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Why do you still need an agent to buy a home?
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| Grover C. McCoury III 2005-06-17, 11:27 pm |
| Realty Bites
Why do you still need an agent to buy a home?
By Douglas Gantenbein
"The first thing we do, let's kill all the lawyers," a character in a
Shakespeare play famously remarks.
I have a different suggestion: Make it realtors.
Here's why: Americans will spend about $1.14 trillion buying 6 million homes
this year-both records. Yet the flat commissions paid to the realtors who
handle the vast majority of those sales, averaging 5.1 percent, act as an
enormous tax on the transaction process, taking wealth from both buyers and
sellers in what for both is often the biggest financial transaction of their
lives. It's true that selling a house is a complex task. But so is writing a
will, and an attorney doesn't ask for 5 percent or 6 percent of your net
worth as compensation.
And what do Americans receive in exchange for that commission, which can
total up to $24,000 on a $400,000 home? In many cases, not much. A realtor's
license can be had after as little as 50 or 60 hours of training (the person
who cuts your hair probably has 1,000 hours or more). I've dealt with a
half-dozen realtors during the past seven years, while selling two homes and
buying three others. Last year, for instance, we sold a home in the $500,000
price range in the town of Newcastle, east of Seattle. It wasn't a perfect
home-a typical suburban place with too much garage, not enough yard-but a
very nice one, including a full theater room and a fantastic home office. We
wanted to sell to make a move to Port Townsend, a little town in the
northwest corner of Washington. One realtor we used to sell it was utterly
incapable of articulating how our house differed from nearby, newer ones
that basically were thrown up overnight and had cheap interior finishings.
Another was clueless as to how to market a house in our price range,
printing a cheap single-sheet black-and-white information flyer. (Our
experiences were generally better on the buy side, except for one seller's
agent who sought to discredit a skilled building inspector we hired who
found that the foundation of a circa-1880 home was a rat's nest of rotting
wood, faulty concrete, falling insulation and, well, rats' nests.)
But the real knock on realtors is a bit of simple economics that many people
don't understand. Whether you're buying or selling, they rarely work in your
interest. For the buyer, a realtor may seem like a dream-a "free"
home-finding chauffeur, who then negotiates the best possible price. But the
service isn't free-the sellers have likely factored the buyer's agent's 2.5
percent or 3 percent of the take into their price. Moreover, it's in the
buyer's agent's interest to have you pay the most that you're willing to
pay. After all, the higher the price, the larger their commission.
What about the sellers? They know only too well the service isn't
free-they're stuck paying the commission for their own agent plus the
buyer's. But "their" agent really isn't interested in seeing the seller get
the best possible price. Instead, that agent's incentives favor a quick
sell, at any price. Look at it this way: Let's say you've listed your home
for $290,000, and you owe $150,000 of that to the bank, leaving you with
$140,000 in equity. The home may well sell for that $290,000-in a few
months. But if the agent can persuade you to sell it for $270,000 in a few
weeks, he is better off having forgone only $500 or $600 in commission while
saving a great deal of time, energy, and uncertainty. That deal, though,
will cost you $20,000 in equity. When we sold the Newcastle house, in fact,
"our" agent actively worked against us in the final stages of the
transaction, doing more than the buyer's agent to knock down our price.
All of this was supposed to change with the Internet, which essentially put
travel agents out of business and stood stock brokerages on their heads. And
it's true that nearly everyone with Web access does at least some shopping
via the Internet when looking for a home. But the basic real-estate
transaction model remains utterly unchanged from what it was 50 years ago:
Homes are listed on a regional Multiple Listing Service, largely controlled
by local realtors. Virtually all of those homes have a listing agent, and
when buyers finally get around to shopping they'll almost inevitably have an
agent drive them around. And in the end, the seller will lose as much as 7
percent of their selling price in commission. True, as I mentioned, the
average commission today is 5.1 percent, which is down from the 5.5 percent
average of a few years ago. But since 2000 home prices also have risen by 20
to 30 percent nearly everywhere in the nation-in California, by that much
just in the past year-and agents' commissions have of course risen, too.
Moreover, the Web seems to have done next to nothing to make the real-estate
industry more efficient. The average realtor today sells about six homes a
year-a figure unchanged from a decade ago. About 1 million homes are sold by
their owners each year, a figure that is inching up with help from the Web.
Why the fossilization? Mostly, it's because of the power of the National
Association of Realtors, which protects its members' turf like a crazed
wolverine defends its offspring. The organization has defeated efforts by
some of the nation's biggest banks and even Microsoft to start their own
real-estate listings, and have largely protected the sanctity of the
Multiple Listing Service, enabling regular folks to scan bare-bones listing
on the Web, but keeping most of the good info for themselves. Overall, the
NAR has ensured that nearly all residential real-estate transactions still
are conducted between two agents in cahoots. And they're largely responsible
for keeping commissions close to that 6 percent level when any normal law of
competition would suggest they'd be lower.
Now the NAR is taking aim at what many realtors see as a genuine threat: the
growing numbers of "discount" brokerages. One of the most prominent is
ZipRealty Inc., which was founded in 1999 and currently is planning an IPO.
ZipRealty lists homes on its own site as well as the Multiple Listing
Service, offering sellers a 25 percent discount on commissions while still
paying buyer's agents their full commission. It also extends rebates of 20
percent of the commission to buyers who come directly to ZipRealty. This
knocks the total commission into the 3 percent range and attempts to
completely unwind buyers from their agents.
But ZipRealty's efforts to drive down commissions and even eliminate the
buyer's agent have drawn the NAR's ire. Early next year the NAR plans to
implement new rules that would allow local brokerages to bar their listings
on ZipRealty's site, a move that strikes directly at ZipRealty's model. The
NAR also wants to prevent online brokerage sites from funneling customers to
agents in exchange for a fee. That targets upstarts such as LendingTree,
which uses the Web to match customers and agents, then rebates to customers
part of the fee it collects from brokers. The NAR's moves have gained the
attention of the Department of Justice's antitrust folks, and have been
delayed twice already.
I'd like to see a strictly FSBO (For Sale by Owner) world. After all, escrow
companies and home inspectors already do much of the heavy lifting in a
real-estate transaction and add more value than most realtors while working
for a flat fee. The Internet, meanwhile, provides a perfect forum for buyers
and sellers to meet, just as eBay has transformed the marketplace for
everything from lace doilies to Ford F250s. I understand that isn't going to
happen anytime soon. Selling a home is indeed a hassle, and realtors at
least offer the promise of one-stop shopping. And there's the issue of
showing homes-realtors perform the legitimate service of vetting buyers and
safeguarding a seller's property. Out-of-towners can benefit from a local
realtor's expertise. And I've heard from sellers who have had agents who
really "got" how to market a home, probably earning their commission and
more.
Still, I'm hoping that upstarts such as ZipRealty, LendingTree, Foxtons (a
discount broker in the Northeast), and Catalist (a California discounter)
will soon blow away the traditional realty transaction model like they're
Puerto Rico playing the U.S. men's basketball team, dropping total
commissions on a house sale to 3 percent, or even 2, while still offering
the services people seem to desire from a realtor. Certainly, most people
realize that a 6 percent commission-or even 5 percent-is nuts, given that
e-mail alerts, Web-based home tours, and other services can easily give
buyers and sellers as much information as their realtors. It will be a
painful change for the 1 million real-estate agents out there-alas, a number
that is growing rapidly. But a little Darwinism is needed to thin out the
herd, and when it happens it won't give me much grief.
Douglas Gantenbein is the Seattle correspondent for the Economist
| |
| Jeff Strickland 2005-06-17, 11:27 pm |
|
"Grover C. McCoury III" <gcmccoury@yahoo.com> wrote in message
news:RJ6dnYVNRdn6cCzfRVn-vw@adelphia.com...
quote:
> Realty Bites
> Why do you still need an agent to buy a home?
You need a realtor because a realtor is going to ask you what you want in a
house, how much you want to pay, what neighborhood you want to live in,
those sorts of things. Then, he (or she) is going to find a house that fits
what you said you are looking for, check it out to see if it is a dump or a
nice place, then take you by so you can look at it. Without a realtor, or
even just a real estate agent -- a Realtor is, by definition, a member of
the National Association of Real Estate Agents, some agents are NOT
realtors -- you will spend countless hours over several weekends driving all
over the region looking for a house you like. Once you find the house, your
realtor handles many aspects of the sales transaction that can drive a
stable person to drink.
Sure, there are lots of transactions that can be done on your own, but when
the Buyer's Agent is paid by the seller during the transaction, why not take
advantage of the services that are available?
The author of this article grossly over simplifies the role of the real
estate agent in the transaction.
</ top post>
quote:
> By Douglas Gantenbein
>
>
>
> "The first thing we do, let's kill all the lawyers," a character in a
> Shakespeare play famously remarks.
>
> I have a different suggestion: Make it realtors.
>
> Here's why: Americans will spend about $1.14 trillion buying 6 million
homes
quote:
> this year-both records. Yet the flat commissions paid to the realtors who
> handle the vast majority of those sales, averaging 5.1 percent, act as an
> enormous tax on the transaction process, taking wealth from both buyers
and
quote:
> sellers in what for both is often the biggest financial transaction of
their
quote:
> lives. It's true that selling a house is a complex task. But so is writing
a
quote:
> will, and an attorney doesn't ask for 5 percent or 6 percent of your net
> worth as compensation.
>
> And what do Americans receive in exchange for that commission, which can
> total up to $24,000 on a $400,000 home? In many cases, not much. A
realtor's
quote:
> license can be had after as little as 50 or 60 hours of training (the
person
quote:
> who cuts your hair probably has 1,000 hours or more). I've dealt with a
> half-dozen realtors during the past seven years, while selling two homes
and
quote:
> buying three others. Last year, for instance, we sold a home in the
$500,000
quote:
> price range in the town of Newcastle, east of Seattle. It wasn't a perfect
> home-a typical suburban place with too much garage, not enough yard-but a
> very nice one, including a full theater room and a fantastic home office.
We
quote:
> wanted to sell to make a move to Port Townsend, a little town in the
> northwest corner of Washington. One realtor we used to sell it was utterly
> incapable of articulating how our house differed from nearby, newer ones
> that basically were thrown up overnight and had cheap interior finishings.
> Another was clueless as to how to market a house in our price range,
> printing a cheap single-sheet black-and-white information flyer. (Our
> experiences were generally better on the buy side, except for one seller's
> agent who sought to discredit a skilled building inspector we hired who
> found that the foundation of a circa-1880 home was a rat's nest of rotting
> wood, faulty concrete, falling insulation and, well, rats' nests.)
>
> But the real knock on realtors is a bit of simple economics that many
people
quote:
> don't understand. Whether you're buying or selling, they rarely work in
your
quote:
> interest. For the buyer, a realtor may seem like a dream-a "free"
> home-finding chauffeur, who then negotiates the best possible price. But
the
quote:
> service isn't free-the sellers have likely factored the buyer's agent's
2.5
quote:
> percent or 3 percent of the take into their price. Moreover, it's in the
> buyer's agent's interest to have you pay the most that you're willing to
> pay. After all, the higher the price, the larger their commission.
>
> What about the sellers? They know only too well the service isn't
> free-they're stuck paying the commission for their own agent plus the
> buyer's. But "their" agent really isn't interested in seeing the seller
get
quote:
> the best possible price. Instead, that agent's incentives favor a quick
> sell, at any price. Look at it this way: Let's say you've listed your home
> for $290,000, and you owe $150,000 of that to the bank, leaving you with
> $140,000 in equity. The home may well sell for that $290,000-in a few
> months. But if the agent can persuade you to sell it for $270,000 in a few
> weeks, he is better off having forgone only $500 or $600 in commission
while
quote:
> saving a great deal of time, energy, and uncertainty. That deal, though,
> will cost you $20,000 in equity. When we sold the Newcastle house, in
fact,
quote:
> "our" agent actively worked against us in the final stages of the
> transaction, doing more than the buyer's agent to knock down our price.
>
> All of this was supposed to change with the Internet, which essentially
put
quote:
> travel agents out of business and stood stock brokerages on their heads.
And
quote:
> it's true that nearly everyone with Web access does at least some shopping
> via the Internet when looking for a home. But the basic real-estate
> transaction model remains utterly unchanged from what it was 50 years ago:
> Homes are listed on a regional Multiple Listing Service, largely
controlled
quote:
> by local realtors. Virtually all of those homes have a listing agent, and
> when buyers finally get around to shopping they'll almost inevitably have
an
quote:
> agent drive them around. And in the end, the seller will lose as much as 7
> percent of their selling price in commission. True, as I mentioned, the
> average commission today is 5.1 percent, which is down from the 5.5
percent
quote:
> average of a few years ago. But since 2000 home prices also have risen by
20
quote:
> to 30 percent nearly everywhere in the nation-in California, by that much
> just in the past year-and agents' commissions have of course risen, too.
> Moreover, the Web seems to have done next to nothing to make the
real-estate
quote:
> industry more efficient. The average realtor today sells about six homes a
> year-a figure unchanged from a decade ago. About 1 million homes are sold
by
quote:
> their owners each year, a figure that is inching up with help from the
Web.
quote:
>
> Why the fossilization? Mostly, it's because of the power of the National
> Association of Realtors, which protects its members' turf like a crazed
> wolverine defends its offspring. The organization has defeated efforts by
> some of the nation's biggest banks and even Microsoft to start their own
> real-estate listings, and have largely protected the sanctity of the
> Multiple Listing Service, enabling regular folks to scan bare-bones
listing
quote:
> on the Web, but keeping most of the good info for themselves. Overall, the
> NAR has ensured that nearly all residential real-estate transactions still
> are conducted between two agents in cahoots. And they're largely
responsible
quote:
> for keeping commissions close to that 6 percent level when any normal law
of
quote:
> competition would suggest they'd be lower.
>
> Now the NAR is taking aim at what many realtors see as a genuine threat:
the
quote:
> growing numbers of "discount" brokerages. One of the most prominent is
> ZipRealty Inc., which was founded in 1999 and currently is planning an
IPO.
quote:
> ZipRealty lists homes on its own site as well as the Multiple Listing
> Service, offering sellers a 25 percent discount on commissions while still
> paying buyer's agents their full commission. It also extends rebates of 20
> percent of the commission to buyers who come directly to ZipRealty. This
> knocks the total commission into the 3 percent range and attempts to
> completely unwind buyers from their agents.
>
> But ZipRealty's efforts to drive down commissions and even eliminate the
> buyer's agent have drawn the NAR's ire. Early next year the NAR plans to
> implement new rules that would allow local brokerages to bar their
listings
quote:
> on ZipRealty's site, a move that strikes directly at ZipRealty's model.
The
quote:
> NAR also wants to prevent online brokerage sites from funneling customers
to
quote:
> agents in exchange for a fee. That targets upstarts such as LendingTree,
> which uses the Web to match customers and agents, then rebates to
customers
quote:
> part of the fee it collects from brokers. The NAR's moves have gained the
> attention of the Department of Justice's antitrust folks, and have been
> delayed twice already.
>
> I'd like to see a strictly FSBO (For Sale by Owner) world. After all,
escrow
quote:
> companies and home inspectors already do much of the heavy lifting in a
> real-estate transaction and add more value than most realtors while
working
quote:
> for a flat fee. The Internet, meanwhile, provides a perfect forum for
buyers
quote:
> and sellers to meet, just as eBay has transformed the marketplace for
> everything from lace doilies to Ford F250s. I understand that isn't going
to
quote:
> happen anytime soon. Selling a home is indeed a hassle, and realtors at
> least offer the promise of one-stop shopping. And there's the issue of
> showing homes-realtors perform the legitimate service of vetting buyers
and
quote:
> safeguarding a seller's property. Out-of-towners can benefit from a local
> realtor's expertise. And I've heard from sellers who have had agents who
> really "got" how to market a home, probably earning their commission and
> more.
>
> Still, I'm hoping that upstarts such as ZipRealty, LendingTree, Foxtons (a
> discount broker in the Northeast), and Catalist (a California discounter)
> will soon blow away the traditional realty transaction model like they're
> Puerto Rico playing the U.S. men's basketball team, dropping total
> commissions on a house sale to 3 percent, or even 2, while still offering
> the services people seem to desire from a realtor. Certainly, most people
> realize that a 6 percent commission-or even 5 percent-is nuts, given that
> e-mail alerts, Web-based home tours, and other services can easily give
> buyers and sellers as much information as their realtors. It will be a
> painful change for the 1 million real-estate agents out there-alas, a
number
quote:
> that is growing rapidly. But a little Darwinism is needed to thin out the
> herd, and when it happens it won't give me much grief.
>
> Douglas Gantenbein is the Seattle correspondent for the Economist
>
>
| |
| Steve Horrillo 2005-06-17, 11:27 pm |
|
On 16-Jun-2005, "Grover C. McCoury III" <gcmccoury@yahoo.com> wrote:
quote:
> I'd like to see a strictly FSBO (For Sale by Owner) world. After all,
> escrow
> companies and home inspectors already do much of the heavy lifting in a
> real-estate transaction and add more value than most realtors while
> working
> for a flat fee.
Where did you get this article from? It mentions a name but no attribution
where it came from. Sounds like from the newspaper. Wherever it's from, the
author is highly biased. Probably for shock effect to get his article
published. That's why it's beyond me why Brokers give away their money
advertising in a medium that is mostly against them. Their main classified
income comes from For Sale By Owners wasting their money on ineffective ads.
I use to feel medicine should be socialized until I visited England and
found that anyone who could afford it had a private doctor. Same thing with
lawyers. How many people who get in trouble represent themselves (pro-se)?
And how many would choose a public defender if they could afford a lawyer?
Even the one's who are technically indigent run to their family and friends
for money to a hire a private attorney.
Same with Realtors. Home owners try it themselves and when they get sick of
weirdoes and bargain hunters showing up. They're glad to pay that 6%. In my
presentation book I I have pictures of FSBO's I listed throwing away their
home made signs. Some photos are really good because you can see the look of
happiness and relief on their faces. I'll have some of those photos on my
site in a few days and you can see for yourself. A picture's worth a
thousand words as the saying goes. If there truly was a viable alternative
Realtors would be out of business tomorrow. But they're not and neither will
any sort of broker. Whether it be stock brokers, commodity brokers, marriage
brokers. You name it.
They're all still here because they provide a service worth paying for. All
these conspiracy theories about the AMA, NAR, or the BAR is a load of crap.
How ironic that members of these professional associations see their
associations as ineffective blood suckers while conspiracy theorists blame
it all on these "powerful associations."
If you want to see where the power lies just look at the solicitation laws
in your state. Realtors have to abide by NO-CALL laws but read your state
law carefully and you'll see that newspaper publishers are exempt. Gee I
wonder why? Next research which lobby groups were pushing for NO-CALL and
CAN-SPAM laws and you'll see that it was the newspaper and magazine
publishers because they see telemarketing and e-mail as a much more cost
effective alternative to their products. And you'll find documents showing
what their budget is. It pales in comparison to NAR's. Not that they didn't
try, but if NAR was so powerful Realtors would be exempt as well. But how
many are willing to do the research. Most would rather believe the snippets
they get from the boob tube and propaganda rags calling themselves
newspapers.
--
Warmest regards,
Steve Horrillo, Realtor | Trainer | Hypnotherapist
http://brokeragenttraining.com (Advanced training for real estate
professionals)
http://over100percent.com (Realtors earn over 100 percent)
| |
| Steve Horrillo 2005-06-17, 11:27 pm |
|
On 16-Jun-2005, "Grover C. McCoury III" <gcmccoury@yahoo.com> wrote:
quote:
> Still, I'm hoping that upstarts such as ZipRealty, LendingTree, Foxtons (a
>
>discount broker in the Northeast), and Catalist (a California discounter)
>will soon blow away the traditional realty transaction mode
Rather than posting these ridiculous articles do a little research. I did a
goggle search on Foxtons using "problems with foxtons." Read the results and
tell me if you'd hire them.
http://groups-beta.google.com/group...ons&qt_s=Search
You won't find as many complaints about ZipRealty because they pay the
buyer's agent full commission. Anyone that doesn't is preying on the
public's lack of knowledge of how the business works and how the mind's of
Realtors work. Especially the "old timers."
Sure the public will fall for it. A billboard that say's "pay 2.5%
commission." SAVE $20,000 will get you more leads. Anyone in sales knows the
saying that you appeal to their, "need or greed." But in practice you'll get
less sales, less referals, and a much higher Agent turnover. You'll find
yourself "creaming" the listing leads for yourself and a select few agents
and sending the bulk of your office showing homes. Your resistance won't
come from the seller, being that I've never in my 5 years in real estate
ever had anyone ask what the split will be even though it's written on the
contract. They don't realize the implications of not paying the buyer's
agent full commission. YOU SHOULD if you have any sort of experience and are
being honest with yourself.
Not just discount brokers are guilty. Weak Realtors have been pulling this
long before someone tried to package the concept and sell it to Brokers. If
the Agent gets chopped down to 5% to get the listing, they give the Buyer's
agent 2.5%. For 4% they give 2%. To Realtors I say, If you don't have the
skill or the self worth to convince a seller to pay what's customary, or if
you're too greedy to walk away from the prospective seller, then at least
have the common sense to take it out of your own pocket. And don't take it
out of your broker's pocket either. Get yourself some training and buy some
affirmation tapes or just work with buyers if you don't have what it takes
to negotiate a proper contract. If you can't even negotiate a standard
commission for yourself, how are you ever going find it in you to negotiate
top dollar for your client?
To the Broker thinking about changing your model and discount Brokers. Open
your eyes! This is just a come-on disguised as a "business model." Don't let
yourself be fooled by these franchisors. It all sounds good in theory. Just
remember their business is to sell a franchise. That's *their* bottom line.
Doing what's best for your client first and Agents second should be *your*
bottom line. Do lots of online research and see what home sellers, listing
and buyer's agents are saying. Speak to agents who've worked at these
places. Consider the consequences of "going against the grain." It's fine to
be a rebel if it only effects you. I'm not saying commissions will not come
down as a result of new communication technologies, but it's a long time
away. Nothing can stop an idea who's time has come. But those who were ahead
of their time died pennyless like Van Gogh. Start cutting commissions and
you'll soon find out why Van Gough found the need to cut off his ear. 
--
Warmest regards,
Steve Horrillo, Realtor | Trainer | C.Ht.
http://brokeragenttraining.com (Advanced training for real estate
professionals)
http://over100percent.com (Realtors earn over 100 percent)
| |
| Grover C. McCoury III 2005-06-17, 11:27 pm |
| The article is from http://slate.msn.com/id/2105114
I find it quite amusing that a Realtor is claiming the author of this
article is biased...
"Steve Horrillo" <usenet@stephenhorrillo.com> wrote in message
news:aqpse.132573$J25.27817@bignews6.bellsouth.net...
quote:
> Where did you get this article from? It mentions a name but no attribution
> where it came from. Sounds like from the newspaper. Wherever it's from,
> the
> author is highly biased. Probably for shock effect to get his article
> published. That's why it's beyond me why Brokers give away their money
> advertising in a medium that is mostly against them. Their main classified
> income comes from For Sale By Owners wasting their money on ineffective
> ads.
| |
| ElJay 2005-06-20, 11:25 pm |
| Grover C. McCoury III" <gcmccoury@yahoo.com> wrote in message
news:RJ6dnYVNRdn6cCzfRVn-vw@adelphia.com...
quote:
> .... It's true that selling a house is a complex task. But so is writing a
> will, and an attorney doesn't ask for 5 percent or 6 percent of your net
> worth as compensation.
And lawyers don't spend hours and hours with clients who then either decide
not to buy, decide to buy a for-sale-by-owner property, or see a sign on a
property they like and just call that realtor leaving the first realtor
behind after hours of working with the client.
Unless you have a very strong, high-dollar case, a lawyer will not take your
case on a contingency (commission if successful) basis.
In most situations, a lawyer will either charge a flat fee, or will charge
you by the hour (in 1/10 of an hour increments) for any and all time they
spend that is related to your case.
If people were willing to pay a realtor by the hour, or even pay a flat fee
up front, realtors would be more than happy to handle cases for far far less
than 5% or the sale price. That's because they would know they will get
paid even if you change your mind about buying or selling, or suddenly
switch off to someone else and buy through them.
Of course, most people don't want to do that.
The buyers don't want to do that because they know they can now run multiple
realtors around the countryside and either walk away without buying
anything, or make a purchase and know that seller will pay the commission.
The sellers don't want to do that because they don't want to pay a realtor
money for their work only to find that no one wants to buy their house, or
no one wants to buy their house at the price, terms, and conditions that
they are asking.
And finally, if being a realtor is such a get-over scam, where all you have
to do is spend 50-60 hours getting a license and then can make outrageous
commissions, why aren't you (and everyone else) out there doing that?
The reality is that most full-time realtors work 60-80 hours a week, running
people around, and either find that they can't even make a modest living
doing that and get out of the business, or make a moderate income for all of
their time and effort in what is essentially a self-employment business.
| |
| Steve Horrillo 2005-06-21, 4:25 am |
|
On 20-Jun-2005, "ElJay" <RLJ@LJLJ.LJl> wrote:
quote:
> The reality is that most full-time realtors work 60-80 hours a week,
> running
> people around, and either find that they can't even make a modest living
> doing that and get out of the business, or make a moderate income for all
> of
> their time and effort in what is essentially a self-employment business.
The reason is they work hard but rarely work smart. Most don't have any
background in sales and marketing so they rely on the broker for leads and
advertising. The only thing that keeps most Agents alive is referrals. And
you don't get referrals unless you are doing a good job. The one's I see
making good money are the one's that do well for their customers and/or have
found some sort of niche or specialty.
--
Warmest regards,
Steve Horrillo, Realtor / CEO / C.Ht.
http://brokeragenttraining.com (Advanced training for real estate
professionals)
http://over100percent.com (Realtors earn over 100 percent)
http::/hipfsbo.com
| |
|
| > Realty Bites
quote:
> Why do you still need an agent to buy a home?
> By Douglas Gantenbein
Well, I have not sold a house yet, so I do not yet feel the pain of paying
the commission, but I did use help of a realtor when I was buying one,
which did not cost me anything. Since you've titled the topic "Why ...
agent to BUY a home", I should say that I did appreciate a professional
guiding me through the process, which is pretty cumbersome and does
intimidate, at least guys like me - first time buyers. The other important
thing was - my realtor had access to an online system with listings of
homes, which speeded the process up great deal. I cannot imagine having to
drive around or poke into the papers for listings. That would have taken
ages.
Cheers!
D.
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| Jeff Strickland 2005-06-21, 6:25 pm |
|
"Steve Horrillo" <usenet@stephenhorrillo.com> wrote in message
news:8lKte.148552$J25.110377@bignews6.bellsouth.net...
quote:
>
> On 20-Jun-2005, "ElJay" <RLJ@LJLJ.LJl> wrote:
>
all[vbcol=seagreen]
>
> The reason is they work hard but rarely work smart. Most don't have any
> background in sales and marketing so they rely on the broker for leads and
> advertising. The only thing that keeps most Agents alive is referrals. And
> you don't get referrals unless you are doing a good job. The one's I see
> making good money are the one's that do well for their customers and/or
have
quote:
> found some sort of niche or specialty.
>
The one's I see doing well have been doing it for a long time, in addition
to the points you mentioned -- niche, good job, large referral base, and
repeat business. Of course, there is a certain amount of being in the right
place at the right time ...
| |
| Jeff Strickland 2005-06-21, 6:25 pm |
|
"DA" <rcdd_at_teledatasystems_dot_com@foo.com> wrote in message
news:42b83398$1_3@alt.athenanews.com...
quote:
>
> Well, I have not sold a house yet, so I do not yet feel the pain of paying
> the commission, but I did use help of a realtor when I was buying one,
> which did not cost me anything. Since you've titled the topic "Why ...
> agent to BUY a home", I should say that I did appreciate a professional
> guiding me through the process, which is pretty cumbersome and does
> intimidate, at least guys like me - first time buyers. The other important
> thing was - my realtor had access to an online system with listings of
> homes, which speeded the process up great deal. I cannot imagine having to
> drive around or poke into the papers for listings. That would have taken
> ages.
>
Remember this when it comes time to sell your house, and call the agent that
brought you by. He'll be very happy to hear from you again. And, if you are
out drinking and playing golf, and somebody says that they are looking to
buy or sell, pass your agent's name along. Be sure to call your agent and
tell him that you gave his name out so that if the guy you gave his name to
really does call, and a sale is made, there could be a couple of box seats
at the ball park in it for you.
| |
| Grover C. McCoury III 2005-06-21, 11:25 pm |
| Definitely flushed the Realtors out of the weeds! LOL
"Grover C. McCoury III" <gcmccoury@yahoo.com> wrote in message
news:RJ6dnYVNRdn6cCzfRVn-vw@adelphia.com...
quote:
> Realty Bites
> Why do you still need an agent to buy a home?
> By Douglas Gantenbein
| |
| Steve Horrillo 2005-06-21, 11:25 pm |
|
On 21-Jun-2005, rcdd_at_teledatasystems_dot_com@foo.com (DA) wrote:
quote:
> The other important
> thing was - my realtor had access to an online system with listings of
> homes, which speeded the process up great deal. I cannot imagine having to
> drive around or poke into the papers for listings. That would have taken
> ages.
Yes but you never got to see the For Sale By Owners also on the market.
Right? If you'd had signed a buyer's agreement you could have seen it all.
--
Warmest regards,
Steve Horrillo, Realtor / CEO / C.Ht.
http://brokeragenttraining.com (Advanced training for real estate
professionals)
http://over100percent.com (Realtors earn over 100 percent)
http::/hipfsbo.com
| |
|
| Steve Horrillo wrote:
quote:
> Yes but you never got to see the For Sale By Owners also on the market.
> Right? If you'd had signed a buyer's agreement you could have seen it
> all.
I honestly don't think "For Sale By Owners" represent more than 10% of the
market (if that), so I'm not too sure I missed much. But let me ask you:
what is the buyer's agreement you are referring to? Actually pay money to
an agent to find you a home?
Cheers!
D.
-------------------------------------
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| Donkeydode 2005-06-24, 11:25 pm |
| Spoken like a man who gets most of his income from realtors...If you have
access to MLS in your area, tell me what exactly a realtor can provide that
I couldn't find already? I have only used a realtor 1 time in 5 real estate
transactions. I can say that it was not difficult at all, the title and
escrow company took care of any issues that arose, which were very minor. I
have always thought that realtors were one of the biggest rackets going
right now. On the other hand if all mortgage agents were guaranteed 3% on
each loan I would protected it like a "wolverine".
"Jeff Strickland" <spamcatcher@yahoo.net> wrote in message
news:sPadnRRCQsXibyzfRVn-rw@ez2.net...
quote:
>
> "Grover C. McCoury III" <gcmccoury@yahoo.com> wrote in message
> news:RJ6dnYVNRdn6cCzfRVn-vw@adelphia.com...
>
>
> You need a realtor because a realtor is going to ask you what you want in
> a
> house, how much you want to pay, what neighborhood you want to live in,
> those sorts of things. Then, he (or she) is going to find a house that
> fits
> what you said you are looking for, check it out to see if it is a dump or
> a
> nice place, then take you by so you can look at it. Without a realtor, or
> even just a real estate agent -- a Realtor is, by definition, a member of
> the National Association of Real Estate Agents, some agents are NOT
> realtors -- you will spend countless hours over several weekends driving
> all
> over the region looking for a house you like. Once you find the house,
> your
> realtor handles many aspects of the sales transaction that can drive a
> stable person to drink.
>
> Sure, there are lots of transactions that can be done on your own, but
> when
> the Buyer's Agent is paid by the seller during the transaction, why not
> take
> advantage of the services that are available?
>
> The author of this article grossly over simplifies the role of the real
> estate agent in the transaction.
>
> </ top post>
>
>
>
>
> homes
> and
> their
> a
> realtor's
> person
> and
> $500,000
> We
> people
> your
> the
> 2.5
> get
> while
> fact,
> put
> And
> controlled
> an
> percent
> 20
> real-estate
> by
> Web.
> listing
> responsible
> of
> the
> IPO.
> listings
> The
> to
> customers
> escrow
> working
> buyers
> to
> and
> number
>
>
| |
| Steve Horrillo 2005-06-25, 4:25 am |
|
On 23-Jun-2005, rcdd_at_teledatasystems_dot_com@foo.com (DA) wrote:
quote:
>
> I honestly don't think "For Sale By Owners" represent more than 10% of the
> market (if that), so I'm not too sure I missed much. But let me ask you:
> what is the buyer's agreement you are referring to? Actually pay money to
> an agent to find you a home?
I receive a list of about 50-75 new FSBO's a day just for my county, and
these are only the one's that the service is able to harvest from local
newspapers and website's. That doesn't even count the one's that only use
flyers and yard signs.
A buyer's agreement means that in the allotted time, say 3 months, any home
you buy the agent gets, say 3%. Even if it's a For Sale By Owner or even if
you find it. Without a contract the Agent has no commitment from you so if
you find one who's more committed to you than you are committed to her/him
consider yourself fortunate. Without a contract the FSBO can be an agent's
worst nightmare. Ask any experienced agent who handles buyers and they will
tell you stories of heartbreak. How they drove someone around for months
only to have them buy on their own. Or how they searched for properties only
to have the buyer go around them and make a deal directly with the listing
agent. Some accept it as the cost of business. Other's refuse to show homes
at all and refer them off. While other's come to distrust and even inwardly
despise the very people they are "hired" to help. I use quotes around the
word hired because without a contract, depending on the State, you haven't
really hired anyone. They are still legally obligated to the seller.
Furthermore, if you think that when you buy a house listed in the MLS that
it is the only seller who is paying the commission you are believing some
Buyer's Agent's sales pitch. It may be true from a legal / contractual
standpoint, but in practice it is the buyer that pays the cost. But just
common sense should tell you that the seller has already adjusted his price
upward to compensate for the commission. In fact statistically on the
average you the buyer is paying 6-21% more for the same type of house
(depending on who's stats you believe and when the study was done).
If you're being pitched by an Agent who wants to sell your house you will be
told they will fetch you over the 6% they charge. If you are buying a home
you will be told that it's the seller who's paying the commission. Both are
technically telling the truth. But look on the bright side. When it's time
to sell the home you paid over 6% for, if you hire a Realtor to sell, it
will be your turn to get 6-21% more. If you really want to get bent over,
buy through the MLS then try to sell it on your own. Of course I'm speaking
of averages. There's always going to be a percentage of people who will beat
the odds, or at least think they can. That's the lure of the FSBO. That's
what keeps ad services, online FSBO sites, classifieds, flat rate, discount
brokers, and gambling casinos in business.
| |
|
| If you have a mediocre or hard to sell property you may need to hire an
agent. But if you have a sought-after property you shouldn't need to.
FSBO is not worth anything, and you don't need them.
1) put up a web page with complete info and photos of every room and
amenity
2) put an ad in the paper with the web address
3) list the property at 4-5% below market (agent-market that is)
4) Give it a month or 2
Think of your advantage if you can knock off $50K from the house next
door and still walk away with the same or more money? At the high end,
you can assume that anyone with that kind of money is reasonable
internet savvy. Or at least they have a kid who is.
Signing an agreement with a broker is totally foolish. Remember that if
you find a FSBO on your own, you have a bargaining position that you
don't have with a broker. If its a hot property you're going to pay
market or close anyway. But if the seller doesn't have to pay the
broker,and you are ready to buy, cash-in-hand, you can get a piece of
that 4-6% overhead yourself. It costs money for every month the seller
doesn't sell without a broker for advertising, carrying costs, etc, so
if you can buy quickly you can get a bargain.
Unless of course you're willing to pay $50K for a glorified chauffer.
| |
|
| "Steve" <tm4525@aol.com> wrote in message
news:1119808773.608496.170020@g43g2000cwa.googlegroups.com...
quote:
> If you have a mediocre or hard to sell property you may need to hire an
> agent. But if you have a sought-after property you shouldn't need to.
> FSBO is not worth anything, and you don't need them.
>
> 1) put up a web page with complete info and photos of every room and
> amenity
> 2) put an ad in the paper with the web address
> 3) list the property at 4-5% below market (agent-market that is)
> 4) Give it a month or 2
>
> Think of your advantage if you can knock off $50K from the house next
> door and still walk away with the same or more money? At the high end,
> you can assume that anyone with that kind of money is reasonable
> internet savvy. Or at least they have a kid who is.
>
> Signing an agreement with a broker is totally foolish. Remember that if
> you find a FSBO on your own, you have a bargaining position that you
> don't have with a broker. If its a hot property you're going to pay
> market or close anyway. But if the seller doesn't have to pay the
> broker,and you are ready to buy, cash-in-hand, you can get a piece of
> that 4-6% overhead yourself. It costs money for every month the seller
> doesn't sell without a broker for advertising, carrying costs, etc, so
> if you can buy quickly you can get a bargain.
>
> Unless of course you're willing to pay $50K for a glorified chauffer.
Another strategy that can work if you already know a potential buyer: Split
the savings in commission down the middle. If, say, an agent's commission
would normally be $10,000, offer it to a buyer for $5000 less than what you
would otherwise demand. I did this in 1998, and it worked fine.
| |
| Steve Horrillo 2005-06-27, 4:25 am |
|
On 26-Jun-2005, "Steve" <tm4525@aol.com> wrote:
quote:
> Signing an agreement with a broker is totally foolish. Remember that if
> you find a FSBO on your own, you have a bargaining position that you
> don't have with a broker. If its a hot property you're going to pay
> market or close anyway. But if the seller doesn't have to pay the
> broker,and you are ready to buy, cash-in-hand, you can get a piece of
> that 4-6% overhead yourself. It costs money for every month the seller
> doesn't sell without a broker for advertising, carrying costs, etc, so
> if you can buy quickly you can get a bargain.
>
> Unless of course you're willing to pay $50K for a glorified chauffer.
You show your colors with that last line. The one's who don't hire realtors
are the one's with "issues" about them, are the kind that think they're so
smart they can beat the system, aren't really motivated, or don't have a
life/job and have too much time on their hands. Anyone who is thinking
clearly would never try it themselves. If you had a bad experience with an
Agent then learn how to shop for an Agent. If you've never used one you have
no business making any judgments.
--
Warmest regards,
Steve Horrillo, Realtor / CEO / C.Ht.
http://BrokerAgenTraining.com (Advanced Training for Real Estate
Professionals)
http://over100percent.com (See How to Earn Over 100 Percent at EXIT Realty)
http::/HipFSBO.com (Find a FSBO Friendly Real Estate Professional)
| |
| Steve Horrillo 2005-06-27, 4:25 am |
|
On 26-Jun-2005, "Don" <dwzimm@telus.net> wrote:
quote:
> Another strategy that can work if you already know a potential buyer:
> Split
> the savings in commission down the middle. If, say, an agent's commission
> would normally be $10,000, offer it to a buyer for $5000 less than what
> you
> would otherwise demand. I did this in 1998, and it worked fine.
The listing agent should already have a contract with the seller for 6%. Why
would the Agent settle for half? Keep in mind it's the buyer's agent that
does most of the work leading up to the closing. Unless the house was
grossly over priced and they weren't getting any action. Chances are you WAY
overpaid for that house.
Warmest regards,
Steve Horrillo, Realtor / CEO / C.Ht.
http://BrokerAgenTraining.com (Advanced Training for Real Estate
Professionals)
http://over100percent.com (See How to Earn Over 100 Percent at EXIT Realty)
http::/HipFSBO.com (Find a FSBO Friendly Real Estate Professional)
| |
| Jeff Strickland 2005-06-27, 6:25 pm |
|
"Donkeydode" <cartman@sp.com> wrote in message
news:U__ue.51076$iU.45752@lakeread05...
quote:
> Spoken like a man who gets most of his income from realtors...If you have
> access to MLS in your area, tell me what exactly a realtor can provide
that
quote:
> I couldn't find already?
The MLS is a subscription service that real estate agents/brokers have to
pay for. The general public hasn't got access to the MLS, this is a big part
of why it works.
I have only used a realtor 1 time in 5 real estate
quote:
> transactions. I can say that it was not difficult at all, the title and
> escrow company took care of any issues that arose, which were very minor.
I
quote:
> have always thought that realtors were one of the biggest rackets going
> right now. On the other hand if all mortgage agents were guaranteed 3% on
> each loan I would protected it like a "wolverine".
>
I have never used a real estate agent. I bought and sold my first house as a
FSBO. Actually, I bought it from an estate that was in probate, and don't
recall how the property was listed, but I didn't use a buyer's agent, I just
bought the house. Then, after living in it a few years, I sold it as a FSBO
(For Sale By Owner). I set the sign out in the late afternoon, and the next
morning I had a buyer at full price.
But, my experience does not mirror the vast majority of transactions. The
vast majority of people decide to move from one area to another, and they
know very little about the new area. They are faced with the prospect of
driving from home to the new place where they are interested in living, and
they have to scour the various sources for homes. The trouble is, they don't
know where all of the homes are, and just because a home is in the local
newspaper doesn't mean that it is in a desirable part of town. You enlist
the assistance of a buyer's agent to have them search for properties for
you. The idea is that they know the neighborhoods, and if you want a
particular neighborhood feature, your agent should know that the feature
exists in one neighborhood or another.
I bought my current house when it was new, and I went every weekend for
something like 10 weeks before I found a house that met my criteria. If I
was looking at previously owned homes, I'd have driven myself and my wife
crazy driving all around the region looking for a house.
| |
| Steve Horrillo 2005-06-29, 4:25 am |
|
On 27-Jun-2005, "Don" <dwzimm@telus.net> wrote:
quote:
>
> I guess I didn't make it clear what happened. No agents were involved. I
> priced the house about what I believed it would realistically bring, lets
> say $175,000. Then I said to the potential buyer: "If I sold this house
> through an agent, you would have to pay $175,000, and I would end up with
> $165,000 after paying a $10,000 commission. I will sell it to you for
> $170,000." So the buyer and I each ended up with $5000 more than we would
> have otherwise.
How many buyers did you show your house to before you sold it? If your home
is shown to, say 3 qualified people in a month versus 30, don't you think
you could have gotten someone to pay you a lot more than you did? If you
were getting showings with minimal advertising at 175k, I guarantee you
could have gotten at least 199-225k if you had Global exposure.
How many potential buyers walked through your home before you sold? Out of
that number how many did you feel were serious and had the capacity to buy?
How could you tell? Did you ask for a Source of Funds / Pre-qualification
Letter? What length of time did you have it "on the market?"
--
Warmest regards,
Steve Horrillo, Realtor / CEO / C.Ht.
http://BrokerAgentTraining.com (Advanced Training for Real Estate
Professionals)
http://over100percent.com (See How to Earn Over 100 Percent at EXIT Realty)
http::/HipFSBO.com (Find a FSBO Friendly Real Estate Professional)
| |
| Steve Horrillo 2005-06-29, 4:25 am |
|
On 27-Jun-2005, "Jeff Strickland" <spamcatcher@yahoo.net> wrote:
quote:
> The
> vast majority of people decide to move from one area to another, and they
> know very little about the new area. They are faced with the prospect of
> driving from home to the new place where they are interested in living,
> and
> they have to scour the various sources for homes. The trouble is, they
> don't
> know where all of the homes are, and just because a home is in the local
> newspaper doesn't mean that it is in a desirable part of town. You enlist
> the assistance of a buyer's agent to have them search for properties for
> you. The idea is that they know the neighborhoods, and if you want a
> particular neighborhood feature, your agent should know that the feature
> exists in one neighborhood or another.
I still wouldn't trust the whole process to an Agent. These days you can
check on sites like realtor.com to make sure that certain properties aren't
slipping through the cracks. The errors I see in the MLS never cease to
amaze me. We have a complex here called Hawaiian Gardens. I've seen Hawaii
misspelled about six different ways. I've been training realtors how to use
the MLS for the past year full time. Most know how to search for a correctly
entered listing but very few know how to make the search forgiving enough to
find an incorrectly entered one. And those are the best deals usually. Being
that the Realtor has probably been telling them the house isn't selling
because it's priced too high. Little do they know that they're not getting
showings because no one can find it!
--
Warmest regards,
Steve Horrillo, Realtor / CEO / C.Ht.
http://BrokerAgentTraining.com (Advanced Training for Real Estate
Professionals)
http://over100percent.com (See How to Earn Over 100 Percent at EXIT Realty)
http::/HipFSBO.com (Find a FSBO Friendly Real Estate Professional)
http://eLOWn.com ("Got a heartbeat?" Get a loan! Credit Repair Library)
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