Posted on 04/24/2005 3:47:55 AM PDT by TXBSAFH
Feds probe real estate agents Money magazine investigation shows Justice Dept. looking into anticompetitive practices. April 22, 2005: 5:27 PM EDT By Jon Birger, Money Magazine NEW YORK (CNN/Money) - Did you pay your real estate broker too much? The U.S. Department of Justice may be set to turn Tulsa, Okla. into a test-case for ending the stranglehold 6 percent commissions have over the real estate brokerage business. MONEY has learned that Justice's Antitrust Division is gathering information on the bully tactics that full-commission brokers in Tulsa allegedly use against their discount rivals to discourage commission-cutting. The probe follows other recent efforts to spur competition in the real estate industry. According to a copy of a Justice Department subpoena obtained by MONEY, federal investigators are seeking information on "possible anticompetitive conduct in the provision of real estate services in the Tulsa area" as well as "documents related to refusal to cooperate on real estate transactions." Realtor Commission Find the right REALTOR?? for you. Get competing proposals from top local real... www.sell-my-home.net Selling a Home? Find Real Estate Agents Planning to sell a home in the next few months? Get competing proposals from... www.sellingagents.net An Antitrust Division spokeswoman confirmed the existence of the investigation but declined to provide additional details.
(Excerpt) Read more at money.cnn.com ...
Standing and applauding.... Like I said in a previous post, I can't believe what I'm hearing here on FreeRepublic.
Hubby is seriously thinking of leaving and finding a different job. He's tired of the people accusing him of being a crook when the sellers/buyers are trying to scam others.
Example, hubby presented a full-price offer to a seller, with the only contingent was based on the house passing inspection. Buyers put down $1000 earnest money. House failed inspection, but the seller insisted that he should get the earnest money ... HUH ? Called my husband a crook because he wouldn't turn the check over to this guy.. Hubby walked away from the sale and the listing (lost $2000 invested, but he was happier)
Sorry --- just ranting here.
Very true and hubby wishes everyone good luck when they go the FSBO route. However, what happens much of the time is that the owners get too emotionally involved and have a hard time playing a detached role. Even when I have talked with hubby as to how much our home is worth, he will tell me XX dollars approximately, but says we would have to have an independent person come in to give a true estimate. Most people cannot value & price their home because of the personal investment.
Hubby has talked with many explaining that just because you receive a lower offer than you want, that it is not necessarily an insult, but a starting place.
Didn't plan on spending this much on a topic !!! LOL
How could it be robbery if the seller agrees to the arrangement? That's called capitalism. The seller thought the service to be rendered was worth more than the $30K (or he wouldn't have agreed to the bargain). And the realtor thought the $30K was worth more than the labor and expenses involved (or he wouldn't have agreed to the bargain). This is a win-win situation.
Realtors better beware. The Feds will focus on an industry for a long time. And they tend to send folks to prison over Sherman violations.
I am a REALTOR® and I'll be happy to answer any questions on the topic and discuss these issues. I am an honest hardworking man, and I am proud of my profession and what I do to help people with their (typically) largest investment.
If selling FSBO was truely the way to go, I would be out of work. But I'm not. I'm very busy. In fact, on the low end 80% of FSBO sellers will end up using the services of a realtor, and there is a good reason for it. We have the qualified buyers. The buyers who have the motivation and financial ability to purchase a home. We have inventory of hundreds, while the FSBO has an inventory of one. And if you think about it, what is the main reason a highly motivated and qualified buyer would skip homes listed with a realtor to buy a FSBO? The answer: Because he want to avoid paying the commission too. But there's only one commission to save. So in order for a FSBO seller to get the commission he has to convince a buyer to pay it. A buyer who purposely skipped 80% of the avaiable homes on the market and sought out the FSBO to save money.
Selling a home is not about advertising, it's about marketing. Exposing a house for sale to the entire market of qualified buyers will leverage the law of supply and demand to a seller's benefit. Yes, you can sell your home with an ad in the paper and a sign on your lawn, but you've just scratched the surface of potential buyers. In that small pool of buyers in a hot market you will certainly find "a" buyer. You'll feel great thinking you saved a ton of money too. But I have access to the entire market worldwide, and I have the tools and expertise at using them . When I charge a certain % commssion, with my marketing tools, experience, and negotiation skills, I will net a seller more money (money in his bank account after paying me) than he can get on his own 90% of the time-- in any market.
It's easy to look at a closing statement and see the empty spot where the commission would have been paid and feel great about saving x% of the purchase price. But the reality is, with the very limited marketing and exposure, it probably cost you more than that percentage to "save" it.
I, my father, and my sister in law all were TX realtors at one time or another. I grew up around home builders and seller, my father was a contractor and home builder. My problem is I am not a good close, not pushy enough. I work better in technology. But that said I would NEVER Use a full commission broker. 6% is to much for what it take s to sell most properties. Period. And if I were to find out a broker blackballed showing my house because of itI would sue. And bring it to the attention of the proper authorities.
"A couple call a carpenter to fix a squeaky floor in their home. The carpenter arrives and goes to the sqeaky spot and rocks back and forth. Squeak... squeak... squeak... He walks 15 feet, bends down, and hammers one nail into the floor. He walks back to the spot where the sqeak was, rocks back and forth, and there is sweet silence. The couple is overjoyed and extrememly grateful until the carpenter hands them a bill for $150.00. They protest that 5 minutes and one nail do not cost nearly that much and that he's ripping them off! He quietly answers that it may have taken him 5 minutes to hammer the nail into the floor, but it took him all his training and experience to know 'where' to put the nail. And that's what they were paying him for." They smiled and gladly paid him.
As a REALTOR®, I know where to drive the nail to get your home sold for the most money in the quickest amount of time, with the fewest problems, even though the act of driving that nail can be done by anyone.
I'm not defending anti-trust violations by those in our industry, if that's what that would be. My post was in response to the "it's never worth listing" posts.
I understand where you're coming from. Remember, though, under certain situations, it might actually take 7 or 8% to sell a house and get it properly marketed to the FULL market where the real money is.
In most residential markets these day if the realtor does his or her job to begin with (market pricing, and trying to get the home owner to at least put lipstick on the pig) 6% is way to much. On my street in the past year (houses run from 105k to 125K) 3 have sold now were on the market for more then 2 months. 6% is way to much for that.
Real estate is local, and your family is in RE in your market so I have to believe you. Of course the difference between 4% and 6% is $2000 - 2500. Saving just one mortgage payment, repair negotiations, and a small percentage increase in price more than makes that up.
Again, though, I won't/can't speak to your market with the same authority you can.
check out the MORTGAGE BROKER or the
TITLE COMPANY......
The discount brokers in my area do those things as well for no more then 4%. I will never use a 6% broker.
Cool. I'm not, by any means, arguing against using them. There are all kinds of diffferent business models for all kinds of different customers. I'm just saying that if "someone" paid $1500.00 more but received back an extra $2,000 in benefit, then it's silly not to pay it just for the sake of not payng it.
Both list on MILS, both advertise in the papers and the real estate free amgazines. I will save the money.
I don't mind help-u-sell and the others and for sale by owner. Hell, if anyone in CA can figure out all the paperwork and legal technicalities, more power to them. Otherwis I'm willing to work my but off. I get 5% if another realtor brings the buyer or 4% if I find the buyer and list the house. I show the house, advertise and whatever, so I work for my money.
We have afew 2-3 million homes in our area. I think I would charge a point lower for over 1 mill and so on. Why not. But I haven't had that problem : ).
This is the way I see it: Twenty years ago if I sold my house for the going market, $60,000, the Agent would get six percent. Now if I sell at market, $360,000, the agent still gets six percent, yet, does no more work than he/she did twenty years ago. This is a rip off.
A very common (mis)understanding. Everything has gone up in the last 20 years, including the propensity for people to sue the easiest target. Advertising costs have gone up. As have insurance, gas, printing expenses, etc, etc.
However, the value I add to the transaction isn't measured on a cost bases anyway. If proper marketing alone brings a seller a 4% higher selling price, then 20 years ago that service was only worth 2400, while it's worth 24,000 today. If skillful negotiation saves a 60,000 seller 1%, it was only worth 600.00 twenty years ago while it's worth 6000 today.
Very few cases warrant the 6% commission. That is why more and more people are using the for sale by owner services or discount brokers.
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