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

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

#271

Post by iends » Wed, Mar 20, 2019, 1:44 AM UTC

gamblor956 wrote: post #239

Nelson69 wrote: post #235

Earlier quoted context omitted.

When I last bought a house, I had an agent to show me houses. Then when it came offer time, I actually had my lawyer do the final review and he essentially did the bulk of the negotiation, the agent was simply a mouth piece with access to the databases and someone the other agents would talk to. It was during the 2008 time and I placed a bid on a short sell, my lawyer gave me distinctly different advice than the agen…

Most people can't afford to have a lawyer go over their home purchase/sales contract. They have to rely on their agent. So some training and insurance is absolutely better than nothing, which is what the comment I was replying to suggested.

I’ve been quoted $500 an hour and $750 an hour from various attorneys. I think that’s pretty easy to swing on a $100,000 house.

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

#272

Post by jessaustin » Wed, Mar 20, 2019, 1:51 AM UTC

kbutler wrote: post #234

opportune wrote: post #228

Earlier quoted context omitted.

I'm having trouble following your math here, how can the seller's realtor gain money from selling the house at a lower price? How did you arrive at the figure of $54k?? It's true that a realtor might favor a slightly lower price for a faster sale but I don't get your numbers.

$2M house. 6% commission split 3% to seller's realtor and buyer's realtor. Seller's realtor gets $60K if it sells in 1 month or 1 year, same commission. No sale = $0. First week gets a 10% low offer of $1,800,000. If sale completes, that's $54,000 income for the realtor (.03*1800000). Or, could hold out for a better offer after for some months of additional work to hopefully get an offer for the full $2M, and the rea…

...after for some months of additional work...

I'm as suspicious of realtors as anybody, but this scenario here includes a real asshole as a seller. If she doesn't want to sell her house, she shouldn't waste everybody's time by putting it on the market. This sort of "just testing the market" shenanigan raises costs for everyone.

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

#273

Post by pkaye » Wed, Mar 20, 2019, 1:55 AM UTC

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…

I think though the average Realtor doesn't sell many houses in a year. I hear it is something like 12 sales/year. According to the Realtor website, the average gross income is around $40k.

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

#274

Post by jedberg » Wed, Mar 20, 2019, 2:08 AM UTC

scarface74 wrote: post #246

jedberg wrote: post #210

Earlier quoted context omitted.

I didn’t say base it on profit for a house. I said base it on a price the seller wants. Like consignment.

It’s still a horrible idea. If I know the market value of my house which is easy to find out based on comparables, how much over could the real estate agent sell it for? The buyer can’t get a loan for more than the house is appraised for. In most house buying situations, the seller,buyer, and mortgage company all know what the house is worth with only a little wiggle room.

If the seller doesn’t offer enough wiggle room no agent will take the deal.

The seller would have to offer enough wiggle room that the agent wants to take on the risk. Combined with a flat fee, the system would guarantee income for the agent and also align the incentives.

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

#275

Post by jedberg » Wed, Mar 20, 2019, 2:10 AM UTC

scarface74 wrote: post #246

jedberg wrote: post #210

Earlier quoted context omitted.

I didn’t say base it on profit for a house. I said base it on a price the seller wants. Like consignment.

It’s still a horrible idea. If I know the market value of my house which is easy to find out based on comparables, how much over could the real estate agent sell it for? The buyer can’t get a loan for more than the house is appraised for. In most house buying situations, the seller,buyer, and mortgage company all know what the house is worth with only a little wiggle room.

You could make the same argument about cars. “Why would anyone sell cars if any buyer can look up the base price of the car?”

Or literally the sale of any other item in the world. Why is a house the only thing where the commission is based on the full price?

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

#276

Post by mindslight » Wed, Mar 20, 2019, 2:18 AM UTC

dd36 wrote: post #255

tomp wrote: post #227

Earlier quoted context omitted.

> That's $300/hr. Similar to what lawyers ask. Do agents carry the same (legal) responsibility as lawyers / doctors though?

Yes. They’re fiduciaries.

Hahahahahaha. Everyone hires a Realtor(tm), once.

My experience: the one time she actually had to facilitate a showing of the house, the alarm system got set off. And when the buyers asked to change the closing date (after plane tickets were bought), she agreed and told us we had no choice. The attorney set them all straight.

A realtor's primary skill seems to be getting you to sign the listing contract.

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

#277

Post by sokoloff » Wed, Mar 20, 2019, 2:19 AM UTC

linsomniac wrote: post #190

dgudkov wrote: post #166

Earlier quoted context omitted.

>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...

It’s at least that figure for engagements that result in a transaction. That doesn’t take into account the people they spend 40 hours with and don’t end in a transaction.

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

#278

Post by TallGuyShort » Wed, Mar 20, 2019, 2:20 AM UTC

DesiLurker wrote: post #265

om3n wrote: post #146

I'm a software engineer, and I started my career at a well known mortgage company in Detroit. Views are my own, BTW. I bought a house a couple years after I started working there, and I wanted the full home-purchaser experience. I used my company's services for everything, and as an employee they hooked me up with a real estate agent (among other things). I was honestly appalled at what little my real estate agent di…

I see many (likely realtors) defending the fees & the larger model. Here is some back of envelop math I once did to put it in perspective: according to Bob Shiller (of case/shiller fame) it has historically taken about 30 years of work to own a house in steady markets. now on an average people move houses once every 7 years due to labor mobility/family/etc reasons. so roughly 4 housing buy/sell transactions in an ave…

Very good point with the math. However with super expensive markets, doesn't their commission then match their increased cost of living to be working there?

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

#279

Post by josaka » Wed, Mar 20, 2019, 2:23 AM UTC

kbutler wrote: post #204

scarface74 wrote: post #164

Earlier quoted context omitted.

Why wouldn’t they unless you agreed to pay the buyer’s agent commission? It’s how they make their living. Edit: oops meant buyers agent - corrected.

Realtors have a fiduciary responsibility to act in the interest of their principal, even when it is against the interest of the agent. "This duty obligates a real estate broker to act at all times solely in the best interests of his principal to the exclusion of all other interests, including the broker’s own self-interest." https://www.nar.realtor/sites/default/files/handouts-and-bro...

At least from the perspective of the legal profession, the scope of "fiduciary duties" of realtors seems relatively constrained. Buyer's and their agent's interests appear to be misaligned. I can't think of other examples of fiduciaries where, the more the principle pays, the more the agent is compensated, like on the buy side of a standard realtor agreement. Fixed fee or hourly comp. would eliminate the misalignment, but my sense is it's disfavored in the industry.

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

#280

Post by JumpCrisscross » Wed, Mar 20, 2019, 2:28 AM UTC

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…

> The amount of work required for an agent on a 100K house is very similar to that of a 2 Mill house

Liability, and the odds of litigation, are vastly higher are bigger dollar amounts. My personal experience with realtors has been pretty much useless. But a bigger asset takes more resources to present and has a lower hit rate given the smaller pool of buyers. There are also unique lending problems that expensive assets run into.