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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

#311

Post by dragonwriter »

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…

> 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 average persons life.

You assume the aversge person owns a home at the beginning of, and throughout, their working today career. That has never been the case.

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

#312

Post by Eridrus »

kevindong wrote: post #74

I'm about to graduate college and move to NYC for a job. The unfortunate norm there is to pay a 15% fee (of the annual rent) to brokers to get a rental apartment. The cheapest the broker's fee gets is one month's rent, so about 8.33% of the annual rent. High end apartments sometimes pay the broker's fee on the renter's behalf [2]. Large apartment complexes sometimes have their own leasing offices, so there's no fee t…

FWIW there is a bill working it's way through city council to limit the fee to 1 month's rent, so people realise it's an issue. Now if only they banned renter-side fees entirely.

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

#313

Post by jessaustin »

fma wrote: post #290
jessaustin wrote: post #272

Earlier quoted context omitted.

...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.

Statistically, per freaknomics, a realtor selling their own home lists their house 10 days longer so they can get a better offer. https://www.bankrate.com/finance/real-estate/real-estate-age... Levitt and Dubner found that, on average, self-listed homes stay on the market an extra 10 days, prompting the authors to hypothesize that agents might be a little more aggressive about their own homes because a 3 percent fluc…

ITT we're talking about "some months" (three? eight? more than a couple, anyway), not "10 days". The Freaks are just hypothesizing the price rise anyway; markets don't always go up.

Your link identifies the only actual service that realtors provide: objectivity. Houses are worth what buyers will pay for them. The realtor who can predict what price a house will fetch in the near term is providing a service. Permanent realtor's signs indicate failures of objectivity.

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

#314

Post by makeset »

speedplane wrote: post #305
ethbro wrote: post #303

Earlier quoted context omitted.

> Oh, and it is illegal here for a realtor to charge both the buyer and the seller because there is a clear conflict of interest there, you can only work for one party. Technically, in the US, the buyer's agent is only working for the buyer. They're just paid by the seller (traditionally and stupidly).

> in the US, the buyer's agent is only working for the buyer. They're just paid by the seller (traditionally and stupidly). I just went through this process. While the buyer's agent ostensibly works for the buyer, their main incentive is to get you to close. It doesn't matter if it's a good deal, a bad deal, or whatever. They take 3% so if you overpay or underpay by 10% of the appropriate value of the house that's on…

Not to defend the system, the incentives are clearly not well-aligned, but I also just went through this process had an unexpectedly great experience with my buyer's agent, whom I found through a referral.

He was professional, ethical, and actually took his fiduciary duty seriously. He didn't claim to find listings that I wouldn't have myself, but guided my search a bit based on my criteria, gave candid feedback on them and what to look for, and bargained on the price with the seller harder than I would have, saving me more than his commission. When I discovered a potential issue with the property and had second thoughts pre-close, he didn't try to discourage me one bit from letting a done deal fall through, and was ready to support my decision. And he set up the many appointments with the seller's agents, handled the literal ream of closing paperwork, dotted the i's and crossed the t's, and made this whole convoluted process go smoothly. From my end, he more than deserved his commission he got out of the deal, and he will certainly have my future business buying or selling.

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

#315

Post by novaleaf »

BrentOzar wrote: post #253
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…

> plus I paid her a 2% commission instead of 3%, and of course not 6% as if she represented me as well. I tried selling my home twice: first with the “normal” approach, using a real estate agent and paying everybody full commission. My agent just didn’t do enough to move the process along. After my contract with her expired, I bid her goodbye. On attempt #2, I listed it myself (for sale by owner) but put in the listi…

awesome tactic. thank you for sharing.

in my life I did a "normal" buy, did a FSBO, and latest did a buy via Redfin.

I can see a place for buying agents, as they can/should do a lot of the legwork scoping out potential homes for their buyers. I did that myself when I did Redfin, which is what I wanted, but I can see how most people wouldn't have the time (basically house shopping was my fulltime job for 3 months)

I only did my FSBO sale at the peak of the last housing boom, so with that caveat in mind, I don't really see a place for normal selling agents.

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

#316

Post by TaylorGood »

Residential real estate is an odd one. Countless times I’ve seen it warp the ego of agents and their perception of value being provided. A friend was looking to buy a $15m house, so I vouched for a childhood friend that was newer to real estate. Agent friend was able to make it happen by tracking down the owner who lived an hour away and convinced her to sell. After close the agent friend then complained to me that he got hosed on the deal because of the “100 hours” he put in and only receiving 1% - $150,000 ($1,500/hr). A year prior he was delivering pizzas (!!).

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

#317

Post by mreome »

dragonwriter wrote: post #310
asciident wrote: post #262

Earlier quoted context omitted.

I and almost everyone I know have had the exact same experience. Buyer agents seems to basically set you up on some auto-email service for a search filter (which you can do yourself on many real estate websites), and occasionally take you to see some homes. They use all sorts of fear tactics to keep themselves from getting cut, and everyone is starting to realize it. I ended up buying a house via private sale (FSBO)…

> Buyer agents seems to basically set you up on some auto-email service for a search filter There are better agents, but finding them is challenging.

If there is a challenge to finding a good agent, and a challenge to doing it yourself, doesn't the option that saves you a ton of money just make more sense?

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

#319

Post by dragonwriter »

mreome wrote: post #317
dragonwriter wrote: post #310

Earlier quoted context omitted.

> Buyer agents seems to basically set you up on some auto-email service for a search filter There are better agents, but finding them is challenging.

If there is a challenge to finding a good agent, and a challenge to doing it yourself, doesn't the option that saves you a ton of money just make more sense?

In some cases, yes, in some, no. It really depends on your situation, including what your opportunity cost for the marginal time commitment of doing it yourself is and if your transaction is special in a way which changes the expected value of an agent and/or the expected cost of doing it yourself, and if you've found solutions that put you in a better than average position with either of the two opposing challenges.

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

#320

Post by coryfklein »

pmoriarty wrote: post #124
0x0000000 wrote: post #96

Earlier quoted context omitted.

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 th…

> Real estate agents don't get to choose how long their clients' home is on the market.

Like hell they don't. The real estate agent's job is literally to sell the house. If a house takes 3 months to sell it is likely because either the agent isn't doing their job, or the seller is not heeding the agent's advice.

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