That 60 Minutes piece on the so-called sacrosanct 6% commission has seriously ignited the blogsphere. Below are some choice comments on the topic, but I’m sure you all have opinions on this. Am I ridiculously overpaid if I sell your house and charge 6%? Oh, please… rip me a new one. I can’t wait.
Redfin: Marketing Itself Off a Cliff
Redfin: In Defense of Ourselves
Diane CohnA creative strategist, Diane uses every angle she can to get the best deal possible for her clients. “I know the market. Trends, numbers, what’s happening on the street. I use it all to my client’s advantage,” she says. Diane earned her BA from the University of California and is an accredited ABR, SRES.
Guy JohnsonA successful prior business owner, Guy brings to the table twenty-plus years of exceeding client expectations. “Listening closely to my clients is the most important step to meeting their needs,” he says. A former Chicagoan, Guy earned his MBA from the University of Illinois.
JoAnn CorrieraJoAnn Corriera is one of Reno’s top-producing real estate agents. She credits her take-charge, pioneering spirit and determination to deliver the positive solutions clients are looking for. JoAnn offers the market expertise and marketing skills that generate top results whether clients are buying or selling.
Mike McGonagleAn architect, business owner, and compulsive public records hacker, Mike reads the tea leaves of the local real estate market from a unique perspective. Yet another Chicagoan, Mike earned his MArch from Harvard University.
9 comments
The beauty is, like everything else in life, you have a choice. One can either have a realtor sell their home, or they can choose to do it on their own. This is America, if you don’t want to give 6% to a realtor, don’t hire a realtor to sell your home.
My view is, realtors were probably a lot less appreciated in the 2004-2005 market when you put a home up for sale, and 20 people come visit the first day.
These days, when a home seller is lucky if they get 3 interested buyers in a month, the edge a realtor gives, and the information a GOOD realtor gives, would be very handy. That’s how I feel.
Not necessarily overpaid all the time. You certainly have to work harder with some properties/owners/buyers than with others, and harder some years than others. I also think things have gotten more complicated over the years, though ameliorated by the increasing availability of information. Our agent had to do a lot of long-distance work with us that could have made things difficult, but she did a fine job and earned her fee, even though we were one of those cream-puff pre-qualified-knew-what-we-wanted-where buyers. This is the 4th house we’ve bought in 4 different markets and states, as well.
What made me irritated (some years ago), was the complaint that the brokers ‘hadn’t had a raise’ in years. Oh. If 6% of increasing prices didn’t indicate a ‘raise,’ I don’t know what did. The increase to 7% by one firm lasted about 6 months.
Thanks for reining in our more, uh, ‘vocal’ posters. There are at least a few of us who come for the actual meat and not the sideshow.
I would say different market conditions demand different answers to your question. In today’s market a stronger argument can be made for the 6% commission, especially for the realtor who takes charge of staging the property and getting the word out to the world in creative internet fashion, like a blog or something. However, in a market like 2003-2005, when the legendary MIT chimpanzee could have put a sign in the yard and received 5 offers in 2 hours, I suggest it is more difficult to support the 6% commission.
My understanding is that the 6% commission is shared between the listing agent/broker and the selling agent/broker so if one person is wearing all four hats then the 6% is probably too high on higher priced homes.
I’ve sold two houses using realtors and in both cases they definitely earned their commission. However, both houses were under $80k so they didn’t get rich from their commissions. I do think that for the middle section of the market and during a sellers market, there is a lot of temptation for sellers to try to do some of the work themselves, especially with the internet so widely used.
Realtors really earn their pay when they assist/advise people moving into a new area. Newcomers really don’t know neighborhoods and appreciation trends like an long established realtor who has experience in housing transactions. Probably the best way for a buyer to go is to hire a realtor as a buyer’s agent instead of working with the seller’s agent. That way the realtor representing the seller is not dealing directly with the buyer.
There are many innovative companies that use technology to cut costs and share those savings with their clients. Learn more at http://BetterHomeSelling.com & http://BetterHomeBuying.com
Maybe the developers of Wingfield Towers need a full service realtor. In a sign of obvious strength in the downtown Reno condo market, the developer of Wingfield Towers has filed for bankruptcy. However, the developer assures all that the bankruptcy is in fact a sign of the company’s health as it awaits its financing. True to form, the RGJ spins it as just a normal stage of the process, you know, the developer always goes bankrupt just before they break ground and start taking deposits. And less I be called a hostile pessimist, as if I would be making this news up, I point out that any doubting Thomases can verify the filing with the Bankruptcy Court at 300 Booth Street.
6% is a bargain if you get a realtor who knows the market, has good connections, and is willing to put in the work needed to sell your house. However, my realtor in California sat in a recliner watching baseball while people went through my dresser drawers during an open house, paying that guy 6% made me want to gag. If/when I sell this house, I will retain a full service realtor, but I will shop around for the best one I can find before I sign on with one
RE: 60 Minutes
It was biased and one-sided. That’s typical for 60 Minutes and the media in general.
RE: Realtors and 6%
I can’t imagine buying or selling a house without a realtor and an attorney working *for* *me*. In other words, *not* the seller’s realtor if I’m a buyer.
Is a realtor worth 6%? Maybe. It depends on the level of service and what competing realtors are charging, i.e. the “comps.”
The real estate commission plans being a percentage of the sale price vs. a flat fixed fee is is a business model that makes little sense… for the consumer.
Why should the sales commission be double for a $1M house than that of a $500K house? The real estate agent’s costs associated with handling the $1M sale is not double….. It just easier for the agent to tell a homeowner that they will charge 6%(or whatever we argue the average commission to be) to sell their home - doesn’t sound like that much. If they said that the commission will be $60,000 - that sounds like a LOT more. Even if the commission on the $1M house is discounted, the commissions will not be equal. Wouldn’t a flat fee system be more fair?
I truly believe the value in using a real estate agent to sell a house is the MLS. The MLS is how prospective buyer find properties…and a home seller has to pay the lofty commission to a buying agent to have buyers view your ‘for sale’ home. I don’t blame real estate agents and brokers for this….. I wish I would have thought of this business model… offer a free service for the buyer while robbing the seller!
The real estate business has such low barriers to entry that anyone can enter … and as evidenced by the record number of new realtors entering the business in 2004-2005, almost everyone had entered the business on some level. The reason I bring this up is that all a HUGE portion of the commissions collected is not going to market the property, but to market the agent and the REALTOR/NAR name. Every page you turn in any local magazine is just covered by agent advertisements, as well as billboards and any other type of advertisement - not advertising the property, but the agent!
I believe that the way we conduct real estate transactions will drastically change in the coming decade and technology will aid in this transition!