Posted on 05/09/2005 4:59:07 AM PDT by Koblenz
NEW YORK (Reuters) - U.S. antitrust regulators are preparing to sue the National Association of Realtors (NAR) over policies they believe will illegally restrict commission discounting and harm online competitors, The Wall Street Journal reported Monday.
The effort by the Justice Department and the Federal Trade Commission aims to protect buyers and sellers of homes and could help contain high real-estate costs in a booming housing market, the newspaper said.
(Excerpt) Read more at money.cnn.com ...
You don't have to pay anyone to sell your house, you can sell it yourself and lot of people do so, sucessfully.
If you want free access to the system that, between license fees, insurance, ongoing (required) education, and CMLS subcription fees cost me about $1500 a year, think again.......
Honestly, I can't imagine a "hot neighborhood" ever being a good investment. I'm pretty sure I've never bought in a neighborhood like that. And except for one condominium and one town home which we purchased as new construction, I always look for fixer uppers. I'm fortunate to have sometimes purchased property in neighborhoods that have turned into fast selling neighborhoods, in which case I've usually sold, and, in too many instances, too soon.
$1500 would be a great bargin compared to 6% on most home sales.
I was the attorney for the seller of the house. I made $950. The real estate broker made $35,400 for three hours work. The client complained about my bill.
First, Realtors don't pass laws. They can lobby, and they do it well, but it's the state governments elected by the people who pass the laws. Every law restricts something. These state laws usually put up barriers to entry into the real estate field by requiring significant education and license fees to be paid to the state. Most prohibit fixing commission prices, as all are intended to protect the consumer of real estate services. According to the article, in question is NAR's pending bylaw to preclude online brokers, so-called "limited service" brokers from having access to MLS information. This bylaw isn't yet effective, as there is still ongoing negotiation with the Justice Dept. to make sure it's legal first.
Second, I agree w/ cbkaty's reply, and disagree with you that 6% commissions are exhorbitant. Listing commissions depend entirely on the property being listed. I'd list a hot seller (read that as little or no advertising expense other than MLS) for 1-2% on my side and pay 3% to the selling broker, which is usually split with the selling broker's salesperson. Typical sales agent take on a transaction is only 1.5%.
Properties needing a lot of extra work - overpriced for the market, high crime area, large dogs, long drive to town, problem renter-occupied, or other unusually difficult properties should have higher commission rates - some much higher, with extra bonuses, cash drawings, and other incentives paid by the listing broker. Once all the players are compensated and the advertising bills and overhead paid, it's not making anybody rich.
For instance, a typical sale in the Texas market I'm in is cheap - $127k for the median home. A 6% commission on that transaction is $7,620. Almost always it will be split by the listing broker and the selling broker, so $3,810 per side. Out of that the listing broker pays all of the advertising expense and office overhead (rent, utilities, etc.). The selling broker splits the other half with the selling agent and pays office overhead on his side. Selling agent in this theoretical transaction takes home $1,905. Out of that he's got to pay federal income tax, social security, medicare, his MLS dues and state license fees, business property taxes, liability and health insurance, car lease/note, and don't forget the price of gas these days. It costs an agent sometimes hundreds of dollars per prospective buyer. Not all buyers close with that agent, or even close at all. To clear $50k a year, an agent would have to close three to four typical transactions per month. Most don't. Some outstanding agents do more. The best do much more.
Regarding access to the MLS networks (raybbr reply #23) - Realtors built the networks. They pay for the networks. They update the information in the networks daily for listings, sales, property information, showing directions, etc. Nobody else other than Realtors should have access to the MLS. There are many other options available for FSBOs and those using limited service firms, but they should not have access to the Realtors MLS market information. It's proprietary. Bought and paid for. < /soapbox >
Even if you're willing to pay it every year regardless?
Just wanted to remind you that the 6% is and always been negotiable, no price fixing allowed. And 3% goes to the listing broker 3% goes to the selling broker. Then that 3% gets distributed to Franchise fees, Errors and Ommissions insurance and a split with the broker office. Typically the agent/broker gets anywhere from 60%-75% of that 3% commission.
Re post #85, last paragraph:
Right on the money.......most people use a realtor to act as a filter........and in turn a typical buyer will not give up personal info as req'd in say a rental (employment history etc.)
As a house rule, I won't show a property to an unqualified buyer......it is almost always a waste of time and money. To qualify a buyer is someting I consider part of the service and it separates the wheat from the chaff. FSBO deals can tie up a property for weeks only to have it revealed that the buyer couldn't qualify for the mortgage.
Do you think you should have access to an MLS for free to sell 'just one'?
You can do that.....it's called an 'Open Listing' and almost no realtor will take the deal.
Not for free. But I would be willing to pay a fee just to be on the MLS.
". . .we will do it ourselves (FSBO)."
My wife used to sell real estate. Do you know how many panicked families called her because they'd fsbo'd their house themselves and made a major error and hoped someone could bail them out?
Sometimes the error was reversible if the buyers were reasonable. Often, the seller had to live with the error.
When you fsbo it yourself, there is no errors and omissions insurance agent standing by to hear from you.
Dear old and tired,
Yeah, well you're buying real estate primarily as an investment. Folks are just buying homes as places to live.
Anyone around here (and I mean the entire Washington, DC region, not just my neighborhood, community, or county) has to be afraid they're buying near the top of the market.
But heck, I was worried about that when I built my house four years and 70% appreciation ago.
You still gotta live somewhere, and if your work is in the Washington metro region, that's where you gotta live.
Lots of folks want a nice neighborhood, decent schools, a house in good shape, because they don't want to take on the burden of trying to fix the neighborhood, the local schools, or the house. They don't mind not making out with a deal on a fixer-upper, because they have a nice house in a decent neighborhood that is mostly problem-free (or at least, problem-reduced).
Folks often consciously, explicitly want a house with "curb appeal" because, heck, they might live in the house a very long time, and it's nice to live somewhere that's attractive.
Also, often, the places that go really quickly around here ARE the fixer-uppers, because a lot of folks are finding it tough to afford the middle of the market around here. The last fixer-upper in my neighborhood sold before a For Sale sign actually made it up. The Internet MLS listing wound up getting in the system after a contract was put on it. So, even if you want a fixer-upper, you need to work with Realtors.
sitetest
Oh, that's right -- the Gub'mint won't sue another branch of...THE GUB'MINT!
"Six Percent is way too much to earn for home sale transactions. It amounts to thousands and thousands of dollars without putting a lot of effort into the transaction."
You obviously haven't THE foggiest idea.
As a realtor, I can tell you the difference between an amateur and professional will literally cost a buyer or seller thousands of dollars.
"Effort"? You sometimes MUST pay for knowledge and experience -- just as with any specialist.
If you don't mind getting what you pay for, go to Foxtons or some other discount backend of a horse's behind. You won't know what hit you until closing when your reaction is, "D'OH!"
Dear thirst4truth,
Like I said, I don't have a problem with Realtors getting the commission for which they can negotiate.
I also pointed out that in a market like Washington, DC, the price of houses is high enough that Realtors have, indeed, begun to compete a lot on commission. Works for me.
But in one instance cited in the article, Realtors in one state are actually trying to pass a law restricting rebates of commission. This restricts the freedom of an individual Realtor and seller to negotiate commissions. I'm very much against that.
sitetest
Boo-F'N-Hoo.
Why don't you go out and get your real estate license then?
Don't let me even begin to stomp on the "legal profession."
Do the course.
Pass the test.
Pay your license fee and MLS fees
Find a sponsoring brokerage.
Get on the MLS.
For your information, there is information on that listing service that sellers don't want to be available to "one time users".
For a "one time fee" anyone would be able to obtain information about a seller(s) at will.
Subscription to an MLS comes with legal and fiduciary reponsibilities "one time users" couldn't be held to.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.