I find it strange that for one of the largest transactions most people will ever make, they choose to use an advisor with little or no real education in the subject, with whom they have a relationship that's steeped in moral hazard.
Or, in today’s market helps get you to the front of the line in a multi-offer situation. Since the sellers agent automatically becomes the buying agent, the listing realtor is highly incentived to push your offer to the seller. In a standard 3/3% commission, even if you negotiate a 2% discount, the listing agent nets 33% higher commission if your offer wins.
But getting 1-3% of the delta on a higher offer that doesn't exist yet is not only a meaningless money difference, if it slows the deal down it costs them money.
Now if they could get a stronger offer by still keeping it on market, and they're only the listing agent, then yes a new offer of like 50k more isn't going to mean that much for them. They'd rather get it sold. That is messed up too because that delta is meaningful for the owner.
From what the parent said, they stopped taking calls because they wanted to represent both sides. It's fucked up.
If you go in without an agent, you must write into the sale contract that you want part of the seller's commission taken off the price, otherwise the seller's agent gets the whole 6% for herself. But in my experience, most buyers are clueless about how all this works and would never know to do that, and would not get a discount, regardless what the seller's agent might say.
(Of course actually it's a bit more complicated, the 6% actually goes to the seller's broker, who pays out both the seller's agent and also the buyer's broker, who then pays out the buyer's agent.)
The 3% is now $24,000. At that rate, the agent only needs to sell 1 house a month, to earn a decent living making $288,000/year.
It’s no wonder the real estate profession’s goals are to make houses more expensive for everyone. This is a racket, and they just skim off the top.
"This buyer has a higher down payment". "They have more reserves if it under appraises". etc.
Price doesn't always win. And it shouldn't. But there are a lot of shady agents that do shady things.
The seller signs an agreement with their agent, and that agreement dictates the commission and fee structure. You, the buyer, don’t pay the commission, and you don’t negotiate the commission with the buyers agent.
And in my experience, a buyer without an agent is just treated as an amateur. The offer is weighed against the headache of dealing with an amateur. It would be an extraordinary conflict of interest, and potentially illegal in some markets, for the listing agent to negotiate a reduced fee structure with the buyer.
Of course there can be other issues, like the realtor "helpfully" setting up the appraisal with their own company, the one that just happens not to notice any major issues with the sale.
I also think that the convention of the the realtor taking a percentage of the sale as their commission is problematic as it incentivizes them to show you the most expensive houses instead of the ones that are best for you. I'd be happier if they charged a flat fee or a flat hourly rate.
You can always try to negotiate the agent’s price. I know a few sellers that had agents agree to 3% commission recently. It’s all about supply and demand, and if agents get desperate, they’ll agree to lower prices.
With that said, my realtor in this market has been doing RE for decades and has a proven record of delivering.
You'll miss the wealthy out of towner with a different brokerage, more likely to be the top bidder.
Most listing brokers will accept a 1% discount, and many buyers will use a discount (refund) broker on their side, so 4% "in house" isn't a substantial discount to miss the one buyer who might go higher.
I don't think that the incentive to show you more expensive homes is that strong. Impression from a friend of mine is a real estate agent wants to close as many deals a year as possible. Closing houses a year, more money. Being known as someone that closes fast and often means hopefully being poached by more upscale agencies.
Buyers agent though has an incentive to soft bully the buyer into over bidding.
Don't know everyone's experience but Realtors show whatever house the client wants to visit and clients can and do find houses for them selves.
>flat fee or a flat hourly rate
Does the client still pay this flat fee/hourly rate if they don't buy or sell the home? I'm sure a realtor would have no problem showing you up to X homes for $Y,000 paid upfront.
The inspector is working for the sale, but indirectly.
One house that my family sold, the inspector showed up at the appointed time, and mentioned that he was the buyer broker's brother. He didn't find any problems with the house.
Don't they have any legal liability if they miss something obvious?
I had a friend who had a house with termite issues that 2 inspectors missed. He tried to get lawyers involved and they all told him he had absolutely no resource besides the inspection fees, which would have been swamped by lawyer fees anyways.
He ended up ripping out all the drywall to repair the termite damage bit by bit.
If the realtor pays the opposite happens.
It is an outdated monopoly that preserves itself by laws they have lobbied for and by bullying people with lawyers. They used to offer an advantageous network effect that we needed before we had stuff like zillow.
I have found that they want the sale as quick as possible.
But if a group of people want to organize and maintain that info in a certain way, and have their notes, and get paid for doing that, is that not their right?
Did they create/curate the info? If so, then yes, just like anyone else is able to use IP laws.
> They use that IP law to grant themselves information asymmetry to gain 6% commissions whereas many countries have commissions half that.
No, they use supply and demand for their services to collect 6% commission. And it’s very negotiable, also showing that the amount a real estate agent charges is due to supply and demand.
I’m only familiar with the way real estate agents work in the US, so I can’t comment on how it works in other countries. But all I can say is, in my experience, the sales history data is all available on the government website, and otherwise, you’re paying for the marketing and whatnot. If you don’t like the price, then negotiate lower, and if that fails, don’t pay it and do the work yourself.
Actually, no. There is extensive evidence that real estate commissions are not tied to supply & demand due to collusion in the marketplace.
If you and I have the same information as the agents, then their use goes down a lot.
This is how collusion in the real-estate market functions.
If you're a seller, you might very well get fewer agents bringing their clients to you. You're free to advertise that you will pay a commission to entice agents though. And the buyer is also free to side step the real estate agent or tell their agent they will make up for commissions from non agent represented sellers.
It's 2021, using Redfin/Zillow/Trulia/Craigslist/Realtor.com is trivial.
I foresee less and less opportunity for collusion as information becomes more and more accessible to everyone.
It's very hard for potential buyers to become aware of the house you have for sale without it being in the MLS system
Realtors control access to the MLS system.
See where I'm going with this?
https://www.nar.realtor/nar-doj-settlement/multiple-listing-...
If you don’t want to pay the real estate agent organizations, you can put your real estate listing on Craigslist, buy online ads, stick a sign on your yard, go door to door to various real estate agent offices, etc.
Our real estate agent worked pretty hard for us buying and selling and we were glad to have him. When we found our new house, it was on Zillow for only 8 minutes and he got us in first during a peak market. It was his tip that "sellers will often stick with the first buyer who offers selling price instead of waiting for better offers" that allowed us to beat everyone else, even though our sellers had actually gotten a higher offer because it made us give them an offer immediately after our first tour. This was after we had basically lost out on three other sales for houses that we wanted (not his fault - we weren't first or highest on those).
The next two sentences are simply false.