I was recently challenged about a blog article I wrote. I was told that the references to the “bozo agent” along with the accompanying visual graphic of Bozo the Clown was over the line and damaging to the real estate industry and the reputation of all Realtors. It was suggested that unflattering stories about the real estate industry erode confidence in Realtors, as evidenced by the first reader comment under the article that stated, “This is why we always represent ourselves. We have had bad luck with agents and find them to have the biggest ego’s.”
Given that the content of the article was a factual retelling of actual events that I experienced as a listing agent dealing with a buyer’s agent, and that the agent was indisputably incompetent, I didn’t at first understand what the problem was with the article. In other words, it really happened exactly as I told it. I thought there was a lesson to be shared by telling the story. I thought readers would appreciate having a glimpse into the real life happenings of a deal gone bad. Coloring it up a bit with a nice photo of Bozo and some harsh, opinionated commentary about the agent seemed appropriate to me. Nobody will ever know who that agent is, but you’ll know there are agents like him out there. And you should know that. You deserve to know that. Why should I keep it a secret?
Nevertheless, I edited the post, removed the photo of bozo, and toned down the writing a bit, though the message of the article remains unchanged. I did this out of respect for the wishes of the person who shared their concerns with me. I always appreciate when others respect my concerns, so I try to do the same. It’s only a blog article after all.
This is the second complaint I’ve received in 2+ years of writing 300+ blog articles. It’s the second time I’ve respected the wishes of someone with concerns. The other instance was an article about an MLS photo that was so crappy (the photo that is) I just had to share it. It was a photo of a house with an SUV parked smack in the front yard (in the grass) and a trash can sitting in front of the garage door. I wondered why the agent couldn’t have had the SUV moved and pulled the trashcan out of the way before taking the photo. Someone saw the blog article, recognized the house, sent a link to the Seller who in turn informed his agent, who in turn demanded that I remove the photo, which I did.
Again, in that instance, I didn’t understand why the agent was upset. It was in fact the actual photo he took and placed in the MLS. Every agent and buyer who saw the listing would see the same photo.
Where should real estate bloggers draw the line in writing about our everyday experiences, observations and viewpoints about the real estate industry and the people in it? Some of the best material pokes fun at the stupid things agents do. It’s hard to ignore all that material. But is this unprofessional? Is it mean? Is it arrogant? Is this sort of brutal honestly damaging to the real estate industry and demeaning to other Realtors? I don’t think so.
What I believe is accomplished in owning and publicly admitting the shortcomings of our industry is that the reader/consumer gains a better understanding of the fact that not all Realtors are the same. We don’t all operate on the same level and we don’t all hold ourselves to the same standards of accountability. Yet, as Realtors, we’re often viewed as having little or no difference, which isn’t the case. When the consequences of choosing just any agent to work with are illustrated and made clear through recounting of actual experiences, I think it helps both the consumer and the better agents.
If you read an article such as the one I wrote about the misguided agent who blew the deal for his buyer, and you see that a real woman actually in fact lost the home that she had under contract because of the incompetent actions of her agent, and that she really, really wanted that home and was unaware of the damage her agent was doing to her deal, I believe it helps you get the fact that who you choose to represent you matters. It matters a lot. Your agent matters.
So where is the line drawn when writing about the life and times of a Realtor? For me, if it’s true and it really happened, and there is a lesson to be learned that might help a consumer make better choices, it’s fair game. If it’s embarrassing to our industry, or makes another Realtor feel defensive and uncomfortable, it doesn’t change the fact that it’s true.
Most agents in our business are very good, or at least adequate. Many are superb and exemplary. But you need to know that it can really cost you if you pick a bad one. And you need to know that the bad ones are out there waiting and hoping you’ll hire them.
So you, the consumer, need to work harder at picking an agent. Talk to at least three. Ask them how many deals they do, which areas of town they know best, and why you should hire them. Listen and watch. Trust your gut. Is the agent authentic in demeanor, or just a good show person with a good pitch? Do they look you in the eye? Do they give straight answers or do they wiggle around the question? Pay attention. You can tell the difference if you really try.
Steve,
FWIW, I really enjoy your blog. I’ve been reading it for at least a year. I’ve recommended to anyone that asks for advice regarding RE. What I most enjoy is your candid, real-world anecdotes. It’s disappointing that you were asked to edit your posts by other realtors. It’s like these folks would rather move the spotlight away from the problem rather than just fix the problem. I can sort of appreciate the photo thing. However, the realtor made the photo public as soon as it was put on MLS. I would say it’s these types of actions that further erode the confidence in realtors beyond the original issues you pointed out.
Thanks for the great job!
Personally, I enjoyed the last article. It showed how much you cared about your profession. And I believe, also helped potential buyers pinpoint red flags in their dealings with shady relator’s in the future. As I just purchased my first place and had no idea about the ins and outs of the contract until my realtor explained it to me. And I would have had a hard time just finding someone to represent me if I didn’t go with a friend of mine. And would have most likely gone with someone like your who kept a blog like this, who tells the truth, good or bad. So keep up the good work.
Good job, Steven. I know, it is hard to testify against your collegues and might be even prohibited in any way by the TREC code of ethics (not sure about this one). We need something like consumer driven rating system to share the experience of dealing with particular agent and give him a score. So far I found this web site http://www.incredibleagents.com. But there’re no reviews and it is useless as it is right now.
I also have something to share about my recent experience with Austin’s realtors. Yesterday I figured out one more lie thanks to Bob Petersen who I hired to do a home inspection. I am representing myself and every time when I ask about passing 3% buyer’s agent commision to me I was told that I don’t have a realtor’s license and it is not possible. Turned out that the principal buyer also has a right to receive it as a reimbursement.
Here’s an example of realtor’s greed (I won’t disclose names at this time) which made me walk away from the deal:
“The fact that (seller’s agent) would offer a buyers agent commission to a cooperating licensed ABOR member agent does not automatically translate into a 3% savings to a buyer who wants to represent themselves or the ability to give the homeowner a rebate. The home is already priced below market. I have kept in touch with you and spent several hours at the home yesterday while you toured the home again for several reasons – besides the obvious desire to get the home sold for the (client’s name).”
I thought your article on the “bozo agent” was so important I actually forwarded the link to the majority of my clients – and I am a Realtor. I thought it was a wonderful example of the many intricacies that are involved in taking a contract through to closing smoohtly and how much work is actually involved. The public needs to be made aware of these situations and I am all for the education of my clients! The article has also bolstered their confidence and trust in me as an agent.
I agree with not giving back 3%. The 3% is meant to pay for a full service buyer’s agent, whose job it is to put the listing agent’s mind at ease, and handle HALF the work involved in a transaction.
Too many “self representing” buyers are incompetent, and so they’re NOT equivalent to a full service agent. They’re “representing” themselves for the sole purpose of saving that 3%, and not because they know what they’re doing. Their hand still has to be held, and so they’re not worth giving up 3% commission.
If I were a listing agent, I’d give back 1%, maybe 2% at most, but never the full 3%.
> every time when I ask about passing 3% buyer’s agent commision to me I was told that I don’t have a realtor’s license and it is not possible. Turned out that the principal buyer also has a right to receive it as a reimbursement.
Sorry Observer, I’ll have to side with the other agent on this one. The total commission is an agreement between the Seller and the listing agent. That amount is established at the time the listing is signed. The listing agent in turn offers a co-broker commission to a buyer’s agent who brings a buyer and closes on the sale. That buyer agent earns the commission by running the buyer side of the deal, handling showings, running CMA’s, writing the offer, negotiating the deal, inspections, administrative issues, following the buyer’s loan through the process, meeting the appraiser, answering buyer questions, etc.
When a buyer agent doesn’t exist on the other side of the deal, it means the listing agent has to take on the duties and responsibilities of the buyer’s side of the deal and deal directly with an unrepresented buyer, which has a lot of downside and no upside. When the other agent tells you “I have kept in touch with you and spent several hours at the home yesterday while you toured the home again”, that’s an example of the buyer agent duties that are now being performed by the listing agent.
So, a couple of points here:
1) The Seller does not “save” anything on commission by working with an unrepresented buyer. In fact, a prudent seller and her agent might insist that you find an agent to run your side of the deal.
2) As an unrepresented buyer, any commission rebated to you at closing comes from the listing agent, not the seller. The seller pays the listing agent, the listing agent pays other agents.
Personally, if a buyer convinced me that she has bought many homes before, has her pre-qualification letter in hand, and survives a sort of mini-interview with me about the purchase process and her expectations moving forward, I would consider working out a partial commission rebate at closing. But I’m still going to have to be on top of that side of the deal, calling the lender, letting in the inspector and appraiser, and all of those additional activities create additional effort and risk, so I would in fact not perform those tasks for free.
The best way to work out an arrangement like that is to present yourself from the outset as a hassle-free buyer who knows how to complete the transaction. I’m curious what caused you to need to be in the house for several hours? That may have spooked the listing agent. It would me.
Steve
Jim,
I will tell you one day how I could get a house for free. I’ve also been told by the 20 yrs in the business realtor how much she learned from me. My offer didn’t have a single mistake compare to other offers submitted by “professional” realtors – that what I was told.
I will probably open my own blog one day to share my experience and teach people how to buy a house without the realtor 😉
Until standards are changed, the real estate business will be very touchy with “bozo” representation, or any implication that they are less than professional. I speak from experience I’ve had in the Chicago area, being a relatively new Austin agent after 12 years out there, but man, the stories I can tell you of screwy agents and deals.
Maybe worst would be the “top” agents, who would operate like the “outfit”, holding back contracts submitted until their “double pop” was consummated, and they got both ends of the deal, in an era when 6-7% was standard. I’ve even had agents in my own office steal my buyers, not to mention agents shopping around buyers with sham financing. This isn’t even including the new agents who had no clue, or the old pros that were difficult to speak with, like I was trying to get ahold of the “Godfather” or something. I had one “top” listing agent ask me if I was sure my buyer REALLY wanted to maintain his inspection contingency, as it might hold up the deal for a few more days(never really got that one). I’ve had listing agents very forcibly tell me that the only way the deal would get done is if I gave up a good chunk of my commission, as the buyer was short on funds(didn’t they realize that going in when they listed the house? Why would they expect the buyer’s agent to do that?). I’ve had an agent even verbally yell at me at the closing table about the removal of a old refridgerator, while both attorneys were present.
My point is, RE agents can indeed be quite incompetent and/or duplicitous, but if you criticize this problem, a problem of public perception that has done more to remove the agent from the prior catbird seat of strength than any discount brokerage or public DIY RE website, you get big-time heat. I think the entire RE occupation at this point needs to be transformed to eliminate this old vestige of incompetence. Much like an old-line Chicago politician padding his payroll
with incompetent appointees, the business is overwhelmed by unqualified agents who should not be in this business.
The public itself is tired of the old paradigm, and looking hard for an alternative to the nonsense that is a vestige of a past when there were far fewer agents. They will hold onto their cartel of information and perks, and raise a storm if any innuendo of incompetence is railed against them, per the bozo pic and all.
Give another 3 years, and the RE industry will have changed so markedly that the above will be a moot point of the past. At that point, the web will BE the real estate industry, as a third-party provider/clearinghouse, and clients will handle the whole process themselves. The whole concept of the buyers agent shopping around the buyer, or the listing agent performing his/her duties, will be a pleasant vestige of the past, like a Norman Rockwell cover. If it wasn’t for the recent
subprime slowdown, we’d be just about thre already, but look for the whole thing to change fast in the next coming year.
Hi Scott,
I don’t agree with your assessment of real estate business, but I appreciate your opinions. As an industry, it’s important that we know what people think. While I don’t necessarily think your views are representative of how most people view the real estate industry, knowing that there are people out there who hold those views tells me we need to work even harder at earning trust and respect.
Steve
>The total commission is an agreement between the Seller and the listing agent. That amount is established at the time the listing is signed
I know this. Basically I cannot force listing agent to rewrite his agreement between him and the seller. That’s why I always asked if the listing agent would be willing to pass 3% absent buyer’s agent back to the seller and I would reduce my offer price by that amount. I had no problems on this with some experienced long-timers but always was fed with “you don’t have a license” nonsence by relatively fresh realtors (TREC website, I’m always checking the profile of the agent who I am dealing with). Apparently, Bob told me that he always getting 3% credited to him at the closing and he specifies this in the offer. You can give him a call, he should be able to confirm this.
>When a buyer agent doesn’t exist on the other side of the deal, it means the listing agent has to take on the duties and responsibilities of the buyer’s side of the deal and deal directly with an unrepresented buyer, which has a lot of downside and no upside.
Listing agent job is to sell the house as soon as possible and at the best price/conditions for his client. I think and most people will agree with me that giving 3% to the listing agent with no performance measures is absurd and will change soon. 3% if the house is sold during first month (week, etc), then 2% and so on
>When the other agent tells you “I have kept in touch with you and spent several hours at the home yesterday while you toured the home again”, that’s an example of the buyer agent duties that are now being performed by the listing agent.
See above. Can you justify 3% of 300K for couple e-mails (not initiated by me, but rather listing agent was interested in me, asking what else he can do for me) and 2 hours of showing the house? What the rate would it be per hr? 😉
>I’m curious what caused you to need to be in the house for several hours?
I did my own inspection to include repaires needed to be done to the Paragraph 7D. You should know that after the contract have been signed the buyer doesn’t have many options to force seller to do repaires – either walk away and loose option fee or hope for the seller’s good will. Unfortunately listing agents don’t like the clause “subject to inspection report” in that paragraph which was advised by my attorney
Hi Observer,
> I think and most people will agree with me that giving x% to the listing agent with no performance measures is absurd and will change soon.
OK, but can’t the same statement be turned around on you? You want to buy a house, with no buyer’s agent, and receive x% rebated to you for “no performance measures”? What have you done to earn that x% and why do you feel entitle to it?
> Can you justify x% of 300K for couple e-mails (not initiated by me, but rather listing agent was interested in me, asking what else he can do for me) and 2 hours of showing the house?
This is one of the most frustrating areas of the real estate commission/compensation debate. Some want to make it about the specific time spent on a specific deal. That’s not how the economics of practicing real estate works. It’s a business, not a set of hourly tasks.
I just got back from spending an hour walking around in the weeds, in the hot sun, with a buyer who called me 15 minutes earlier and wanted to see an acreage lot. I got in my truck and met him there, told him all about the subdivision, showed him a couple of lots, and told him about some other lots as we spread out a plat on the tailgate of my truck. I got a sunburn on my forehead because I don’t listen to Sylvia and wear a hat, and I probably picked up a bunch of chiggers while walking through the tall grass.
I may or may not ever hear from that prospect again. Or he may become a lifelong client who I help a half dozen times over the next 20 years. There is no way of knowing. I am assuming 100% of the risk in the relationship. He didn’t pay me anything for my time.
The point is, Realtors perform a lot of uncompensated work, dealing with a lot of buyers and deals that never pan out, plus the overhead costs of licensing, training, auto expenses, health insurance, etc. Some deals are easy, some are excruciatingly difficult. But over a year’s time, an agent either makes his/her living or he doesn’t. For someone to take a narrow snapshot of that year and say “you were overpaid there on that specific deal” is an inaccurate way to describe the compensation of a commissioned sales person.
> Unfortunately listing agents don’t like the clause “subject to inspection report” in that paragraph which was advised by my attorney
I would never allow a seller to accept that clause. I’ve had agents bring offers with that written in, and we make them take it out. Paragraph 7 is for writing in specific repair items that are known in advance, so the seller can consider whether he wants to agree to those specific items before signing the offer.
The Option Period provides the buyer ample opportunity to have the home inspected and determine if the condition is suitable. If a seller were to agree to your attorney’s clause, what is the seller agreeing to exactly? What does that clause accomplish? The only thing is accomplishes is muddying the water with an ill-defined, unnecessary clause. It somewhat implies that the seller might agree to some inspection repairs, so a seller would be poorly advised to accept such vague language. I’d be interested to hear your attorney justify the purpose and rationale for the clause.
I enjoy hearing your side of things, Observer. Sorry if I can’t agree with where your coming from on 100% of it.
> OK, but can’t the same statement be turned around on you? You want to buy a house, with no buyer’s agent, and receive x% rebated to you for “no performance measures”? What have you done to earn that x% and why do you feel entitle to it?
Steven, you forgot the fundamentals and started believing in the industry’s marketing. Tell me – who pays the money and where agent’s commisions are coming from ? 😉 Then we can discuss who deserve what. I don’t want to mention how many times I heard that having buyer’s agent won’t cost me anything as seller pays it. Sounds familiar? No buyer – no commissions, doesn’t matter how much effort you put into listing and advertising the property, period !!!
If you’re asking what I do – I do my own research on the property (CMA, county records, deeds, outstanding liens, previous owner’s history, the same for the neighbors and so on) even before visiting the property. I don’t need a single answer from the listing agent regarding the property but I’m asking anyways to separate truth from lie and get a feeling on the person I’m dealing with.
It is no secret that after the contract agreed upon the rest of the work is on title company. You mentioned you would need to call the buyer’s lender to verify prequal letter. That’s fine because you don’t want to put the property on hold for 30 days (usually) to find out that the buyer couldn’t get a financing and the deal felt apart.
> The Option Period provides the buyer ample opportunity to have the home inspected and determine if the condition is suitable.
Again. The only options the buyer has in this case either to walk away and say goodbye to his option fee ($100 or $250) plus inspection cost ($350) or hope that the seller will do some repairs or compensate. It is one way road as I see it
Sorry, have to go to the meeting, “cubic life of the engineer” as you named it in one of your previous article 🙂
The truth makes the world better. The thing that needs to change is the behavior of that realtor, and the decisionmaking of potential customers. The lesson is, even after hiring a realtor, be more involved in your property transactions. Know what they are doing.
Thanks for writing that post. I learned a lot, and thought about those lessons.
Steve-
I’m with Edward on this one. Your retelling the story about the “bozo agent” doesn’t damage the RE industry… the (in)action of the other agent however, does. Reasonable consumers should know the difference.
-Jason
Steve –
I’m just catching up on your blog. My son is about to sell his house so I figured I’d invest some time to get caught up with your postings and insights. Looks like you’ve got quite a bit of commenting going on with this post. That’s excellent – means what you’re saying is relevant and important enough for people to take the time and write. Increases traffic too.
I’m not a realtor but I want to chime in here to acknowledge your willingness to be gutsy, straightforward and honest about what you see in your work. I would have liked to see the Bozo picture stay but well that’s me. You’ve always been willing to hear both sides of the story ever since I’ve known you (now 7 years). You blog like you talk – you walk like you talk. You’re a straight shooter and some people just aren’t always comfortable with someone else calling a spade a spade as they say. Yet you’re willing to take the feedback and make adjustments. Says a lot about your character.
Keep blogging. Keep pushing the edge and stay with your honesty. It’s what makes you such a valuable real estate person and I suspect your clients see this and your business growth reflects this too.
I value the authenticity of your personality.
appreciatively
Tom
Tom Parish Inc.
Social Media Consultant
Observer: you are right on with all of your comments. I’ve stated the title company does all of the work too.
I’ve had realtors tell me they spend x-amount of dollars marketing the said property…wow-print a flier, put it on MLS, put in the Statesman homes section (no picture-too expensive), and then on Craig’s List (FREE). Oh-if they are w/the big agencies they claim to have a “realtor property tour” (I’ve seen these…maybe 5 agents show up). Lately with the market being soft and the amount of homes on the market-I’ve seen lights on the front yard signs and even agents claimimg NO REASONABLE OFFER DECLINED….does this count as marketing? Both of those houses are still sitting on the market (months)
What does an agent expect to get paid? If you hire a lawyer at $250 per hour (estimate) if they do 8 hours of work for you that’s $2000. Think about it. Say my house I am selling is $300000, 6% of that (sellers agent and buyer’s agent each getting 3%)-that’s $18000 on the table that the buyer and seller is forking out for the services agents are providing….what the heck!!! That’s $9000 each! An Attorney would have to work 36 hours for the buyer and 36 hours for the seller (at $250 per hour)…..how much does it cost to list on MLS?-less than a thousand… list in the Austin American Statesman? less than $200. Craig’s List (FREE), property web site? as little as $5 per month. If it takes an agent 72 hours or even 36 hours to do those things and show the house….I can certainly do it myself. Why…because it doesn’t take that long and agents aren’t spending that much time on your home. Period.
Can an agent have an open house 24/7? You could if you wanted too and on your own terms. FREE!!
Hi K,
I appreciate your comments.
Sounds like you’re someone with the skills, time and expertise to not need the help of a Realtor. That’s great. I think there are many like you. I’m not one of those who says everybody needs a Realtor. I do think most people do though.
You’re using your circumstance to argue that since you can personally do without professional help in a real estate transaction, that everyone should be able to do the same. That’s simply not the case. Many people don’t have the time, knowledge or expertise to deal with everything that might happen. They feel like they can be better served by a professional. They are free to shop around and interview lots of agents and find one who will work best for them.
Is it possible for you to be proud of yourself and your ability to be self-reliant and good at real estate without bashing those who have different situations and circumstances, and without bashing those of us who have dedicate ourselves to the occupation of serving people who choose to hire a Realtor?
Steve
Yes, but I was only reading comments above and commenting on the 3% issue on why agents don’t think agentless buyers are entitled to getting 3% off of the purchase. What about the agent saying why should the agentless buyer get the discount when they have to hold their hands because of lack of knowledge of process. That being said…why is it bashing agents or people that don’t have the time and need to use an agent? Is pointing out the facts on how much money is on the table bashing? I was only stating a point…a fact…Personally, I would use an agent if I were new to a city/state and didn’t know where to start-yes, I’d need professional help. and 2-if I were selling/buying rural property-
I am sorry if you or anyone else here took my comments as bashing those who chose/choose to hire a prefessional Realtor. You are right, it takes time-not alot though. You can run your checks while at work in your cubicals-public records can be found on-line. Steve-I appreciate your kind words about my knowledge and the success we’ve had w/our real estate transactions. In fact, I read on one of your blogs in the comments that 1% of the market is like me. If I remember correctly, the commentor said the 1% was neither here, nor there-meaning that 1% was not something he worried about.
What were your thoughts on my question about what a fair pay for agents should be using my analysis of agent vs lawyer. With your expertise and your data, how time do you spend on a property that you list…you can give me an average if that makes it more realistic-
Here is the comment I found to be bashing agentless buyers:
Jim Says:
October 18th, 2007 at 8:40 am
I agree with not giving back 3%. The 3% is meant to pay for a full service buyer’s agent, whose job it is to put the listing agent’s mind at ease, and handle HALF the work involved in a transaction.
Too many “self representing” buyers are incompetent, and so they’re NOT equivalent to a full service agent. They’re “representing” themselves for the sole purpose of saving that 3%, and not because they know what they’re doing. Their hand still has to be held, and so they’re not worth giving up 3% commission.
If I were a listing agent, I’d give back 1%, maybe 2% at most, but never the full 3%.
This is why I made the comment I did:
I agree with not giving back 3%. The 3% is meant to pay for a full service buyer’s agent, whose job it is to put the listing agent’s mind at ease, and handle HALF the work involved in a transaction.
Too many “self representing” buyers are incompetent, and so they’re NOT equivalent to a full service agent. They’re “representing” themselves for the sole purpose of saving that 3%, and not because they know what they’re doing. Their hand still has to be held, and so they’re not worth giving up 3% commission.
If I were a listing agent, I’d give back 1%, maybe 2% at most, but never the full 3%.
Using that post from a previous commentor…that is why I posted the realtor vs lawyer analysis: this is my 2nd rebuttal-the first one was removed-
I was not bashing people who didn’t use agents-just putting the shoe on the other foot in reqards to the comment above about not rebating back 3% per the agents comment.
I have to acknowledge that doing it by yourself is not for everybody. As Steve mentioned it will require enormous amount of time, access to the information and some knowledge (which is protected by the industry from being opened to the outsiders IMHO ;-)). And even after that you still might have a doubt if you could’ve done better with the help of the right (honest) realtor on your side
Personally me, I feel better if everything is under my control and I know every ins and outs of the process 🙂
Isn’t it this simple?……the agent running this blog insists that agents are indispensible in the RE transaction. I mean, what would you expect someone to do, say that his profession is redundant and worthless?
Here is what I’ve seen the last 12 years….I’ve been reading articles on the RE industry at least since ’95, and the theme is always the same. The commission rate was at a national average of 7% in ’95, now its around 5%, or slightly lower. Also, during the same time, the web has come close to making local MLS’s defunct per, ironically, it’s own realtor.com along with other on-line local MLS public sites. Because of the same, you have had realtors trying to defend their turf in a macroenvironment that slowly but resolutely nips at that very turf.
These are all the same arguments I’ve heard 5-6 years ago. The agent is indespensible to the transaction, the public doesn’t understand the effort agents go through, etc. What you are seeing is a slow progression of power from agents to the public that has been going on at least 10 years. Agents will fight to maintain what centrality per the RE transaction they can, crunch stats and persuade the public that they still count.
Meanwhile there is only one venue that counts: The marketplace. If agents are indeed as integral to the RE transaction as they insist, commission rates will hold their own, things will proceed as usual, etc. If they are not, the market will remove them from that perch as IT sees fit, in its own time, in its own way.
My feeling is yes, the agent is integral, but in varying degrees, per varying circumstances.
And, those circumstances would imply a varying commission rate per those ciinuestances, which would lend itself to a menu of services and prices. Indeed, in a red hot market, or other variations, it might be enough to put up a sign/adv. on inernet, and pay folks to process paperwork. In a slow market, the service of an agent will obviously be more vital. The answer would obviously be something resembling a menu of services.
The public in the role of the marketplace will decide this situation themselves in the coming years. If they continue to see value themselves in what RE agents have to offer, they will continue to pay commission. If technology allows them to DIY, and they feel competent doing so, they will NOT pay the commissions.
As simple as that…..
Hi Scott and K,
Thanks for your comments. Again, I think you’re off base, but I appreciate hearing your input. It’s helpful.
As far as the “Realtors are paid to much” argument goes, the big Discounters in Austin have little market share. Some of these companies, one in particular, advertise heavily on the radio and elsewhere, but still have less than 1% market share.
Keller Williams does no corporate advertising to consumers whatsoever – none – and we still dominate the Austin market with between 15% to 20% of the listings taken and homes sold. That’s based on reputation, brand awareness and the hard work of individual agents promoting our services.
So, at least in Austin, the consumer market is speaking loud and clear. Buyers and sellers want full service agents affiliated with a trusted name are willing to pass up the lower cost alternatives. So, your arguments are not supported by reality. There is tremendous value in being served by an experienced, full service Realtor and the proof spoken every day by the market itself.
By the way, in areas where the Discounters, Limited Service brokers, etc. do gain market share, they melt away and disappear as soon as the market gets tough. Why do you suppose that is?
Steve
So you can
Steve
The market is about to get tough with forecasts of getting worse-we shall see who drops out.
I’ve stated that when buying or selling rural property, I would consider using an agent. When coming from another city/state and not knowing the area or only being in town for the weekend to find a home-I’d use an agent. As we know, most of Austin’s real estate sales is to people relocating to Austin….many of companies use brokerage agency/firms for their employees they are relocating to Austin…I don’t know-you tell me what the stats are on relo’s vs Austinites? This could be one reason for your current stats.
Here is a link to an interesting article in the Statesman-it talks about the Austin Real Estate Market:
http://www.statesman.com/business/content/business/stories/realestate/10/20/1020homesales.html
When you say the average home price is up in Austin, are you indicating the asking prices are up? or the actual sell prices? Just wondering.
> When you say the average home price is up in Austin, are you indicating the asking prices are up? or the actual sell prices?
Both. See all the stats here, broker down by area:
http://crosslandteam.com/blog/2007/10/22/austin-real-estate-market-sales-update-sept-2007-and-ytd/
Steve
I think Austin might be a busy city as well, and busy cities don’t have as much time to monkey around selling houses
themselves. I found that many of the fsbos in my old area in chicago were retirees, or households with stay-at-home
moms. Almost invariably, the two-income with kids, or singles listed with agents have time contraints. People forget
that selling themselves is a part-time job. Remember, you are on call, after work and on week-ends, to show the
property. You may end up cancelling many activities for no-shows. And so on. And in this slow market, that could be for 3-6 months as well. Most people in Austin don’t have that time, or aren’t willing to give it up to be on call 24/7.
Regarding discount brokerage, yes, I’ve seen most fall apart after time. They all try to nip, but get nipped themselves
eventually. The paradigm is always the same. Discount to the point where you are just about paying the client yourself,
and work the numbers. I saw just one discount broker get those numbers in my area of Chicago. He charged a flat fee
of $300, and had about 100 listings(pretty good as it was a one man operation). The real estate board in Il. changed
the statues to force negotiation as part of a mls listing, and he went away as well. Sure, he might have made 100K
that year, but only by absolving himself of all responsibility for the deal besides MLS listing and entering MLS data.
Companies have a harder time. They have a brand to advertise, and some brick-and-mortar to upkeep. Add the cost
of recruiting new agents and all, and its no wonder few last. Now, after all that, here is where I see the industry in 5 years:
The paradigm will be so far away from the present situation, it is esssentially unrecognizable. Try a 100% web mediated
transaction, with pay-per-deal specialists available in person if needed to step in at any time in the transaction.
Each state RE board would drastically renew their classification system for new RE related occupations, with the requisite
licensing as well. The occupations would be in the guise of the following:
“Stager” – would be an interior/exterior decorator of sorts. For a one-time fee, a plan can be drawn up to be implemented
later by the seller.
“Buyer facilitator” – would show buyers properties, and write up/negotiate offers for the client as well
“Negotiator” – Would work much as an auctioneer does, just getting called in to get a deal ironed out for a seller.
He would be licensed and insured with the same errors and omissions insurance that agents currently have
“Post negotiation facilitator” – would insure that the deal just signed gets consumated, and can be retained at any time
up to closing.
The question is, will the seller and buyer save more money after all is said and done? The answer, in short, is…..NO!
Full-service gas stations switched to self-service over a period of about 3 years, from around ’74 to ’77. At first,
you saved money by pumping it yourself per the full-service station. By 80, everyone self-pumped, and no money was saved. The only end result was that everyone was FORCED to pump their own gas. The same will hold true in the RE
industry. When everyone sells themselves, there is no commission to be saved, and prices find their own level, without
regards to commissions. End result? Everyone has to do it themselves, OR pay someone to do it and bring it all round again to agents.
So, after all is said, no one saves more money anyway! Isn’t that hilarious?