In my area it's not uncommon to see 3+1%, where the listing agent is taking 1%. However, doing this is not a sustainable business model and many agents will have to leave the business because of it. Competition is fierce in this market.

You seem to be missing the basic math of percentages.

6% of $200,000 is $12,000.
6% of $150,000 is $9,000.

If your home value drops, so does the commission you are paying to a realtor.

Agents are providing a service. If you think that service is overpriced, there are alternatives. You can do FSBO or a flat fee listing agent. You'll still need to pay 2-3% to a buyers agent, but that is still significantly cheaper. The downside of doing it yourself is, well......, you gotta get out there and do it yourself. You probably aren't going to get good results just plunking a sign in your yard in this market.

Bottom line. In this market, Realtors are having to work harder to make less. And our fees and marketing costs aren't exactly decreasing either.
You're going to get what you pay for.

They haven't lowered their commissions because real estate agencies and their MLS boards hold a monopoly position on the marketing of homes for sale.

With the advance of technology, transaction costs _should_ have dropped significantly.

There are also too many realtors in the business. When I went to sell my house last year, I went to a few websites of some local realtors. I added up the number of agents across these agencies, and it totaled over 300. This was last summer, when there were 180 homes on the market. Do we really need two agents for each home for sale? Obviously not. It's just that the barrier to entry is relatively low.

It has come down to less than 32,000 Realtors leaving the business every month. No one is protected in this economy. My son is a surveyor also, luckily he has other talents in the Engineering field to fall back on, which can be used in the same company.

Here is a link that might be useful: NAR Membership

I guess I already know the answer, I just wanted to see what others thought. It's all about greed, isn't it?

I totally understand 6% of $200k is less than 6% of $150k. Still 4% of $150k is pretty darn good when you consider you only have a few hours invested in it. I do realize a lot of houses sit on the market for a year or more, and maybe you get 20 showings, and all this time adds up. Even at worse case scenario - if you end up with 100 hours invested in one house, isn't 4% still pretty darn good money? I sure wish I could work 100 hours somewhere and make that. What you are really doing here is recouping all your time spent (or wasted) on showing to non-buyers. You may have 20 listings, of which 15 may actually sell, and those 5 that didn't sell are being paid for from the commissions of the ones that did sell. The whole thing is a sort of a racket game.

We had a house that sat unsold for 2 years. It was a very nice house, it was truly one of top ones on the market. We had great pictures posted online, I had "take me" flyers posted on the sign in the yard, the house was immaculate. We had 25 showings. Everybody had positive things to say about the house. Just our luck, we came in 2nd place 3 times and the buyers bought another house. We actually had a contract once and the buyers flaked out and made a lame excuse to get out of it. They probably found a cheaper one. For whatever reason, it NEVER sold. The price had dropped so low I was eventually forced to try the FSBO thing. That failed too, so I was then forced to rent it out.

Can you believe even just renting there is a greed factor involved? I called a couple agents to list it on the MLS, and every one of them wanted my first months rent ($1400) as their commission. Thats not even 6% - that is 8.33%! Can you believe that? First months rent just to list my house on the MLS? They weren't even going to show the place or anything. I was doing ALL the work, all they had to do was to list it on the MLS. Pure greed. I said heck with that and placed an ad on Craigslist. Within a month I found a renter, and it has worked out good. I had a good lease agreement drawn up, and I did good with my interviewing skills and I performed background checks. My renter has been there 1.5 years now and everything seems ok. I am one of the lucky ones.

Why did this house never sell? All becuase of greed. Our realtor first gave us a price of $425k, supposedly based on other comps, and we liked that number. Yes, we were greedy too. By time 2 years had passed, we were down to $275k, when we had paid $285k for the house ourselves. From $425k to $275k - great fun. With continually dropping the price and the house sitting on the market for so long, it was a losing battle. I think after all of that, it gave people the unfounded idea that maybe something was wrong with the house. It was the perfect storm.

We were a victim of the economy, plus we were a victim of greed. Had the realtor told us $385k or even $350k instead of the $425k from the beginning, maybe things would have been a lot different. There are a lot of good, decent, hard-working realtors out there, but unfortunately there are also a lot of greedy, clueless, lazy ones. When your house doesn't sell, the first thing they say is "you're priced too high". Well whose fault was that? You are supposed to be the professional, I listened to you.

Another huge problem in our area is overbuilding. There are way too many houses available, and yet they continue to build more. Yet more greed. My house is a 15 yr old house in an established neighborhood. I am competing against brand-new houses, and you just can't compete with that. Most people seem to think newer is always better. I think much differently. I can see all the inferior materials and the poor quality that is put into modern homes of today. I will take an older home with some true quality and character, and an already established, landscaped yard anyday. But I am not like most people I guess.

Yes as if you can't tell, I still have a lot of anger with this whole thing. I know I am among the fortunate since I eventually found a good renter. I still would have rather just sold it and have been done with it. This is all something that will need to be dealt with again, should the renter leave, and I am dreading it. This whole ordeal has really put a bad taste in my mouth, and I find I respect realtors and bankers a whole lot less. I would still be tempted to go the FSBO route, but I know I will be forced to take a realtor, because they truly do have a sort of monopoly here. I guess I can thank my renter for basically paying what will eventually be my commission.

You do realize that the listing agent doesn't get the entire commission, right? In fact, the listing agent will get less than half of the commission. First they split with the buyer's broker, then they split with their own broker. And the agent spends more time working on the listing than is apparent to most buyers and sellers. There are also advertising costs, etc. Most agents that I know are NOT making much money right now. Plus as independent contractors there are NO employer paid benefits, no employer contribution to SS. Any agent that is making a decent middle class income these days is working d@mn hard.

Thank you ragtop for sharing your experience.I am trying to decide what to do with my newly vacated house. Whether to list with one broker on the MLS or try FSBO for a while. I already have one Real Estate agent offering to list it on MLS for for a 3 1/2 % total commission, which he will split with the buyers broker. I dread having a house that sits on the market for a year. It is a good mid-priced home in a good neighborhood but in this market who knows?

why is it that everyones prices are going lower and lower with no relief in sight.........but realtor commissions still remain at 6%? I just don't get it. Why aren't realtors willing to accept say a 4% commission? Why aren't they willing to take the hit just like the rest of are doing? I would think 4% of something is still better than 6% of nothing.

For me, its less expensive to take nothing, then to take a listing for 4%. If a listing commission is not competitive with other listings in the area, its going no where. With the length of time homes are sitting on the market, I lose money with advertising, time, costs. With the price of gas, I am very picky about what buyers I take out and what commissions I will accept. When prices go down, the amount of the commission goes down too. The price of advertising, internet, catering for broker tours, gas, are all going up in price. Our expenses are also increasing, our incomes are decreasing, just like everybody else.

As for the price of a rental, that one month rent that you are paying for commission is also split between FOUR people. If you pay a $1400 commission, the listing office will receive $700, the buyers agent office will receive $700, then the broker will give their agents "their share" whatever that may be.

I tried the FSBO route myself, and I know it doesn't really work. Not enough advertising

It doesnt work because you dont have the resources and avenues that realtors have and pay for. Its expensive to get your property noticed and sold. You have to pay for that

realtors will not show if they know they can't get commission

Would you go to work if you knew you werent getting a pay check at the end of the week?

For what it's worth, I remember thinking this seemed high when we bought (as the boom was beginning to go into freefall)---and then I calculated how many hours our realtor had spent with us and added a few more for the paperwork. I think we figured out we were paying her the equivalent of $40 an hour, which isn't obscene---and that was when values were higher than they are now, in one of the costliest markets in the country. Her broker seemed to have the better end of that stick since he split the commission with his agents (so 1.5% each of a 6% total split between buyer and seller)---but then, I assume all of the overhead of the office costs and such comes out of that, and when they're the selling agent, the costs associated with listing. It wasn't as lucrative as I perceived it to be, though.

Greed? Are you kidding me?

"Still 4% of $150k is pretty darn good when you consider you only have a few hours invested in it....Even at worse case scenario - if you end up with 100 hours invested in one house, isn't 4% still pretty darn good money?

Let's do some math. 4% of $150K is $6K. 1/2 to listing broker, 1/2 to buyer's broker, or $3000 each. Depending on the contract, let's say 50% to broker and 50% to agent (some are as low as 70%/30% for the first year).

So your theoretical listing agent is getting $1500 for 100 hours of work = $15/hour. Great! Better than McD's! But that's BEFORE taxes, expenses, fees, insurance, benefits, etc. That agent was working for next to NOTHING. You will get what you pay for.

Granted, from a seller's perspective, $6000 is a lot of money. But there are a lot of people involved in getting your house sold and they just want to be paid a fair price for their services. If you're not getting the service you want, then you need to find someone else, because there are good agents and bad agents just as with any service. But don't expect miracles in this market, either.

Greed? Of course it is greed. You're complaining about making $15/hr like thats not good enough for you. Sure sounds greedy to me. There's plenty of people out there who don't make anywhere near that ammount, including a lot of your clients. And that was a worse case scenario example. I bet you get a lot of houses that sell for more than $150k in less than 100 hours invested.

Another interesting thing about my house not selling story that I forgot to add: Out of 25 showings, guess how many times the listing agent actually showed the house herself? ONE TIME. She could have possibly shown it a 2nd time, but she was out of town, so who showed it? ME. I had always wondered what kind of battle we would have if the ones I showed the house to would buy. Yes, she really put some hard work into that, didn't she? And all the nice pictures that was on the website......who took them? ME. She only took 4 pics and they were lousy, so I redid them all and gave her 20 to post. Then I had to practically fight her to post them all because she was crying about how expensive the extra pictures were going to be. I even wrote my own house description to be placed on the website. Her description was very generic and didn't highlight any of the really nice features of the house. All she had to do was cut and paste my text (that I emailed to her) into the website and she couldn't even get that right. Then I had to fight her even more to take care of some of the misspellings that were within the ad. The "take me" flyers placed on the sign was also my idea and totally created by me and all the copies were paid for by me. She didn't want to waste her time with that. She said "take me" flyers have never created a sale. I think she was more afraid someone would get that "take me" flyer to another realtor. Thats why she preferred no "take mes" - she was hoping someone would just call her phone number posted on the sign. Yes.....still all about greed. Your thing of "you get what you pay" for doesn't hold any water - I picked one of the top realtors in my area, and I ended up doing a lot of the work for her. Another interesting tidbit of info that I picked up along the way.....I was complaining about how I thought she had priced us too high in the beginning to another realtor. You know what he told me? He told me that happens a lot, and sometimes it is done on purpose. He told me he loved showing overpriced houses. He told me that when you show an overpriced house to someone, it makes easier to show the same people another house that isn't overpriced, and bang.....they will buy that house. Interesting, huh? Maybe that explains how we came in 2nd place 3 times? Yeah, I'm still pretty angry about all of this.

Well sounds to me like you didn't do your homework in picking the right realtor. I would have fired that lady and gone with somebody else if I had to do all that myself.

Sounds like maybe she is the realtor that gave you the highest price and you were greedy so you went with that. If you want to place blame make sure you distribute it on yourself too. You were part of the problem.

"We were a victim of the economy, plus we were a victim of greed. Had the realtor told us $385k or even $350k instead of the $425k from the beginning, maybe things would have been a lot different."

Why would any agent deliberately list a house too high to sell?

No sale means lots of work & no paycheck, & owners who overprice their homes are the most demanding ones out there.
& when the listings expire, they *always* say the agent "told" them to list it high.

By the way, if the house didn't sell at $275, why do you think "things would have been different" had the Realtor suggested $385 or $350?

As for the agent who loved to show overpriced listings, why wouldn't he?

I always tell my seller clients
"pricing your home too high will sell your neighbor's home".

My experience with leasing is that it takes just as much time & gasoline & knowledge, & the paycheck is nothing but a token;
the only leases I do are for people I know, people I've sold homes to or for, & people who plan to buy in the future.

Am I the only one that thinks your post sounds like a ridiculous rave of a bunch of inconsistencies? You say your realtor overpriced your house, but it was the "top house on the market". Then again, you always came in 2nd or 3rd? How many "always" need to happen before YOU figure out that you're being beat by the competition. And then, to top it off, you didnt figure this out for 2 years and your house never sold? You renewed contract after contract with her but you werent happy? Your posts makes you look foolish. Perhaps you need to take some of that responsbility. You seem to want to blame everyone else for your misfortune. It is evident to me that you dont understand so many aspects of real estate. Your realtor, YOUR REALTOR, got 25 people to show your house and yet, that wasnt good enough, you complain that "SHE" only showed it once. Her job is to "market" your home, get it shown, if she gets a buyer of her own to look at it, then great. We all love that. But then, people like you complain about dual agency, then you want a reduced commission because she is getting "the whole commission". You are the type that is never going to be happy.

Next you complain about the commission you have to pay to rent it out. Again, not understanding any of the commission. YES, they want 1 months rent, that pays for the listing agent and the agent who would eventually bring the tenant. The commission doesnt just pay to stick it in MLS as you say, "and not even show it". To those that understand how real estate and the commission work, you look incredibly silly. It seems to me the agent that told you they were using your house to sell others, was trying to be nice by letting you know you were overpriced. My bet is, you and ONLY YOU, didnt want to admit that. WOW, what incredible greed your agent has shown. She stuck with you for 2 years, advertised you and dealt with you for 2 years to in the end, get NOTHING! Yes, she certainly was greedy!

I don't get what you are saying about the "inconsistencies". What.....so you think I am just making all this up? That it never happened? I never said anything that wasn't true, and I have never overexaggerated anything.

I never fully explained the 2 year deal. I didn't think it was necessary. OK so here it is. We spent 1 year with the first realtor who did nothing for us and priced us too high. Why would someone overprice us only to do so much work? What work? Didn't I already explain all the stuff I had to do for her? We had her for the full year because we had a 1 year contract. We had 25 viewings with her. She did a great job by getting us so many viewings? No she didn't do a great job. Her job was to sell the house. She failed. She was supposedly the top agent in town. Her name and face is plastered all over every pubilcation you can find around here.

We then got rid of her and got a different realtor (the one who told me he loved overpriced houses). We had 9 viewings with him, and of those he showed it 4 times personally. He did a whole lot better than her. He was the one who got us a contract at $325k, but then the buyers flaked out and got out of the contract, presumably because they found a cheaper house. Whats so hard to understand about this - we got a contract of $325k under a different realtor 15 months after she first priced it at $425k. Why is it so difficult to believe had it been priced at $350k to begin with we would have still gotten that same $325k contract so much sooner? We kept him for 6 months. We actually still liked him and would have kept him longer, but we had now reached the price point where I was now forced to do the FSBO just to break even.

All along the way we kept dropping our price to supposedly catch up with the market. Then we did the FSBO thing for 6 months. We had 4 viewings as a FSBO. Final asking price before we gave up was $275k - $10k less than we had paid for the house 7 years prior. This whole thing lasted 2 years total. Anyone who is experienced with what has happened in this market should easily understand how you can start at $425k and end up at $275k two years later. It is not that unbelievable.

My house was top of the market because it was totally immaculate, in need of no renovations whatsoever. It was 3500 s.f., half brick/half vinyl siding, finished walkout basement, oversised 2 car garage, 1.5 acres, 4 BR, 3.5 BA. Walls were all painted neutral colors, no damage to any of the walls, all of the carpet was immaculate, we had nice custom wood trim throughout, cathedral ceilings, skylights, we had all new stainless steel kitchen appliances, and we were conveying a 3 yr old Lawn Tractor valued at $3000(with full price offer). What else could you ask for - it was a really nice place. All you needed to do was move in and and make it your own. You tell me - does 38 viewings over a two year period tell you anything about the desirability of this house? I know what all the competeting houses were like because I looked at a bunch of them. Most of them needed a lot of repairs, and most of them were little mass produced cracker boxes located within overcrowded neighborhoods where all the houses look alike and they may be 20 feet apart from each other. My house was a custom built, one of a kind house located in a nice neighborhood where the neighbors were not all on top of you. Like I said earlier - this house was on the market for so long and had gone through so many price reductions that it either scared people away because they thought something was drastically wrong, or maybe someone was watching and noticed a pattern in the price drops and was just waiting to see how desperate I would really get. Any realtor with any level of experience should fully understand what happens with a house, even a perfectly beautiful house, if it sits too long or if it goes through too many price drops.

As for the renting and the agent wanting $1400 just to place the house on the MLS - you still don't get it. I was going to be doing ALL the work - meeting the viewers, doing all the phone conversations, showing the house, drawing up the contracts, ALL of it. The ad was to have my direct phone number - all the agent was required to do was list it on the MLS - thats it. Once he had it listed he was done. What is so hard to understand about that? Why do you keep coming back with "oh its worth it it because you have all these other fees"? What other fees? Spending 15 minutes on the computer to download all the info that I provided is really worth $1400 and they earned every penny of that? What the.......?

Like I keep saying.......all about greed. I already admitted that I was also greedy in the beginning when the $425k price was given to me. By the end, there was no more greed on my side, I was trying to get rid of the house without taking a huge loss (only to be expected). I don't call that greed when you are trying your hardest just to break even, or in our case, take a $10k loss.

I'm curious. How and why did you choose your first agent?

"Anyone who is experienced with what has happened in this market should easily understand how you can start at $425k and end up at $275k two years later. It is not that unbelievable. "

Yes, we all understand how that happens. It starts when a homeowner greatly overvalues their home. They pick a realtor that will tell them what they want to hear and agrees to list it at an absurdly high price. (The realtor is hoping that the homeowner comes to their senses and drops the price, but that can take months or even years.) In the meantime, the market continued to fall and the homeowner continues to chase it downward.

Most smart realtors just refuse to work with that kind of owner. Some just take all the listings they can in hopes of making up for the obvious shortfalls with big volumes.

"You tell me - does 38 viewings over a two year period tell you anything about the desirability of this house? "

It tells me you house was on the market for 2 years and neither you or your agent had the good sense to price it appropriately to sell. Chasing the market is a horrible strategy to sell a house and probably cost you $50,000-$100,000. I can understand why that would make you upset with your choice of agents, but it is really unrelated the the relative value (4% vs 6%) of an agent that actually does a good job getting your house sold for top dollar.

I didn't pick a realtor that told me what I wanted to hear. It was quite surprising when she told us $425k. We thought we had hit the lottery - $150k more than what we paid? Woohoo! Yes, we were greedy in the beginning. What would most people do when you get that dangled in front of your face? But again, we were still going by what she had told us. I picked her because it was my impression she was the top agent in the area, and we seemed to click with each other right a way. She was the only realtor we interviewed. Our stupidity for not interviewing others. Our naivety for trusting the first one we met.

She was the one who suggested the price, she was the one who came up with the comps, she was the supposed expert. I don't see how you can blame an owner when they are using the price (supported by comps) that the realtor came up with. She never once came to me and suggested we drop the price. I was always the one calling her and telling her to drop the price. Again, if it was priced wrong, and the realtor knew it was wrong, it should have been her duty to come to me and tell me that - which she never did. We also had so many showings we were thinking the price wasn't so bad at all.

The only other factor I found out along the way was in the beginning I truly thought a large house with a large yard was very appealing, and very valuable, because that is the type of place I prefer. What I seemed to find out is that most younger people prefer to be in the overcrowded cracker box subdivisions because you get more house for the money, it means more friends for their kids to play with, less yard work, etc. The only people interested in my kind of house were older people, and then again, that larger yard presented a problem for some of them. So that part of it I now understand a little better.

Hey I know I probably pissed a lot of you realtors off with a lot of the stuff I said. I have to apologize and tell you that of course it is nothing personally against you. I do not know you, or your capabilities, I have no idea how good or bad of a realtor you are. In my case I truly feel I got hooked up with a really bad realtor, plus the market was working against us the whole time. I still truly believe there are a lot of good realtors, but also a lot of really bad realtors out there. I am still very angry over this whole thing, and it will probably piss me off for years to come. I know I need to just get over it and let it go, but thats easier said than done. When you see your whole life savings go up in smoke, you are now paying for two houses and worried that your renter may leave - making you have to deal with this all over again - its easy to see why I am very on edge here. Plus in our case, the new house we bought just before the market crashed. We paid top dollar, and this house has since lost about $100k in value. Wonderful fun. Oh woe is me......no I don't want a pity party, I am just explaining why it is that I am so very angry with this whole real estate thing.

So for what it is worth, I do apologize if I have come across as being a big jerk, but I never intended to insult any of you. You guys had nothing to do with all the crap I am dealing with, you were just unfortunate enough to be around when all this crap came to light up again. So for what its worth I really am sorry if I offended anyone.

Hope you have a good day and hope your business picks up.

Maybe if you had business relationships with some of the hard working Realtors in your area, your surveying business would be doing well.
I referred three lot buyers to my surveyor over the last 8 weeks. He is a nice guy. With a super attitude. And he realizes how much time and money and energy it takes me to find these buyers.

I feel for you. We sold a year ago this month and I wouldn't want to deal with it again, although we will be. We had the most wonderful Realtor who worked very hard to sell our house during a falling market. We were listed for 4 months and had showings every single week.

When we first listed with her, she presented an analysis of our area and gave us a price range to consider. We choose the highest in the price range. After 2 weeks, she suggested a $40,000 price reduction. The house was pulled for two weeks and relisted at the reduced price. After multiple showings that weekend, we received two offers. That was the same week of the price reduction. We rejected the offers as being too low. She insisted we, at least counter.

We received multiple offers all lower than we expected. Eventually we accepted an offer another $40,000 lower than our list price. We were not happy, but realized she was right. The market was dropping and we didn't want to risk going through the winter.

I went into this real estate adventure with rose-colored glasses. Our Realtor kept us grounded and we trusted her advice. I am so glad we followed her directions.

Had we listed a year before, the odds are that we could have sold higher.

I have no regrets and am so happy the house was sold. I wish we could have gotten more money but am convinced we did the right thing.

I can't imagine working with someone who didn't have the know-how, experience and personality of our Realtor. I am not the easiest person to work with during so much stress. But she always made us feel she had complete control over what was happening. I will be eternally grateful to her.

I also want to point out that during the entire process, our Realtor never showed our house. She would be present at showings, if I requested, especially 2nd showings. But she did not show our house. Her contacts were wide and she always got people in the house.

It is possible that at the time you listed, you were given a price range and you both agreed to the highest price, as we did originally. After a few showings, with no offers, you should have lowered the price. It is too bad it wasn't suggested.

I would not have left the house listed for 2 yrs. I would have pulled the listing for a few months and relisted at a lower price. We had planned to pull the listing, but got an offer, which we accepted in Oct.

It sounds like you, and your agent didn't communicate well. Something went terribly wrong and I can't imagine going through such a mess.

You need to focus ahead and hope the market is improving and might give you a better chance to recoup some of your money. Waiting for the market to stabilize isn't such a bad thing. I believe the market is improving. You have learned a lot and will be less likely to make the same mistakes. You will be more mindful of what you want and the type of person you work with, if you decide to go that route again.

I wish you a lot of luck and hope you can put your bitterness aside and look ahead to the future.

Jane

'I wish you a lot of luck and hope you can put your bitterness aside and look ahead to the future.'

I doubt it. Seems like just an angry, miserable person - see post about how the 'gays' are destroying HGTV.....

Here is a link that might be useful: Elsewhere on this Forum

First of all, badgergrrl is just mad because she seems to think it is ok for a realtor to steal a FSBO sign, and I called her on it. And I wasn't even being mean to her in the first place. Her coming to this thread and directing you elsewhere is not only a pathetic attempt at vengeance, but that also seems to be something an angry miserable person would do.

Secondly, who clicks on people's names and follows them around to see what they said elsewhere? How lame is that?

Third, I stand by what I said on the HGTV thing, and am not the least bit ashamed, nor should I be. The "alternate lifestyle" (as they like to call it to minimize it's ugliness) is morally wrong, and I do not have to accept it. Just because it is supposedly "more acceptable" now than it was in the 1950's, does not mean that it is really acceptable at all. It does not make me a bad person that I feel this way.

OK then - I hope everyone has a great day!

Thank you Jane for the very nice comments. I am sorry you took less for your house than what you wanted, but you should still feel very happy you got rid of it. If you would have held out longer, expecting a better price, you probably would have regretted it, and you may have gotten yourself into my predicament. I am glad you got rid of it and there is one less thing in your life to worry about.
Thanks again. Have a good day!

The "alternate lifestyle" (as they like to call it to minimize it's ugliness) is morally wrong, and I do not have to accept it. Just because it is supposedly "more acceptable" now than it was in the 1950's, does not mean that it is really acceptable at all. It does not make me a bad person that I feel this way.

It's time to pass the popcorn!

I'm guessing cas66ragtop is an old guy. Luckily, that attitude is dying out with the passing of time.

Last February when we listed our last home, our agent told us due to the current market he was dropping his commission to 4%. In December he lowered it again to 3% in order to make the sale. He knew we were losing money on the final price but the cash buyers wanted more $$ off.

His reasoning was 3% was better than 0%, as he had bills to pay too!

In response to billl -

"Yes, we all understand how that happens. It starts when a homeowner greatly overvalues their home. They pick a realtor that will tell them what they want to hear and agrees to list it at an absurdly high price. (The realtor is hoping that the homeowner comes to their senses and drops the price, but that can take months or even years.) In the meantime, the market continued to fall and the homeowner continues to chase it downward."

You are right that some sellers do overvalue the homes they like. But saying that the realtor hopes they will come to their senses and drop the price once they have listed it at a higher price is strange.

The realtor is *supposed* to be the professional in this relationship. It is his or her JOB to provide a detached, honest estimate of the homes value. If a realtor does not think a home can realistically be sold at or near the seller's asking price, then the honest course of action is to REFUSE THE LISTING.

It is wrong to assume that a seller is always going to be sophisticated enough to understand that a realtor is simply telling them what they want to hear. It is a very dishonest way to get a listing. In my book, a realtor who does this is not a professional, and won't last long in the field.

As far as commissions go, realtors are like anyone else. They will charge as much as the market will bear. If enough sellers list with their competitors who offer a better rate, or decide to go FSBO, they will lower their rates as much as they are able to in order to get the business.

One of the easiest ways I've found to get a realtor to offer a discount is to put your home up FSBO. In the past when I've done it I've always had several offers of 1.5-2% savings if I let them have the listing. Usually, if you get an offer to list in the 4% range, I've found it rarely saves anything to do it yourself. YMMV.

Ragtop seems to have been oblivious to anyone's situation but his own. It's entirely possible, with the economy in freefall, that many people just couldn't afford his home, so they opted to buy more modest ones. Some may have examined the cost of home ownership, the stability (or lack thereof) of their jobs, and opted out of home ownership altogether.

Only bought two, only sold one, but in our second experience, buyer's broker shows the home.

dragontree- you quoted the first part of my post, but ignored the second.

"Most smart realtors just refuse to work with that kind of owner. Some just take all the listings they can in hopes of making up for the obvious shortfalls with big volumes. "

It is a bad way to do business, but consumers should be aware of it. The unfortunate reality is that is 3 agents are all in the game to list the house, there are some homeowners who will ALWAYS pick the agent who values their home the highest. They only thing that will convince them that they have overpriced is when the home sits, and sits, and sits.

Frankly, my father is doing that right now. He's got a condo and 1 agent has multiple listings in the complex. They are all listed for the same amount and none of them have sold in almost 2 years. However, several units have sold that were marketed by other agents at much lower prices. My father steadfastly dismisses those as "distressed" and will not give up the hope of getting a higher price.

The unfortunate reality is that is 3 agents are all in the game to list the house, there are some homeowners who will ALWAYS pick the agent who values their home the highest. They only thing that will convince them that they have overpriced is when the home sits, and sits, and sits.

I couldnt have said this better myself. It reminded me of a man who after an hour of discussion with him about his house said to me, "if you arent going to list my house for at least 1.2 million, we've got nothing to talk about". I looked him straight in the face and said, well then, I guess we have nothing to talk about. I had forgotten about that until Bill made his statement. That mans house still comes on the market every spring, it still hasnt sold. He has been trying since 2001!

***The unfortunate reality is that is 3 agents are all in the game to list the house, there are some homeowners who will ALWAYS pick the agent who values their home the highest. They only thing that will convince them that they have overpriced is when the home sits, and sits, and sits.***

When we decided to sell house #1, we called the local realtor. He looked around and a couple days later came back and told us what he calculated the house would sell for. Husband was dismayed at the figure, because he had put a lot of sweat equity into renovation and building a barn next to the house. I can't remember the exact words, but Realtor said:

"I'm in business to sell houses, not list them."

billl -

I did not mean to ignore the later part of your post. But it just seems to me that too many people seem to be willing to place all the blame on the homeowner for sticking with a higher price. I worked in the field for a long time, and while some homeowners know better, a lot do not.

Just to take your example, don't you think that the realtor he is listed with is responsible for a lot of his unwillingness to set a lower price? Realtors are paid to be professionals, that includes telling owners - "sorry, your house is not worth that". If that means they lose a listing, that is part of being a professional - and being honest.

It seems from reading some of these posts the realtor who is spitting out all of these inflated prices gets a pass for his dishonesty. Sorry, but I think the realtors who do this are more to blame than the uninformed homeowners.

"It seems from reading some of these posts the realtor who is spitting out all of these inflated prices gets a pass for his dishonesty. Sorry, but I think the realtors who do this are more to blame than the uninformed homeowners."

Realtors are not appraisers. In this market I see appraisers who can't agree on values and I'm not talking a few thousands apart.
Owners need to quiz agents about their methodology in justifying the listing price. Look at the comps, have the agent show them the competition if necessary. The final word is always with the owner, not the agent.
If the agent inflates the price, the owner will not get showings, the agent will lose the listing and not get paid. What's the sense in that?

"Realtors are not appraisers. In this market I see appraisers who can't agree on values and I'm not talking a few thousands apart.
Owners need to quiz agents about their methodology in justifying the listing price. Look at the comps, have the agent show them the competition if necessary. The final word is always with the owner, not the agent.
If the agent inflates the price, the owner will not get showings, the agent will lose the listing and not get paid. What's the sense in that? "

berniek, are you saying that owners should not trust realtors opinions on prices? If that is the case, maybe they should not offer price advice?

I am not entirely disagreeing with you, I wish we had not taken our realtors price advice the first time, I am pretty sure we could have sold for more. But we assumed she was the expert, and we weren't.

"berniek, are you saying that owners should not trust realtors opinions on prices? If that is the case, maybe they should not offer price advice?

I am not entirely disagreeing with you, I wish we had not taken our realtors price advice the first time, I am pretty sure we could have sold for more. But we assumed she was the expert, and we weren't."

Home owners need to do their homework and not take the agents word as gospel. Even if the price was high initially, the owners must have realized based on the number of showings and feedback, that the asking price was unrealistic.

I agree home owners need to educate themselves and should not place all their trust in the realtor. But the bad thing is........realtors are supposed to be the professionals here.....you SHOULD be able to trust that they are capable of doing their job. After my experience, I truly believe I am much more competant than a lot of realtors.

From what I have been reading, it seems that the realtors who have responded believe that they are totally unaccountable if the house doesn't sell. If the price is too high, it's always the home owners' fault, never the realtors' fault. So basically, if realtors are unaccountable, and their "expert" opinions should not be trusted, then what use are they?

For those of you who are great realtors, I offer congratulations. But you have to admit there ARE a lot of really lousy realtors out there.

cas66ragtop, you are right. If Realtors don't follow their Code of Ethics:
" Standard of Practice 1-3
REALTORS, in attempting to secure a listing, shall not deliberately mislead the owner as to market value."

they are not professionals.

One major problem is that sellers sometimes develop partial deafness;
they just don't hear any figure that's lower than what they want.

Realtors sometimes take overpriced listings in the hopes that the seller will reduce the price when the house doesn't get shown at all, or when it gets shown a lot but nobody comes back for a second look or an offer.

but sellers, instead of lowering the price, forget that *they* insisted on the too-high price.

When the listing expires & their house is still unsold, they tell all the Realtors who call them that they are utterly dismayed, that the first Realtor made them list the property too high.

Then they list with a new Realtor & reduce the price but not too much.

Then they finally get to the point that they are sick of it & want to sell the house, & they list at the right price.

Has anyone else heard "The Realtors' Prayer"?

"Dear Lord,

If it is not Thy will that I be anyone's first love or second wife, at least let me be their third Realtor."

Amen!

Interesting discussion. I haven't met too many realtors who I've really liked. When you think about it, most of their work is passed on to others, aside from a few showings. The guy who sold me my house spent a couple days with me...maybe 3. His take was 3% of 435K...about 12K...which was split up with his firm. Bottom line, he probably made 5 to 6K for less than a week of work.

I think realtors are a scam, unless you HAVE to use one. I plan on selling my house someday by myself as long as I have the time. I will advertise differing prices and add to the asking price for using a realtor.

For example. Price: 435K with no realtor or 448K with realtor....and 460K if your realtor wants 6%. This will encourage the buyer to ditch their realtor and go alone. With Craigslist, self service MLS, zillow and other technology, power is with the seller. Obviously a lot to research, but there has to be a way to avoid getting soaked for so little work.

And I noted the hostility on the page...probably from realtors. I totally agree with cas66ragtop... most realtors are lousy. I understand that they need to make a living, but I'm also smart enough to realize I can do much of their job.

Wow, db. Be sure to report back to say how selling your house with various price options works out. (BTW, I'm not a Realtor)

I'm also concerned about your differing price option.
I agree you should try to sell yourself, hope it works for you.
I happen to like the MLS service and don't mind paying a good agent, they are good agents in my area, I know that is not always the case for others.
BTW, in my area commission is lower than 6%, no agent would ask for or expect 6%.

& just who *are* you, db?

no member page indicated,
email link didn't work,
& you resurrected this thread whose last post was 2 months ago.

I still dont get it :
1. Why do I have to care what percentage of the sales price goes to everyone else but my realtor? That's not my problem. Don't use it as an excuse that I have to feel good about giving away a ton of money.

2. How much extra work or advertising is worth the extra money a realtor makes on a 200K house vs. a 600K? Seriuosly..give me actual numbers!
Why does a raltor deserve 3x as much on one house vs. the other?

My DH can't get around that obvious question. So far, realtors we have interviewed can't tell us a distinction well enough to see that we are somehow paying for more service.

Seems to me those that are selling more expensive homes are subsidizing those homes selling for less. It would seem more fair to sell homes on a sliding scale. More upfront and decreasing as the sales price goes up. Cover their costs up front. Anyone can take pics, throw up a few signs and put a house on the MLS. What else are they doing to earn the sale?

I dont know the answer as I'm not in the business. But,

Our main problem when we sold over 10 years ago is NOT picking a person who was familiar with rural mountain areas the first time. First agent was a friend thru church --NEVER

"Greed? Of course it is greed. You're complaining about making $15/hr like thats not good enough for you. Sure sounds greedy to me."

So you think $31,200 is a good wage while you are driving folks around?

And in a down market it is not like there agents are closing a sale every week.

Do not confuse household incomes with personal incomes ether.

I watched the teachers union in Nashua, NH do that.

"How can a teacher live on $35,000 a year?
The average household income is over $50,000."

And their are more than likely two working folks in that household.

One could ask the same question of stock brokers, car salesman, waiters, the attorney who closes RE transactions, and even the tax man.
For one, the more money at stake means there is more of a possible liability for the agent in charge.

I realize the original thread is a year old. But as someone who has sold and bought a house in the last year, I have really been struck about how real estate selling/buying has changed over the recent years but how agents are compensated really hasn't.

When I first bought a 30 years or so ago, things really were different. For example, in buying a house I used to expect the agent to find houses for me and send me information on houses for me to choose to look at. Nowadays I just never do that. At most the agent will set up a search to my specifications, but, really that search didn't find anything I didn't find through the searches I made through MLS. I am bemused at times when I see people talking about agents not showing flat fee listings, etc. From my standpoint, I don't quite see how that would work since I'm the one (as buyer) who tells the agent which house I want to see...

I also think that with all the computerization in my instances the buyer's agent spends more time helping the buyer find a house than the seller spends selling the house. It doesn't bother me that the selling agent usually doesn't show the house -- there is no particularly reason to expect them to personally find the buyer. Still when I think back to the last couple of houses that I sold and the last couple of houses that I bought the buyer's agent spent more time than the listing agent spent.

I understand the concept of the 6% fee. Those who sell compensate for all those who don't sell and the more expensive houses compensate for the less expensive houses. It is not too dissimilar to the contingency fee that an attorney might get for an auto accident case where that fee compensates not just for the one case but really for all the cases where there was no recovery or only a small recovery.

It does seem strange though that -- unlike other fields -- in real estate the model for how agents are compensated and the amount of the fee hasn't changed.

It doesn't matter what the general population thinks is fair for an agent to make per transaction. if it's $500 or $50,000, if an agent can't make a living, s/he will be out of business. Since most buyers and sellers are not running their own business, they don't have a clue what it takes to have a business plan and make money to stay in business. The expenses are huge. The general population does not have any idea of the cost of overhead to run a business.
My time is billed out at tripple the hourly rate to pay the overhead and expenses. If an agent was going to to that, the consumer would pay double or more in commissions. They are getting a bargain IMO.