When I first purchased a home my credit history was.. interesting. The value the realtor provided was putting me in touch with the right grants, forms, etc and ways to build and fix my credit. They helped me not get scammed with a high interest or ARM loan. Their knowledge helped me. Also she steered me away from a couple houses due to inspection concerns that would have cost me time.
Fast forward to now my credit is awesome, the homes I can afford are in a far different category and my last home purchase was fairly routine, so my realtor didn't do as much but I still value their knowledge and experience because you won't need it until you need it.
I bought a home recently and work in the mortgage industry. My opinion: the buyer's agent should be a flat negotiated fee, maybe an hourly rate. There is very little that most do that the buyer can't do themselves. If the buyer doesn't want to do it themselves, then that's a choice they make to pay, and for items like inspection reviewing and negotiating, I'm not sure I see why it's significantly different if I'm buying a $200k house vs an $800k house. I don't agree with their fees being a percentage of the home prices.
Seller's agents on the other hand...those guys are salesmen. I can see way more value in incentivizing that person to get maximum value for me.
A fee sounds good, an hourly rate seems to incentivize the wrong behavior (as does a percentage of the sale price).
For example let's say a selling agent is getting 6% on a house listed at $500k. If it sells at $500k he gets $30k, if it sells at $520k he gets $31k. If he were to get a $500k offer it probably isn't worth his time to put in a lot of extra effort to try to get that extra $1k, but to you that extra $19k is a lot of money. You might want to do another open house but the agent will convince you to just take the offer in hand. I think this is one of the reasons that agents use all these short deadlines and pressure tactics, it's not just to get the buyers locked in, they want to be in and out of each deal as quickly as possible so they can move on to the next deal.
Not sure how to fix that, but it is an issue to be aware of.
That agent was very helpful in a lot of ways, but didn't get me a particularly good price -- another, nearly identical unit in the same condo complex sold around the same time for about $30k more.
I think the next time, I will stick to my guns on the terms. That probably means I'll have to find an independent agent. This is not necessarily a bad thing; I think the agent who sold that other unit in my complex was independent.
Lots of things like that. And then both parties having to pay 5.1k for his 'service'.
It really pisses me off that in this day and age they think they can be "gatekeepers" of the information.
And they provide an extremely shitty service, they don't even take the care to take good photos of the property.
They've long lobbied for more regulation in my country and are extremely angry that most people are not using their services (I wonder why... :) ).
They did manage to make their services mandatory for state-owned mortgages :( .
When realtors' business model gets disrupted, sellers will not end up getting the same prices for their houses as they do currently, or get to keep the 6% that now goes to agents - that money will simply drop out of the cost of buying homes (except for the new, smaller, cost that will be captured by the new business model).
It's not clear to me that that is true. All economics tells us is that in the current system, sales clear, which means that buyers are fine buying at the current prices and sellers are fine selling at the current prices less commission.
If the commission were to suddenly disappear, it is not clear if the buyer, the seller, or some mix would retain that money. You're suggesting that the buyer would retain all the money without evidence, whereas basic logic would suggest that the seller has more economic power (because housing prices generally appreciate faster than inflation), particularly in hot real estate markets.
But I think it might be partly true, too. As you said, currently "sellers are fine selling at the current prices less commission". When those commissions disappear, sellers who were previously content to get Price - 6%, should still be content to get Price*0.94, since those are the same, and at least in buyer's markets, competing sellers have an incentive to undercut one another in the effort to get their house sold. It seems probable that those would lead to houses moving to a new normal pricing structure 6 percentage points lower than the old normal (less whatever amount the new model is capturing).
I fully believe that there are realtors out there who make their clients money. There is, however, no reliable way for me to differentiate them from the lazy scumbags.
And I don't know where you are located but I've always known the standard commission to be 6% (3 to buyer and 3 to seller agents). But everything is negotiable, I got mine done at 5%. She knocked 1% of the seller agent fee to be my buyer agent on the next transaction when her fee wouldn't come out of my pocket. She got me a second great deal, could I have gotten the same? Maybe, but knowing that negotiation isn't my strong suit, probably not.
But then again, most people buy houses so infrequently that one or two experiences either good or bad is going to color your whole outlook on the industry. I've been lucky enough that my few experiences look like net wins from my perspective.
My friend has also worked with my sister, so all told he's helped myself or someone close to me with buying and/or selling 6 homes and maybe a 7th.