From what I can see, real estate agents work pretty damn hard. They work seven days a week showing homes, and can work with prospects for months before making the sale (if they do at all). And if they do, they may have to split the commission with the listing broker.
When we were looking for a house, the agent took us to various properties every week from November to the following May, and then had to split the commission.
I think she earned that 6% very fairly.
Maybe, but consider the case in the DC area, where there's such a demand for housing that properties sell the day they're listed. Do the selling and buying agents each deserve a legally-mandated 3% for that, or should market pressures be allowed to determine the price through competition?
Maybe true 20 years ago, but with home prices and demand the way they are today, 6% is alot of money for the amount of work required. Where we live, people are starting to simply demand reduced commissions or they just sell it themselves.
I would agree with this. Agents work their butts off for nothing and buyers often feel no loyalty because it is often revealted that (gasp!) the agents are working for the seller. However, should an offer be made and accepted it is then the selling agent that has to hold the whole thing together by making sure that lawyers do their jobs and that inspectors get access to the house, the correct paperwork and insurance policies are available at closing. And should a deal fall through or at the last minute a buyer just decides to buy from another agent - the original agent who did all the work gets nothing.
I tend to agree. Selling is such an iffy thing. You invest a huge amount of time and personal energy on something that may fall through at any moment. However, if there is monopolization, it should be stopped. I am a very long time user of the 'Net (since before it was the 'Net), but there are some things you can't buy over the internet; you just have to see them in person.
Dear Maceman,
I don't have a problem with Realtors charging the commission they can get in an unrestricted open market. I don't have any problem with Realtors making a ton of money.
But in an unrestricted open market where housing values have soared, you get a lot of Realtors who are willing to work for less than 6% commission. A whole lot less.
Around here (outside of Annapolis, MD), $300K for a house is down-market. A realtor who focuses on the upper half of the market can list houses for $400K, $600K, $800K all day long. And they sell. One house sold last month in my neighborhood in one day. I think they got $675K. Another took nearly a whole week. But they were only asking about $610. When you do the math, a Realtor who sells 25 homes a year (not that tough a mission) at 6% at an average of $500K per house is generating $750K in commissions.
There's a Realtor around here who has been selling in this region for decades and decades, and he offers full-service brokerage services for 4.75%. What's that doing to his commission? He's reducing gross commissions to about $600K on the above example.
And he's saving the typical homeowner about $6K on the commission. Which is not a small piece of change.
As housing prices have soared, the fixed costs of selling houses haven't risen proportionately. If a Realtor spent $3K marketing a house when it was worth $300K, he still is probably spending about $3K to market the house now that it's worth $600K. And, because Internet marketing is now more important than other forms of marketing, and it's cheaper, his fixed costs for marketing the house have probably fallen a little.
So, the Realtor's costs have fallen a little in absolute terms, a lot in relative terms, and thus, some Realtors are passing at least some of the savings along to consumers. And other Realtors are feeling the price pressures, and thus keeping their commissions moderate.
And that's how it should be. Because of market conditions, because prices have risen so high, and the houses right now are selling so quickly, there's price competition among Realtors. I remember not too many years ago, Realtors often asked, and got, 7% commissions.
Now, no one even mentions in a whisper anything over 6%, and there are lots of good, reputable, long-time Realtors, especially those making good use of the Internet, who are charging less than 6%. And on the side, a lot of the six-percenters are quietly giving back some part of their commissions to get listings.
That's good old-fashioned competition.
Realtors should not be permitted to change laws in a way to undermine that competition.
sitetest
None of us get a full 6% on a resale.....
I list homes for 0% to 1.5% and receive what the SELLER is offering me to bring them a BUYER..... Would I bring a BUYER to a 2% sale...maybe...maybe not..... This is capitalism at it's best.... We Realtor's are free to set our prices at any level... BTW...new home builders are paying better commissions than any resale SELLER....
"When we were looking for a house, the agent took us to various properties every week from November to the following May"
Six percent helps incompetant agents survive in the industry and makes the competant ones wealthy.
I don't many wealthy agents who would have spent and afternoon a week showing you houses for 6 months.
I blew that last line:"I don't many wealthy agents who would have spent and afternoon a week showing you houses for 6 months."
Should read:
I don't know many wealthy agents who would have spent an afternoon a week showing you houses for 6 months.
I agree SOME work hard but why not a sliding scale.
I'm with you. Realtors that actually make money work extremely hard.
BTW, the average annual income of a realtor nationwide is $25,000. That does not sound "overpaid" to me.
If they earn it, the market will bear it; and if not, not.
Either way, no need for mandates. There should be maximums, but not minimums.
I'm about ready to sell my home, I already have a buyer ready and waiting. My friend the real estate broker said she would handle the paperwork for 'only' 4%--which is $12,000. Not much of a friend.