The law of economics here is telling you that most agents can’t make a decent living unless they charge on average about 3% a deal. If I figured out a way to sell 300 homes a year by myself by working reasonable hours then I’d consider doing it at 1%, but that’s impossible. But that’s unlikely, so 3% is what allows me to make a confortable living, and I’m not budging from this fee. go use discount brokers if you want, but don’t complain about poor service. You DO have a choice.

But the more “toublesome” customers are difficult to identify prior to entering into a listing or buyer rep contract, so it would be hard to tell someone “geez, you seem to me like you’re going to be tough to deal with so I’m going to have to charge you extra”. Or “you seem like such nice people, I’m going to be able to sell your home for less than my usual fee”.

There is no way that could work and it would open the door to potential problems, such as being accused of discrimination. Now, if an agent wants to let his or her fee be determined by the negotiating skill of the client prospect, that’s up to that agent to decide.

And I don’t like to think of any customer as being “troublesome”. Every customer is an opportunity for an agent to help someone and to provide the best service they can. Not every buyer will purchase a home. That doesn’t make them troublesome, or a waste of time. We know that about 70% of all buyers that sign a Buyer Rep Agreement with us eventually buy a home. The other 30% are just as appreciated and valued because at least they gave us an opportunity to help them. People change their minds and that’s ok.

> I will refrain myself from making comments from this point forward.
I hope you’ll reconsider.

Steve

Steve, I perfectly understand the unevenness of the real estate deals. Some folks don’t do their own homework and cause tremendous hassles to all the parties involved. Some deals are much more complex than some others. That’s exactly why the 6% cross the board commission is not fair. These more troublesome customers ought to pay more because they used more services. By the same token, if I am such a good seller/buyer, I did much of the prep works myself and I made the entire process smooth and efficient, why should I be penalized for some other incompetent sellers/buyers pitfalls?

“…though you sometimes cause me to worry about how to maintain civility while still keeping an open forum”

I almost never attacked Jim directly, nor did I ever make any uncivil remarks. However, I respect that this is your blog and you are the owner of this domain. So I apologize for your concern. I will refrain myself from making comments from this point forward.

I appreciate your lively participation in the Crossland Team Blog, though you sometimes cause me to worry about how to maintain civility while still keeping an open forum. Please be kind and respectful to one another.

I think one of the toughest things to understand about the perceived value of anything we pay for in life is that the amount paid doesn’t always seem to match the effort or outcome we observe. Since a lot of the effort put forth by a Realtor is uncompensated, the gap has to be made up on paying customers, or “done deals”.

For every “easy” deal that a Buyer or Seller may think we got (where it looks like our efforts are disproportionately small compared to the money we earned), there can be 2 or 3 that were very difficult to complete, or that we worked hard on for months, only see see it all fall apart at the end due to circumstances beyond our control.

Steve

I just want to find an agent who charges less and doing just as good if not better job as yours. That’s what competition is all about. I end up saving money, the agent get paid according to the quality and amount of work he’s done. That’s all. Simple logic, and yet some 6% people just don’t want to get it.

Jim, your rhetoric is getting old. Really.

Really, just 40 hours. How about the hours of prospecting and talking on the phone with “clients” who waste your time asking questions but never sign the listing agreement. How about the hours driving showing properties to people who never buy?

How about, Bill, your boss at work only pays you at the end of the month, and only if he decides your work is good enough? What if you wake up in the morning not knowing where your next paycheck is coming from?

I currently do 2 deals a month, my first year in business, and about $200k house. It takes ALOT of work to get here, and I’m only making $90k a year or so. Imagine if I got 1% instead and only made $30k? Would I be motivated to stay in this business. Try working as a realtor, Bill, and you’ll see.

And Zillow, those companies sell you on very useless and inaccurate home assesments so you give them their name and #, which they turn around and sell as a lead to a realtor so you can get a “more accurate” evaluation. The commission crap is all a marketing ploy by some companies to win over business.

We already had this discussion. Even a top performing agent selling a good number of homes a year will only make average income selling at 1% or 1.5%.

An average income in real estate is not good enough, because it’s a very unstable job. It’s a business, and people expect to be rewarded with an above average income. That’s why all those 1% realty companies go through hundreds of agents a year. People burn out and go somewhere where you can make a decent living. It’s a matter of supply and demand. YES, commissions are negotiable, but NO, they’re not negotiable below a certain point. I for one will NOT work for anyone below 3%. However, I will give discounts to repeat clients or very good friends.

End of story. People bitch and moan about this for years, but the fact remains that the majority of folks realize this is a tough job and that’s why realtor commissions haven’t really gone down much.

For how much work? Well, listing it on MLS, hosting a couple of open house sessions, giving me some pointers on how to get the house dressed up, and at last, when the contract is in, he will be responsible to help me prep the documentations. I guess if you add all his work together, it’s about 40 hours of total working time, and that translate sinto about $112/hr of wage. He will pay his due to his agency, but I think the agency shouldn’t ask him for more than half a percent ($1500). Even after broker share, he still has about $75/hr. wage level. I think it’s pretty high already.

I don’t care if some hot agent who can sell million dollar houses in a heart beat. He can charge 10% or even 20% of the selling price if he’s that good. That’s how some hot shot lawyers charge their clients. Even with high fees, they still got plenty clients.

Let the agents compete. Starter/juior agents should charge less than senior agents. Government doesn’t have to step in, as long as the real estate trade associations let the market decides the commission level, rather than a rigid 6% rule with full service agents.

Again, the key is fairness and reward of hard work. I am not jealous of those high power attorneys or real estate agents. I am mad that those imcompetent agents that make pretty much the same amount of commission while wasting my time.

Thanks for your comments.

The NYT article is more of the same anti-Realtor stuff. I did post the Wall Street Journal article more than a year ago that says the same thing. http://crosslandteam.com/blog/2005/08/15/wall-street-journal-delivers-scathing-attack-on-real-estate-commissions/

If you search past blog articles you’ll find several discussions of Discount Realtors and the issue of commissions. I believe consumers have more choices and options today than they ever have before and I simply disagree with what the opponents of the current compensation system try to hold forth.

I’m curious, and I have a few questions for you or anyone else who would care to respond:

1) If you wanted to sell your home today, in what way are your choices limited with regard to the commission structure or level of service available to you in the Realtor marketplace?

2) What product is it that you want to purchase from a Realtor and at what price? (within reason – i.e. nobody will list and sell your home for $100) In other words, what is your perception of the amount of income needed to carry on a successful and profitable real estate business such that the practitioner can thrive and remain in the business for more than 15 years, as we have?

2) Do you believe the government should tell me what I can charge for the services I provide, or should that be dictated by market forces, my level of experience, competition from other agents, and ultimately, the decision made by the Seller or Buyer who hires me?

Steve