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"When I write posts decrying the wasteful sloth of real estate agent commissions, I invariably get a cadre of agents - more often, actually, their defensive husbands - saying I just don’t understand the value they bring."
I see what you mean Bette.
Good news (for us unrepresented buyers) nonetheless.
Bette, as I posted on another thread, that ruling will not change much here in Washington. Anyone(they do need to have a license) who wants to join the NWMLS can. We have Redfin and others who can list on our MLS. So far, full service agents are still getting most of the listings. Every so often I will see a flat fee company (Redfin, MLS4owners etc) but I have noticed that if the home hasn't sold in 6 months, they tend to relist with a full service brokerage.
Ohh, no what do I do?
I was typing to fast. I meant to post "as I saw posted" not as I posted.
If we follow the argument logically. Since most homes are easy to sell then you should be able to offer less commission and still sell. Fair enough. Then for those that are hard to sell (i.e. tear downs, incomplete homes, hazardous waste, etc.) then you would expect to pay higher then normal commissions, like 8,10, 15 percent? If that is the case then its just time to specialize. Nothing different then most good Realtors are doing anyway.
The only thing opening up the mls does is make it harder for the Agents who are not as established to gain a foot hold. They are the ones that will be taking less and less commissions and struggle to survive. Those long time successful agents with their niche markets and referral lists, will survive and adapt.
Its the nature of Capitalism.
bette: i've heard getting addicted to online games is a good way to pass the time. beware babycenter, the ppl on there are usually nice but i got tired of all the "ladies"... i'm not a lady, dammit. i'm a bloody grumpy woman. ;>... of course, i spent *my* late pregnancy getting obsessed with real estate. :*) may i suggest discovering a new passion to investigate, or a long-running webcomic or three to read?
i think realtors deserve the money what a buyer / seller is willing to pay. in every market it is totally negotiable and the experience helps both. this is not going to change anything.
I think it is good to break up monopolies and make more infomation readily available.
Now if that would just happen to the mortgage market so that these brokers would not think they are entitled to thousands of dollars for filling out a couple forms! Maybe we should just finance the house on credit cards! We get better rates, better competition, better disclosure, and less paperwork! Besides, the credit card companies don't insist that the title list their names first for our purchase, nor does it require paying the county to change the title after the loan is paid back, nor do the credit card companies insist that we carry insurance.
Pasa you're really trying to stir up trouble now! ;)
Personally, I think that a good mortgage broker (or lets just say LO) can bring more value to many transactions than the average realtor. Maybe not for a simple, vanilla transaction, but certainly in some situations.
Would love to see a range of offerings on commissions just like you have now with stockbrokers. Full service brokers charge a hundred bucks a trade but you can chit-chat with them all day long about the market, if you are so inclined. Schwab charges 8 bucks a trade but all the research is yours to do online. And there is everything in between.
Why not 8, 10% or more for a unique house/ situation, but down to 1% for commoditized product (for example, a home in a new tract development with a thousand identical homes. How hard is it to do comp analysis on these?). Everyone can choose their level of service and price point.
Good news for Realtors for sure. We won't have to pay to maintain our MLS systems anymore. Someone can come up with something, but I won't pay another dime to maintain if there is a free MLS site. And what comes with a "public" MLS site. Overhead.
This may help people understand why we charge what we do. Hint: We don't charge based on some fictional number that is "acceptable". Brokers establish prices that they allow their agents to charge because of overhead cost of doing business.
So in my estimation, overhead will go down, and be transferred to the home owner. Money will still be made, believe me...we just won't be "the bad guy used house salesmen that steals 6%." We will have service menus, and you can choose which you like. Either way...adapt, survive, thrive.
I LIKE IT!!!
Subway,
I agree. That is usually the case now in new tract developments. I can't speak for your area, but here as a Buyer's Agent you get whatever the Developer is willing to offer. Only now with lag in new home sales are developers offering more then 1% commission.
I think there are any number of ways to make commission more relevent, what probably needs to be done is that a comprehensive agreement of what is covered for different sort of listing commissions. That needs to be spelled out on a brokerage by brokerage basis.
I wonder if that will hurt the smaller companies...
Personally, I think that a good mortgage broker (or lets just say LO) can bring more value to many transactions than the average realtor. Maybe not for a simple, vanilla transaction, but certainly in some situations.
Mikal1,
How so?
Jim I think the good agents have nothing to fear. The ones who jumped to real estate from whatever else they were doing before 2005 ...... good bye!
Actually Chutta, it may benefit smaller companies. With the freedom to quickly adapt to market changes without the "corporate BS", and quick availability of training, the smaller companies may end up being the industry leaders.
I've been speaking for a while about the "unravelling" of our services into menu form. You check off what you want, and go from there.
Jim,
I like the idea of service menus. Less overhead and less commission will probably equal same take home for most. Also asking a Realtor to bring something to the table other then a Purchase Contract and some comps... good times. I'm still going to take my negotiated commission and no Buyer is going to tell me otherwise. LOL
Subway, I know you and I are cool, no need for explaination. But I was serious about the fact that this may benefit things. It may actually turn into a salarie based business instead of commission based. I mean...the public is speaking...and this is what they want. If that is truly the case, we will gladly accept overhead costs upfront.
Several little-noticed items in the fine print of the settlement:
1) Husband-and-wife realtor photos on bus stop benches are now prohibited.
2) Brooches on lapels of realtor pant-suits should be reduced in size by 50% by 2012.
3) Incidences of Lexus driving, heavy-perfume wearing, and Merit Ultra-Light smoking by realtors to be reduced by 30% effective immediately.
4) Lawrence Yun must visibly cross fingers every time he is making market predictions.
5) Glamour shots on business cards down by 100% immediately. You're not fooling anyone.
6)
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Realtors, Prepare to Lose Your 6 Percent
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Bette Defarm
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Kiss your 6 percent commission good-bye, Ms. Agent! Competition is on the way.
The only reason ? only reason ? that Realtors could hold onto their high commission for such little value and work is that they kept information away from the marketplace, making it inefficient. To quote Umair Haque (sorry, no link; I?m pulling this from my manuscript):
Competitive advantage is fundamentally about making markets work less efficiently. One catastrophically effective way to do that is to hide and obscure information ? to gain bargaining power relative to the guy on the other side of the table. . . .
A world of cheap, abundant, always-on interaction, where value is shifting to the edges, demands a fresh understanding of what?s truly strategic and what?s not.
Here?s a quick example. Where orthodox strategy advises hiding information and making things less liquid, what does edge strategy advise? Exactly the opposite: release information bottlenecks and make things more liquid.
To continue reading:
http://seekingalpha.com/article/79166-realtors-prepare-to-lose-your-6-percent
*Stinks that little url is no longer available and NO the author is not related to J.*
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