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The Topic No One Will Touch with a Nine Foot Pole: “Agents are Overpaid”

Real estate agents are overpaid.

It’s a notion I’ve heard from many many people outside of the real estate industry over the past 8 years. And there are countless entrepreneurs who have thought the same thing, and actually tried to change it (because that’s what entrepreneurs do). PayPal veteran Keith Rabois, who is working on a startup named HomeRun, is the most recent. HomeCanvasr is making an attempt at it. As is HomeVana. You can buy homes on eBay. Redfin of course started hard in the camp of reduce commissions by giving rebates, though has shifted back toward more of a traditional agent model. As did Urban Compass (they’ve retreated back to traditional model). I’ve talked to 2-3 other entrepreneurs privately over the past few months who are working on projects focused on cutting commissions or dis intermediating agents entirely.

Disclosure: I have no idea whether agents are worth 6% of a real estate transaction. I’ve never bought or sold a house (& I don’t plan to soon), so don’t have an informed opinion to share on the topic.

sixpercentBut “are agents worth 6%?” is not what I want to talk about. There are clearly many many people who think the answer is no and working on solutions to change that. Many years and lots of money has been spent by some incredibly smart people trying to change the economics of real estate.

Yet commissions have not changed from 6%. Sure, technically, they are negotiable, but buyers and sellers don’t really know that.

The question is why none of those efforts have succeeded?

Real Estate Dynamics that Other Industries Don’t Face

Most people buy a home every 7 years. That’s a long, long time between transactions. Compare that to paying your credit card monthly. Or buying a plane ticket every couple months. Sharing a photo or sending a text daily. Looking at news daily. Writing a blog post every couple days. Eating lunch and dinner everyday. Buying a new shirt every 3 months. Etc.

For me to try a new website or app to find a plane ticket, is a fairly low bar. I ask no one before I make that decision, because the consequences of a poor experience are small. If it doesn’t go well, who really cares because it just cost me an extra 20 minutes, or $50. It’s not the end of the world.

Everyone knows, a house is the single biggest financial transaction most people ever make. People don’t make that transaction without talking to their friends, families, and professionals for advice. Those conversations take place over the course of months and years, the vast majority of which include iterations of “who is your real estate agent?”,” you need an agent to represent your interests”, “my agent did X”, and “you shouldn’t/can’t sell FSBO.”

Why? Because those people are just recounting their experiences, all of which included an agent. Point being, there is an incredibly strong social pressure to use an agent, since everyone else has — and you don’t want to be the sucker who tried to do it on your own, and got screwed out of $50,000 or $100,000 (or some other high $$ amount).

Lowering Commissions

There are two camps of those trying to lower the costs of buying and selling real estate. Those working on discount brokerage models and those trying to build a marketplace of buyers and sellers, connect them directly, and get rid of the agent entirely.

Discount Brokerage Models

The most well known discount brokerages are Redfin and ZipRealty. But there are a bunch of others, including recent entry Keyzio.

You can not sell a house with only one side of the transaction accounted for, meaning you need the cooperation of the opposing representation to finish a deal. The whole industry will battle you tooth and nail, the minute you start rebating commissions and cutting into standard commissions. Just ask Redfin, which has faced battle after battle from the industry over the last decade. And, of course, NAR is one of the largest and most influential trade associations in existence. There are a LOT more traditional agents than agents who work for discount brokerages — and they ALL talk, non stop…not much of which is favorable to discount brokers winning over buyers and sellers.

Can discount brokerages digitize the whole transaction, and cut costs to buy and sell at scale in the process? Redfin is making strides, but it’s still a long, long road to changing consumer behaviors.

Buyer – Seller Marketplaces

What is required to connect buyers and sellers directly? A large marketplace of engaged buyers and sellers to find and connect with each other. Delivering on that is easier said than done. Potential sellers need to be able to post their house, in a private and trusted environment, and receive serious buyer inquiries. Otherwise, it’s a gimmick. The chicken and egg problem is massive, particularly given the infrequency of people buying or selling. How on earth do you target and find home owners? You either need to get VERY, very geographically focused – ie convince every homeowner in a specific ZIP code to sign up, or you need massive massive distribution (ie Zillow or Trulia scale).

Zillow already did Make Me Move, which is an early indicator that someone might sell. How do you differentiate beyond that? Sure, many people don’t want to publicly state they are thinking about selling, but where can they post privately where buyers will actually see it? This gets us into the whole pocket listings opportunity.

I’ve talked to several founders working on tackling this, and I’ve yet to get past the “will this work at all?” question, let alone figuring out how to make money doing it (aside from pivoting back to being a brokerage).

An unlikely player that could emerge? NextDoor, since they are driving toward a daily use case for home owners — regardless of whether they are buying or selling. Zillow or Trulia could do it as well, but of course connecting buyers and sellers directly would cannibalize their entire business of connecting consumers with real estate professionals.

Entrepreneur Advice

Here’s my advice to entrepreneurs who believe commissions are too high, and intend to do something about it:

  • Go sell real estate OR work in the industry as a vendor for a couple years (on someone else’s dime).
  • Ask questions at every opportunity in your quest to understand all the behind the scenes industry dynamics that exist.

By doing those two things, at least you’ll have a very thorough understanding of the industry you aim to conquer going into it. You might find your strategy changes with that deep industry understanding, which is not a bad thing

Final Question

So, is there a viable strategy to lower commissions? If so, what is it?

[Graphic via http://www.infotube.net/]

About Drew Meyers

Founder of Geek Estate Blog / Geek Estate Labs. Zillow Alum. Travel addict & co-founder of Horizon. Social entrepreneurship & microfinance advocate. Fan of Red Hot Chili Peppers and Kiva.

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  • Sandra M.

    So the “people” who think RE agents are paid too much, (those nasty RE people taking advantage of sellers and buyers) want to change it for what reason? Out of the goodness of their heart? NO, like anything else, THEY want a piece of the pie. They figure if they could get 2% or 1% of EVERY real estate transaction that would be great for them! And they would be liberating the poor buyers and sellers, right? How many of these CEO’s of these discount company start-ups had a meaningful professional position and substantial income when they started on this quest? Or where they just some consultant/blogger who bounced around. I don’t know any of them, and I don’t care to meet them. You know I think the airlines make way TOO much money on baggage fees, in fact billions ripping off travelers. Why not find a way to transport the luggage for free, on your dime and liberate the travelers!

    • Wow, your post here is full of much anger. “…liberating the poor buyers and sellers”. Who’s saying that? “nasty RE people” ? You say “I don’t know any of them” but you have no problem throwing them and your unsubstantiated knowledge of their previous careers and backgrounds under the bus. Shall I start judging you despite not knowing anything about you?

      “….that would be great for them.” Yes, it would. “THEY want a piece of the pie.” Yes, they do. And it’s AWESOME. You know why? Because competition and innovation are the heart and soul of our economy. This is America and if someone wants to try and do something new then that’s their RIGHT. We should encourage this type of thinking. If you don’t like it, then go outperform them. But don’t cry foul.

      You write your post as if these innovators “have it out” for realtors. Maybe they’re just trying to build their own American dream, saw an opportunity and are initiating the next phase of how real estate is done. You seem to be threatened by this. And if you’re not willing to embrace change, then maybe you should be threatened. It’s one of the biggest industries in the world – why would you NOT expect newcomers?

      Your 6% model is not a Constitutional right protected from change or outside influence. Even a broker here (Bryn) says realtors are overpaid. After all, does it take twice as much effort to sell a $600,000 house than a $300,000 house? The commission earned will double if using a straight percentage but it could very well take you half the time and effort in many cases. Would you give back half your commission in that case? We both know the answer. But the 6% remains intact anyway — and who’s that good for? Realtors. You.

      As more and more information becomes publicly available, more people will get more educated and look for more efficient ways of buying and selling. That’s called leveling the playing field, and real estate is only one of many industries who’ve had to deal with it (ever price an item online before visiting the stores?) However, there will ALWAYS be buyers and sellers who value the time, energy, market knowledge and resources of a good realtor – that won’t change. And I’m all for that as well – that need will always be there, and where there’s a need there should be people willing to serve that need.

      But the realtors who cling to that decades-old model as their only way of conducting business and cry foul will soon find themselves more tightly crowded in a shrinking pool.

      • When I was an ad guy on Madison Ave agencies charged a flat 17.65% on all work then they marked up all outside services, like photography etc., then clients got the idea the 17.65% markup could be negotiated and lo and behold agencies had to negotiate and yet the agency business got bigger not smaller. But in the early days chicken little was running amok!

      • thehousedoctor

        Most discounters are not doing it as a favor to the public when they advertise how much “less” they charge. They act like crusaders when when the bottom line is they are just another business model. If not then they should advertise what they charge instead of how much “less than the others” they charge. Discounters are playing on the innate “bargain hunting” attitude of the public not on any altuistic purpose they are serving. Just think if we all reduced our fees to less than the discounter…now they would be the overpriced agents all the others are talking about. Then they would reduce theirs, then we ours until there would be no industry left. It is a very slippery slope leading to a hole that is very difficult to climb out of.

        • MEB

          But that’s just marketing and advertising — I don’t recall ever seeing “We’ll sell your house for 6%” on any realtor’s business card or on any materials in a broker’s office, so it goes both ways. They can use whatever spin they choose – it’s just advertising. Of course, the root is that they believe it’s a business model that will be profitable for them — no one believes they’re doing it as a charitable public service and I don’t see anything from discounters claiming as such. If they can do what you do for less, then you indeed have a problem. If you can’t compete on price, then you have to compete on something else, like service or marketing. If you think they are the Wal-Mart of brokerages, then it’s your job to call it that way and position yourself as the Neiman Marcus instead. They’re not going to go away so realtors will have to find a way to manage these new entrants into their markets. If you can’t win the war on price, then there are other places to fight that battle.

  • Thanks Drew. A good analysis. The truth is already what you inferred. People working outside the space have no idea the amount of work put in by quality agents involved in listing and buying homes. I was a 20 year Tech guy (Marketing and Website Architecture)and have now partnered with my wife (a very successful realtor and home appraiser for over 2 decades)for nearly two years, and I can honestly say I’ve never worked harder. And we rarely if ever earn a 6% commission. In a large coastal pop center-even the best realtors assume a discount to the client-due to the competitive nature of the industry. People have lots of choices when picking a realtor. You better have an airtight process, a solid and stellar reputation both in the community and online and a proven track record of success. And guess what? It takes a lot of time and money from the realtor to position themselves accordingly. Like usually working 7 days a week. Earning 4-6% depending on the transaction is totally equitable. For those who disagree, work for a couple of years in the business and then come back and report your findings.

  • Yes, we are over paid, and I hope it stays that way.

    Like many others I jumped into this business because Realtors are paid so much. That was not the only reason, but it was a big one.

    I think it will stay this way because of what you mentioned above. Who wants to be the sucker who saved $20K on commission but sold their home for $70K to cheap.

    Sellers believe agents will net them more money, so they are not so concerned about the commission. They are concerned about their bottom line, and they feel they make more money paying full or discounted commission then doing it on their own.

    They also feel there is less liability, and they like that an experienced expert is there to guide them through what is the largest transaction they will do in their life.

    • The average full-time Realtor makes around $60k/yr. The whole “overpaid” cliche comes from people seeing how much one commission is and not understanding the bulk of unpaid work that agents do. Don’t reiterate the inaccurate cliche.

      • Sam, the “bulk of unpaid” work we do is normally focused on getting more business.

        The public does not care how much time per week we spend prospecting and trying to get more business.

        All they see is how much time we spend helping them.

        They then take those hours we spent helping them, and look at how much commission we will earn on the sale, and that gives them an idea of how much they feel we make per hour.

        In my market the median sales price is $648,000. Each sale is different, but let’s assume the buyer’s agent spends 3 hours showing the client properties. Then the client figures another 3 hours were spent managing the escrow, although in my case most of that time is done with offshore VAs.

        So now they figure we have 6 hours into helping them. Running those numbers using 3% of our median price and 6 hours of work that gives us an income of $3,240 per hour, and 3 of those hours were mainly handled by the offshore VAs who charge us way under minimum wage.

        That is a lot per hour in the public’s view. An expensive attorney might be $300 to $500 per hour.

        In our market many homes are sold above the median, so sometimes they might feel we are making as much as $6,000 per hour, or if you remove the time spent by the VA as much as $12,000 per hour.

        I don’t have any suggestions on changing the public’s perception, it is what it is, but I also don’t think we need to promote that it is an inaccurate cliche, as the public probably sees this as just brushing aside the facts I mentioned.

        • I’m not asking you to change the public’s (mis)perception. I’m simply asking you not to perpetuate and fuel a statement which we all know is based on false assumptions (which you’ve clearly illustrated above).

          • Sam, we have agreed on a lot previously, but on this matter, it sounds like we disagree, which is OK.

            I can assure you I don’t go around pushing my opinion on Realtor’s pay. I commented on this as Drew brought up the subject in this blog post.

          • I was about to say exactly the same thing–much more in common than in opposition.

        • thehousedoctor

          Many of those who say we get paid too much are the same ones who have no problem wasting our time asking for “free evaluations” so they have the right price to sell fisbo. They are the same ones who call agents to show them property when they have no intention of buying a home. They are the kin to the ones who call all the listing agents because they think they will get a “Better deal”. They should ask themselves if they would choose a discount doctor when their life is on the line. Most buyers don’t buy in 3 hours. With some it is months and even years.

  • Another company trying to removes Realtors from the equation.

    http://www.opendoor.com/

    While the co-founder of PayPal who is starting this new company is no doubt a very smart guy, I think he will find sellers still want to use a traditional agent to make sure they don’t sell to cheap and have the liability protection.

    • The “homerun” company I referenced, is now named “OpenDoor”

  • craigmackenzie

    Drew,

    I’m not sure that is quite the right question.

    A fairer one might look at the transaction costs in whole. (Are lawyers paid too much for a real estate transaction, they just shuffle paper don’t they? – if you think Realtors can raise a stink, lookout on that one!).

    A lot of the people who talk about the money paid to Realtors don’t look at the associated costs, photography, advertising of any kind etc etc. Indeed most discount Brokers pull all these costs out of their model, and charge extra for them so that the real saving to a client is not as great as their advertising would suggest.

    Where our model does break down is not being paid for work being done. At the end of the day we do not get paid if a client does not buy, or the home does not sell. Unlike the fore mentioned lawyer who may give one hours time to sell themselves, they get paid, win or lose. I have often wondered what an hourly paid model might look like.

    As a final observation an awful lot of the people who complain about our commissions seem to charge very high prices for their low transaction cost services.

  • I just was interviewed by our local business journal to get my thoughts on a new company starting in June in my market that will rebate 100% of their commission back to the buyer and make money from advertising.

    They will have buyer’s agents and transaction support and everything, but pay for it through ad revenue. Everyone would of course be on a salary.

    This could be tough to compete with for a while until it probably implodes because of lack of revenue. Unfortunately we still get a lot of revenue from representing buyers and that could drop for a while.

    • Peter Liem

      Can you elaborate about the name of the company that you mentioned here? How are they doing nowadays?

      • The company is http://www.srematrix.com/. They are taking a good part of our business I think. The founder said he is willing to spend $100 million to get this company going. If you run the numbers, $100 million is a lot of money and will pay agent’s salary for many years, so unless he pulls the plug, I assume they can keep going and losing money for a long time.

        Personally, I think they have an issue, and I have met with him twice about it. His strategy is to get a large part of the market going to his website. Think about Trulia who was losing millions, yet because of their website traffic was worth billions to Zillow. However, people are coming to him to get the 100% rebate, but they don’t use the website it seems because it is not so good. As the whole idea is to capture a lot of eyeballs on the website, he needs a great website. I believe this is their biggest issue right now.

        My website gets a lot of traffic here in the local market, and I have better website engagement than Zillow, so buyers probably use my website and then go to him for the rebate. This is why I met with him twice, but nothing has come out of it as of yet.

        • “people are coming to him to get the 100% rebate, but they don’t use the website it seems because it is not so good. As the whole idea is to capture a lot of eyeballs on the website, he needs a great website. I believe this is their biggest issue right now.”

          Yea, without a great product…doesn’t stand much of a chance at all to succeed with an advertising business model. The scale you need to make ads actually generate real money is insane.

        • Peter Liem

          $100 million!!!!! that is a lot moolah!!
          wow….I saw your traffic analysis…your does have better traffic quality than zillow. If you expand your area ….do you think you can rely on ad-revenue only? Imagine that …..a true “commission free” broker site….that will be disruptive.

          • I don’t even think he is thinking about ad revenue. Just about traffic. That is a lot of money, especially from just one individual.

  • rmdxchapin

    For starters agents dont get 6%. Please get your facts straight before putting tiur thoughts in writing.

  • SG

    Great article. Sadly these entrepreneurs want the “whole pie” not just a few slices. And it’s clearly all about the money for them. (They are happy to be “overpaid”.) Their false premise that a website matters more than the agent-client relationship is hurting more than helping the public in the long run, as well as the real estate agents. A real estate transaction has so many moving parts and takes smart, savvy, knowledgeable, etc. agents (and other needed services) to bring them to a successful close. A website can’t do that.

    • KRB

      It doesn’t cost 6% to sell a home and that’s the real point; and that’s what keeps people with ideas taking shots at an industry with 21st century tools and a 20th century compensation model. Selling agents simply list the home on the MLS and that’s usually the net/net of the marketing effort. According to the NAR’s own data, 90% of buyers source their own leads online. The NAR is an entrenched, incumbent, anachronistic institution who spends more money lobbying congress than any other organization in the U.S. With the exception of the combined, national chambers of commerce…! That’s right! Now why is that? Do you really need congress in your pocket to represent buyers & sellers of residential real estate? Only if you want that done a certain way which maintains the status quo and keeps the NAR relevant. Everyone knows it’s just a matter of time until someone figures out the right model: that time has arrived. Keep your eyes out for a start-up coming out of Philadelphia that has absolutely cracked the code and will disrupt the industry instantly & permanently.

  • SG

    ps to below/ Even if the business model of some of these websites will offer buyer/seller transaction co-ordination services and support that it is no substitute for neighborhood,”boots on the ground” agents in the field day after day, networking with other agents, etc. A transaction doesn’t happen in a vacuum.

  • Irregardless “ir” means the same thing as “less” so you really are saying you agree. However it is a common mistake but still…. I read your article/blog an came away with no new info! Here is where I stand, as a REALTOR, but also an experienced marketing/advertising exec. Sales is the ability to make your service worth what you need to charge for it. 6% or 10% or 50%. It depends on how valuable the product or service is. Maybe what you sell is only really valuable to one person well then charge a lot. Look to fine art auctions! Would you buy a toilet turned upside down? Today’s real estate agent must be knowledgeable and clever and successful. I give my clients a trust, a great knowledge base and a strong hand. They know almost immediately they have an advocate. Whether they a young and new at home shopping or veterans with some idea about home sales. I read recently a comment that was very clear and true….today’s home buyer is drowning in a sea of information yet thirsting for knowledge. If as most agents do one lists property and just waits for the MLS and all the web sites that gather that info to sell the house they are not worth 1%.

    • “Irregardless” – i removed that text 🙂

      • Sorry but I make errors all the time and as upset as I get I am grateful when someone points it out. I was corrected about this mistake once in a meeting with a client. I was livid, but never made it again.
        I appreciate your articles though, keep it up.
        Lou

  • just found this site too (via an Ad on Zillow actually) – https://www.hubzu.com/portal/how-it-works

  • The best way to reduce costs is to move away from a commission model. Commissions are high because agents take on the risk and often don’t get paid for work that is done. I would happily charge per hour up front and only answer my phone from 9-5 and take weekends off. Consumers’ expectations are different however.

    Salaried agents, paying up front or billable hours are reasonable ways to reduce the cost. Under the current system, the sellers whose homes actually sell are “subsidizing” the work that is done on behalf of buyers and sellers whose transactions never come to fruition. I think that salaried teams could be a great way to give consumers great service and lower consumer costs, but I don’t have the capital needed to conduct the market research.

    • Might an entertaining post – “What a completely hourly real estate experience would look like”.

      • Geordie’s pretty much nailed it. Want it cheaper? Pay upfront like everyone does for everything else they buy, and get your professional services during regular business hours. Consumers don’t want that. It’s amazing how often we come back to the basics that “innovators” just want to ignore.

        Redfin has been working the salary angle for years, and they may be getting into a groove now, but they believed agents were overpaid to start, too. I think the rebates were slashed in a dozen different ways to the point where they take the lion’s share of the commission now and only work the “profitable” part of the market. There has been a whole lot of capital spent on that market experiment.

    • thehousedoctor

      Salaried agents would have no incentive to work long hours, weekends, holidays or go out of their way. The owners of the company that pays a salary to agents would most likely go broke. The incentive of commissions is what makes agents work hard to earn them. Every time I hear people talk about how much agents get paid, I tell them to get in the business. I don’t know of anyone who has taken my advice and stayed in the business.

      • ^^ Truth. That’s why the “salaried” companies who are testing the waters have to hire mercenary “showing agents” as contractors to run when the phone rings outside of business hours.

  • This is a great overall analysis. The inertia of the system keeps it from changing quickly. Still, there is so much money and so much power trying to change it, and failing, that it might just be that the cost structure isn’t all that out of proportion.

    I keep repeating it–the average full-time Realtor makes $60k/yr. If that’s the money you’re trying to “disintermediate”, you’d better be ready to do a very high volume business model because there’s not a ton of fat to cut there.

    • Laura Gilliam

      I agree. I think the average is actually lower than that depending on where you live. And realtors work weekends, late nights and holidays regularly. We have enormous expense loads associated with our business, as well as take on a ton of risk. Any realtor has many stories of times they worked long hours and never got paid for it. We work very very hard for the money we make, and it’s not as much as most people seem to think. You couldn’t cut it much more or no one could afford to stay in business.

  • Drew – great analysis and thanks for the Keyzio mention. We are actually in both camps that you describe — “discount” (I cringe at that word as we provide full-service) on the sell side (we charge 1.5% – 2% with a minimum fee to list) and then our app is a buyer/seller marketplace where consumers can connect directly with each other. And we let them do just that until they ask for help from our team. Btw, we still charge 3% for buyers that we represent as buyers do tend to take up much more time than sellers. I also 100% agree with, and have taken, your entrepreneurial advice 🙂

  • Gabe Sanders

    I would argue that most consumers know that commissions are negotiable and many try the discount models that are currently available. I would like to see an analysis of the results from the different models as well as the values received.

  • FSBO Faster

    Especially with the Sellers Agents becoming less and less relevant more companies like FSBO Faster are offering products that help For Sale By Owners to sell without an agent. Their Sales Reps make amazing commissions!

    • FSBO products have been around forever. Its still a fraction of the market. Just offering fsbo products isn’t enough to change consumer behavior.

      • FSBO Faster

        Yes, but as technology advances, it is becoming easier for people to sell FSBO. They just need the right program, marketing, and education on HOW TO. FSBO Faster has a pretty innovative program; we were created using years of experience coming from the Agency side of the Real Estate Industry. Our goal is to EMPOWER people and allow them to sell FSBO with confidence. We aim to see the numbers of people selling FSBO increase dramatically

        • Yes that’s your goal. But tools/ technology aren’t enough. You need to attract more buyers. If buyers don’t find the Fsbo properties, everything else is irrelevant.

          How exactly are you enabling more people to sell Fsbo?

        • “with the Sellers Agents becoming less and less relevant”

          Actually, the percentage of homes being sold by an agent vs FSBO has gone up in recent years.

  • tnhome

    Seller/Listing agents who try to convince you to pay a large percentage of the sale price for entering the property information into a computer and wanting to to keep a larger portion of a commission for themselves than what they offer to buyer agents who actually bring a buyer to get your property sold.

    The buyer agent cooperation may have far reaching consequences for the exposure your home gets, the number of showings (and feedback) your property gets, and yes: even the price you may eventually fetch.

    More sales are made by Buyers agents than Listing Agents”. I can see that 10 years ago when the listing agent had to do more work but not now. I have seen stats where the “Buyer Agents” are responsible for over 9 out of 10 homes sold. If your home is priced right and on the “MLS”, it will sell regardless who lists it or what the Listing agent charges.

    You see, most real estate agents spend up to 80% of their time marketing to find new buyers and only twenty percent or their time (or less) working on actual transactions.

  • Excellent point. This is a known fact in the industry is also the reason why most agents don’t stick around long they know they don’t add value.

  • Kyle Smith

    Let me chime in on the real estate agents are not only useless, for buyers AND sellers they are a net negative financially. My father was a mortage broker and real estate agent, I have sold 3 homes (one for sale by owner).

    The job of the agent should be to help you find the house you want to buy and help you sell your house. Yet, by being paid on commission the real estate has a disincentive to help the buyer reduce the price (they get paid more when price is higher) and as a seller data shows that they try to sell your house faster by recommending you reduce the price than they do for their own houses.

    As early as 2001 I found a house on the internet. I am paying someone 3% to let me in a house? Why isn’t this digitized with phone enabled cards? I have never worked with an agent that knew more about the builders and the areas than I could find in one hour on the internet and I moved across country every time. I have found every house without an agent just surfing the internet. Agents add nothing to this search.

    Ok – that’s enough. The reason change is hard is the same reason medicine sucks to make tech progress in. Super regulated industries resist change because laws stand in the way. Medicine, real estate and a few others are so paralyzed by laws that old players like doctors and real estate agents still have economic rents that don’t represent their actual utility to others.

  • stanny1

    Since the Listing Agent is Overpaid, one heeds to design a system to eliminate or reduce listing cost. I think that the long-discussed Google International MLS allowing home sellers to directly input their listings for a fee would be the best solution. The Buyer’s Agents have always made the system work and worked the hardest, and they should be rewarded. Excess listing commissions just go into Ego-Marketing, which economists call “deadweight loss”.Google would also eliminate the inefficient system of local MLS systems and the waste of agents competing for leads by eliminating costly 3rd party vendors.

    • Jared

      Spoken like an agent with no listings. Sad

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