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Real estate brokers in the hot seat
CNN.com ^ | 7-26-06 | Les Christie

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.

Real Estate Impact Tell us your story Is the slowdown in real estate affecting you? Are rising rates beginning to take their toll through higher monthly payments? We want to hear your story for an upcoming feature. E-mail us at yourhome@cnn.com. (more)

Quick VoteDo you think real estate commissions are too high? Yes No or View results

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.

(Excerpt) Read more at money.cnn.com ...


TOPICS: Business/Economy; Miscellaneous; News/Current Events
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To: Vision
You may have strong feelings about it but at least get your facts right. The average Realtor only gets 3-2.5%, the other half going to the buyers agent. Most brokerages get 40% of a Realtors 3-2.5%. The rule of thumb on that final amount is 10% spent for marketing on a listing/or gas for buyers(I had a buyer once I showed 80 homes to). This if before taxes, malpractice insurance, and all the fee's Realtors pay.

Well actually here in OK....one realtor can do both sides of the deal. And surprisingly it happens alot.

41 posted on 07/27/2006 7:39:16 AM PDT by Osage Orange (A world of chickens is only peaceful without foxes..................)
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To: Rb ver. 2.0
Any Realtor that wastes their own money advertising an overpriced property is a fool, IMO.

It's one thing to have an opinion on a business you're not in, it's another to insult a high end agent who knows her stuff.

It's really amazing to me. Half of the people hate agents for not doing enough, half hate them for doing stuff.

In that case, that agent had to find the market as it did not exist at the time, and during the initial stages of a slowdown. She did the right thing and the seller screwed her. Must have had an attitude like yours.
42 posted on 07/27/2006 7:41:18 AM PDT by Vision ("...cause those liberal freaks go too farrrrrr")
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To: DB

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.


43 posted on 07/27/2006 7:43:47 AM PDT by listenhillary (Only the stupidest of animals fouls it's own nest - Democrats provide a fine example of this)
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To: True-Stu
The system isn't out of whack, you're choice of agent is bad.

Now explain this to me again. 6% was good in WWII but not now?
44 posted on 07/27/2006 7:43:59 AM PDT by Vision ("...cause those liberal freaks go too farrrrrr")
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To: Osage Orange
There is no dual representation in Maryland.
45 posted on 07/27/2006 7:45:01 AM PDT by Vision ("...cause those liberal freaks go too farrrrrr")
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To: Vision

"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.


46 posted on 07/27/2006 7:52:05 AM PDT by Ganymede
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To: jaydubya2

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.


47 posted on 07/27/2006 7:54:07 AM PDT by atlaw
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To: Vision

"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!


48 posted on 07/27/2006 7:54:41 AM PDT by Ganymede
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To: Ganymede

You had a 2.5 million dollar home?


49 posted on 07/27/2006 7:55:14 AM PDT by Vision ("...cause those liberal freaks go too farrrrrr")
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To: Vision
The listing agent can be held liable for anything on that property. It's the highest sued business in the nation.

Again, the lawyers are screwing all of us.

50 posted on 07/27/2006 7:58:38 AM PDT by Loud Mime ("Countdown": A documentary about Keith Olbermann's dwindling IQ.....)
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To: atlaw
I have sold houses myself. And it was very easy to do. Actually, the ones I sold myself went smoother than the Realtor handled deals.
But I did not have the time to sell my last one so a Realtor was involved. As, I mentioned earlier, he was a friend and he cut me a great deal on the commission. If I had to pay a Realtor the full 6% I would have declined and gone FSBO. 6% on a $200K house is way too much, in my opinion.
51 posted on 07/27/2006 8:02:48 AM PDT by jaydubya2
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To: Ganymede
If the home prices are inflated they will come down.

Did gas cost $3/gallon in WWII. Did agents do anything to market properties in WWII. Do you think those who bought and sold property had any of the liabilities there are today? Where buyers and sellers represented well then- buyer agency just came into being in the 90's.

I'm open to your idea. Let's find out what the median price of a home was in WWII and the media household income.

To me a lot of your type of anger is hyper selfish. You love the 180% appreciation you got for doing nothing in the last five years, but when it comes time to sell it, hey those Realtors aren't doing enough. MeMeME!
52 posted on 07/27/2006 8:05:18 AM PDT by Vision ("...cause those liberal freaks go too farrrrrr")
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To: atlaw

"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.


53 posted on 07/27/2006 8:06:07 AM PDT by Ganymede
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To: Loud Mime
Unless, of course, you're the one screwed by misrepresentations about the biggest purchase you're ever likely to make. In which case, your lawyer is a good lawyer, and it's all those other lawyers that are snakes. : )
54 posted on 07/27/2006 8:07:19 AM PDT by atlaw
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To: jaydubya2

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.


55 posted on 07/27/2006 8:08:20 AM PDT by Vision ("...cause those liberal freaks go too farrrrrr")
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To: Vision

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.


56 posted on 07/27/2006 8:09:56 AM PDT by RinaseaofDs
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To: Ganymede
My agent didn't do even half of that.

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.

57 posted on 07/27/2006 8:10:07 AM PDT by atlaw
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To: Vision
Deal with it, most on the thread thin and I agree with then that 6% is way to much. I would either fsbo or go with a cut rate broker the next time I sell. If I had my druthers it would be law in TX that you can not charge more the 3K to sell a house.
58 posted on 07/27/2006 8:10:39 AM PDT by Hydroshock ( (Proverbs 22:7). The rich ruleth over the poor, and the borrower is servant to the lender.)
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To: Vision
"Barbara Streisand, at least tone it down some if we're to believe you".

I am a good republican, I'm sure you are, too.

I just hate to give away thousands (and thousands and thousands) for a job that takes very little effort. When a realtor is working on 20 simultaneous closings, the pressure must be immense. We had to worry about just ONE closing, and all of our energy was concentrated on the sale of our own property.

I don't know why some FSBOs fail, we never failed. If we settled for a little less money, the money we saved in commission more than made up for it, and everyone involved was a winner (just not my neighborhood realtor).
59 posted on 07/27/2006 8:11:55 AM PDT by EnquiringMind
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To: Vision

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.


60 posted on 07/27/2006 8:14:11 AM PDT by Hydroshock ( (Proverbs 22:7). The rich ruleth over the poor, and the borrower is servant to the lender.)
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