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Comment by o_nate | Hacker News Reader

When we sold our house, it was obvious that our realtor's incentive was to get a deal done. They had no incentive to go for a higher price if it lowered the chances of a deal getting done. If you really want an incentive to get the best price, you should have a base fee and an incentive fee, similar to how hedge funds operate. E.g. 2% of total price, plus 20% of difference of price above some baseline (e.g. assessed value).

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The Freakonomics guys found that "when real estate agents sell their own homes, they tend to keep them on the market longer (about 10 days) and get a higher sale price (by about 3%) than when they sell homes for their clients."

https://www.investopedia.com/financial-edge/0311/how-real-es...

I know the obvious takeaway is (to exaggerate) that all realtors are crooks who are selling your house for too little because they don't care about you. But are we to expect that every realtor should spend as much time and effort selling every home as they do on their own? They presumably only sell their own home every few years, if that, and sell other people's homes every week.

I'm actually surprised the numbers aren't "worse" for realtor's own homes. Never mind that realtor's are, presumably, the most aware of local market conditions and are then in a position to best prepare their own homes for a higher sale price, i.e.: more likely to do home improvements that reap a higher return, to know how to best show the house, etc.

Yes, we should actually expect them to spend more time and effort. It’s their job!

Would you be happy with the local plumber spending more time and effort fixing their own water valve or yours? Do you expect construction crews to spend more time or less time and effort when building a concrete bridge as compared to when they pour their own driveway?

These are even examples where we should expect the person to care less about their job than their own personal stuff. Realtors have a fiduciary duty to their client.

Real estate agents don't get to choose how long their clients' home is on the market.

Quite often real estate agents work with people who want to sell quickly, and therefore price their homes lower than if they had more time to sell.

Also, the advice that real estate agents give on setting prices is often ignored by their clients. Clients routinely think that they know better about how to price their own home than the agent -- even an agent who's been in the business for many decades and who's sold hundreds or thousands of homes.

> Real estate agents don't get to choose how long their clients' home is on the market.

Like hell they don't. The real estate agent's job is literally to sell the house. If a house takes 3 months to sell it is likely because either the agent isn't doing their job, or the seller is not heeding the agent's advice.

When I sold my house, I agreed a fee that was a lower than normal % on his estimated worst case sales price and a 3x higher % of any amount above this.

End result was he worked really hard getting prospective purchasers bidding against one another. I ended up selling for 25% above my reserve price.

Sure, I paid a lot in fees. But since I was living 20,000km away at the time, it was totally worth it for the peace of mind achieving a good price.

I am still surprised that almost everyone goes with the standard fee scale, for what is the largest financial transaction in your life!

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