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 ...
When I sold my condo, I did FSBO. Sold it in a few weeks, got the same price as an indentical unit in the building sold through the MLS.
We sold our house through a discount broker: 3.5%. 2.5% went to the buyer's broker and 1% went to him. Our house was in Greenwich, CT.
He held one open house, and got us in the MLS. Our house sold in three weeks, and this was around Christmas, and the first weekend there was major snow so no one could come down our street and the second weekend was Christmas.
I understand why the buyer's broker gets 2.5%. But why should the seller's broker get much? We had committed to selling our house. He didn't need to convince us. He just put a lockbox on the house and had one open house for realtors.
After we sold the house, Al Gore came and stole the lockbox...
The government directly or indirectly has controls on many markets. We both know this.
And while we're at it, we can make laws saying that architects can't charge more than $5000 to design a house, contractors can't charge more than $8000 to build a house, and just for good measure, TV's can't cost more than 50 bucks! : )
We just sold some land in Yugoslavia and their version of a broker had a fee of judst 3%. That seems very fair to me.
Then how did "My realtor made a whopping $31,500 on my house in April".
One major difference, in TX RE agents are licenced and regulated by the state. The rest aren't.
I failed to include the fact that the seller was interested in a quick sale, due to cash flow considerations. We offered the asking price and it was accepted immediately. The seller was happy. We (the buyer) were happy. And the real estate agent made a cool $15K without paying a dime in advertising and about 4 hours of effort...his value was knowing his customers and putting the right people together at the right time.
I've always been a bit suspicious of a business that can generate a healthy annual income for folks who seem to have a lot of downtime.
"And while we're at it, we can make laws saying that architects can't charge more than $5000 to design a house, contractors can't charge more than $8000 to build a house, and just for good measure, TV's can't cost more than 50 bucks! : )"
Sounds like the modern version of FDR's "a chicken in every pot" promise.
I'm voting for you!
"One major difference, in TX RE agents are licenced and regulated by the state. The rest aren't."
I don't of any state where Real Estate brokerage isn't regulated by a state agency.
"One major difference, in TX RE agents are licenced and regulated by the state. The rest aren't."
Yes, architects are licensed by the state. Contractors aren't licensed but their work has to be inspected.
Licensing has to do with ethics and legal issues, not the amount of fees charged for a service.
"Then how did "My realtor made a whopping $31,500 on my house in April"
$529,990 x 6% = $31,794 to be exact. The realtor didn't get all of that, but it all went to the same brokerage firm. Better?
Bottom line is that some 'freepers' advocate fascism by government price and wage controls instead of capitalism.
If real estate is such easy money why don't more freepers go for it?
"But if you hate agents, "
then DON'T use them. If you value their services and think the fees are worth what you get then find one that you like. That's what freedom is.
It's amazing to me how many people on FR say they are conservative, but as soon as something comes along that they don't like they immediately think of a law that will instantly solve their problem.
As in most any other sales field, the 80/20 rule applies.
Lots of part timers and dillitantes. Many commission motivated who provide no service.
Those don't usually last.
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.