees…it’s simpler. I don’t usually go as low as $4,000, but the dude was sharp and I liked his devotion to his family and the task at hand. I was also crazy about his wife and kid.

    I would never work on an hourly..too complicated to keep track of the hours, and I often do extensive work behind the scenes that would be considered “optional” that I would not want to eliminate because the client was paying “by the hour”. But then in my 41 years in business, I have never worked for an hourly wage. It might be easier for another agent to go that route. No taboos…and no reason you can’t try whatever you want. All you need is a desire to do so, and an agent who is a willing participant.

    The possibilities are endless, and can be a lot of fun as well. I learned a lot from those experiments, and now apply what I learned often…without the client needing to ask for “a discount”. All commissions should be commensurate with the task at hand, and not all clients have the same objective.

    I’ve had people come to me who already know exactly which house they want to buy. I have others who have no clue where they want to live. Why should they both pay the same price? They shouldn’t…and don’t.

    When I represent a seller vs a buyer the work at hand is a bit more uniform in nature. I stage my own houses, so a lot of the cost factor depends on what the house looks like when I get there. I once made the mistake of pricing the service before seeing the house first…won’t do that again. It took me weeks to get it ready for market. MANY weeks. :)

  34. 34
    David Losh says:

    RE: Hugh Dominic @ 25

    If you are talking about sellers, what makes more sense, to me, is to reduce the commission for the seller doing what is suggested.

    The one thing the redfin business model did for guys like me is open up the rebate. My company can perform work on properties, be paid up front, then rebate back to the seller at closing.

    If the seller, paints, does some carpet, cleans, does the landscape, organizes, and stages the probability of selling goes up. If the seller puts a good price for a great looking property, then yes the commission can be reduced, or the rebate increased.

  35. 35
    David Losh says:

    RE: ARDELL @ 33

    As always, I forget to mention that all commissions are negotiable. It can be fun, and informative to work with people who know what they want.

  36. 36
    Jonness says:

    By Kary L. Krismer @ 18:

    As to the second comment, almost no buyers are interested in paying by the hour.

    The game is rigged by the RE industry. How many people in their right mind would pay an agent $15K to open a couple of locks and fill out a few papers if they weren’t deceived into believing the agent’s services are free?

    Thank goodness for the newly emerging RE model of refunding $11,250 back to the buyer. And thank goodness when the buyer sells 10 years down the road, he will not be forced to pay 6% ($30K) of the purchase price just to sell the home. (On a $500K house)

    It’s ludicrous to make people pay for all the work done to show people homes they never end up buying. Why should I pay $11,250 to an agent so he can make up for all the times he worked for other people who were not serious about buying homes? If I buy, I deserve to keep the money. It’s mine, and I’m taking it.

    Agent’s can have it up front or they can give me back 75% of their commission. Either way, I don’t mind. The point is, it’s ludicrous in this day and age to pay 3% to buy a $500K house if you have the agent open less than 100 doors for you. Showing 100 homes to each buyer works out to about $60/hr, which is more than generous. $20 can go to the broker and $40 can go to the agent.

  37. 37
    Hugh Dominic says:

    RE: Jon @ 26 – It’s a proposed model for sellers, not buyers. It says so right in my post.

    It sounds like you will need a full service agent to help you figure out all those complicated forms for you. They are full of all kinds of words.

  38. 38
    Hugh Dominic says:

    By m-s @ 28:

    RE: Hugh Dominic @ 25
    Of course, what the agent would try to do is get the seller to agree to a low-ball expected price, so when the property goes for “more”, the agent gets a larger cut. Sounds fine to me…

    I think you’d interview multiple agents, and work with whichever one you liked that quoted you the best expected price.

    It sounds like you need to work with a full service agent, since appraisals, basic comparison shopping, and negotiation seem to be beyond your skill level.

  39. 39
    Jonness says:

    Ira, you are a funny guy. That’s worth an extra 1% on top of your normal fee. :)

  40. 40

    By Hugh Dominic @ 38:

    By m-s @ 28:

    RE: Hugh Dominic @ 25
    Of course, what the agent would try to do is get the seller to agree to a low-ball expected price, so when the property goes for “more”, the agent gets a larger cut. Sounds fine to me…

    I think you’d interview multiple agents, and work with whichever one you liked that quoted you the best expected price.

    Was that intended to be funny? Someone here has been critical of my using too many ” ;-) ” symbols in my posts, but it’s necessary because otherwise someone might take something that would be really bad advice as being serious.

  41. 41
    Pegasus says:

    I am in favor of agents getting an extra 3% commission as long as they are not allowed to post nonsense on blogs. It would be well worth it and the consumer would benefit from less confusion caused by self-serving posts by agents.

  42. 42
    Hugh Dominic says:

    RE: Kary L. Krismer @ 40 – “Best” does not have to mean “highest”. In every case, including under today’s system, the seller should exercise good judgment and avoid agents who blow smoke their way with an overpriced estimate in order to land their business.

    The main point was that a seller should not select one agent and blindly follow his advice.

    Those under my proposed model, an agent is less likely to overbid on the list price, because it costs them a lot more to recommend price cuts. They have to share the pain of the mistake.

  43. 43

    By Hugh Dominic @ 42:

    RE: Kary L. Krismer @ 40 – “Best” does not have to mean “highest”. In every case, including under today’s system, the seller should exercise good judgment and avoid agents who blow smoke their way with an overpriced estimate in order to land their business..

    Perhaps “best supported price” would be the proper phrase?

    I recently saw a CMA where the comps were 6 active and one sold listing, and they were spread across a geographic area that was very broad (probably at least a 5 mile radius) and diverse (some were rural and some inside city limits).

  44. 44
    Mike says:

    Was very happy to pay our seller’s agent 3% for her work in coordinating painters, yard guys and other handy men to help get our house ready to list, providing appropriate furniture to stage it and then handling being their at the house for the sewer scope and all the other junk that had to be done following accepting the offer. A good seller’s agent seems worth their 3% even at Seattle prices.

    Why in the world buyer’s agents get paid 3% for running a cab service and unlocking doors still boggles my mind (and no I don’t work with Tim). Beyond the huge conflict of interest issues, 3% is just way too much for the value of those services. Maybe it wasn’t back in 1970 when you really had to drive all over town to find houses, but now I can narrow what I want to see down looking online on my Friday lunch break, drive out to those houses and rule out 75% just on a drive-by, see most of the 25% that are interesting on an open and then and only then call in an agent to do a couple of seperate showing and maybe to write up an offer on a standard form document.

    And maybe that was Tim’s plot all along with this post was to point out the absurdity of paying 3% as the buyer.

  45. 45
    David Losh says:

    RE: Jonness @ 36RE: Mike @ 44

    Number one, it’s not a game, It’s hundreds of thousands of dollars, and people today, and for the past five years have been paying way to much for crap.

    Most agents don’t know the product that they are looking at, and they, supposedly, are looking at product all day every day. That’s what you pay for.

    A home buyer, on the other had will drive by 75% of the houses they look at on line, and think they are doing something.

  46. 46

    I’ve worked with all types of agents, many with different commission structures and who seemed to offer different levels of service (at least from my standpoint).

    It will be interesting to see if real estate commissions become regulated the same way as LO comp has been earlier this year. I’m not for anyone’s income being controlled by the gov but it seems to me that re agents should be treated the same as LOs.

    My pay is no longer associated with interest rate, perhaps real estate agents pay should not be associated with the sales price of the home?

  47. 47
    David Losh says:

    RE: Rhonda Porter @ 46

    Loan products are much different than property. They should be more heavily regulated.

  48. 48
    Hugh Dominic says:

    RE: Kary L. Krismer @ 43 – Yes that’s a good phrase.

    Those comps – either a tough situation or a bad agent.

  49. 49

    RE: David Losh @ 47 – I think you’re missing my point. It’s the buyer who winds up paying 6% in commission since the agent’s pay is built into the sales price.

    I’ve also had agents who try to find out from me if their buyer can qualify for more than what the buyer is wanting… 9 times out of 10, it’s about their paycheck and trying to sell a more expensive home.

    Why should the commission be tied to sales price?

  50. 50
    David Losh says:

    RE: Rhonda Porter @ 49

    So, loan originators are paid a flat fee now? There is no 1% loan origination?

  51. 51

    By Rhonda Porter @ 49:

    RE: David Losh @ 47 – I think you’re missing my point. It’s the buyer who winds up paying 6% in commission since the agent’s pay is built into the sales price.

    I’ve also had agents who try to find out from me if their buyer can qualify for more than what the buyer is wanting… 9 times out of 10, it’s about their paycheck and trying to sell a more expensive home.

    Why should the commission be tied to sales price?

    It shouldn’t. If real estate agents are to be truly representing their client’s best interests, their compensation probably shouldn’t be based on commission at all. It just leads to agents working more for themselves than for their clients.

  52. 52
    David Losh says:

    RE: Ira Sacharoff @ 51

    OK, let’s go over it again for the fifty millionth time.

    The best agent I ever met, or knew, drove an old pick up truck with a dog in the passenger seat. The Brokerage he worked for got bought out by Windermere. He started making more money, and ended up in the Lexus. It was actually an Acura, but you get the idea.

    I asked one time how much money he made, and he didn’t know. His old Broker told me he made a lot, but nothing like when they went to Windermere.

    He now had the ability to move up to larger dollar amounts. He didn’t have the opportunity to do that when he and the dog were in the pick up truck. His buyer base changed.

    It’s the same for mortgages. If you are writing a million dollar loan people don’t want to come to your home office. If you want referrals from agents they want you to look good.

    Windermere has an over head, as does John L Scott, redfin, ReMax, and Coldwell Banker. Those Brokerages want you to have an over head to match theirs. The buyer, and seller are demanding more, and more service at each escalating price point.

    The clients want, the brokerages want, and the agents want a look, and feel of higher quality to match the property they want to be associated with.

    Let me put this into perspective for you. A small boutique Brokerage has a base over head of $600K per year. They bring in a million.

  53. 53

    RE: David Losh @ 52
    I understand the reality of what you say, David, I just wish it weren’t that way. Before becoming an agent, I would have always preferred working with the agent driving an old pickup with the dog in the passenger seat. As an agent, I prefer working with the clients that would be more comfortable working with that old pickup driving agent. It’s just a shame that the industry has been transformed, that the brokerages spend tons of money on glitz and the aura of success. They have to squeeze lots of money from their agents. The agents don’t drive the Audis because they are successful, they drive the Audis to look successful. And yes, there are lots of clients out there who want to be represented by an agent who shows off the trappings of success. But to me, none of this suggests in any way that this agent is going to be working in the best interest of the client. It suggests that the agent is going to be working hard to make sales despite the best interests of the client, in order to pay for that lifestyle, in order to make the Audi payments.

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