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Message
re: Are realtors worth it?
Posted on 12/9/11 at 9:53 am to ItNeverRains
Posted on 12/9/11 at 9:53 am to ItNeverRains
My thoughts are in the home buying process, the value a realtor adds to the transaction is RARELY worth 6%. Probably more like 1% if you took all home transactions in the US in a given year.
Also, as to the giving of advice, I believe a realtor is just as likely to give bad advice as good advice. Look at the housing market crash, they were helping drive a horrible bubble and giving absolutely horrific advice that helped frick a lot of people and the entire country to an extent.
A buddy of mine was very close to pulling the trigger on a $400k condo as an investment (that he was stretching on anyway). He asked my advice (this was towards the end of the bubble). I had been wage growth as compared to real estate value growth (the best indicator of whether prices are in line) and gave him the worst case scenario of the real estate market crashing, foreclosures, and the domino effect (which we all saw). He didn't go through even though he had an agent in his ear yapping about how it was such a great investment.
Also, as to the giving of advice, I believe a realtor is just as likely to give bad advice as good advice. Look at the housing market crash, they were helping drive a horrible bubble and giving absolutely horrific advice that helped frick a lot of people and the entire country to an extent.
A buddy of mine was very close to pulling the trigger on a $400k condo as an investment (that he was stretching on anyway). He asked my advice (this was towards the end of the bubble). I had been wage growth as compared to real estate value growth (the best indicator of whether prices are in line) and gave him the worst case scenario of the real estate market crashing, foreclosures, and the domino effect (which we all saw). He didn't go through even though he had an agent in his ear yapping about how it was such a great investment.
This post was edited on 12/9/11 at 9:54 am
3
Posted on 12/9/11 at 9:57 am to Tiger n Miami AU83
Also, on the rental side of things, I think a realtor is a great resource to help find a good rental. I have used them twice in the past to hunt for a condo/townhouse for me to rent and they were great and worth every penny.
Both times the realtor sent me tons of pics to look at and visited many properties without me and took pics. I was very specific in what I wanted (water view, higher floor, building age, etc) and the realtor saved me hours of looking. She narrowed it down to a couple of properties each time that I had seen pictures of and researched, and both times, I only had to visit 1-2 condos before making a decision.
Minimal time and effort on my part and the realtor earned their money.
Both times the realtor sent me tons of pics to look at and visited many properties without me and took pics. I was very specific in what I wanted (water view, higher floor, building age, etc) and the realtor saved me hours of looking. She narrowed it down to a couple of properties each time that I had seen pictures of and researched, and both times, I only had to visit 1-2 condos before making a decision.
Minimal time and effort on my part and the realtor earned their money.
Posted on 12/9/11 at 10:03 am to Tiger n Miami AU83
quote:
Also, as to the giving of advice, I believe a realtor is just as likely to give bad advice as good advice. Look at the housing market crash, they were helping drive a horrible bubble and giving absolutely horrific advice that helped frick a lot of people and the entire country to an extent.
Good point. A good way to identify these people is they are usually the ones who say "now is a great time to buy OR to sell".
Posted on 12/9/11 at 10:04 am to Tiger n Miami AU83
quote:
My thoughts are in the home buying process, the value a realtor adds to the transaction is RARELY worth 6%. Probably more like 1% if you took all home transactions in the US in a given year.
You realize that 1% would pay the listing agent, his broker, the selling agent and his broker, correct? 1% split 4 ways and probably not at 25% each? On a $200,000 house that would be $500 to each party maybe.
Think about how many houses are sold in your area each year and how difficult it would be to make a living at $500 a transaction.
Posted on 12/9/11 at 10:20 am to VABuckeye
quote:
You realize that 1% would pay the listing agent, his broker, the selling agent and his broker, correct? 1% split 4 ways and probably not at 25% each? On a $200,000 house that would be $500 to each party maybe.
Think about how many houses are sold in your area each year and how difficult it would be to make a living at $500 a transaction.
Point?
Posted on 12/9/11 at 10:20 am to Tiger n Miami AU83
But isn't it a salesman's job to sell you....and the consumer must decide whether to purchase or not?
In other words, unless it was his buyer's broker giving him bad advice, the listing agent SHOULD be speaking of all the property's advantages that's their job
But yes, I understand they can come off looking like a used car salesman as well. So it goes...
In other words, unless it was his buyer's broker giving him bad advice, the listing agent SHOULD be speaking of all the property's advantages that's their job
But yes, I understand they can come off looking like a used car salesman as well. So it goes...
Posted on 12/9/11 at 10:32 am to Shankopotomus
At the end of the day the seller is the one who is under a contractual agreement to compensate their agent if the property sells. We all know the money they are compensated with comes from the sellers proceeds, and the proceeds come directly from the purchasers pockets or mortgage.
I would be interested to see the statistics on the breakdown of homes sold through fsbo - limited service brokers - full service brokers.
I would be interested to see the statistics on the breakdown of homes sold through fsbo - limited service brokers - full service brokers.
Posted on 12/9/11 at 10:41 am to VABuckeye
quote:
On a $200,000 house that would be $500 to each party maybe.
Think about how many houses are sold in your area each year and how difficult it would be to make a living at $500 a transaction.
$500 - $1000 per transaction sounds about right to me. A relator often has no college degree with low barriers of entry into the profession and minimal training or real value added expertise (which in this case would involve economics and finances IMO). I would say the value they add may be worth $15-$20 per hour worked at MOST. That would mean they would need to work 33-66 actual hours for each $500 - $1000 earned. Sure you have to account for time spent which never results in a pay day, but I would betabout 20-30 hours of actual real continuous work goes into each actual sale. How much time does it take to list a property? 1-2 hours? Say you drive someone around 15 times at 1.5 hours per trip before a sale. That is 22.5 +2 + a couple of hours of paperwork and a few hours on the closing. Maybe 30 hours total.
Fact is realtors do less work per $ earned than probably any other type of worker.
Posted on 12/9/11 at 10:52 am to Shankopotomus
quote:
In other words, unless it was his buyer's broker giving him bad advice, the listing agent SHOULD be speaking of all the property's advantages that's their job
Seems he was talking about selling agents.
Posted on 12/9/11 at 10:52 am to Tiger n Miami AU83
I think that it is the problem, because there is not a set number of hours. My wife and I looked at 12 properties(not including the times we viewed the same property more than once), submitted 3 offers on properties we did not get, once under contract, my agent was consently doing the little things for me, running to my lender to get things, running to my work to pick up documents, running to get extensions, opening and staying at the property for my inspector and contractors. I would think my agent worked between 75-100 and I am not sure what the listing agent did so I can't comment.
Posted on 12/9/11 at 10:55 am to DieSmilen
quote:
--------------------------------------------------------------------------------
I think that it is the problem, because there is not a set number of hours. My wife and I looked at 12 properties(not including the times we viewed the same property more than once), submitted 3 offers on properties we did not get, once under contract, my agent was consently doing the little things for me, running to my lender to get things, running to my work to pick up documents, running to get extensions, opening and staying at the property for my inspector and contractors. I would think my agent worked between 75-100 and I am not sure what the listing agent did so I can't comment.
That agent did work. Sounds like $1500 of work to me. The thing is, during the hot housing market days, the realtors had days when they may have done 10 hours of work on a transaction.
This post was edited on 12/9/11 at 10:56 am
Posted on 12/9/11 at 11:02 am to Tiger n Miami AU83
I completely agree with everything you said thus far. 
Thread is entertaining.
Thread is entertaining.Posted on 12/9/11 at 11:10 am to kfizzle85
FTR, I like realtors. A very good friend is one. I just think it is a profession that does not work hard in general and should not expect to be well compensated for doing little work or adding minimal real value in most cases.
This post was edited on 12/9/11 at 11:11 am
Posted on 12/9/11 at 11:10 am to Tiger n Miami AU83
quote:
That agent did work. Sounds like $1500 of work to me
Me too. Let's say it was a $300K pad. The current system dictates that that work was worth $9000. Think about how absurd that is.
Posted on 12/9/11 at 1:24 pm to jameison125
Yes.
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