A New Reality for Real Estate Agents

Very interesting. However, doesn't this belong on the Real Estate Professionals board. And besides, isn't this the type of info that you would prefer the general public not to get. :)

Expect a full frontal assualt rockinblu.

Seriously, as I posted previously, I am in the traditional investment business (stocks, bonds, mutfual funds, annuities) and our commissions were slashed years ago primarily for the reasons stated in this article. We no longer had a monopoly on ACCESS TO INFORMATION.

I am NOT saying I will not pay for an agent's professional services, just that all real estate agent's services are NOT equal so why should the commissions all be the same @ a fixed rate??

I'll pay more for a good one but his/her rate must be somewhat negotiable.

MY commisions are negotiable and on a sliding scale. I have competition and I MUST provide better service or I don't eat.

Most of my clients are referred to me or are repeat customers.  My fee is on the high end of the scale and it is not negotiable.  Here is my logic: First, I believe that I offer a service and skill that is not available easily from available public sources and Second, I maintain my integrity at all times as I maintain my client's trust and confidentiality.  I agree there are agents who do not earn the commissions they receive however, I am not that agent.

A quick example: Clients will pay top dollar for the services of a top professional.  This applies to any profession.  Whether it is an Athelete, Attorney, Doctor or Real Estate Agent, people are always willing to pay for results. 

A Question:  Would you prefer to pay a discount Doctor, Attorney or any other professional?  Or would you prefer to pay for the very best you can afford?

While my fee in not negotiable, the choice always belongs to the consumer.  As for my wife and I, we average one closing per week in any market condition, for very happy clients.

Jack

Great for you.  However, i would guess that 95% of all the other realtors aren't selling properties in incredibly affluent areas of the Country.  Which means, they will see an ever smaller piece of the pie.  All realtors do is sell information to their client - and that information is becoming ever more available for free over the net for anyone that has a few hours to do the research.

Oh by the way - the reason you pay those other professionals so much more is because they have PERSONAL LIABILITY TO YOU FOR THEIR MISTAKES.  When was the last time a real estate agent got sued because they sold a property to a client at an inlfated price?  Any friggin monkey can be a real estate agent - it requires nothing more than a GED and passing a few tests that require little to no preparation. 

Please do not try to compare the real estate profession to doctors, lawyers cpa's etc.  You make yourself look not to bright.

Jal74

One of the biggest mistakes made by a segment of the public is that agents are selling information.  If that were the case, I would agree with your assessment.  It is true that property information is becomming more and more available and someday may be totally available to the public.  So, if you only need information about what properties are available, I guess your comments have merrit.

However, if you are looking for a professional negatiator or adivise about homes in an unknown area or recommendations for service professionals or opinions about the quality of a builder or suggestions about homes that meet all of your criteria physically and emotionally or etc..... You might find that paying a Real Estate Professional might save you considerable time, pain and dissapointment.

A few notes:  I do carry Professional Errors and Omissions Insurance and I am liable for all my actions.  And you are right my area is very affluent and you might draw a conclusion that if all my clients are at the top of affluence in this country and they see the value I bring to the process, maybe others could see it also.....????

jal74,

I recommend that you take the real estate qualifying class and exam in your state before say "any friggin monkey." I suggest respectfully that there is a lot more to being successful in this business than the no education, no business sense, and barely human.

For one, real estate agents can be sued for their mistakes. Each of us carries E&O insurance (errors and omissions). If any agent outright lies they will pay in court. And, worse, they can lose their licenses.

A couple of other things that you may want to re-examine about your "all realtors sell is public information." Contrary to popular belief, real estate information has always been public. Anyone, at any time, can place a for sale sign and advertise vigorously. FSBO sites copy this model.

Given that real estate professionals are personally responsible (by law, by courts) and that real estate professionals have a code of ethics that is enforced, the MLX system is their data exchange. It is not a free-for-all newspaper. It is a list of properties whose disclosure meets a certain legal guarantee.

What real estate agents sell is trust, integrity, disclosure, accountability, and acting on the behalf of their client.

(next post I'll tell you just what I found on FSBO listings)

I have seen FSBO listings that include basements as square footage, extra bedrooms that didn't exist (because someone could always build an extra one), no disclosure on water damage, and incorrect disclosure about property boundaries.

I am all for someone who wants to sell their own home. And most FSBO who aren't clear about their property will have disappointing showings.

I think it would be safe to say that one of Jack's and Michael's pet peeves is someone knocking Realtors. LOL

"code of ethics that is enforced"

Laughably

“the MLX system is their data exchange. It is not a free-for-all newspaper. It is a list of properties whose disclosure meets a certain legal guarantee.”

Are you going to tell us that the MLS “mlxchange.com” is not the Achilles heal of the RE industry supporting the wage and earnings potential of the vast majority of agents in the field today by restricting the access from the general public?

As a self-described moderate, I’ll take a position somewhere in the middle of the arguments I have read in this thread.

I personally know some people who were licensed agents.  Not all were the sharpest tools in the shed.  Now that the market is correcting itself, most of these people chose other lines of work.  Realtors who are still making a living in Real Estate are obviously doing something right.  I think some are very talented at what they do and I respect that.  I also know of a few agents who come from old money and had a financial ability to promote themselves early in their career.  Many of these people are relatively successful.  Could they have been successful without the money for self-promotion?  We’ll never know the answer to that question.

With the Internet, an agent is no longer required to locate most homes that are for sale in your area.  In a Hot market they are generally able to see listings before it is on realtor.com.  I do want someone who is able to screen potential buyers.  The last thing I want is to waste my time on an unqualified buyer.  My realtor already earned his commission on this issue.  He was also able to negotiate a better price for our new home.

MP:  You wrote  " I have seen FSBO listings that include basements as square footage, extra bedrooms that didn't exist (because someone could always build an extra one), no disclosure on water damage, and incorrect disclosure about property boundaries."

I have seen the same in listings by licensed real estate agents too many times to count.  Errors are so common that when I'm looking I go through and check every fact on the listing.    In addition, I've seen houses with 2 bathrooms listed and one in reality, a new furnace listed when the actual is ~20 years old, etc etc.   Errors in FSBOs has nothing to do with whether or not a licensed agent offers value.

All I would care is, sell my damn house! Money talks and BS walks.

Is "mlxchange.com is the Achilles heal of Agents..."?

I think it is misplaced blame to believe that mlxchange.com supports Agents by hiding information from the public. I can demonstrate that it makes the public more aware of homes. Let's take your most common concerns and examine them:

-- you say: the information is hidden; actually it is not. All of the information is public and on realtor.com. The address may not be shown but that you can simply call the agent and get the address. You are not required to work with that agent.

-- if the seller felt that it was more economical to go it alone then they would have.

Mike,

Most information is available to public, I will agree
Except public cant see pending, past sales, inactive, price changes, etc. Realtor.com etc only shows active. The public can’t see “Realtor Only " remarks (which I will agree are only filled out 50% -75% of the time at least in the "Mid Florida" Mls and are often irrelevant when they are)

There is quite a bit of useful information on the MLX that the public doesn’t have access to. The mapping features, selection by school criteria, stronger search features etc. but that’s not the point Mike. Are you saying that if we take away the MLX that the way RE is bought and sold wouldn’t change drastically much like the way the travel business changed. Today there are people that still use travel agents but the vast majority of us go online to view, research, and purchase at a lower price.

Spec_Tater,

"if we take away the MLX ... wouldn’t change drastically" Yes, absolutely.

There is no inherent secret in MLX. realtor.com has been around for at least 10 - 12 years and it hasn't changed agencies. It has helped them tremendously. The more people are able to view and select homes from the confort of their homes the better!

Everything about MLX is public, even price changes and days on market. Just because sites don't display it (like trulia.com) doesn't make it private. If an agent can tell, the info is public.

The examples you sighted in your post would be useful in any context. For example, it might be useful if newspapers reported how well their sales move. In my MLX I cannot search by school criteria, and mapping features are only available because they integrated Microsoft Mapping. Mapping is coming to realtor.com, and is already avaiulable on other services.

MLX started, and continues to be a way for a broker to promote information on homes for sale to other brokers and the general public (through realtor.com and any licensed site, like trulia.com, etc...)

Funny I haven't seen any commentary yet on the graduauted commission scale. ie, the higher the listing price the lower the commish %.

This is COMMON now in the traditional investment biz.

Schiri,  In my experience, as price goes up so do the costs.  Many high end homes require large investments in  advertizing and as a rule take longer to sell to a smaller market base.

Publications for high end homes can cost as much as $2,000 per page, not to mention a greater number of advertizing outlets and media locations in many cases even international positions are needed.

All of which is normaly done at the agent's risk.  If the property does not sell, the agent eats the cost.  I think the % commision works fairly well for both sides.  Real Estate is not a comparable to selling items via the internet.  There is far more marketing, operatonal and functional costs involved that can not be calculated in a one size fits all process.

"My fee is on the high end of the scale and it is not negotiable."

At least you're honest about it, though I wouldn't get too comfortable with that hardline stance.

Jack and Mike,

Since agents are such assets to their clients, why aren't agents paid based on results (and straight commission while under contract doesn't count)?  For example, the agent gets 6% if the house sells in 6 weeks, the agent gets 4% if the house sells in 3 months, and so on.  I would argue that if the agent is actually a strategic marketer and good sales person, he/she should be able to sell the house faster and thus earn a higher paycheck than someone who just uses the basic marketing and MLS listing tactics.  Why is this pay strategy not utilized?

AustinGirl,

I think the main reason you don't have a standard staggard commission structure is that at the end of the day the Seller is the person setting the price.  The Seller sets the conditions of showing the property, etc.  I think you could negotiate a graduated scale if the Listing Agent felt that the conditons of sale from the Seller would lend itself to a quick sale.  For example if you want to list your property at market price today (which depending on your market, might not be market price tomorrow) and only wants showings during the working hours of the business day then how can you expect a Listing Agent to feel confident that a sale can be generated within your 6 week time constraint? 

That being said it is a business relationship and everything is negotiable, but as Jack mentioned if you want to work with him then most times he will not negotiate his commission.  There are many agents who will, but I will guarantee that most of them will be working in another industry next year.

In r

sorry about the last post.  In regards to the initial article that Michael posted.

For every person that is a success story selling and buying on their own.  I have personally met an equal amount of those whose research and "knowledge" or buying and selling homes has only gotten them further into trouble. 

Every Real Estate market has its complexities and a Good Agent can provide the experience of dealing with the buying and selling of land on a daily basis.  I agree with the statement that 5% of the agents in any given market are doing 95% of the transactions.  There is a reason for that, it is because of all the things that Jack and Michael have previously mentioned.  The intangibles of doing this job on a daily basis, but if at the end of the day the cost is more then it is worth, then as a Seller you have the right to decide on going it alone.

Well said Caleb. AustinGirl, I can appreciate where you are coming from.

If there were infinite buyers, and very few houses, selling would be easy. There was a time when the market was so hot that houses sold within hours.

Today, there are many more homes than buyers. It's all location, condition, price, and marketing. The agent can only help with the marketing so that it will bring people to his real estate agency and then make them want your home.

The longer it takes to sell your home the more marketing $s it takes. The agent winds up spending and earning less.

Maybe not any freakin monkey, but a monkey with a high school diploma....lol

When they have nothing to contribute, and cannot participate at the current level of conversation, they try to take it down. Read "To Kill A Mockingbird" then tell us what you learned.

Don't get offended. At the end of the day, most people consider your all used home salesman. You can thank the housing bubble for that too!

All Real Estate commissions are negotiable by law and there are many different pay structures to choose from when working w/REAs.

Most of the services I provide for my clients deal far more with contracts, disclosures and representation. There is so much information available to the consumer and that, to me should be a welcome development within our industry. Informed clients are the easiest to work with.

People who chose a different pay structure than what I offer or who choose to go FSBO are making a far more informed decision than in the past. Win / Win IMO

Spect tater

You missed the main point abou the MLX, yes buyers can view properties on Realtor.com, but where the monopoly comes in, is that Sellers cannot list the property on MLX without a Realtor.  I won't say that realtors would be obsolete without their monopoly on MLX, but they certainly wouldn't demand much more than 1-2% for essentially carting people around and cracking open lockboxs.

The number of real estate agentas in the industry are dropping as well, on Long Island, anyway. In 2005 there were 34,000 agents, today there are less than 23,000. Real estate commissions are dropping with inexperienced brokers and realtors that compete with other realtors and major websites as the ones mentioned in the topic.

Experienced and knowledgable brokers and realtors that don't compete and network with the industry are increasing their commissions and providing better and higher results produced to principal clients and customers real estate endeavors across the country.

This is nothing new, realtors have been competing against themselves since the real estate industry began. And realtors have been networking the industry since that time as well. It's all in one's perspective that will determine their success and the sucess of the clients and customers.

From our perspective on Long Island, the more agents in the industry the better for us, our clients, and our customers. The free websites, the best technology that hit the industry that has and is enhancing the real estate industry.

The affluent of America are not affected by the housing slump they simply dont care if their house loses money . I think very honestly the commission you receive for the job you do is highly inflated when it involves high end houses. I also believe the price paid to movies stars and sports stars is inflated too. I guess some jobs are like that.And to Rockinblu too late lol we have this info.

Lisa