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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

#121

Post by s_dev »

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…

To the people citing Freakonomics. I've read that piece it was a comparison of real estate agents selling their own houses vs their clients houses. Not flat fee vs % based commision.

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

#122

Post by olyjohn »

tacomonstrous wrote: post #6

The model's pretty broken now, when anyone can look up listings on realtor.com or Redfin, and get customized alerts based on preferences. I mean what special skills do agents even bring on the buy side? I can mediate things with the seller myself, thank you very much. On the sell side, an experienced agent can be much more of a help. Even there, we used Redfin the last time we sold, and the difference in commission w…

Anybody can look up listings. And anybody can go directly to the selling agent to buy the house. It's not about negotiating a price, it's about making sure that everything is legit with the transaction. Are you going to make sure that everything is properly filed? Are you going to keep on top of all the other people involved to make sure they're doing their jobs? Are you going to go through 4000 pages of legal paperwork? Are you going to ride the sellers' asses to make sure the sale closes, so you aren't stuck homeless after moving out of your old place?

There's nothing stopping you from hiring a real estate lawyer instead of an agent. I'm sure he'll be happy to charge you by the hour.

And also as the buyer, you don't typically pay anything to the agent.

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

#123

Post by bradenb »

mbesto wrote: post #69
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 really hard work, with low barriers to entry, and significant upfront costs. So then pay by the hour.

Does this just incentivize them to spend a lot of time without actually selling the house? While I think 3% is outrageous, it at least incentivizes selling it quickly (even if it doesn't incentivize getting the best price).

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

#124

Post by pmoriarty »

0x0000000 wrote: post #96
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…

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...

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.

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

#125

Post by jiveturkey »

andrewtbham wrote: post #2

currently, it is illegal to pay anyone a commission for selling your house except a licensed real estate agent. If you got rid of that restriction, imagine the opportunities. you could let your friends sell your house by sharing a link on social media and they could get the commission. Also in England, real estate commission fees are about 1% vs. 6% in US. As the article states, in the US a lot of agents won't show F…

> currently, it is illegal to pay anyone a commission for selling your house except a licensed real estate agent.

I think you are confused about a realtor not being able to pay a finder's fee to anyone but a licensed agent.

You, as a seller, are free to pay anyone any commission you like. Unless of course you've contracted that right away in an agreement with a seller's agent. But that's just normal contract law.

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

#126

Post by Mindless2112 »

jdpedrie wrote: post #104
nrclark wrote: post #48

Earlier quoted context omitted.

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.

Sure, but a real estate agent who has a "seller" client has a pretty easy time finding "buyer" clients -- run an open house on a property you're selling and prospective buyers (specifically the ones that decide they don't want to buy the property being shown) come to you without even knowing that you exist.

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

#127

Post by nrclark »

pmoriarty wrote: post #116
koolba wrote: post #99

Earlier quoted context omitted.

> Watch the movie Glengarry Glen Ross sometime. The life of a typical real estate agent really is that bad, or worse. You do realize that all the salesman in that movie were scammers right?

It's been a really long time since I saw that movie, but to my memory only one of them (the successful one) was a scammer. One scene that stuck in my memory -- SPOILER ALERT -- was when one of the agents, who desperately needed to sell because he hadn't been able to sell in a long time and his job depended on it, finally thought he sold a home to a couple he had spent all this time and effort on, only to find out the…

Isn't it kind of a self-inflicted problem though? As an organization, Realtors guard listings jealously, control access to house viewings, and bind themselves to clients with exclusivity contracts. It shouldn't be surprising their time gets wasted by people who are just window-shopping, because they're essentially standing in front of all the windows.

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

#128

Post by olyjohn »

noveltyaccount wrote: post #101
ApolloFortyNine wrote: post #92

Earlier quoted context omitted.

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.

The market for a $2 million house is going to be much smaller than for a $100k house. That big ass house can sit on the market for a lot longer, and have much pickier buyers. Houses like that also get a LOT more marketing. Would you spend 6 months unpaid working for a $3000 commission, or would you rather only list cheap houses that turn around more quickly for the same price?

Besides, if you can afford a $2MM house, please don't tell me you'd also be crying about paying a percentage.

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

#129

Post by jiveturkey »

deckar01 wrote: post #111

One of the strangest parts about mortgages to me is the "point" system lenders use to sell buyers lower interest rates. They offer a lower interest rate if you "buy points" rather than applying it towards your down payment. It seems like lenders are prioritizing their short term profit over their customers' long term financial stability.

Why is this strange? The majority of lenders repackage and sell off loans that they originate. Of course they are prioritizing short term profit.

As for buyers, also what's not to love? Buying points gets you more cash flow than the reduced principal. There's some math to do, and some financial projection, where you expect to be in 5 years, etc. It's great to have the option.

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

#130

Post by kthejoker2 »

pmoriarty wrote: post #116
koolba wrote: post #99

Earlier quoted context omitted.

> Watch the movie Glengarry Glen Ross sometime. The life of a typical real estate agent really is that bad, or worse. You do realize that all the salesman in that movie were scammers right?

It's been a really long time since I saw that movie, but to my memory only one of them (the successful one) was a scammer. One scene that stuck in my memory -- SPOILER ALERT -- was when one of the agents, who desperately needed to sell because he hadn't been able to sell in a long time and his job depended on it, finally thought he sold a home to a couple he had spent all this time and effort on, only to find out the…

> It's been a really long time since I saw that movie, but to my memory only one of them was a scammer.

You really need to watch the movie again. Their entire operation is based on high-pressure sales. True hackers.

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