[nrclark]

Agreed 100%. Realtors do legitimate work, and deserve to be compensated for sure. But I think the pay is grossly disproportionate to the amount of value provided, and it's propped up by Realtor-sponsored laws and kickbacks. A lot of Realtors won't even deal with non-Realtor(tm) real-estate agents, which promotes their monopoly stranglehold on the real-estate market.

I'm not sure where I fall on what a real-estate agent's cut should be for selling a house. But for the buyer's agent, it's really over-valued IMO. And why should a buyer's agent in San Jose make 4x more than somebody in Des Moines for the exact same value-add?

When I bought my house, my Realtor found some good listings, arranged viewings, did the paperwork, and set everything up for me. All useful services, and worth paying for. But was it worth $12k for less than 40 hours of total work? I don't think so. That's a higher hourly rate than I'd be charged by a good doctor. And my house was a pretty cheap one by modern standards. Those are monopoly prices charged by people who know they've got you over a barrel.

[dgudkov]

>But was it worth $12k for less than 40 hours of total work?

That's $300/hr. Similar to what lawyers ask.

Although, I suspect that a lot more education is required to become a lawyer than a real estate agent.

[linsomniac]

Note they said "less than 40 hours", so that's "at least $300/hour". I feel like my buyers agent, who I really liked, worked more like 10-20 hours for $9K, for $450-$900/hour.

Don't get me wrong, I really liked her and she did a great job, but I'm not sure she did $9K great...

[sokoloff]

It’s at least that figure for engagements that result in a transaction. That doesn’t take into account the people they spend 40 hours with and don’t end in a transaction.

[ninkendo]

I feel you. I just bout a $715k house largely because I found it online, and went through an agent to show me the house and, I guess, do some paperwork for me? Her company made $21k off of the seller, and I'm sure she took at least half of it.

Probably 10-20 hours of work in total.

[opportune]

1. Lawyers are also a cartel 2. Realtors don't do much complicated stuff. If you take a "becoming a real estate agent" seminar they will probably walk you through the entire buy and sell side process for 90+% of transactions in a few hours.

[tomp]

> That's $300/hr. Similar to what lawyers ask.

Do agents carry the same (legal) responsibility as lawyers / doctors though?

[dd36]

Yes. They’re fiduciaries.

[mindslight]

Hahahahahaha. Everyone hires a Realtor(tm), once.

My experience: the one time she actually had to facilitate a showing of the house, the alarm system got set off. And when the buyers asked to change the closing date (after plane tickets were bought), she agreed and told us we had no choice. The attorney set them all straight.

A realtor's primary skill seems to be getting you to sign the listing contract.

[graysonk]

I thought that was just Real Estate Brokers and not Agents?

[dd36]

AFAIK all licensees are fiduciaries and in any event the broker is responsible for the agent.

[jdpedrie]

> But was it worth $12k for less than 40 hours of total work? I don't think so.

First, I agree that the fees charged are exorbitant. However, for many smaller realtors, they may not have much inventory at any given time. So, just like a freelance programmer, the buyer is paying for their work and for their downtime between jobs.

[ska]

Isn't this a bit circular though? If the fees are high enough, it allows for an oversupply of realtors ... which only gets worse in a rising market because fees are % based and entry-to-market (for a realtor) is fairly easy. NB: easy to enter doesn't mean easy to succeed, which is borne out by the longevity statistics, I believe.

[Mindless2112]

Sure, but a real estate agent who has a "seller" client has a pretty easy time finding "buyer" clients -- run an open house on a property you're selling and prospective buyers (specifically the ones that decide they don't want to buy the property being shown) come to you without even knowing that you exist.

[atwebb]

Really, really depends on the specific house.

[dd36]

It’s also hit or miss as offers fall through at every stage. A good agent is worth it just like a good lawyer or doctor.

[pkaye]

I think though the average Realtor doesn't sell many houses in a year. I hear it is something like 12 sales/year. According to the Realtor website, the average gross income is around $40k.

[fma]

Also, if the realtor is part of a bigger company, they don't keep all 3%.

[pmoriarty]

"When I bought my house, my Realtor found some good listings, arranged viewings, did the paperwork, and set everything up for me. All useful services, and worth paying for. But was it worth $12k for less than 40 hours of total work? I don't think so."

A lot depends on the realtor.

One realtor I know not only does everything you mention, but also gives their clients lots of advice (based on many decades of experience in the industry) -- for instance, telling them if the prices they're setting on their home or bidding for are likely too high or too low, or what to do with a house in order to make it more likely to be sold. How much is such advice worth -- advice that could get them the house they're dreaming of or sell the house they desperately need to sell?

They also explain everything related to real-estate in great detail, tell them about the neighborhoods they're considering, drive them around all over the place (paying for their own gas, car, maintenance and insurance), sit in with them during the closing to go over the entire contract with them and explain everything and make sure they're not getting screwed. For sellers, the agent provides free advertising, spends a ton of time sitting at open houses waiting for people to show up and then showing them around, and trying to sell them the home, etc, etc. They negotiate deals and are the buyer's or seller's representative to the other party.

All this work is done for free unless the house is sold.

Again and again, I've heard how clients take months and months of this work done for free and then switch to go to another agent, paying the agent not a single dime for all the time they spent working for them. Or they'll just change their mind and no longer want to buy or sell.

I've heard so many horror stories from them: clients are often incredibly inconsiderate, calling at all hours of the night and on weekends (this is not a 9-5 job), expecting them to work when sick, or just being super abrasive assholes or liars. Personally, I would never put up with any of that, but agents have to make ends meet, so are often forced to work with those kinds of people or starve.

Watch the movie Glengarry Glen Ross sometime. The life of a typical real estate agent really is that bad, or worse.

Real estate agents also risk their own lives doing their jobs: they routinely go alone in to empty houses with complete strangers. It's not common, but real estate agents have been assaulted, raped, or killed while showing homes. How many people think of that: that being a real estate agent is actually a dangerous profession? I didn't until I got to know an agent well and they started telling me the horror stories of what they have to go through and put up with.

[koolba]

> Watch the movie Glengarry Glen Ross sometime. The life of a typical real estate agent really is that bad, or worse.

You do realize that all the salesman in that movie were scammers right?

[pmoriarty]

It's been a really long time since I saw that movie, but to my memory only one of them (the successful one) was a scammer.

One scene that stuck in my memory -- SPOILER ALERT -- was when one of the agents, who desperately needed to sell because he hadn't been able to sell in a long time and his job depended on it, finally thought he sold a home to a couple he had spent all this time and effort on, only to find out they have no money and just like talking to agents.

That actually happens. People will just waste a ton of real estate agents' time, with absolutely no intention to buy.

Real estate agents just get constantly jerked around, lied to, and cheated. That's just a fact of life for a real estate agent. I would never in a million years want to be one because of how constantly you get screwed -- and don't even get paid for your effort.

[nrclark]

Isn't it kind of a self-inflicted problem though? As an organization, Realtors guard listings jealously, control access to house viewings, and bind themselves to clients with exclusivity contracts. It shouldn't be surprising their time gets wasted by people who are just window-shopping, because they're essentially standing in front of all the windows.

[pmoriarty]

Maybe it is their fault. In my opinion the entire business model is fucked up. If it was up to me, I'd charge for every single hour of my time, charge for advertising and any other money I spend towards selling the home (or build it in to my hourly fee), and charge a commission on top of that. But from what I understand an agent can't do that because it's against the law.

As for exclusivity contracts: agents don't just impose those on clients. The client can sell the home themselves if they want, it's called "for sale by owner". But if they want an agent to represent them, then yeah, the agent will act as their representative. Why shouldn't an agent get paid for their time when they act as the seller's representative -- even if the house doesn't sell?

It just boggles my mind how much free work agents do.

[nrclark]

Exclusivity contracts are also the norm for buyers.

[kthejoker2]

> It's been a really long time since I saw that movie, but to my memory only one of them was a scammer.

You really need to watch the movie again. Their entire operation is based on high-pressure sales. True hackers.

[pmoriarty]

I'll watch it again, and I'll be the first to admit that there are unscrupulous salespeople of all stripes -- maybe they're even the rule rather than the exception. But there are also honest salespeople who truly want nothing but the best for their clients, who refuse to cheat or lie, and who often get screwed by people who do.

I personally know very well one of these latter types, and just feel really bad for them because of how much shit they have to put up with, how much work they have to do for free, and because it's a really tough business to succeed in if you're honest.

[ska]

I think one of the main issues is it being a purely commission sale. I suspect that makes it easy for the principals to ignore the cost in their thinking but it makes the time investment riskier for the agent, which they have to balance against fee size etc.

Perhaps a better system would be a base fee + (lower) commission, and commission based on concrete sales target rather than market value...

[pmoriarty]

In my own view the fairest structure would be an hourly wage plus commission based on the sale price.

That way even if the client backs out, at least the agent hasn't completely wasted their time, effort, and money for absolutely nothing.

I don't see why a commission should be limited, however. If you're great at your job and have a track record of selling homes home for more or buying homes for less than other agents can, why shouldn't you be allowed to charge more?

Even now, some agents (if they're desperate or just starting out in the field) will negotiate away part of their commission. So a lower commission is always an option too.

[ska]

Commission is always limited in some absolute sense, but that's not what I was suggesting. I was suggesting structuring differently than on % of sale price ... after all that is affected by a lot of things out of the agents control and does not lead to incentives necessarily matched with the principal.

[manny_hasyrs]

They already have options. You have 1% brokerages in every state now. There is even a guy in my town that will list your house on the mls for $500 until its sold. You bring him the pictures and an address. You do everything else yourself. He has an a la' carte real estate brokerage.

[ska]

Getting lots more agents playing around with the options is a good way to find out what works, so that's good.

I'm not sure how either of those address what I was responding too, though. If you are (as an agent) doing all the legwork in the hopes of getting paid on close, it's risky. Some form of industry standard way for agents to get paid a bit for this work I thing would improve it for everyone, but ymmv.

[OrgNet]

If you had a non-profit that would list all for-sale homes with a good search engine, it might make real estate agents useless