Posted on 08/12/2005 5:36:12 AM PDT by OESY
...[I]n almost every other consumer industry-- booksellers, retailers, home appliances, insurance, banking, stock brokers-- the introduction of Internet and discount sellers has been a phenomenal financial benefit to customers....
Economists call this process of squeezing out transaction costs "disintermediation." If any industry is ripe for this, it is the $70 billion-a-year real estate brokerage market. Yes, fees have fallen modestly to about 5.1% on average in recent years. But a new study... concludes that in an unimpeded free market, fees should be dropping much faster -- particularly amid a real estate boom that has doubled home values over the past decade. Many, if not most, of the services that Realtors provide don't vary with the sales price, so the percentage fee should fall as home price rises.
The problem is that state lawmakers are squashing such competition through two types of laws. First, they make it illegal for brokers to provide rebates on their commissions, which is an overt impediment to price competition. So, for example, LendingTree.com is prevented under these laws in about 10 states from continuing its popular practice of providing several thousand dollars of rebates and coupons at Home Depot to homeowners who use its real estate services. Discount real estate agents would also be prohibited under many of these laws from advertising their lower prices in newspapers.
The second legal device used to restrain trade are "minimum service requirements," which prevent real estate brokers from providing limited services to home sellers for a negotiated fee. These rules outlaw the increasingly popular choice of home sellers who contract with an agent to list their homes for a flat fee of typically around $500, but then handle all the other aspects of the home sale themselves in order to save $5,000 to $10,000 in additional fees....
(Excerpt) Read more at online.wsj.com ...
Do you exaggerate in every post? Don't you think that there is an honest individual anywhere?
I am appalled by your generalities...and please enlighten me as to your profession....
I do not take kickbacks nor have I ever been offered one..you may need to seek other friends...the folks you are associating with seem a very shady...
This is an illegal practice in Texas...the agent either represents the SELLER or the BUYER and never both. An agent can be an intermediary and not represent either...but this is very unusual. I do not do this.
The house had been on the market for over 6 months. Yet this agent magically turned up multiple bids for this house, all with escalation clauses, and my friend ended up paying $75k over the asking price for it, because she had already sold her house and had nowhere else to go
Your friend should have had representation either by her own Agent or an Attorney.....I feel bad for her...but why did she decide NOT to have representation?
I know there are good realtors. But I just don't care for the profession. In many instances, one can do "For Sale By Owner." Do some research and hire a good real estate attorney (which you need anyway).
...and she didn't have representation; I rest my case.....
Bought one house recently and sold another. I never want to deal with another realtor. In neither case were any of the papers correct; (wrong names, etc.) I'll try to live the rest of my life without moving. I'd rather go through the months I spent in the hospital with colitis than deal with another realtor.
Everyone knows the worlds oldest profession but few will admit the second oldest profession was her pimp/realtor.
You need to read the post I was responding to. My points were strictly in response to the following comment:
"but to turn loose thousands of idiots without knowledge of real estate law on the unsuspecting public would be a sad thing. Let's face it, people file lawsuits these days at the drop of a hat...in Texas we must take & pass the required courses, pass the RE test, take continuing education classes & carry Errors & Omissions Insurance"
I took that comment to mean that Joe Blow off the street shouldn't be allowed to sell RE because he hasn't been trained in Texas law. My point was that they take one law course -- RE Agency Law -- and possibly another law course -- RE Law (maybe RE Law Contracts, I don't know if that's still offered) -- and that's it. The course schedules I've seen have these fast track courses in JuCos at 3 weekends (Fri/Sat/Sun) for the entire class. It used to be only a full week (M-F), but I think they changed that. Anyway, no one can learn what they need to know about Texas RE law in 9 class days, so what's the difference in turning Joe Blow loose? Maybe thats a bit of hyperbole, but I think the broader point is clear.
Rest assured, there are people in Texas with RE licenses that have no clue about RE law. The agency requirement only came into effect within the last few years. Both my parents took the RE exam and passed. My dad actually worked in the business but my mom didn't. Neither took a law class, though that was in the late '80s. I had all the educational requirements (still do, I guess) for a salesman's license, and I never took a law class until law school (except maybe an Anti-trust Economics class in undergrad).
If this is not clear, let me know. I will conceed that some things here are ambiguous.
It's amazing how "good" realtors get when you're buying or selling a very expensive house...and how lax they are when you are buying or selling a "middle-income" home. They must have priorities, you know.
I agree....I believe that the jest of the many posts on this thread are that the property SELLER doesn't need professional advise regarding the tranfer of property....and that the cost of this advise is prohibitive. Also, that ALL agents are idiots...
My point is simply, the exposure to liability and the cost of litigation is much more expensive. Pick your R/E agent or attorney wisely....but pick one or the other....and sleep well. As to the idiot comments...all I can do is roll my eyes..... There is no substitute for experience in this business....
bump
Of course, once reality (and cynicism) set in, I realized the way they really make money is to move as many properties as quickly as possible. Volume is key. Time is money. Their hourly rate is by far the highest when they can sell a house with the least time invested, without any regard to the price. Thus, anytime an offer comes in from a buyer, it is in the agent's best interest to try everything possible to get the seller and buyer on the same page and make the deal happen without any regard to the price. Seller concerned that the price is too low? 'Good' agents have ready answers to placate sellers for every occasion.
Real estate agents do NOT represent their sellers' interests. They clearly represent their own interests. (Those who tout their sales volume as a reason to hire them are the ones who really make me laugh. The easiest way to achieve the highest volume is to move the most properties the quickest!)
another reason for more commission for higher priced homes is the increase in liabilities. there are fixed and variable costs associated with real estate transactions.
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