Posted on 07/27/2006 5:37:21 AM PDT by Hydroshock
NEW YORK (CNNMoney.com) -- The fight over competition in the real estate industry went to a new battlefield this week as representatives of consumer groups, brokers and government agencies clashed before a House subcommittee.
Few participants pulled any punches.
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Steven Brobeck, executive director of the Consumers Federation of America, told the subcommittee on Housing and Community Opportunity that the real estate business model is a "cockamamie system . . . nonsensical and ridiculous."
Among Brobeck's beefs: He claims prices are rarely advertised, that restrictive state laws and anti-competitive practices prevent consumers from getting discount service, and that there are roadblocks to securing key product information through the Internet.
Aaron Farmer, a discount broker in Texas, described how full-service brokers discriminate against discounters: They refuse to show discounters' listings, Farmer said; pressure home magazines to not accept advertising; and refuse to allow discount brokers' clients to view home listings full-commission brokers control. They even destroy for-sale signs.
The full-service brokerage industry, as represented by the National Association of Realtors (NAR), has fought to maintain the status quo. In nine states, for example, there are minimum-service laws that effectively force all agents to provide full service - discounters would otherwise be willing to offer limited services and charge home sellers much less than the traditional 6-percent commission. There is move to pass such a law in Michigan.
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Well actually here in OK....one realtor can do both sides of the deal. And surprisingly it happens alot.
Just about to close on a FSBO (for sale by owner).
Just had a horrendous experience with a Realtor listed home that I came close to purchasing. Backed out after too much dishonesty from seller and Realtor in the transaction.
"OK, I can see your frustration, but that's not the norm. Also she bears all the legal responsibility and priced your home. BTW, if it sold that fast I hope you had a discussion about what the ceiling for appraisals was."
I know it's not the norm, but I still think it's outrageous that she got that much money for so little work. As far as the price on the house, it was priced just right. Not too high (like similar models which just sat and sat and sat on the market!) and not too low (as similar models also were). As it stands, no one in my subdivision has sold for as high a price as I did for the same model. So, maybe the realtor helped out in that regard... but $31,000 worth of help??? Don't think so.
Then sell it yourself. All you have to do is market your house (people have to know its for sale); comply with all disclosure requirements in your marketing and descriptions to prospective buyers (who are prone to sue if you misrepresent stuff); arrange for your own inspection (which you will probably need to accurately represent the condition of your house and to counter potentially unscrupulous buyer's inspectors) to determine the actual condition of stuff like wall, attic, and major appliance wiring, operational conditions of a/c and heat units, termites, dry rot, roof conditions, chimney and fireplace conditions, etc., etc.; be on site whenever prospective buyers show up, or want to show up; negotiate with prospective buyers when they counter-offer and counter-offer again; be on site whenever a buyer's inspector shows up; monitor the buyer's inspector as he performs his inspection to be sure there's no fudging on demanded repairs or alleged conditions; prepare binding option period and escrow contracts; arrange for appropriate escrow; prepare your seller's contract, deed transfers, and real property recordations; arrange for title insurance; and go to work every day in the mean time.
"Now explain this to me again. 6% was good in WWII but not now?"
During WWII, did it cost $530,000 for a two bedroom condo? Or $750,000 for a three bedroom townhouse? That's what the real estate market is like here in Alexandria, VA. Six percent commission is ridiculous!
You had a 2.5 million dollar home?
Again, the lawyers are screwing all of us.
"Then sell it yourself. All you have to do is market your house (people have to know its for sale); comply with all disclosure requirements in your marketing and descriptions to prospective buyers (who are prone to sue if you misrepresent stuff); arrange for your own inspection (which you will probably need to accurately represent the condition of your house and to counter potentially unscrupulous buyer's inspectors) to determine the actual condition of stuff like wall, attic, and major appliance wiring, operational conditions of a/c and heat units, termites, dry rot, roof conditions, chimney and fireplace conditions, etc., etc.; be on site whenever prospective buyers show up, or want to show up; negotiate with prospective buyers when they counter-offer and counter-offer again; be on site whenever a buyer's inspector shows up; monitor the buyer's inspector as he performs his inspection to be sure there's no fudging on demanded repairs or alleged conditions; prepare binding option period and escrow contracts; arrange for appropriate escrow; prepare your seller's contract, deed transfers, and real property recordations; arrange for title insurance; and go to work every day in the mean time."
My agent didn't do even half of that. She didn't have to be on site to show my house. Realtors called me directly when they wanted to show my property to their clients and let themselves in my place by accessing the lockbox on my front door. My agent also wasn't on site when the buyer's inspector showed up. As far as the offer/counteroffer process, not much work there either. Buyers offered asking price but wanted $10k closing assistance. I said okay on the offer but not the $10k. That was that. As far as preparation of contracts, she used her broker's form agreements. As far as deed transfers, real property recordations, title insurance, etc., the settlement company handled all that. Sorry, not a lot of hard work was involved in selling my place.
If I ever sell my new place, it will be FSBO. I think I can handle it.
It's amazing, every FSBOer Freeper can sell a home like nothing. But in America, over 8 out of 10 fail. In my experience, I practically never see a FSBO sell at a price higher than what they would have netted with a Realtor.
Avg. Home price in Western Washington: $400K
At 3% commision: $12,000 not including what the mortgage people are going to do to you and fees.
On the other hand, being in sales, working with people trying to make a rational purchase decision is worse than handling livestock in my opinion.
Then you had a lousy agent. Be cautious when you sign a listing agreement, and make sure there's a "for cause" clause permitting them to be fired. Then fire them if they're lousy, and get an agent that knows how to do the job.
I have members of my family that have. But in fairness I come from a family of contractors who are savey on the building and real estate industry.
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