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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

#181

Post by jliptzin »

nugget wrote: post #179
jliptzin wrote: post #155

Earlier quoted context omitted.

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.

Still, even if a home appraises for 25% less than it otherwise should, that's still a vastly better compensation scheme than our current system.

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

#182

Post by atwebb »

olyjohn wrote: post #122
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 paperw…

A slew of what you mentioned is the responsibility of the closing office and attorney. Your real estate agent is not our there verifying deeds, ownership interests, liens, titlework, or insurance. They have real estate attorney/title offices they generally work with, you always have a choice and generally the spend is the same.

The best bang for your buck buying/selling is choosing a great closing office. Even boutique ones tend to be within a margin of cheap ones and their the people making sure everything will be smooth, from loan closing to property transfer.

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

#183

Post by pmoriarty »

bradenb wrote: post #123
mbesto wrote: post #69

Earlier quoted context omitted.

> 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).

They should be paid by the hour with an additional commission based on the sale price.

The industry should also be completely transparent as to how quickly each agent sells houses and how much their houses sell for.

As a client, you should do your own comparison shopping, do your due diligence, and get recommendations. Then go with the ones who've been recommended by people you trust and who have a track record of selling homes quickly and for the most money compared to other agents, or buying homes quickly for less money than other agents.

Agents should also be allowed to charge however much they want. The agents who buy/sell quickly and manage to get great prices will naturally be able to sustain charging more than those who can't.

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

#184

Post by mdorazio »

olyjohn wrote: post #106
Latteland wrote: post #47

Earlier quoted context omitted.

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 ag…

> Who is paying $60,000 to sell their house?

Allow me to introduce you to a place called California. In Santa Monica, where I live, median home price is over $1.5M. Yes, median. La Jolla is about the same. Irvine is just shy of $1M. In San Francisco it's over $1.2M median. San Jose is right around $1M. Mountain View is north of $1.7M. Etc. These places represent thousands of homes and average time on market is generally around a month. It's really that insane.

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

#185

Post by ben509 »

tacomonstrous wrote: post #156
tathougies wrote: post #67

Earlier quoted context omitted.

> I can mediate things with the seller myself, thank you very much. Yeah, but if you use an agent, you can sue them when things go bad. You have to eat your own losses. People often pay others to take on risk.

I'm not sure this is true. Short of actually colluding with the other agent, I don't think there's anything the buyer's agent can do that would be worthwhile to bring a lawsuit over.

They carry E&O insurance, so all the usual negligence and screwups are fair game.

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

#186

Post by WkndTriathlete »

olyjohn wrote: post #122
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 paperw…

Back in the day I did a FSBO with a real-estate lawyer who charged a grand total of $250 for a sale of $100,000.

I'll take 0.25% overhead any day over 6%.

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

#187

Post by pmoriarty »

ska wrote: post #173
pmoriarty wrote: post #83

Earlier quoted context omitted.

"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...

In my own view the fairest structure would be an hourly wage plus commission based on the sale price.

That way even if the client backs out, at least the agent hasn't completely wasted their time, effort, and money for absolutely nothing.

I don't see why a commission should be limited, however. If you're great at your job and have a track record of selling homes home for more or buying homes for less than other agents can, why shouldn't you be allowed to charge more?

Even now, some agents (if they're desperate or just starting out in the field) will negotiate away part of their commission. So a lower commission is always an option too.

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

#188

Post by OrgNet »

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…

If you had a non-profit that would list all for-sale homes with a good search engine, it might make real estate agents useless

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

#189

Post by robocat »

Sellers fees mostly average 3% to 4% in Christchurch, New Zealand - https://www.thepropertymarket.co.nz/compare-our-fees

The fee structure is X+1% for the first $350000, and X% above that.

One company advertises 1% fees, but they make it up with other charges.

From my experience, few people use a buyer's agent (maybe because property details are well recorded centrally, and often they are not part of a building, and so there are fewer legal risks in NZ).

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

#190

Post by linsomniac »

dgudkov wrote: post #166
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? That's $300/hr. Similar to what lawyers ask. Although, I suspect that a lot more education is required to become a lawyer than a real estate agent.

Note they said "less than 40 hours", so that's "at least $300/hour". I feel like my buyers agent, who I really liked, worked more like 10-20 hours for $9K, for $450-$900/hour.

Don't get me wrong, I really liked her and she did a great job, but I'm not sure she did $9K great...

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