Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

marketwatch.com

Post reply on HN
Print view View original

171–180 of 344 posts

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

#171

Post by benj111 »

gnopgnip wrote: post #147
benj111 wrote: post #90

Earlier quoted context omitted.

You seem positive about the situation? As a point of reference in the UK it's around 1% commission to sell your house, they do the marketing, including on a variety of websites.

There is a noticeable difference having agents as a buffer when buying or selling a home. For many it is an emotional experience and without representation the sale would not close. There is also a difference between transactions where everyone is represented by an attorney who is paid even if the deal falls through, or where they are represented by agents who are only paid when the deal closes. Having a financial in…

It looks like theres been a downward trend over the past decade [1]. And it seems a London premium [2].

1% is about right in my experience. (non London).

I wouldn't expect an estate agent to be doing that much running around last minute though.

[1] https://www.yopa.co.uk/homeowners-hub/estate-agent-fees/

[2] https://www.housesimple.com/estate-agent-fees-information

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

#173

Post by ska »

pmoriarty wrote: post #83
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…

"When I bought my house, my Realtor found some good listings, arranged viewings, did the paperwork, and set everything up for me. All useful services, and worth paying for. But was it worth $12k for less than 40 hours of total work? I don't think so." A lot depends on the realtor. One realtor I know not only does everything you mention, but also gives their clients lots of advice (based on many decades of experience…

I think one of the main issues is it being a purely commission sale. I suspect that makes it easy for the principals to ignore the cost in their thinking but it makes the time investment riskier for the agent, which they have to balance against fee size etc.

Perhaps a better system would be a base fee + (lower) commission, and commission based on concrete sales target rather than market value...

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

#174

Post by duwease »

Yeah, I've never quite understood the value proposition of that fee myself. Between that and the gatekeeping that happens to become an agent, it seems like it's a bit inflated and held up by tradition.

At least the iBuyers like Opendoor provide a service whose value I can see, even if it might not apply to every individual. Having someone else take on the hassle of dealing with shady vendors and house showing, repair negotiations and flaky buyers, while letting me move out cash-in-hand whenever I want? I get that.. especially after experiencing my good friends hit every one of those nightmares themselves, ending up having to waste thousands on AirBnB's after contractor issues left them without either home for months.

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

#175

Post by gangstead »

berdon wrote: post #142

We bought our house with a realtor who found and walked us through listings. Ultimately, we found the house we ended up buying. Our buying agent was helpful and did a good job but the questions she answered and information she gave was available online. We sold our house without a realtor and had no real issues. Buying agents tended to stray from our listing and most would communicate with us first to make sure we wo…

This was my experience as well. I've bought two homes and both times we found it ourselves. Used the real estate agent friend of a family member (there's always one) to show us a couple houses and relay offers, but I never felt like they did something I couldn't have done myself. I went along to both home inspections and found things the inspector missed. At all 3 closings (buying and years later selling the first house, buying second house) I've been sitting there in a room full of people sighing and tapping their feet while I read all the paperwork they want me to sign and all three times I've caught mistakes, two of which were several thousand dollars in the other party's favor. All in all it's not just the realtors that are doing mediocre work to extract a percentage, but a whole industry (agents, inspectors, title companies).

I couldn't agree more that selling my house by myself was also a breeze. Maybe the experience is different in a down economy. I paid a flat $175 fee to a website for an MLS listing (which farmed the listing out to an agent in our MLS region 5 hours away) plus the 3% buyers agent fee and people started calling. I'm not a great photographer but I took pictures that were 100X better than a realtor walking around with a cell phone and put the Zillow "zestimate" as the listing price because I did a lot of research and took an honest look at my house and couldn't come up with a reason to go higher or lower. I definitely got the "will you pay my fee" calls despite already putting the buyer's agent fee on the MLS listing. As an experiment I tried to negotiate that with an agent and I realized that wasn't going to go anywhere. The only annoying part of the process was the buyer's agent clumsily slipping in some clauses in the contract that would have made it a terrible deal for me.

If anyone is reading this and wants to try going without an agent I'd recommend asking a friend who recently closed on a house to see their contract. That will help you spot any tricks an agent is trying to slip past you.

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

#176

Post by [deleted] »

cladari wrote: post #107
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.

[deleted]

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

#177

Post by obelos »

I've bought houses using an agent and not, and the latter was in every way more pleasant and predictable. The agent (and their supervising broker) overlooked fundamental items in the contract which ought to have been obvious, like ensuring the current renters would be out before close. Even with the seller picking up the tab for both agents, as a buyer I would prefer doing it myself. The only drawback is, of course, that it's much more difficult to get into houses without being represented by an agent.

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

#178

Post by noneeeed »

matthewowen wrote: post #163
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…

Depends on the state. For instance, in PA yes, they cover the legal side of things (at least to the extent that there isn't usually another lawyer involved in the process). The other piece to this is that this 6% is split between the buyers agent and sellers agent. Typically, as a buyer, the person showing the house to you is _your_ agent (versus the UK where it is the seller's agent). Put another way, there's effect…

Thanks, that was really helpful. I find it interesting how differently countries around the world do essentially the same thing.

I quite like the idea of having someone find houses for me, although with most houses in the UK being on either RightMove or Zoopla (the two main listing sites) it probably wouldn't be worth the fee.

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

#179

Post by nugget »

jliptzin wrote: post #155
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.

Pretty simple to fix actually. Charge a flat fee up front, like $1,000, to do the initial listing. Get the house independently appraised, maybe subtract 10%. Give incentive commission equal to the difference in the sale price and the discounted assessed home value * 20%. So if the agent manages to sell a $500,000 home for $700,000, they get a $41,000 commission. If the home sells for 10% below its market value, they…

In your model you’d simply shift (even more) corruption onto the appraisal process.

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

#180

Post by matthewowen »

noneeeed wrote: post #178
matthewowen wrote: post #163

Earlier quoted context omitted.

Depends on the state. For instance, in PA yes, they cover the legal side of things (at least to the extent that there isn't usually another lawyer involved in the process). The other piece to this is that this 6% is split between the buyers agent and sellers agent. Typically, as a buyer, the person showing the house to you is _your_ agent (versus the UK where it is the seller's agent). Put another way, there's effect…

Thanks, that was really helpful. I find it interesting how differently countries around the world do essentially the same thing. I quite like the idea of having someone find houses for me, although with most houses in the UK being on either RightMove or Zoopla (the two main listing sites) it probably wouldn't be worth the fee.

In most US areas everything is on the MLS (a central listing source that all brokers use), so it's actually even easier: Zillow and Redfin both hook into it and make it easy.

Mostly I think the house finding part of it is kinda easy: I think the bigger value is having someone "on your team" who can help you understand value / issues to watch for / etc.

Post reply on HN