Consumer Reports says 71% of home sellers who asked their real estate broker to cut their commission got a lower fee.
Less than half (46%) of the people surveyed for the Consumer Reports National Research Center’s annual questionnaire dared ask for a cut in their broker’s commission.
Those who paid 3% or less said they were just as satisfied with their service as those who paid 6% or more.
“If you’re looking for an agent, shop by personal recommendation or commission split,” said Amanda Walker, Consumer Reports senior project editor.
You can read more on best deals for buyers and sellers in the Consumer Reports September edition or online.
For other real estate news…
It is only a matter of time before real estate agents go the way of travel agents and dinosaurs. The only way that real estate agents may survive is if they have a strong enough lobby to get our politicians to protect their jobs. At this point the only real function of the agents is to open the door so that clients can get a look at the house. All of the necessary information required to purchase a home is on the internet for free.
The same was said of car salesman Nano…has not happened in that industry….yet. Not sure if it will.
I point to one simple fact: how many Redfin signs do you see in your neighborhood? I see zero in mine.
The problem I see with the RF model is they will have a very tough time attracting top talent. They are a phenomenal information portal. But, if you are listing your home, here is what you need to do:
You will need to cover your own open houses and the agent who is an expert on your home does not do a property tour…according to their website. Unless I am missing something, they do not visit your home personally. Hmmm.
Nano: you are correct that the information is on the web for free. Marketing is not free. The days of putting your home on the MLS and it moving are behind us. Essentially what you have is two different mindsets: one of full-service and one of self-service.
All of this coupled with the fact that if the seller is “dissatisfied” they pay nothing. Dissatisfied? Hmmmm. Think there might be some unscrupulous people among us that will magically be dissatisfied prior to closing?
then mulligan
i will be my owner seller and pay a % to the buyers agent who actually brings me the buyer. that i will pay for, but to fill out a few forms, get on the mls and do my own open house is fine. I might even pay the buyers agent 4% since they are actually being my rep by being the one that brings me the business. hey maybe I just created a new business model. DO YOUR OWN SELLING BUT PAY BIG FOR BUYERS TO BE BROUGHT TO YOU. I like it.
Gary,
If you are selling I would interview Redfin along with 3 other full-service agents and witness their listing presentation. See where else your home will be seen besides the MLS. Do they have a relationship and agreement with other websites? For example, First Team Estates is affiliated with luxuryportfolio.com. Surterre Properties is affiliated with Christie’s Great Estates.
One other aspect not discussed yet is the broker preview. There are 15,000 properties on the MLS in Orange County today. It would be beneficial to be remembered if you are selling. Broker previews are the introduction of your home to the broker community. In essence, it is a broker only open house. They are usually conducted Tuesday-Friday depending upon the area. Having your home “on the mind” of buyers agents is certainly an advantage. Ever wonder how that good home just never makes it to market? It literally sells as a pocket listing due to the relationships and networking of one or more agents in the area.
So again, I wonder if the discount brokerages participate in the previews. it would be a good question to ask them during your interview segments.
I showed Redfin to my Realtor and my Realtor agreed to a 1% commission. It worked out well for everyone.
Haiku: what was the total listing fee?
Mulli,
I do agree with you…..the statement about marketing.. Let me rephrase my statement……..the opportunities in the real estate industry will change. No longer will an agency be able to get a 6% commission for listing a home on the MLS. Individuals and companies that can facilitate the sale of homes will do very, very well. One last point, the transition in some industries, like travel, occurred very rapidly. In other industries such as autos, the transition will occur over a generation or two…………..my guess is that the transition in the real estate idustry will take at least a generation.
Salesman are at the core of our society. I wish I had greater sales skills, but I was behind the door when god was handing out those capabilities. Throughout my career, I’ve always searched for partners(business) that had great sales and marketing skills. We will never outsource salesman.
Mulliganville: I was the buyer on a short sale. The bank paid the full 6% commission, I got 2% back from my agent on closing. It paid all of my closings costs and bought me a better rate.
I think a flat processing fee with maybe a 1% commission makes sense to me. Like any other business the better a “producer” you are the higher the flat fee you can charge.
I like the idea of getting 2% back as the buyer. That helps a lot in the market we are in today. Giving people money to help them buy something or pay for various costs.
I think most home buyers are using the Internet at some point or another to look for homes. Gone are the old days of having your realtor “find” you a house. One of the things I can see a realtor doing is knowing about homes that arent on the MLS yet…or are newly listed short sales and such.
Redfin is great because you can look to your hearts content and never sign up for anything or get emails if you dont want. Many other listing sites that are run by Real Estate offices require you to “sign up”, I want to decide if I want to be bothered by them, not the other way around.
I am in the market for a home and when I call the agents to see if I can see a home, I either don’t get a call back, or the agent says they will not show me the house unless I will work with them exclusively. I inhereted a large amount of money in January, and am buying rentals for cash. I now find the lender that is selling the home and deal directly with them. If they want to pay an incompetent realtor, it is up to them.
………. 6% is a huge market inefficiency……….
………. as this industry evolves…… first the redfin type business model will replace realtors on homes priced 150% of the median and below…….in the next evolution…..the redfin type business model will be replaced with small lump sums to facilitate transactions……… it could be redfin…. or it could be someone else…… but it’s going to happen regardless……. there is a ton of money to be made in making this market more efficient….
…… best advice….. if you are a young realtor…..go back to school….
…… i wonder if the current tweens and teens will be comfortable buying homes through myspace, when the time comes……..
Good statement nano- I agree completly. I see the commissions especially on the listing end come way down. There is too much information on the internet and you have to remember that we can still remember when there was no internet. Well you guys can my memory is fried. :) But anyway my son is 9 years old and he surfs the net like it was his back yard. Can you imagin when his generation gets to our age! They will be so tech oriented it will be like 2nd nature. To shop on the net before looking at anything. I do it already. I look for it on the net and call to see if it is available or I just buy it from their website and wait until it appears on my door. Magically!
Just imagin what virtual tours will look like in 2040!
What in God’s name to realtors do to earn 6% on a million dollar house?
Please.
They are worthless and have been living high off the hog- now they are making nothing.
They were all cocky and arrogant driving around in the new Mercedes in 2000- to 2005- now look at them- begging for business- it’s embarrassing.
OCR editor & Lansner,
DON’T BITE THE HAND THAT FEEDS YOU! The real estate industry is keeping your paper from bankruptcy! They are over paying for advertising in an outdated and obsolete part of the media…
Even though the OC population has increased 10 fold, You have the same amount of subscribers as you did in the late 1970’s…
NOBODY READS THE PAPER ANYMORE! MAYBE THE OCR SHOULD REDUCE LANSNER’S SALARY…Any moron can sir up controversy!
Nanowest has it exactly right. Real estate agents in this market seem to not realize that things have changed. They are stuck using tired descriptors such as “this one won’t last!” etc. and can’t seem to realize that the market has changed dramatically, and people are actually reading the blather they post on the MLS. The information posted is so unreliable…listing 3 bedroom houses as 4 bedrooms with a remark like “dining room can be converted back to 4th bedroom” etc. It’s pretty embarrassing. They can’t get away with that kind of untruthfulness in today’s market. In this environment, it won’t be long before the agents are off selling time-shares, used cars, or subscriptions to tanning salons. Take out that “fat” from sales, and we’d all be better off.
I would actually have to disagree with the “moral of the story” in this article. Can you get away with paying less? Sure. Will it get you what you want? Probably not. In my experience you are not going to get the same amount of attention as if you were paying a standard 3% to your listing agent. Also, do not mistake this to mean you could or should pay less than 3% to your buyer’s agent. In this day and age where there is intense competition amongst sellers, many are offering 3.5% and more to the buyer’s agents and those are the ones they take their clients to first and give the most attention to. If your goal is to unload quickly then this is the time to pull out all the stops, in my humble opinion.
How about this for a commission plan:
Sell the house in 1 month at listing price get 6%.
On the downside, for every % less than the listing price, the broker has to take 1/2 of the pain. So if the house goes for 10% below the listing price the broker only gets 1%.
Then on the upside, if the broker can sell for above the listing price, they split the gain……if they sell for 10% above list they get 11 %. (6+5)
After 1 month, the start commission is 5% same upside downside.
After 2 months, the start commission is 4%……….
After six months the broker has no incentive and the listing expires.
Brokers are SCUM. They are just useless, worthless middlemen. Greed is their only motivating factor.
I recall this blog arguing over commissions last week… of course haggle the price. who would pay 6% to sell a home. insanity
# ihatelasner&gwbush Says:
“NOBODY READS THE PAPER ANYMORE! MAYBE THE OCR SHOULD REDUCE LANSNER’S SALARY…Any moron can sir up controversy!”
–
No, not ANY moron. Not you.
What you spew isn’t worthy of discussion.
Where is everybody today??
# they are down Says:
Where is everybody today??
—
She’ll be back. Never fear:)
hey nanowest……………..i agree. If the RE agent can turn a house fast (under 30 days) then I have no problem rewarding them. Its not the selling realtor I care about, its the person bringing me the clients.
PDY,
You are a moron!
PDU,
Your a freakin MORON!
Hey Mulligan,
According to your thinking, realtors are unnecessary anyway.
You tried to tell me real estate is a commodity — if real estate is a commodity then we could all buy from an order desk, sight unseen.
I told you I wouldn’t let that slide.
–
Mulliganville says,
“Like I said earlier, you can not think of RE as a commodity. We can disagree…it is OK :) I think it is. Hence the “paradigm shift” mentioned previously. It requires one to think of it in different terms. I am OK with you not being compliant here…perhaps you could do the same?”
—–
Never.
You are wrong.
Don’t try to patronize me here, you are wrong.
For anything to be a commodity it needs to be interchangeable with any other supply of the same commodity.
–
commodity - definition of commodity - A physical substance, such as food, grains, and metals, which is interchangeable with another product of the same type …
–
Jewels can be a commodity. Custom made jewelery is not.
Lumber is a commodity. Cement is a commodity. bricks are a commodity. Pipes are a commodity. Copper wire is a commodity.
You can buy any volume of any of the above that you want. If it meets specs you don’t need to see it.
Put all of the above together and you can build a house. That house will NEVER be a commodity, unless you preassembled them exactly alike and agreed to deliver identical product to anyone wanting to place it on a location that would then cause that house to be one-of-a-kind, no longer a commodity.
Look again at the definition — the key word should be obvious, “INTERCHANGEABLE”.
I had an agreement with an agent who was to act on my behalf as a buyer. Part of our agreement was that he would rebate half of his commission to me.
When it came time to make an offer on a house, the agent “couldn’t recall” having agreed to the commission split and got pretty testy with me when I pushed him on it.
Long story short, I ended up firiing him.
Yeah but they’re going to take one look at the outdated house with a WTF price by unrealistic sellers and say “no thanks” right off the bat then go represent another one of the thousand sellers who is more motivated than an ant at a Raid convention. I’m not saying it’s right or they deserve it, that’s just how it is unfortunately.
Hey HB Bear. That’s not a bad idea. I kinda like it! Just make sure you get it in writing. Thanks for the tip - I will def. keep it in mind for the next purchase.
If housing is not a commodity then why can we now trade futures in housing?
……. Alfalfa…. betting on case schiller is sort of like betting on the lakers….
Yeah, a lot of people do it.
….. so you think the lakers are the commodity?……
…… if anything i guess you could argue that the bet is a commodity…… but the homes or the lakers are not…….
….. is anyone offering a housing future on CDM homes on block 200?…. cuz jimmy is buying if they are….
Joe,
You say: “Brokers are SCUM. They are just useless, worthless middlemen. Greed is their only motivating factor.”
Spoken like a true greedy corporate loving republican!
…….. crap got moderated?……wtf?
….. so you think the lakers are a commodity?……. you think the bets impact their performance?…….
…….. you can bet on case schiller all day long and you won’t impact the value of homes…….. you will just change the cost of the bet……
More than one definition pdu…
com·mod·i·ty Audio Help /kəˈmɒdɪti/ Pronunciation Key - Show Spelled Pronunciation[kuh-mod-i-tee] Pronunciation Key - Show IPA Pronunciation
–noun, plural -ties.
1. an article of trade or commerce, esp. a product as distinguished from a service.
2. something of use, advantage, or value.
3. Stock Exchange. any unprocessed or partially processed good, as grain, fruits, and vegetables, or precious metals.
4. Obsolete. a quantity of goods.
Definition #2 is appropriate. BTW, I do not see the word interchangeable here…do you?
We can agree to disagree. I think it is a commodity. You do not. I am ok with that…but you, for some reason, are not.
Another opinion:
—There are arguments that real estate acts like both (product/commodity) at times but after 20 years in this industry and two real estate market corrections my experience has been it definitely acts more like a commodity. If the price of the property is not correct all the advertising in the world is not going to sell the property. If it was that simple you could sell a trailer home that is worth 40K for a million dollars just by taking an ad out on the front page of a major newspaper. The value of Real estate reacts to supply and demand just like a commodity.
There has never been a time on record when real estate values were increasing when inventory was growing faster then the buyers where buying. Sellers have to understand that the market (buyers) doesn’t care what you bought the property for or what it was worth last year. They are going to evaluate the market and only give you market price.—Richard Halloran, Long Island NY
Perhaps we are each correct in how we see it pdu…
We know the bets impact performance. Ever heard of point shaving? And if case schiller has no effect on value then why do people like Diana Olick keep pointing to it as the be all and end all indicator of housing prices? Can’t have it both ways. Either it effects value or it’s useless.
Mulli,
You can’t be this dense…………….. but it appears you are.
It’s not my job to teach you - learning is up to you.
I only pointed out to you that a commodity, by it’s very definition is interchangeable, and real estate, not being interchangeable is NOT a commodity.
You obviously missed something in your education. Logic. First semester.
In the opinion you quote it should be glaringly obvious to you that there is no discussion of real estate BEING A COMMODITY.
Can’t you even comprehend what they are saying?
They say real estate “ACTS LIKE” both a product/commodity at times……………
And
“The value of Real estate REACTS to supply and demand just like a commodity.”
There is NOT the slightest suggestion that real estate is a commodity and because something ACTS LIKE or REACTS like something else doesn’t lead to it being that something else.
………..And using #2 above tells you what?
- - - - - - - - “2. something of use, advantage, or value.”
I would hope a commodity is of use, advantage or value, or there be no need.
Geeeezzzz, Mulligan, using your logic one could argue that taking a dump is a commodity - it’s definitely of use, advantage, and value.
Fresh air is of use too. I think I’ll go get some. Your inability to reason stinks.
Here Mulligan,
commodity
Definition 1
A physical substance, such as food, grains, and metals, which is interchangeable with another product of the same type, and which investors buy or sell, usually through futures contracts. The price of the commodity is subject to supply and demand.
–
— For some reason you miss that those discussions you posted were only discussing that real estate ACTS like a commodity in relation to valuation - supply/demand pricing. That’s news?
pdu…you act as if I am raining on your parade somehow. You see it how you want to…I will do the same. Now, enjoy your dump.
I am thinking Alfa, Mully and Wall St. think Housing is a commodity.
Hey Mulli provider is argueing with me on the previous blog about fully index rate still. I have been monoplozing her time. Sorry
She called me smarty pants……… :) He HE
PDU knows what I am talking about. Please don’t bring it hear. If you have any comments leave them on the other blog.
Sorry they are down was asking where everyone is.
OK Mulli,
I’ll take a dozen, f.o.b. at market. Send invoice (and keys:)
Oh, what is market today on houses?
Hooverville,
what do you care, you sold 3 properties in 2006. LOL
That would have been personal properties RAT…LOL.
Perfect pitch of a salesman of (resort) properties (time share).
What the hell are you talking about truthi…
There is no such definition as selling “personal properties”. The correct term they are referred to is “personal residences”. Personal property is completely different as every realtor knows.
Oh, excuse me. I assumed you and others knew what I was referring to.
May it please the court:
One parcel of land was in TX. Real Property .
One investment “residence” was in Incline Village, NV . Real Property.
One primary residence was in TX. Real Property.
May we proceed from here truthi?
Well PDU, you are so busy making sure every one knows how smart you are you missed the post about these start up companies that are buying foreclsures in bulk directly from the banks. To get into the investment pool for these companies you need to pony up $50,000 to $100,000. It will only be a matter of time until one of these types of companies becomes an ETF.
And Alfa, what would that make Real Estate?
Properties that you do not reside in are correctly referred to as “income properties” not “investment residences”.
I am perfectly happy to see start up companies buying up properties at huge discounts as they will lower all the other homes in the area much quicker than the one-at-a-time rate. Just think, we could see even further price declines then we already have by massive numbers of homes selling for cheap. Let’s get to the bottom quicker and evaporate that imaginary equity.
these are basics a licensee would absolutely know.
Yes, that is why the residence was in quotes…I would expect a phd in smartassness to get that…
Speaking of Investment Property aka Income Property (it is used both ways)…here is what the media has said over the long haul:
—Do You Believe The Dire Media-Predictions?
There will always be cynics and skeptics who will tell you that the real estate market is going to crash - these kind of people have always been around…
Meanwhile, the successful investors are still “in the game” buying and holding onto their properties as they continue appreciating in value.
Here’s an example of how (for years) the media has criticized real estate investing…
Dire Media-Predictions:
“The prices of houses seem to have reached a plateau, and there is reasonable expectancy that prices will decline.” - Time Magazine, 1947
“Houses cost too much for the mass market. Today’s average price is around $8,000 - out of the reach for two-thirds of all buyers.” - Science Digest, 1948
“The goal of owning a home seems to be getting beyond the reach of more and more Americans. The typical new house today costs about $28,000.” - Business Week, 1969
“You might well be suspicious of ‘common wisdom’ that tells you, ‘Don’t wait, buy now…continuing inflation will force home prices and rents higher and higher.” -NEA Journal, 1970
“The median price of a home today is approaching $50,000… Housing experts predict price rises in the future won’t be that great.”- Nations Business, 1977
“The era of easy profits in real estate may be
drawing to a close.” - Money Magazine, 1981
“The golden-age of risk-free run-ups in
home prices is gone.” - Money Magazine, 1985
“Most economists agree…[a home] will become little more than a roof and a tax deduction, certainly not the lucrative investment it was through much of the 1980’s.” - Money Magazine, 1986
“Financial planners agree that houses will
continue to be a poor investment.” -
Kiplinger’s Personal Financial Magazine, 1993
“A home is where the bad investment is.” -
San Francisco Examiner, 1996—
So while truthi dissects the technical merits of a surface conversation, are you interested in building wealth for yourself over the long haul, or stuffing your money in the stock market while the $ continues to decline? Gold and Real Estate over the long haul will offer protections paper companies cannot.
Sorry to change the subject but provider posted this and is reffering to the word “fully index rate”. I think I got under her skin- there are like 166 commnets a few post down.
provider Says:
August 5th, 2008 at 7:43 pm
Oh god. I didn’t say the term didn’t exist, I said it is next to meaningless, because it requires other terms to accompany it at all times. THAT is why it is barely used, except internally by (mainly) underwriters. It cannot stand on its own, and even when the issue is forced, it requires inspection and confirmation and manipulation. Geez, even Fannie Mae is using it in a much larger context. Fannie Mae does not have it in their Glossery, and neither does Freddie Mac (but they DO have my terms). It is the most unimportant, unuseful and over-discussed term that has ever been uttered. You go right ahead advising your clients with it. The voluminous evidence I have provided is all wrong. You know better than everyone.
Am I wrong for saying the fully indexed rate is important?
Way too many small minds posting here posing as experts.
Seriously disillusioning that one claiming to be a realtor doesn’t know the difference between a product and a commodity and follows that with a lack of understanding about the difference between personal property and personal residence.
No more Mulligans given to Mulliganville.
He’s a basic duffer with a club membership, fancy golf clothes, a 30 handicap, and a booze problem.
Even has a Cadillac! Geeeezzz. A white belt and white shoes to match the Vogue white-wall tires that he protects with curb-feelers.
You just like to pile on pdu…and it is ok. I know you know what I was referring to. If we all would like this to be a definition based blog, top to bottom, front to back, count me in. Again, I understand the stark difference between real property and personal property. I also understand fixture, contingency, community property, grantee, grantor, RESPA and a host of other terms. You can continue to act pompous and omniscient if it makes you feel better about yourself. The bottom line is each of you knew what I was talking about. But, let’s be technical. This should be fun.
PDU swallows camels but strains at gnats
Commoditization and real estate.
Regarding real estate becoming a commodity.
For obvious reasons real estate itself could never become a commodity, however, the marketing of real estate could become commoditized.
It seems conceivable that the internet could remove the differentiation of vendors, resulting in it making no difference which source you use to purchase a house, at which point the marketing (a service) of real estate (a product) could become commoditized and the realtor of today would disappear:)
Interesting, no? The Mulli-type would disappear.
Marketing 101: When Your Market Gets Commoditized
One of the most difficult marketing challenges you can ever face is what to do when your product or service becomes an off the shelf commodity. In this article we’re going to illustrate this first with theory and then with an example of what a vendor of email server software might choose to do. In the next commoditization article we’ll cover it from the example of a web development consulting firm. In the third and final part we’ll go over additional commoditization issues like pricing.
What’s a Commodity? What’s Commoditization?
The term commodity is used by economists to indicate an “undifferentiated good or service”. The classic example of a commodity is something like butter or wheat — there just isn’t much difference between butter or wheat from vendor A to vendor B. The term commoditization indicates what happens when a market moves from the status of a differentiated good to a commodity. For example, when no one knew how to make butter except for one or two farms, butter was not a commodity. And it had a premium price. When everyone knows how to make butter then it becomes a commodity and prices fall. Think about it: Do you really care what brand of butter you buy?
There are dozens of brands of butter available to the consumer today. I don’t know about you, but I do have my preferences. There are also lots of knock-offs…margarine, spray butter, butter buds, etc. Lots of imitators…but they ain’t real butter. They look like butter…some taste like butter…but some will not melt in the trunk of your car in the Arizona desert. I do not want to eat that…do you?
Let’s take bread for example. Do you have a preference with respect to bread? I sure do. There is the budget buyer of bread: $0.99/loaf. There is the affluent buyer of bread who wants lots of extra bells and whistles and will pay $5.99 per loaf. Then there are the masses, who want bread for $3.29 per loaf. I hate wimpy, cheap bread. I also do not see the value of Pistachio crusted 38 herb bread at $8 per loaf. So, while I agree with you there are many bread and butter choices out there, most of us typically buy the same one over and over again. It is how consumers think. Similar to that agent in your neighborhood that dominates the listings…
?