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Commissions are crumbling...

Posted by: Dean Foust on March 07, 2006

This article, published by Inman News, is further evidence that it’s a matter of time before real estate commissions come down. It tells the story of an agent named Barbara (no last name given) who is rebating a portion of her commission back to the seller, but doing so without the knowledge of her employer, the real estate brokerage.

You just knew this had to start happening. Hundreds of thousands (millions?) of people jumped into the real estate business, be they agents or mortgage brokers, and they’re now scratching for business. I’ve always felt it was just a matter of time before the real estate cartel cracked and agents began competing on price.

I’ve always felt agents were overpaid. I remember…

during my years living in Washington DC when the big real estate brokerage, Long & Foster, announced it was raising commissions from 6% to 7%. The president of the company rationalized it by saying that it had been years -- DECADES, even! -- since agents had last "gotten a raise." And he said this at a time when housing prices were on the rise. Wasn't the commission from selling a $500,000 more than the commission when that house was selling for just $300,000 three years earlier?!?!?!?!

I've also had fantasies about the next time I sell a house. I'd love to sit down with an agent looking for my listing and make him or her a deal: Since it would be relatively easy for me to establish what the fair market value of my house was, I'd offer them a full point BELOW the prevailing commission rate for selling at that price (since it should take little work to sell at that price). And THEN I'd offer them them an extra half-point if they got me, say, five percent above that baseline, a full point if they got me 10% above, and so on. My feeling is they should be compensated for bringing in foot traffic and then striking a hard bargain at the negotiating table. But then again, this is just a fantasy because I know that most agents would simply walk out rather than accept that bargain. I'd love to hear from agents here...

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Reader Comments


March 7, 2006 07:12 PM

My wife offered up something similar in the Seattle market last June (, but she never got any takers.


March 8, 2006 11:50 AM

Or why not just skip the agent entirely and go FSBO? More and more attorneys are building practices by assisting FSBO sellers (and buyers of all properties), usually for a reasonable flat fee. Then you don't have to worry about paying ANY commission.

Glenn Kelman

March 8, 2006 12:22 PM

Great idea.

I think Dustin's wife might have gotten a better response if, as Dean suggested, she offered a discount on the standard commission in exchange for upside on good performance.

As an online brokerage, Redfin has been thinking plenty about our pricing too, so we'll throw this into the mix. We'd want to make sure we didn't create an incentive for people to price too high -- the commmission bonus would have to be driven off a third-party-provided value.

housingpanic - keith

March 8, 2006 05:05 PM

how about 0%. it's called the internet. realtors are no longer needed in any way, shape or form

If you need help with the paperwork, hire an hourly lawyer. If you need exposure - craigslist.


March 10, 2006 01:29 PM

Listings that have commissions that are based on a sellers net requirements are referred to as a "net listing". These listings are not legal in Washington state, which is one of the reasons you got "no takers".

As for using a bloated, no-fee referral service like Redfin or Zillow or a bloated bulletin board like Craigslist, basically says that you get what you pay for.

The real problem is that it has been a seller's market for too long. This problem will be solved once the market flips back to a buyer's market, and all the discount brokerages and no-fee referral services go out of business.

J Porter

March 13, 2006 04:27 PM

We're currently wondering whether to renew our listing with our real estate agent (at 5%, a full point lower than most NJ commissions), or use a flat-fee listing broker (I've found several on the internet) for approx $500. This way the house will still appear in the multiple listing service for our area, and be on, along with a few other hot online real estate web-sites, and all we'll have to pay at closing is the buying broker's and agent's commission, a total of either 2.5% or 3%, ONLY if the buyer uses a realtor. If we get the buyer ourselves through the internet, no commission.

Saul G.

March 15, 2006 09:21 AM

Ever find it absurd that real estate agents have been driving BMWs? These aren't professionals, and there is no reason for them to be earning such high salaries for what is essentially a sales position. You don't see a Macy's clerk leaving the parking lot in a Benz. These agents ahve been getting away with murder given the frenzy in the last few years, and that's going to stop.
"Do you like this house?" is soon to be "How would you like your coffee?"

Unfortunately Anonymous

March 15, 2006 01:45 PM

I am a real estate agent. I have done extremely well in a very short space of time. BUT it didn't take me very long to figure out that by taking a listing at 6% I was (in my own mind) committing a legalized form of highway robbery. Did I feel like pondscum? YES. Did I get sick and tired of hearing my broker espout "value"? DOUBLE YES. By the way, what the heck does "value" mean in this context - "oh, Mr. Seller, I am sorry to hear that you need a new car because the one you are driving is a heap of rust, and I know you could certainly use that $30K you are paying me to sell your house to actually buy a new car with CASH, BUT I am providing you with "value" , you know."

I made 6 figures easy in my pocket last year alone .... but it all felt so soul-less.

My broker had a fit when I suggested that I fix my own commission rate and give him a cut, hardeharhar. So I thought, OK I need to be my own man. Do my own thing. I made the mistake of telling my broker that I was going to become a broker myself so that, when I open my own local version of a slashed rate full service brokerage, I wont (ridiculously) feel like such a backstabber. Yes, backstabber. So many agents have not yet woken up to sniff the corfee, and feel that 5 to 6% commission is their natural right. What will they do when the rug is snatched out from under them? They will of course blame me and others like me. I have already received crank calls.

Point is, I am not yet a broker (almost but not quite) but my broker fired me anyway. I made that office some decent income. Anyone know where I can find a good lawyer?



March 17, 2006 02:17 AM

We already have exactly what you are proposing, discount brokerages. The brokerage company poster j porter mentioned that a brokerage will charge $500 for MLS exposure is a sure example. I'd like to sell mr./ms. porter a bridge in Brooklyn, too. What the discount brokerage doesn't tell you (the uneducated home owner) is that putting a house on the MLS does nothing but let other agents know that the house is for sale and is offering no incentive ($0) for the agent to show the property. So guess what no showings from them. Or there's the discount brokerage that offers a 2.5-3% commission charge if they themselves sell the property. How many times have you ever sold a house with a brokerage and had that brokerage represent both you the seller as well as the buyer? Hmmm... I'd verture to say never. Then there's the good ole FSBO. He's going to save a bundle but only has himself trying to sell the home instead of say 4000 other agents tied into his metro area assisting him with the marketing/sale. Have you ever shopped for a home by FSBO? If so were you trying to make sure the seller got market value for the home or were you looking out for your own best interests. Then there's the old adage, you get what you pay for. I think that applies here as well. No, I'm not an agent but I am practical and I know agent that did very well last year. They also pay for their own gasoline, car, advertising expenses, insurance, licensing, etc. out of their share of the commission which averages after expenses around 1% of the sales price of the home. They also cart around people using up their time that don't end up purchasing a darn thing. I also know that the agents that did do well last year worked on average 60-70 hours a week. I think people find the real estate industry so interesting that they think if they've actually bought a home in the past that they are somehow some expert on the industry all of a sudden with an inate ability to know how to sell/price homes all on their own. My neighbor sold her house in the height of the selling frenzy last summer and was so delighted that she got a full price offer after only two hours of placing a sign in her front yard. I told her she didn't ask enough for the house then and she just didn't get it. It was priced about $20,000 less than the market price. Hey, but she saved $8,000 by not having an agent list it.


March 17, 2006 02:30 AM

Anonymous is obviously a fraud. They stated in the last paragraph that their broker fired them. There's not a single state in the country where a licensed agent in an employee/employer relationship. No broker can "fire" an agent. Your just a low life lier, fraud.

John Thomas

March 17, 2006 10:50 AM

Am I going to shoot my own business plans in the foot by identifying myself? Hell no. I gots plans, mister, for my entire local area and many agents are going to be looking for a different line of work, like Sandra and tc.

Sandra - You defend the real estate industry as vociferously as if you were a bulldog. Not an agent? Guess again. You have just used every tired cliched argument there is to defend a 6% commission.

I do, however, agree with one facet of your defense - flat fee MLS is a rip off. No agent in his or her right mind would work for nothing. Would you, secret agent? Of course you wouldn't.

As for dual agency? It's legal and it happens all the time.

Finally, the National Association of Realtors has done such an excellent job of locking up the information and throwing away the key (please see the Department of Justice's lawsuit for more reference) PLUS they have made every homeowner paranoid of even attempting to sell their own property, which then follows the natural order of things in that 85% of buyers are paranoid of buying from a FSBO. Yes, NAR has done a great job of colluding and creating an illusion of "you CAN'T do it yourself".

As for you, tc, I fully expect you to be enquiring "would you like fries with that?" because you are obviously another member of the herd soon to be thinned. If it makes you feel better, Mr/Mrs/Ms Shallow and Pedantic, my broker "let me go" - yes, idiot, they can ask you to leave. "Fired" may not have been the best LEGAL term but the point was to make a point. As in, I was working for a broker, I let the broker know I was going to open a (READ) FULL SERVICE brokerage of my own - NOT flat fee MLS or FSBO or anything else - and the broker showed me the door. Now if that isn't collusion I don't know what is. Also, tc, you might want to try using spellcheck because your spelling is like that of every other average uneducated agent who spent 10 hours in a classroom and cannot spell korekkly.

So, for everyone out there who wants to employ the same old tired bullcrap like Sandra or nitpick minor details like tc above, get used to the new order of things. Commissions are going to drop and traditional brokerages are going to either have to consolidate or go out of business. It is the beginning of a new era and I, for one, will be listing and selling houses and providing a FULL SERVICE for thousands of dollars less than 6% - and guess who will be getting all the business, and getting still more ALLLLL the time? tc, hold the mayo, fool.


March 20, 2006 06:42 PM

Idiot (you know who you are) and yes, you are an idiot... I am not in the real estate industry. I am a health care consultant with an MBA from William and Mary.


March 28, 2006 12:04 AM

This thread has gotten old, but Sandra or John (or anyone else) if you're still around, I have a question. In the flat-fee listing broker scenario, I thought you pay your flat fee, the listing goes in MLS, and you are only required to pay commission to the buyer's broker/agent if they have one. So, why wouldn't an agent want to show their buyers that property?? Wouldn't they get their commission? Please clarify, thanks.


March 31, 2006 12:17 PM

Monica, an excellent question.

Yes, for most discount or limited service brokerages, the seller usually pays a selling office commission (SOC). On the face of it, this is the motivating factor for agents to show a property to their buyers. However, there are two problems with this.

1. Especially with limited service brokerages, the selling agent is required to negotiate directly with the seller. Many agents feel this is in conflict with some of the basic tenets of an agency relationship, and avoid dealing with such listings whenever possible (I'm one of them).

2. With discount and limited service brokerages, the listing agent simply doesn't have the time and resources to effectively manage their transactions. The burden then falls on the selling agent, who ends up doing twice as much work for the same amount of commission.

I trust this answers your question. And yes, threads like this get old when immature persons engage in name-calling and so forth (let's keep it congenial folks!).

Judy L. Reed

March 31, 2006 08:30 PM

Just a few observations on "the free marketplace" which, by the way dictates prices for everything that we buy. I have been a fulltime Realtor in N.Calif.for 28 years and have seen interest rates and mkts. fluctuate wildly to mildly repeatedly. Less then a year ago and for the three years previous, sellers and agents were negotiating lower commissions all over the board (excellent market for sellers)Sales prices climbed and commissions dropped. Everybody and their brother rushed out and got a real estate lisc.(Just takes a lisc. right?) Our board membership increased within a year from about 600 to almost 1500 agents. Now,here we are again, most definitely a buyers mrkt. Inventory is growing by leaps and bounds,prices are going down like a bad stock mkt. and guess what, commissions going up just as fast. It's the free market folks, in real and living color. I just wish that those of you who are so very angry about what we do for a living would follow some of us around for a month or so. You would be exhausted and maybe change your viewpoint s little.


April 3, 2006 12:35 AM

Folks -

With the commentary postings above.....and then Realtors wonder why consumers have a low respect for them?

From my perspective, one of the reasons transactions fail is that some Realtors refuse to let the transaction blossom between the parties. In other words, it's the Realtors own infighting, bickering and backstabbing in front of their own clients that leads to transaction deterioration, and consumer disdain for the industry.

If the primary clients could get together over a cup of java, they would quickly discover that the apple they discribed was turned into an orange by the other parties agent. I'm a firm believer that of those deals that fail, a healthy percentage of failures were unnecessarily caused by the real estate agents involved.

If you could all be a bug on the wall in the closing room and listen to customers discuss transactions--agents would be humbled, ashamed and have a clear idea of why people have a hard time dealing with them.

Tim Kane,
Legacy Escrow Service, Inc.
Washington State,


April 3, 2006 11:17 PM

Thanks (anon on March 31) for your very enlightening answer to my question.

I'm not an agent, so obviously I don't know what I'm talking about. However, if there is a listing from a discounted broker (one that has been paid a flat fee just to list on MLS), doesn't it seem reasonable that a buyer's agent would like to show it to his clients because

1) he could potentially negotiate 4% or more from the seller if he brings a buyer, which could cover the cost of doing the work of two agents

2) he knows there could be less competition from other buyers if other agents are avoiding this type of listing?

Your answer was clear and insightful. I guess I'm still holding out hope for the Seller who is also just trying to save some money in commissions...


May 5, 2006 09:56 PM

Selling a home "For Sale by Owner" isn't all that difficult. You just put an ad in the Sunday paper, pay for an hour or two of attorney fees, and you can sell your house better and faster than if you hire a realtor. We've sold several houses this way, and you can pretty much bet that your home will sell faster than the one your neighbor listed with a realtor and with more $$ in your pocket.

Also, we're looking for a new home now, and I am doing my own homework. So, I'm telling the broker for any MLS listings that I'm self-representing myself and that I've already got my attorney's verbiage that will be put into the contract. If I buy a listed property, I'll only be paying 3%, not 6%. That's still too much money in my mind, but at least somewhat palatable. Everything in real estate is negotiable . . .

Milan Cole

May 6, 2006 12:06 AM

To put some of the above comments in context. A study by Texas A&M's Real Estate Center found that generally speaking, sellers who are using discount real estate services got slightly less and it took slightly longer to sell their home. However, in no way did using a discount broker preclude a buyer with agent representation from showing up and purchasing their home. In a market like Southern California, where I live, even discounted commissions are more than enough money to motivate the average realtor even if that means dealing directly with the seller on the other end.

Garrett Gitchell

May 17, 2006 12:05 AM

When I mentioned to an agent the other day that I was going to sell my own house (I used to be an agent so this is a little more than blind FSBO) she said, "Typically an agent sells a home for 10% to 15% more than it would have sold FSBO."

I thank my college education (which of course is unnecessary for the "profession" of real estate) for the ability to pick that statement apart. If you had the same home on the same day sell both by FSBO & with a 6% real estate agent you would have proof for that statement. Otherwise it is vacuous, but of course scary like all the other scare tactics agents are taught(I went to some great seminars that made me very sick to my stomach and of course made me look for a better career).

If I want to buy a house and I can use a mouse I want to quickly see all the homes that are available. I do not want to pay a buying agent commission (how does that make sense? The more I pay the more they make?). If the house is overpriced by 6% because of agents then I question their value to me as a buyer. If my buying agent refuses to show me a house and I find out.... That will begin to happen oh so soon.

As a seller I would be pretty irritated if a prospective buyer was kept from the information about my home- which even real estate agents say happens all the time.

There is a better way and I bet in the next year of two things will get reasonable. Until then it is fun to watch the battle of words and laugh at some of the logic.

Marley Bob

May 22, 2006 09:08 PM

Hey all! If we were all comfortable with buying and selling homes ourselves (FSBO) and using discount brokers, why are we paying doctors AND lawyers (which we always say are scum bags of the earth???). I am not an agent but, what about other professions and services? Shouldn't we first get rid of lawyer scums? Isn't that why we are all scared into thinking that doing it ourselves is bad?? Maybe if we stop sueing each other then we would not need so many laws, paperwork, and lawyer scums!

rocket scientist

May 23, 2006 04:07 PM

To Marley Bob and the others..
comparing a realtor to a lawyer or doctor is just silly and reflects poorly on your intellect.
I have bought and sold a number of houses, recent ones with negotiated rates (3 or 4% total), but it is very apparent to me that the work of a realtor is consistent, mundane tasks on the order of a shoe salesman with more paperwork.. not MD level! Jeez.
I would be interested in a study, for a median realtor, at $20/hr, what a fair percentage would be, considering average time to sell/ buy, mileage costs etc. as that would be a fair wage. Someone sharp can sell more, some dumb and slow, less.

NO WAY is a "fair wage" 6% unless the realtor is getting WAY more than a FSBO sale.. which is NOT 6% less (seen many, almost all at market!).

So yes, Realtors should get a fixed fee, not a percentage, with bonuses above asking price, (or below if buyers agent).


May 25, 2006 12:49 AM

we may get an agent who charges only half a percent in commission to sell our home. when we list, can we add on in the mls listing for our
house that the outside broker gets a cetain
percentage only like say one percent.
instead of paying them the 3 percent?

rh mayo

May 29, 2006 01:03 PM

Full service broker with a discounted commission structure worked for me in CA. I did get a full service broker to work on a discounted commission schedule. We reviewed comparative prices and fixed 2.75 percent as the commission on the home price that was th lowest in our neighbourhood over the last 12 months. For every 25000 dollars over the base price the agent could increase her commission by .25%. Worked for me because she got me the price I wanted and worked hard to get the sale closed.

Milan Cole

June 2, 2006 07:26 PM

I think the performance based commission structure as mentioned in the last comment is a great way to go, and I am surprised that it is not a more popular model. Essentially, if you establish a fair price using an appraiser or comps from Zillow then you can incentivize the realtor to really try to get the most for your home.


June 6, 2006 09:29 PM

As a REALTOR I believe that the actual problem is the barrier to entry (lack thereof) If it only takes a few hundred dollars and 40 hours of class (that can now be done online) to get a RE license, of course you're going to have thousands of people become "agents" for about 8 months. If it were harder to become a REALTOR you would have fewer, but more professional agents doing more transactions at possibly a lower rate. If you ever deal with a top tier agent, you very quickly realize that, like any other professional, you are dealing with someone who knows the law, the marketplace, and how to meet your needs as a buyer or seller. I completely agree that 80% of the agents should not be in real estate, and more power to you if you can sell your house on your own and come out ahead. I still do my own taxes instead of hiring an CPA, but I don't go around saying that CPA's have no value. You can debate the value of an agent to a transaction all you want, however, it is a service that the majority of Americans still seek. Make prudent business decisions, that's what America is all about.

Shari Posey

June 7, 2006 02:33 PM

Performance-based commissions is an interesting idea BUT not based on sales price. Agents don't have much control over selling prices--buyers determine the value of a home. But, the more traffic an agent can generate; the better chance of obtaining multiple offers, which may push the price a little higher if the agent is a good negotiator. Performance is based on the total job. Getting an offer is only part of an agent's job. Until a sale closes, nobody gets paid. An experienced full-service agent stays on top of the details and communicates with all parties involved throughout the process so the seller can have a smooth, stress-free transaction. A great agent who has many happy past clients is worth the money. A bad agent who only does a few deals a year, doesn't know what they are doing or who is desperate and will work for 1 or 2% can cost the seller much more than a few percent on the sales price. For example, a bad agent will over price a property so it sits on the market (time=money), cause delays in escrow so it doesn't close on time, cause unnecessary stress, process paperwork incorrectly that could cause future problems, etc.
Yes, I'm a Realtor. I work 6 days a week from 7 a.m.-7 p.m. I have my cell phone on all the time to take client calls. It's true that there are a lot of bad--I mean, really bad--agents out there. I have worked with agents on the other side of a deal who never returned a phone call, whose clients called ME to get updates on the transaction.
Before hiring an agent, call their past clients and find out if they would hire them again and if they were satisfied, just like you would do when hiring anyone to work for you.


June 12, 2006 05:18 AM

I am not a realtor, but I am a divorced mom of two kids that was forced to sell her home ( court ordered). My realtor, a man and wife team came along side me and helped me beyond the call of duty. They even helped me pack, and provided food for us in rough times. They carried heavy tubes from my water bed and emptied them. When the carpet layers that my jerk husband paid for left my furniture upside down with staples all over the floor they called them and got down their throats. I was an emotional basket case after a knee surgery, broken arm and the loss of my home.This was just the tip of it all;however I have now had three superior realtors. My last home I sold in vancouver Wash because my 85 year old mom needed me in calif. My realtor cleaned and even chased down my trash can some kids tipped over. The trash was all over according to neighbors, and she alone picked it up.She paid out of her own pocket advertising and drove her clients around in her suv with high gas prices. She is also a single mom trying to make an honest living. I hear alot of jealousy out there. These people earn every cent.


June 13, 2006 10:07 PM

I find it interesting that everyone is blaming the Agents for everything. Much (not all) of the problem lies within each state's laws and requirements.

It is far too easy to become a real estate agent in almost every state.....that is why we have too many bad agents. I recommend to people to only deal with someone with a broker's license so that at least you start with someone with x years of experience and additional education/testing.

Also, payment structure to agents in many states is controlled by state law. Many states do not allow fee-for-service or net-based commissions. As a Broker and owner of a small company, I would LOVE to charge an hourly rate or fee-for-service (a la carte)....$500 for MLS listing, $200 for preparing the contract, etc., etc. that my clients pay along the way, but it is AGAINST THE LAW in my state. Or a combination of a small commission plus fee-for-service. There are many different options, but again....state law prevents it.

In what other industry does a professional outlay so much time & money in advance without the guarantee of earning an income or being re-paid of there expenses??

Those of you who are so angry with the way the industry functions should find out what your state law requires for agents/brokers....and if you don't like it, put your energy towards lobbying your local government to make a change.


July 5, 2006 01:42 PM



July 7, 2006 11:31 PM

Now offers For Sale By Owner (FSBO) home owners a chance to be marketed along with listed properties.

Flat Fee Fool

August 8, 2006 04:50 PM

The flat fee mls thing looks like a scam to me.

The realtor will take your calls and attempt to sell the buyers other pieces of property.

It's all about holding homes hostage right now. Once they have their sign with their name and phone number on your lawn, it's in their best interest to leave it there. It's their only contact with the outside world. They leave the price off, take your calls and whether or not they like the price, they offer to pull up some homes from the mls. They would rather sell a home someone else is handling, take down that guy's sign and leave their phone number on your lawn to reapeat that process as many times as possible.

These are desperate people right now. They can't be trusted. FSBO is the only way to go. Every serious buyer checks the local newspaper.


September 12, 2006 08:53 AM

Comment on 'Flat fee MLS listing' -

1. You do sign a contract with the listing office to pay a commission of your choice, and the agent who brings you the buyer will earn that commission! (Agents don't work for nothing!)

However, the agents will tell you that they are afraid to show your listing since you are also selling it on your own, and the buyer can circumvent them and go directly to you the owner. (Is this just excuses or protectionism?)

2 There is NO extra work for the buyer's agent - the sellers are much more knowledgeable than they have you believe, and, they have their own attorney to review the contract and handle all paper work!

3. My question is - currently there is so much inventory on the market. Why don't the realtors concentrate on selling to earn their commission instead of protecting their "right to listing" - selling any MLS lisitng, including those by flat fee brokers, will earn them their commission!

The realtors always tell you they have buyers to entice you to list with them. Once listed, they seldom bring one single buyer to show your house. They leave it to the other realtors to sell your property. Yet if your are not listed with a "traditional" broker, they refuse to even show your house, which is against their code of ethics and entirely not in the best interests of the buyers!

Comment on FSBO -

1. the disadvantage in FSBO is that most of the folks who come to you practically expect you to sell your property at "distressed" price. They are the greatest bargain hunters who give you not much choice but to list with the brokers. Everything has a fair price, but the folks who look for FSBO properties don't seem to realize that.
2. I don't understand why some folks accuse the FSBO folks as stupid, ignorant people who over-price their properties, or are afraid to deal with the owners. Most FSBO folks have plenty of resources and are very knowledgeable. There is nothing wrong if they choose to sell their own homes!

In a way, people are contradicting themselves - on one hand they want to sell high but don't like paying so much commsiion when they sell, on the other hand, they want to pay way below market value when they buy! Perhaps this is why the realtors win.


October 9, 2006 10:55 AM

Ihave been a Realtor for 23 years and a Broker for 10. I live in the midwest--not California-so 6% commissions aren't that much. I agree that it is much to easy to be a Realtorand the ethics standards that we have are not enforced. The business needs to clean up it'sact. We have over 900 realtors in our mls, so much of our time is expended prospecting. If we had half that much we could lower the commissions, do a better job,and everyone would be happy. Realtors are kindoflike congressman that spend most of their time trying to raise money (or get prospects) instead of doing the people's work. In both instances the problem is the system demands it. I have a Masters degree and most of the people in my office are college graduates. Having a BA should be mandatory. Anyone with ANY felony conviction should not be hired. New Realtors should be more closely supervised. As for people have acess to our MLS--get real--we pay alot for our system. is acessable to the public, however, and many of my clients use it. If people think they can sell their own homes, more power to them. In a seller's market it is possible. Buyers, however, should be very cautious. I have seen a ton of problem's over the years--no disclosure's, over pricing, purchase contracts that do not protect the buyer. As for attorney's,some are knowledgeable--some are not.


October 10, 2006 06:03 PM

LMAO--Had to respond to your comment of way back because it was just so comical...
"Ever notice how Realtors drive BMW's?"--These aren't professionals- they are making all this ridiculous money for what is essentially a sales position"....

HUHHHH??? Are you living under a rock my friend? -The majority of the most highly paid people in this country aren't doctors, presidents or lawyers, they are professional SALES people of one kind or another....One of these days maybe you will ditch that pizza delivery boy job and figure that out. Dont be a hater Saul, its sooo ugly.....

October 24, 2006 02:57 PM

I don't believe a thing real estate agents say. I don't hate them just the tricky and unexperienced ones. Which in my opinion is most of them. Take the "no obligation market evaluation" for example, the oldest and most unoriginal term you will see advertised. Do they think people are stupid? The real definition should be, “yes I will come over to your home, tell you what it’s worth, then I will bug the hell out of you until you list it with me". In the meantime, they will send you some “awesome” fridge magnets, calendars and pencils just so you don’t forget them. I have written at length about this, I'm NOT selling anything, just a frank, real world discussion.

Stephen G.

October 30, 2006 02:21 AM

Realtors (and similar ilk) are an unnecessary evil. You don't even need a lawyer to buy and sell real estate. It's just as straight forward as buying a car. You don't need an escrow, the lenders should do the appraisal and negotiating yourself assures that you have your best interests on the table.


November 7, 2006 03:02 PM

Real Estate.
I think 6% is way to much. And that note above where a Real Estate Broker said we need a pay raise? Well when homes climb 200,000. My friend you recieved nmore that a pay raise. A good Real Estate house would have a keen business mind and start offering 4%. Lets talk about it. A home in Boston sells for 500,000.00 dollars. X 4% = 20,000.00 dollar commision. How much money do you think it takes to upload on MLS.I hope every State take a very good look at what the Real Estate Agents have got away with for years. And condition there listing fees to a 2% max fee. Consumers should consder listing on MLS & prior to listing your home. Have an inspection of your property and fix it prior to listing. Also have a licensed appraisor ( yes i said licensed) ( not a realtor) give you a fair value for your property. If the property is up to snuff and offered at a fair price, they will come. Make sure you have an attorney who can handle the paperwork for you. You may end up saving thousand and thousands of dollars. Now go ahead and buy that new car, or invest in your portfolio.


November 11, 2006 11:30 AM

First off, I am not a realtor, but this I know.......A good real estate agent will advertise your home where potential home buyers look: newspapers and homes for sales books. This costs money. The cost of Advertising in newspapers, etc., has gone way up recently. And someone has to post the listing & photos, to various web sites, set up appointments for showing the property, process the sale when sold, be available to answer questions later when the tax bills come out for the time the seller lived in the property, etc....... And good real estate people have costs to meet:-- they are very busy and cannot do it all alone---- office, payroll, utilities, etc........That commission is their paycheck. And every house does not sell: sometimes they have all the costs but no income, no payday.


April 8, 2007 12:41 PM

A lot of interesting posts, I think that most of you have it right, at least partially. Your right, agents are not MD's, they are sales people. And as with any organization the Pareto principal applies;10% are making 90% of the money. As for the Beamers and Hummers, most of these guys and gals are on borrowed money, I know as a lender their score. But they got to look good right? Is 6% too much to pay to sell? Not if you got a top dollar buyer around the corner, which isnt usually the case. I wouldnt pay it and never would. According to NAR 75% of all home shoppers start their search on the net. On the flip side I dont want a to spend time showing my house to strangers and playing negotiater with some trump wannabes either. If I got an agent in the mix I can have them negotiate on my behalf in the 3rd person, giving me leverage to stay to my price. Ever notice on the top car lots you dont get to make the offer directly to the "decision maker", its always the go between, and they make the bank. What do I care if Im paying 1% listing fee to someone who is going to help me make more $, list my house and screw up their weekend and evening plans showing and negotiating? Would I pay 3% for that, hell no. But 1%? As for flat fee 595, whats the point? Might as well just buy the old Fsbo signs and go it solo then. I was just going to be watching tv at night anway.


May 17, 2007 10:45 PM

Here is a different look at this. I live in an area where there are many houses for sale and they are all very similar. It is hard to make your home stand out in a listing because it isn't unique.

If I were to list my house with a good agent at a higher commission rate, would more agents push clients to my house. Instead of 6% I would list at 8% commission but keep my price higher. Maybe sign with the agent for less time (3 months or so). My thinking from talking to other agents is that they sort the MLS listings by commission rates. If they know they can get a few extra thousand they may be inclined to point people in my direction.

I don't know but could someone tell me the error in my thinking. I'm just another home owner wanting to sell.


March 18, 2008 07:24 AM

If the public had direct membership access to the network, or if a similar proprietary network owned and operated for the sole benefit of the public were established, we could eschew the function of the "listing agent" middle-man altogether and save on half the commission from the start.

Well, maybe not do away with altogether but at least lessen the role played by the LA to that of a consultant or provider of ala carte services. We're building a platform to allow the public to list with full control over their flat fee mls listing at Minimal interaction with the LA, functions basically as a surrogate for entry into the MLS. Our goal is to provide technology that will ultimately allow sellers to list directly from this platform, without a brokerage brand standing in the way, or Realtor unions, of the powerhouse which is the MLS.

I think the course of the future will be a public MLS system where Realtor consultancy is a service which can be "added", but is by no means mandatory.

Lone Wolf

January 3, 2009 09:10 PM

I've been a Realtor for 10 years and have worked for some of the biggest corporate names in real estate and I've learned the scam. And, yes, it's a scam and it has to be for the big corporate entities that control the market to survive.

I've been in practice long enough to see the risks that FSBO's take but, do I understand why they go it alone--you bet. There are plenty of reasons why I think every home owner and buyer benefit from having a professional that lives and breaths the business on their side. But, do I think the commission structure is fair--NO WAY. Commissions are set up to maintain the corporate structure and the Realtors don't have a choice but to play the game. There are a few of us however that would love to develop a system where you get paid for the service and expertise you provide.

For that reason I kept track of all of my hours devoted to a listing and found that I could cover my expenses and deliver the standard service that the majority of my listings required for a mere $4000--less with seller participation. So, that leads me to the question--What's your Realtor's hourly rate? Sure there are times that you run into a "troubled" listing and spend more hours but, in my case they are the exception and I'll take the lower hourly rate to sleep well at night.

Don't get me started on the commission structure for the buyer's agent--usually 3% in my area while it is the listing agent that has the expenses for marketing. Have you ever had a listing agent negotiate a lower buyer' agent fee--of course not. A totally other subject .....

There is so much fat in the system and most of the agents have bought into it because, frankly, there are too many of us. In addition to feeding those large corporate companies the average agent makes very little.

If you really want to sell a home with a professional look around your community and find the lone-wolf. Make a solid connection and negotiate a good deal. You won't have the big corporate entity representing you but you'll have a professional that knows the ropes. And, let me tell you those big corporate structures are smoke and mirrors. They know it. They just hope you don't find out.

Thank you for your interest. This blog is no longer active.



BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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