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A new class-action lawsuit takes aim at real estate agents and their 6% fee

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Re: A new class-action lawsuit takes aim at real estate agents and their 6% fee

#101

Post by noveltyaccount »

ApolloFortyNine wrote: post #92
sl1ck731 wrote: post #15

Earlier quoted context omitted.

I purchased my first home in 2017. I absolutely would not have known half of what to do without my agent. In retrospect there are some things that he swept under the rug that I'm paying for now, but all of the paperwork and having someone who knew what to ask for was invaluable. If I was left to my own devices I would have made some probably very stupid offers and lost the chance at my property. This might just be be…

Mine made an offer way below asking that I thought was insulting, but he told me to go with it, so I did. And they took it, and even on top of that he said I should ask for a few repairs to be made, and they even did that too at 100%. So I too am in the bucket of people who think's the 3% is well worth it. Not to mention the time spent showing houses and the research he did. I get some peoples issue with it being a p…

I still don't see why your experience means the pay should be percentage-based. Why not a flat fee? Why not hourly? Or a base fee plus hourly? The advice the realtor gave you was obviously valuable - but it shouldn't vary if you were purchasing a $100k house or a $2MM house.

Re: A new class-action lawsuit takes aim at real estate agents and their 6% fee

#102

Post by stevesimmons »

o_nate wrote: post #44

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…

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!

Re: A new class-action lawsuit takes aim at real estate agents and their 6% fee

#103

Post by jaclaz »

bootlooped wrote: post #60
s_dev wrote: post #52

Earlier quoted context omitted.

It being % based means the incentives of the agent are more aligned with the seller than buyer. If the agent charged a flat fee -- the agent doesn't have incentive to negotiate a higher price.

There was a Freakanomics podcast episode or book section (I don't remember) where they asserted that the data showed realtors left their own homes on the market longer, ultimately yielding a higher sale price, when compared to homes they were selling for their clients. The reasoning they gave was that the difference in the realtor's percentage between a lower total price and a higher total price was not meaningful en…

>There was a Freakanomics podcast episode or book section (I don't remember) where they asserted that the data showed realtors left their own homes on the market longer, ultimately yielding a higher sale price, when compared to homes they were selling for their clients.

It was a bit more subtle than that.

Given a fixed percentage (let's take the 6%), if the agent sells today the house (valued 100,000-120,000 US$) he/she gets US$ 6,000 today.

If the 100,000 offer is refused the house stays on the market for - say - 3 months more, and eventually is sold at 110,000 US$) the agents gets only US$ 600 more (and three months later), but has to arrange many more visits, so the formula is incentivating "quick sales" and the agent has all the interest to counsel the seller to accept a "low offer".

The proposal by the freakanomics authors was to increase the percentage due to the agent on the sums exceeding the "base value" of the property, so that the convenience would be shifted to "sell the house at the highest reasonable price in a reasonable time".

Re: A new class-action lawsuit takes aim at real estate agents and their 6% fee

#104

Post by jdpedrie »

nrclark wrote: post #48
pseudometa wrote: post #25

It blows my mind that the fees are percentage based. The amount of work required for an agent on a 100K house is very similar to that of a 2 Mill house. Presumably the seller agent wishes to get compensation for increasing the value of the house, but for both the seller and buyer agents, the number of deals done far outweighs slight incremental selling prices. In which case, both would prefer to settle on a lower pri…

Agreed 100%. Realtors do legitimate work, and deserve to be compensated for sure. But I think the pay is grossly disproportionate to the amount of value provided, and it's propped up by Realtor-sponsored laws and kickbacks. A lot of Realtors won't even deal with non-Realtor(tm) real-estate agents, which promotes their monopoly stranglehold on the real-estate market. I'm not sure where I fall on what a real-estate age…

> But was it worth $12k for less than 40 hours of total work? I don't think so.

First, I agree that the fees charged are exorbitant. However, for many smaller realtors, they may not have much inventory at any given time. So, just like a freelance programmer, the buyer is paying for their work and for their downtime between jobs.

Re: A new class-action lawsuit takes aim at real estate agents and their 6% fee

#105

Post by everdev »

s_dev wrote: post #52
pseudometa wrote: post #25

It blows my mind that the fees are percentage based. The amount of work required for an agent on a 100K house is very similar to that of a 2 Mill house. Presumably the seller agent wishes to get compensation for increasing the value of the house, but for both the seller and buyer agents, the number of deals done far outweighs slight incremental selling prices. In which case, both would prefer to settle on a lower pri…

It being % based means the incentives of the agent are more aligned with the seller than buyer. If the agent charged a flat fee -- the agent doesn't have incentive to negotiate a higher price.

No real estate agent I've ever worked with or heard of encourages holding out for a better price. They try to talk you into accepting the fastest close.

Time is money and the faster they close on your house the faster they can start selling the next one.

Re: A new class-action lawsuit takes aim at real estate agents and their 6% fee

#106

Post by olyjohn »

Latteland wrote: post #47
bkohlmann wrote: post #19

Where you stand really depends on where you sit. My wife recently became an agent, and prior to that I was all about disrupting the industry. But I’ve come to see the 3% on each side as an almost market clearing price. It’s really hard work, with low barriers to entry, and significant upfront costs. In a tight market, being a buyers agent can be a blessing or a curse. She’s been working with one client for nearly a y…

It's not that people don't do something worthwhile. It's more a question that is it worth paying 60,000 when selling your house? It's not. At $100 an hour, do you get 600 hours out of work of them? No. It's not about market prices, because the cartel (real estate industry) prevents lowering percentages - and they fight to the death any upstart who wants to do it. It should not be a percentage, it should be a fixed ra…

Who is paying $60,000 to sell their house? Most houses and agents aren't selling million dollar houses. There are some, but that's not the majority. Also houses that are priced like that don't have as many buyers, they take longer to sell. They have to market them to the right people, and have connections to sell those kinds of places quicker.

People gotta remember, the commission is split 4 ways unless one of the agents is a broker. Most agents themselves are only getting 1.5%

People CAN set different rates. Redfin charges a very low percentage compared to others. There are brokerages who charge flat fees, and will just slap your house in the MLS and then call it a day. You wanna list with a discount broker go for it... You can even sell your house yourself!

This whole thread reads like a bunch of people talking about tech people. "Oh you just sit at your computer all day surfing the web, why do you make so much?" or "Why pay you so much, I can just set up a website on Wix for $10."

Yeah there's some shady shit with the NAR and access to listing services, I'm not disagreeing with it 100%, but the average agent is doing a lot more work than you realize.

Re: A new class-action lawsuit takes aim at real estate agents and their 6% fee

#107

Post by cladari »

pseudometa wrote: post #25

It blows my mind that the fees are percentage based. The amount of work required for an agent on a 100K house is very similar to that of a 2 Mill house. Presumably the seller agent wishes to get compensation for increasing the value of the house, but for both the seller and buyer agents, the number of deals done far outweighs slight incremental selling prices. In which case, both would prefer to settle on a lower pri…

You can get breakfast at the Breakers for 50 bucks or the Waffle House down the street for 10 dollars. The Breakers waitstaff will get a 10 dollar tip and the Waffle house staff will get 2 dollars for the exact same meal and the exact same amount of work. It's a messed up system.

Re: A new class-action lawsuit takes aim at real estate agents and their 6% fee

#108

Post by noneeeed »

chrisseaton wrote: post #75
noneeeed wrote: post #57

Earlier quoted context omitted.

Is there a significant difference between what an "estate agent" (UK) and a "realtor" (US) do? Are they more involved in the actual legal side of things (the sort of thing a conveyancing solicitor would do in the UK), or are they still just there to advertise the property and show people round? If they were doing a lot more of the legal side of things I could understand the difference, but a four or five percentage-p…

Realtor is a brand name - it's a registered trademark. The generic version is estate agent.

TIL!

I've only ever seen it used in the generic sense online, a bit like the way we talk about "a hoover" when we mean "a vacuum cleaner".

Re: A new class-action lawsuit takes aim at real estate agents and their 6% fee

#109

Post by tres »

bkohlmann wrote: post #19

Where you stand really depends on where you sit. My wife recently became an agent, and prior to that I was all about disrupting the industry. But I’ve come to see the 3% on each side as an almost market clearing price. It’s really hard work, with low barriers to entry, and significant upfront costs. In a tight market, being a buyers agent can be a blessing or a curse. She’s been working with one client for nearly a y…

The real big issue here is not the agents -- although there's built-in systemic conflicts of interest that the industry engenders -- it's the people above the agents that really benefit from this system...

The companies who normally take about 50% of that commission from the agent do not provide anywhere close to the kind of value that they charge for.

These are the real winners and gate-keepers in the current system. These are the people that pay millions for lobbyists to keep the status-quo.

Re: A new class-action lawsuit takes aim at real estate agents and their 6% fee

#110

Post by benj111 »

crooked-v wrote: post #93
benj111 wrote: post #10

I'm from the UK where it works differently. If you're a buyer, what does the realtor do? Do they sort the legal stuff? Or are you (/seller) paying 3% to find you a house? How does the legal mechanics of this work, do realtors have an obligation to work in the interests of the person that engaged them, or the person that's paying them? Presumably its who engaged them, as they won't know who's paying them. Why then are…

Note that "realtor" is a trademarked brand name invented by a trade association to distinguish from the generic "real estate agent".

Thanks didn't know.

I have visions of them sueing 'Tor' now, because they're the real ones.

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