Real Estate Forums

skeptik · 02-05-2006, 05:31 PM

I respect the need for anyone to make a living and work hard. But, the real estate business, as I am learning, is extremely monopolized and incredibly overpaid. To collect a % of the sales price is rediculous. The same service, provided for different houses, nets hugely different fees. This makes no sense whatsoever. Some agencies/brokers cap the fees, I realize, and even fewer work on a flat rate (makes much more sense). But, for the most part, you ask for a percent of the sales price which most often is an outrageous fee for the preparation and work involved.

I quickly learned of this outrage when an agent asked to show my for sale by owner home and brought a contract for me to sign that said she gets a percent of the sales price. For what??? For walking through my house and telling the buyer all about my house that she knows nothing about??? I told her I didn't think that was fair and she seemed taken back by the fact that I even took the time to read over what I was signing much less questioned the fee. Let's say she had to spend 4-6 hours or so setting up the inspection, appraisal, etc etc. Okay, so how much per hour is that??? I went to school for 10+ years, have people's lives in my hands, and have literally hundreds of thousands of dollars in educational debt and I don't make that much.

I'm not surprised that the real estate business has created this scheme. What surprises me is the fact that the public lets them get away with it. I hope people start becoming more aware of this fleecing and start to use FSBO and other avenues more to force a reasonable behavior from the real estate business. It makes me sick every time I drive by an agency that has a huge luxurious building built by millions of dollars of people's hard earned equity that they've skimmed like a drug dealer. I would be happy to hire an agent/broker if they actually spelled out their fees like any other reputable business. As it stands now, I'll do everything I possibly can to keep from using a real estate 'professional' unless they are flat rate or have some other reasonable system of charges. You can continue using the MLS like a mob boss, but I have a feeling (and I hope to God) that something similar will replace this as a good source of potential property for a buyer.

LVH · 02-05-2006, 10:07 PM

I took your first post I saw on real estate forums serious but now I have the feeling you are just forum trolling for FSBO business. You are either a discount agent frustrated you cant get business or you run a FSBO website. Here was your last post

Your opinions are noted but unfounded as if research was done you would realize that 90% of all FSBO hire a real estate agent after trying to sell their home FSBO within 90 days. Ask yourself why or read some of my other comments from your last post on the other forum.

skeptik · 02-06-2006, 06:58 AM

Quote:

Originally Posted by LVH

I took your first post I saw on real estate forums serious but now I have the feeling you are just forum trolling for FSBO business. You are either a discount agent frustrated you cant get business or you run a FSBO website. Here was your last post

Your opinions are noted but unfounded as if research was done you would realize that 90% of all FSBO hire a real estate agent after trying to sell their home FSBO within 90 days. Ask yourself why or read some of my other comments from your last post on the other forum.

I do realize that most are forced to list after trying to sell on their own. This is my point. If it wasn't so mafia-like using the MLS like a market-cornering thug, more people would be successful and not be forced into giving up their equity. The whole thing stinks.

And you are wrong on both assumptions. I posted the same message on two websites to get more response as I would like to hear the real estate businesses explanation.

glenng · 02-06-2006, 08:35 AM

In reading your post there are several items that you may not have considered in making your determination:

1) Do you know for a fact that it takes only 4-6 hours of follow-up time to complete the transaction? (It takes far longer.)

2) Do you know what the costs are associated with your benefit package from your employer? Usually the benefit package, health insurance, government required employer payments - medicare, social security, state and federal unemployment insurance, workers compensation, paid holidays, paid vacations, etc - costs your employer? These costs are borne by the Realtor, because of being an independent contractor.

3) Do you know the costs associated with your employer's overhead - rent, utilities, computer systems, software, advertising, etc. in order to keep employed? Again, these are borne by the Realtor as an independent contractor.

From your post - "I went to school for 10+ years, have people's lives in my hands, and have literally hundreds of thousands of dollars in educational debt and I don't make that much." So, you are must be in the health care business. And you are probably running your own practice, so you are well familar with the overhead costs with running your business. As a retired hospital financial administrator - I know how healthcare practitioners run they business in many cases - very poor fiscal managers - they loose $10,000's in how they run their offices, as well as, income tax strategies.

Sometimes it pays to look beyond the gross income and look at the bottom line. It does appear that you are looking at your bottom line divided by the hours you work while looking at the gross income of a Realtor divided by a SWAG guess of hours to complete a transaction.

skeptik · 02-06-2006, 08:56 AM

Quote:

Originally Posted by glenng

In reading your post there are several items that you may not have considered in making your determination:

1) Do you know for a fact that it takes only 4-6 hours of follow-up time to complete the transaction? (It takes far longer.)

2) Do you know what the costs are associated with your benefit package from your employer? Usually the benefit package, health insurance, government required employer payments - medicare, social security, state and federal unemployment insurance, workers compensation, paid holidays, paid vacations, etc - costs your employer? These costs are borne by the Realtor, because of being an independent contractor.

3) Do you know the costs associated with your employer's overhead - rent, utilities, computer systems, software, advertising, etc. in order to keep employed? Again, these are borne by the Realtor as an independent contractor.

From your post - "I went to school for 10+ years, have people's lives in my hands, and have literally hundreds of thousands of dollars in educational debt and I don't make that much." So, you are must be in the health care business. And you are probably running your own practice, so you are well familar with the overhead costs with running your business. As a retired hospital financial administrator - I know how healthcare practitioners run they business in many cases - very poor fiscal managers - they loose $10,000's in how they run their offices, as well as, income tax strategies.

Sometimes it pays to look beyond the gross income and look at the bottom line. It does appear that you are looking at your bottom line divided by the hours you work while looking at the gross income of a Realtor divided by a SWAG guess of hours to complete a transaction.

I understand all of that. I understand the need for all of that. It still doesn't justify paying thousands of dollars difference based on the value of the home being sold.

I just think it's presumptuous for a real estate agent to come into my office and brag about how they've made over $100K/yr and only had to train for 2 weeks to get a license. A commission-based structure leaves too much room for getting worked over (for lack of a more accurate but less tasteful word).

And overhead must not be too bad for the agency as most I've been to have beautiful luxurious buildings.

It's true, most doctors run a terrible business and lose money hand over fist. Doesn't have anything to do with this discussion, but if it's part of your argument, I don't disagree.

LVH · 02-06-2006, 03:33 PM

Quote:

Originally Posted by skeptik

I understand all of that. I understand the need for all of that. It still doesn't justify paying thousands of dollars difference based on the value of the home being sold.

I just think it's presumptuous for a real estate agent to come into my office and brag about how they've made over $100K/yr and only had to train for 2 weeks to get a license. A commission-based structure leaves too much room for getting worked over (for lack of a more accurate but less tasteful word).

And overhead must not be too bad for the agency as most I've been to have beautiful luxurious buildings.

It's true, most doctors run a terrible business and lose money hand over fist. Doesn't have anything to do with this discussion, but if it's part of your argument, I don't disagree.

I can understand how you feel. My wife has a PharmD and we have this discussion a lot. I make a lot more than she does and yet she spent almost 8 years in college. Its hard to understand how someone, not me, can make high 6 low 7 figures a year and not offer what some preceive as a important profession. Just to poke some fun, hell my wife has a friend who is a cocktail server here and she makes over 200k a year serving drinks, for some reason that just doesnt seem right..LOL. We have kids who park cars here making over 80k a year..for parking cars...WOW

I can tell you however that it takes longer than 2 weeks to get a license much less understanding how to properly market a home to sell. If you are a MD as I am guessing than I am sure you understand the meaning of working long hours. I can tell you I personally put in on average about 14 hours a day or more. My clients come first and sometimes my family suffers because of this, as I am sure you can understand that. My level of expertise has a value and I deem my value to average X dollars per hour, just as I am sure you do.

I will offer some solace to your comments however. If I list a home for say 6% and that home sells within say 2 weeks and I have not spent any major marketing dollars I do cut my clients a break on their fees, but if I list a home at 6% and it takes me 2, 3 or 4 months to sell that home and I have spent a good chunk of change marketing that home ( At My Risk Not The Clients ), I do not offer any discounts as my time and knowledge comes at a cost.

With every service there is a set value for that service. I personally do not agree with what some doctors charge but that is at the present moment a value for their services. You claim to have huge overhead from student loans and so on, we as Realtors also have overhead and cost as with any business and yes this is a business we must pass these cost on to the consumer as any company does.

glenng · 02-07-2006, 12:22 PM

Quote:

Originally Posted by skeptik

I just think it's presumptuous for a real estate agent to come into my office and brag about how they've made over $100K/yr and only had to train for 2 weeks to get a license. A commission-based structure leaves too much room for getting worked over (for lack of a more accurate but less tasteful word).

And overhead must not be too bad for the agency as most I've been to have beautiful luxurious buildings.

It's true, most doctors run a terrible business and lose money hand over fist. Doesn't have anything to do with this discussion, but if it's part of your argument, I don't disagree.

It may have been only 2 weeks of education and pass tests to get a real estate license, however, there are skills and experience to be learned, similar to an intern or resident.

Just as doctors within a discipline have varying degrees of skill and knowledge, it is the same with real estate agents.

A good or excellent real estate agent has to have more knowledge than just sign on the dotted line. I will readily admit that there are some real estate agents out there that should not have licenses to practice this profession.

The basic issue here that is presented is that you feel there is direct corrolation between education and renumeration. However, it is truly skill, knowledge and problem solving abilities that is what people pay for.

My personal thought is that there are 2 different real estate agents in the industry today - those that take a sales approach and those that take a consultive approach. Perhaps, you ran into an agent that takes the sales approach.

One of the things that you did not mention in your earlier comments was the commission percentage that the agent was going to charge.

Personally, being a broker I can set what I would consider a reasonable fee for my services, in a case such as your's. My fee would be probably between one-third and one-half of the normal fee.

When in the hospital financial profession - there were instances where a patient could have an issue with a physician. It was my responsibility as part of the risk management committee, to review the patient's medical record, consult with medical professionals to determine if there was any exposure and propose a solution. I can honestly tell you that I was earning far less than the doctors, but actually saved them reputation and monetarily. How do you justify that? (FYI - I only have 5 years of education - not 10 years.)

In closing - book smarts does not necessarily make for skill, knowledge nor the ability to amicably resolve problems.

Quote:

And overhead must not be too bad for the agency as most I've been to have beautiful luxurious buildings.

Geez, the medical practice must not too bad, since docs have expensive homes, expensive cars, country club memberships, etc. Maybe, this is why our country has issues with the high costs of healthcare and health insurance???!!!

Now, justify the charges for physicians and hospitals for us.

San Diego Homes & Condos · 02-07-2006, 12:32 PM

Wow! Good post it makes me eager to respond! You know I can understand where you are coming from but you are not aware of all that is involved. It is not that easy and do you know how many discount agencies and for sale by owners get involved in litigations because they did not use the right contracts or make sure the escrow checks were handled right? A lot and being a good realtor requires a lot of knowledge sure it is quicker than getting a college degree but the real schooling takes place after you get your license and it takes years to learn all you need to know that is why you have to work for a broker there is a lot of legal liability and costs involved in a listing. Being a newer agent just so you know is a lot harder than you think. Agents don't just get 6% if you have a listing that is a 6% commision you get 3% and the buyers agent gets 3% well say I was the buyers agent I have a broker I pay my broker 50% of my commision so I am down to 1.5% since they carry the legal burden pay for websites marketing it is not cheap! Then with my 1.5% I pay the Errors and Ommisions insurance, transaction cooridinators, so that leaves me with 1% then say I showed my client 60 homes all over town that is a lot of days and gas sometimes it takes months so you are telling me that guiding my client legally and making sure all goes well and nobody rips them off they get inspections, then I do paperwork for any repairs then negotiate for them there is a lot of paperwork that is important not to mention building search websites for them to find the perfect home and take them to all the homes they want to see you are telling us that we do not desearve 3k from a 300 and something thousand dollar home after months of working then you are a very mistaken. I assure you if you looked into it attorneys fees are much more expensive in the long run if you did not have a realtor. The seller pays commision for both sides and then when you buy you do not pay so it is fair in the end. It is not just about access to the MLS and anyways who wants the MLS to be public there is a lot of confidential information on the MLS about the sellers which I am sure you would not appreciate every one having access to. Do you want un accompanied strangers going in your home when you are not able to show it. And if you think buyers will wait until you are home it would take you a long time to sell your home. If you are so bitter why don't you try being a realtor then you will change your tune.

G550 · 02-07-2006, 05:40 PM

The fact that you spent so much on your education, have so much responsibility, but yet get paid so little is disheartening. Have you thought about real estate as a profession? You make TON's of money, work very LITTLE and get to meet such interesting people

.

Las Vegas Homes · 02-07-2006, 06:04 PM

G550, after cafeful consideration, I have decided that you put it best! LOL, if it is so simple and so lucrative, then why not do it skeptik? I am confused....Additionally to that, what is your point for being on the site if only to complain about how much money we make as Realtors? What do you feel is a fair amount of compensation? If an average 3% commission is so outragoeus, then why do people agree to pay it? I am just haveing trouble understanding what you are trying to accomplish here....