Do Mustachians hate real estate agents?

[BeMurda]

     lkjlkj

[fattest_foot]

I'm not a fan personally, but I can see that there are definitely people that need the hand holding.

My biggest complaint about real estate agents really comes down to the fact that fees are a percentage of cost. I'd much rather pay someone at a flat hourly rate.

[Wrenchturner]

I think it's a general distrust of salespeople, coupled with the fact that your clients are buying a home, not something simple and material like a pair of shoes.  So they see you as parasitic I guess.

[FireHiker]

Eh, hate is a strong word. We are selling our house right now and we LOVE our agent! She is the best! But, we've had crappy agents in the past, like the time my father-in-law hooked us up with his friend who was atrocious...and of course there's the lazy brother-in-law who is an "agent". I think a higher barrier to entry might raise overall regard. I will say having a really TOP agent can make a huge difference, especially if you're in a HCOL area and the agent goes above and beyond. But, like any other group, a negative experience can go a LONG way towards overall low regard.

And, you're very welcome here as far as I'm concerned. :)

[socaso]

I really feel that the realtor who helped us buy our house was extremely useful. It was a very competitive market when we purchased and we were about to offer a crazy number for our house. He talked us out of it and we bought the house for less than we thought we would, which was great. He also called the flip company we were buying from because he (correctly) guessed that one of their main concerns was closing in a month. Since he had done business with them before and everything had gone off without a hitch he reminded them of the transaction and what do you know? Our offer was accepted. I know they had more than 10 offers so I think all the work he did really helped.

It also made me realize that I don't really want to learn all there is to know about negotiating the real estate marketplace so I'm more inclined to use a realtor. I have worked with realtors in 3 different cities and all of them were seasoned pros with great advice. They earn their money. People just get touchy about salespeople. I'm a salesperson myself and I get a lot of side eye until people realize I know what I'm talking about and I know stuff they don't know.

[BiggerFishToFI]

I'd echo the comments regarding the realtor fee being tied to a percentage of the purchase cost.

Not to mention with the internet, what a realtor brings to the table for us is not much. The last house we purchased after looking at houses for months online, visiting the neighborhoods and looking at the homes from the outside (without realtor), then when we finally found one we liked, we called our realtor and they unlocked the door. We made a strong offer against 4 competing offers and won.

So the realtor worked for us maybe 8 total hours and earned what I earn in a month.

However I like realtors more than most mortgage brokers!

[bmjohnson35]

One of the issues I have experienced with agents in the past is when trying to market our home myself, agents only seem to be interested in convincing me to list our house with them.  I would explain that I was not interested in the service, but I would have no problem paying a 3% commission if they brought me a buyer.  I also clearly stated this on the zillow list description.  I spoke to many agents, but none brought me a buyer to look at the home.

I've also had experience with both good and bad agents.

BJ
   

[MayDay]

The issue is that they are theoretically working for you and getting you the best deal on a good home.

But the compensation structure is exactly the opposite! They make money by selling you any home, fast, for the most money!

Also given online listings, there's just no reason for the fee to remain as high as it was before everything was online.

So personally, despite having worked with some great agents, I go in with a fairly high level of distrust.

[EngagedToFIRE]

I'd echo the comments regarding the realtor fee being tied to a percentage of the purchase cost.

Not to mention with the internet, what a realtor brings to the table for us is not much. The last house we purchased after looking at houses for months online, visiting the neighborhoods and looking at the homes from the outside (without realtor), then when we finally found one we liked, we called our realtor and they unlocked the door. We made a strong offer against 4 competing offers and won.

So the realtor worked for us maybe 8 total hours and earned what I earn in a month.

However I like realtors more than most mortgage brokers!

This is my issue as well.  With the internet, the value of a realtor has declined radically.  You are paying someone thousands of dollars to unlock the door and post some pictures online.  But you have to, since only they can post the pictures to the real estate sites.  It's a monopoly designed to protect them.  You need someone to handle the contracts and what not, but it's not that complicated at all and something that should be done for a low flat fee by an attorney.  Heck, you end up paying an attorney anyways...

My parents are both realtors.  They do pretty well.  Tough business.  But only because it's flooded with agents seeking the big paydays.  This is an industry that really should be much smaller, with local companies handling showings and some basic stuff for a low flat fee.  But again, you can't get on the MLS without paying the realtor, so you are screwed when you want to sell.  Should be illegal.

[Candace]

I love my real estate agent. She earned every penny of my very difficult sale many years ago.

The above posters have listed many of the reasons why some people think the system that supports agents is unfair to clients. Like any profession, there are good ones and bad ones. Like only some professions, though, people only see the big payday and they also see the ways their realtor's interests aren't aligned with their own. There are other professions that have similar issues. Lawyers come to mind. Financial advisors. Doctors. People say, "Why do they get paid so much to do 'X'?", especially when the internet has made doing many things easier for the average person. At least with a plumber, you see the work they're doing. With these other professions, you may not see it. And, sometimes, the payday CAN be out of line with the amount of work done.

[EngagedToFIRE]

I love my real estate agent. She earned every penny of my very difficult sale many years ago.

The above posters have listed many of the reasons why some people think the system that supports agents is unfair to clients. Like any profession, there are good ones and bad ones. Like only some professions, though, people only see the big payday and they also see the ways their realtor's interests aren't aligned with their own. There are other professions that have similar issues. Lawyers come to mind. Financial advisors. Doctors. People say, "Why do they get paid so much to do 'X'?", especially when the internet has made doing many things easier for the average person. At least with a plumber, you see the work they're doing. With these other professions, you may not see it. And, sometimes, the payday CAN be out of line with the amount of work done.

Well yeah, lawyers are shake down artists.  Why would we like them?  It's a horrifically immoral and unethical profession, generally speaking (yes I know there are some decent ones, public defenders, etc.)  Financial advisors, same.  They aren't there to help anyone.  Fee-based maybe.  But that's rare.  They are commissioned salespeople and shady as fuck, who care not one bit about the well being of their clients.

My house is worth $1.5M.  I can't fathom a scenario where real estate agents earned every bit of $90,000 in commission to post some pictures on the internet and open the door for prospective buyers, plus put together some pre-fab contract and get signatures before turning it over to the title agency.  Heck, many agents just put lock boxes and don't even do the showings.  It's CLEARLY an industry that is going to die eventually, or at least change radically, thanks to the internet.  As it should be.  $5,000+ would be a substantial fee for this service but reasonable.  $90,000 is flat out extortion.

[Chickadee]

This is a interesting post and question.
I don't like being pushed.. so I have gone through a few of them.
Example: Oh you make x you can afford 15% more so let me just show you houses you said are out of your budget (because I know it is a self imposed budget!) or keep texting you all the time even if you said you want a break from looking while you take care of work or family or go on vacation.

We were thinking of buying a home and the agent just kept saying "ooooo look at these you have to get these upgrades!" it was such a turnoff I was saying in my mind " have to?!?!?  then why don't you buy it since you love it so much!" instead I just clammed up and we never built a home. It was very insulting the childish fawning and interruptions over back-splash, kitchen sinks, and lanai.. when I was interested in roof type, cost per sq foot, overage % expected and used sale price comparision in c/per/sqfeet. I also feel as a male agent he was trying to patronizing me as a female with the comments about nonsense like built in and herringbone back splash versus subway tile. There are young ladies who care about return on investment!

I have met some nice ones that are very effective and have done business with them. :) They treat me like a friend and can answer the tough questions.. and take No for a answer.

[Mtngrl]

The real estate agent who sold our last house was awesome. Things he did that I felt earned him his commission:
Had a stager come out and consult with us on things we could do to improve our odds of selling -- no extra cost, and no requirement that we take the advice.
Had professional photos and videos taken of the property. I've seen some really crappy house photos, so I appreciated this.
Labeled different features of the house and included a flyer that pointed out these same things. As he explained it, when you look at a lot of different houses, it's easy to forget which one had that greenhouse window in the kitchen and the hot tub on the back deck and which one had the cool wood stove and extra-large master closet.
After the offer he stayed on top of things like deadlines for inspections, paperwork, etc. As it happened, the buyer's agent drug his feet on everything and we came close to missing some important loan deadlines for the buyers which could have meant the sale falling through. Also, when the FHA inspector was being a dick, our agent went to bat for us in a big way. That alone was worth a lot to us, as we were also selling a business and preparing to move across the state.
We had a not so great experience with the agent who sold the house previous to this one, so this time we interviewed three different agents. I think that made a difference.

[Tyler durden]

To poster above ...Don’t want to sidetrack but we just met with our financial advisor and it couldn’t have been more helpful. Granted they use a team approach and charge a percentage for assets managed but they brought in an estate planner into the meeting and subsequent meeting with respects to irrevocable trusts / gifting etc was invaluable.

To tie back into the original posters point - best not to paint with to broad of a brush.

[Sibley]

Here's my general view on ANYONE I'm paying: do your damn job, timely, efficiently and competently. For probably a variety of reasons, there are a lot of realtors out there who are not timely, efficient, or competent. However, when I bought my house, the realtor I worked with I thought was really good. You have to find the good ones.

[Bloop Bloop]

I don't have any issues with any professions, even if they sort of have a monopoly on the market (like real estate agents). That's how life works. You get rent seekers (literally) in some fields. Well, I can't really object to that. It is what it is.

[Metta]

I've had good experiences every time I used a realtor. In general they saved me money by noticing things that would make the house unsuitable for us (when we were buying) and saved us money on ill-advised pre-listing renovations when we were selling. They helped with the negotiations and got us more money when were were selling than we probably would have gotten without them.

For my sister using a realtor was extremely helpful. The person she sold the house to began stalking her and threatening her. The realtor got in the middle of that and protected her from harassment. (Interestingly enough, the buyer wanted her to forgo using a realtor but she refused.)

I don't mind doing some DIY but when it comes to big financial matters, I want assistance from experts to avoid falling into big problems that I can't foresee. 

[austin944]

The entire real estate industry is rigged to extract the maximum amount of money from home buyers.  Building codes, zoning laws, and the overall complexity of the home buying process unnecessarily drive up the costs without adding value. 

Why should it be against the law to build a house that's less than X sq. ft., or one that has an "improper" setback?  Who is harmed by these things?

[moof]

I hate the price fixed nature of the business.  Our agent was great, but still was overpaid for the services we received.

[lollylegs]

I'm very happy with my real estate agent- they save me a heap of time and stress managing my properties very professionally. In five years I've had less than two weeks vacancy ( most of that was for renovations), good tenants and when we did have a problem with one tenant it was handled very quickly. Theres good and bad in all professions.

[Raenia]

We used a realtor to buy our first house this year, and I can say I would happily use this guy again in a heartbeat.  Yes, the actual searching for houses to look at can be done online, but as a first time buyer we appreciated the help with process and paperwork, and having an in-house title service was very helpful.  Even after having done it before, I wouldn't want to submit the offer paperwork without an agent to make sure all the details are there.  He saved us a ton of stress and possibly an expensive mistake or two.

I think that, like lawyers and financial advisers and doctors, there are good ones who will work with your best interest in mind, and there are bad ones who will have their own interests at heart. Lawyers who drag the process out to get higher fees, financial advisers who shill for expensive annuities, doctors who order unnecessary tests to pad the bill, and realtors who push you to the upper end of your budget.  But there are also plenty who do a good job, quietly and professionally, and we never hear about those.

[DadJokes]

I don't feel like our realtor provided a service that justified the large fee. Particularly in this market, where we had three offers within twelve hours of listing our house on the MLS (on Easter Sunday, no less), it's just difficult to see any value provided. It was our first time selling a house, so we needed one then to learn how everything works, but I would strongly consider FSBO in the future.

To me, it's like paying a financial adviser to manage my investments. If I can do job myself, why should I pay someone to do it? All I really need is access to the MLS to sell my house.

[bryan995]

My view is that most will be replaced with automation and the likes of a Redfin/open-listings solution.

Agents will always remain for the top end stuff that is harder to move. Eg where you need to ‘con’ someone into a sale ;)  But new construction or lower end can and should be automated.

[Omy]

I don't feel like our realtor provided a service that justified the large fee. Particularly in this market, where we had three offers within twelve hours of listing our house on the MLS (on Easter Sunday, no less), it's just difficult to see any value provided. It was our first time selling a house, so we needed one then to learn how everything works, but I would strongly consider FSBO in the future.

To me, it's like paying a financial adviser to manage my investments. If I can do job myself, why should I pay someone to do it? All I really need is access to the MLS to sell my house.

FSBOs don't typically get multiple offers. If the process was so easy that you think you could DIY, you probably had an excellent realtor.

[DadJokes]

I don't feel like our realtor provided a service that justified the large fee. Particularly in this market, where we had three offers within twelve hours of listing our house on the MLS (on Easter Sunday, no less), it's just difficult to see any value provided. It was our first time selling a house, so we needed one then to learn how everything works, but I would strongly consider FSBO in the future.

To me, it's like paying a financial adviser to manage my investments. If I can do job myself, why should I pay someone to do it? All I really need is access to the MLS to sell my house.

FSBOs don't typically get multiple offers. If the process was so easy that you think you could DIY, you probably had an excellent realtor.

Literally all we needed was professional pictures and the ability to put our house on the MLS, in the current market.

[Boofinator]

I don't dislike the idea of real estate agents as a profession, but I do dislike the structure of the industry as it currently exists.

a) The seller is expected to pay the buyer's real estate agent fee. This feels like a scam designed to 1) get as many people to purchase real estate as possible without showing them the true nature of the costs incurred and 2) squeeze a disproportionate amount of money from the sale of the house relative to the value provided.

b) The percentage-based fee of 3% per agent seems wholly disproportionate to the value provided. It also creates an incentive for the buyer's agent to have the buyer spend as much as possible on a home, which is a huge conflict of interest. Why aren't agents paid on an hourly scale, similar to most other professions?

I've had a couple of real estate agents who have provided good value, but my experience mostly shows that many are more inexperienced at real estate and negotiation than myself, set horrible price points, and have huge conflicts of interest. So as a profession, they don't deserve a lot of respect in my book, but it doesn't feel inherent to the job but rather an artifact of the current structure of the industry.

[JSMustachian]

I personally do not like the percentage based commission/fees. When the day comes to sell my house I will be looking for flat fee options.

[EricEng]

Realtor fees made sense pre internet when you needed them to know the houses since you couldn't view them all.  Now that we have the internet, the realtor is nothing more than a safety babysitter to let you in the house.  I've bought three homes and they always just tell me, here's the mlrs program, go find what you want.  They give no recommendations for what to look at.  Zillow is my best ally for shopping for homes.

As for selling, they just stick it in MLRS, add an automated lock box, and answer a few questions I could do myself.  A month later they get a check for $10k+ for doing very little. There's a reason realtors are so numerous and constantly wanting new clients selling homes.  It's easy money.

The work is largely fixed regardless if its a $200k or $800k home.  It should be a fixed dollar amount, not a percent.  I have only used traditional realtors because my work covers the cost as part of relocation benefits.

[ReadySetMillionaire]

Well yeah, lawyers are shake down artists.  Why would we like them?  It's a horrifically immoral and unethical profession, generally speaking (yes I know there are some decent ones, public defenders, etc.)

Yowzers.

[Nick_Miller]

I guess I agree with the camp of "I think realtors offer value, but they should be paid differently."

Yeah, buyers' agents definitely have financial incentive to get the clients to buy at the highest purchase price possible, even if the home is more than what the client needs, or if the negotiations could have resulted in a lower price, I definitely see that as an ethical minefield. And then you have the underlying issue of - the realtor really really really wants the client to buy SOMETHING, so I can see them pushing the client to pull the trigger at some point even if the client isn't ready or convinced.

I am a personal injury attorney (and I'll ignore the comments demeaning my profession) and I get paid a percentage of the recovery for my client, so we're in the same boat - higher settlement means more money for both of us. Now, even with this structure, can there be ethical issues? Sure! An attorney should never push the client to settle the case just because the attorney is desperate for money now! BUT...again, at least the underlying agreement has us on the same page.

Anyway, we bought a house about 2.5 years ago, and our real estate agent definitely helped smooth out the process (I thought we got good prices on both the sale and the buy), and she was very knowledgeable. I guess she made $2250 from the sale of our home (1.5 percent to her, her agency, buyer's agent, buyer's agent's agency), and I view that as reasonable. Now if I would have been selling a $400K home, and she would have earned 3 times as much as she did, maybe I would feel differently.

So sure I would prefer an hourly rate most likely, BUT that has its own challenges. It would scare off a LOT of potential clients. A LOT! And the agents know that. Then the client has to audit/review the bills, because some of what the agent does is "behind the scenes." And then you could have agents who pad their bills (just like certain attorneys AND engineers AND other professionals are known to do). So let's say my real estate agent claims she spoke with potential buyers for 1.3 hours, wants to charge me $130 for that, but NONE of those people even agreed to a showing? Wouldn't the client feel bilked? But wouldn't the agent be right to charge them for the work?

Remember, most attorneys, engineers, etc., bill slightly more sophisticated clients, including businesspeople, etc. Agents are dealing directly with ordinary folks, who are all starry eyed about getting a new house...I definitely see opportunities for that sort of system to be abused.

When it comes down to it...agents are selling the RESULT, not the process. They want to SELL your house or get you to BUY, and whether that is a long process or a short process isn't as important to them (I would assume) as that the end result occurs.

[lookingforadelorean]

In a hot market, I definitely fail to see the value in agents. We did all of the leg work ourselves when buying our home. If we sell, we'll probably list with Redfin in order to at least save 2% overall.

[partgypsy]

I have to say as someone who went through law school that I find it pretty unbelievable that someone could characterize the entire legal profession as merely a bunch of shakedown artists! The scope of what lawyers do goes so far beyond consumer facing services and to the deep structure of society including judiciary etc. Although I suppose the legal system in the US is pretty rough! I wouldn't know.

yes. I had to get a divorce attorney (actually 2, one for the main things, and a second one for splitting my work pension) and it's a necessary job. There is a lot of paperwork that needs to be completed and worded a specific way, and every state/jurisdiction is different. There's a reason to pay someone to do it, if you don't do it correctly it can cost a lot more money and heartache down the line. The only thing I didn't like was my main attorney was averse to actually advising me. She would give me options, and when I would ask what she would suggest, she would say "I can't give you advice" or "who knows it depends on which judge you get it can go either way."  Gee if I can't ask you who should I ask?

[mm1970]

I have several friends in town who are realtors and real estate agents.  They are professional, knowledgeable, trustworthy, educated, hard working individuals.

Buying a house will vary by location.  In NY, where I have relatives, you are required to have a lawyer at the closing, so my FIL did a lot of those in  his day.  In more rural areas that I know, it is not uncommon to buy and sell houses without an agent.

I can see the appeal to going without an agent.  The seller's fee here is typically 5-6% (shared with buyer's agent), and with a median house price of $1M, that's a big chunk of change.  But from what I can tell from my friends and my own experience - these folks work for it.  Helping with pricing, staging, looking at comps, advertising, recommending updates or fixes, recommending good inspectors, etc.

Also, interestingly - I keep a tight watch on our local market - both the general area and in my own neighborhood.  I can tell when people don't have a decent agent because their listing prices are out of whack.  I've watched 2 or 3 houses go on the market multiple times over the last 15 years - always $200k above market.  When the market was high?  $1.4M for this one house down the street, when it's worth $1.2M at best.  At the low? $900k when going rate was $700k.  I love Zillow can remind me of all that.

Additionally, there's a house that has been on the market for 6 months, FSBO and NO AGENTS.  The listing has only 2 photos.  The house was originally purchased for $200k decades ago, and was first listed for over $1million and now the price has dropped 2x - more than the cost of the realtor's fee.

[fattest_foot]

I don't dislike the idea of real estate agents as a profession, but I do dislike the structure of the industry as it currently exists.

a) The seller is expected to pay the buyer's real estate agent fee. This feels like a scam designed to 1) get as many people to purchase real estate as possible without showing them the true nature of the costs incurred and 2) squeeze a disproportionate amount of money from the sale of the house relative to the value provided.

b) The percentage-based fee of 3% per agent seems wholly disproportionate to the value provided. It also creates an incentive for the buyer's agent to have the buyer spend as much as possible on a home, which is a huge conflict of interest. Why aren't agents paid on an hourly scale, similar to most other professions?

I've had a couple of real estate agents who have provided good value, but my experience mostly shows that many are more inexperienced at real estate and negotiation than myself, set horrible price points, and have huge conflicts of interest. So as a profession, they don't deserve a lot of respect in my book, but it doesn't feel inherent to the job but rather an artifact of the current structure of the industry.

I wanted to add to this about why I believe the percentage based structure works against agents as a proponent for their client. Let's say you're looking at a $200k house (either buying or selling). The 3% fee the agent gets is $6000. Once you've got an interested party, the agent has a conflict of interest because of the nature of their compensation.

Does the agent really care about saving you $5k? It only adjusts their personal compensation by $150. If you get screwed, even for $10-20k (5-10% of the purchase price!), it does little to their bottom line.

It's in their best interest to close the sale as quickly as possible so they can move onto the next one.

In a fee based structure, let's say if they're earning $200/hr, it pays for the agent to negotiate on your behalf. Every hour they spend negotiating is extra compesnation for them, and it means a better deal for their client. Now they'd be getting a percentage of what they're getting for their client, and not just an arbitrary amount of the purchase price.

I also want to reiterate what others have said about agents being mostly obsolete in the era of the internet. The bulk of our house search (in 2015) was us finding places we liked on Zillow and then having our agent show them to us. Why can't we cut out the middle man? I can hire an attorney at an hourly rate to do the paperwork on the back end. The agent provided very little actual value. But this is why in my original post I said I can see why some people feel comfortable with an agent hand holding them through the process.

[KBecks]

I am sure there are some great agents, and some real duds.  I take no issue with very good agents.  Yes, they make a ton of $ on the transactions, and that is hard to swallow, but an agent that works for it and makes the process work better earns that money.

Duds are duds no matter what the profession.

[mm1970]

Well yeah, lawyers are shake down artists.  Why would we like them?  It's a horrifically immoral and unethical profession, generally speaking (yes I know there are some decent ones, public defenders, etc.)  Financial advisors, same.  They aren't there to help anyone.  Fee-based maybe.  But that's rare.  They are commissioned salespeople and shady as fuck, who care not one bit about the well being of their clients.

That's a big paintbrush you have there.  Public defenders, divorce lawyers, prosecutors, employment lawyers, patent attorneys, in-house counsel.  My FIL was a hometown lawyer handling wills and such.

Also, I have a couple of friends who are financial advisers, including one of my best friends who is an honest as they come.  He refused to work with a fellow adviser who was recommending unneeded insurance - so I can see where the thought comes from.  But again, it's a big big brush. 

[fattest_foot]

I have several friends in town who are realtors and real estate agents.  They are professional, knowledgeable, trustworthy, educated, hard working individuals.

Buying a house will vary by location.  In NY, where I have relatives, you are required to have a lawyer at the closing, so my FIL did a lot of those in  his day.  In more rural areas that I know, it is not uncommon to buy and sell houses without an agent.

I can see the appeal to going without an agent.  The seller's fee here is typically 5-6% (shared with buyer's agent), and with a median house price of $1M, that's a big chunk of change.  But from what I can tell from my friends and my own experience - these folks work for it.  Helping with pricing, staging, looking at comps, advertising, recommending updates or fixes, recommending good inspectors, etc.

Also, interestingly - I keep a tight watch on our local market - both the general area and in my own neighborhood.  I can tell when people don't have a decent agent because their listing prices are out of whack.  I've watched 2 or 3 houses go on the market multiple times over the last 15 years - always $200k above market.  When the market was high?  $1.4M for this one house down the street, when it's worth $1.2M at best.  At the low? $900k when going rate was $700k.  I love Zillow can remind me of all that.

Additionally, there's a house that has been on the market for 6 months, FSBO and NO AGENTS.  The listing has only 2 photos.  The house was originally purchased for $200k decades ago, and was first listed for over $1million and now the price has dropped 2x - more than the cost of the realtor's fee.

Are they really working for it though? 3% of a $1M property is $30k. I don't know how many hours they're working on just that one property, but I can't imagine it's more than 10 hours a week (I suppose in crazy markets like that, however, that it's possible they only list a single property). There's a good chance their compensation is in the $500+ an hour range! Are you kidding me?

Would you ever hire...anyone(?) at $500/hr for anything? Heck, even $200/hr?

I feel like most people if faced with two options, doing it yourself or hiring an agent at several hundred an hour would absolutely DIY. You can hire an attorney for 2-3 hours to draw up paperwork at a fraction of that, and that's a person with an actual professional degree.

[mm1970]

I have several friends in town who are realtors and real estate agents.  They are professional, knowledgeable, trustworthy, educated, hard working individuals.

Buying a house will vary by location.  In NY, where I have relatives, you are required to have a lawyer at the closing, so my FIL did a lot of those in  his day.  In more rural areas that I know, it is not uncommon to buy and sell houses without an agent.

I can see the appeal to going without an agent.  The seller's fee here is typically 5-6% (shared with buyer's agent), and with a median house price of $1M, that's a big chunk of change.  But from what I can tell from my friends and my own experience - these folks work for it.  Helping with pricing, staging, looking at comps, advertising, recommending updates or fixes, recommending good inspectors, etc.

Also, interestingly - I keep a tight watch on our local market - both the general area and in my own neighborhood.  I can tell when people don't have a decent agent because their listing prices are out of whack.  I've watched 2 or 3 houses go on the market multiple times over the last 15 years - always $200k above market.  When the market was high?  $1.4M for this one house down the street, when it's worth $1.2M at best.  At the low? $900k when going rate was $700k.  I love Zillow can remind me of all that.

Additionally, there's a house that has been on the market for 6 months, FSBO and NO AGENTS.  The listing has only 2 photos.  The house was originally purchased for $200k decades ago, and was first listed for over $1million and now the price has dropped 2x - more than the cost of the realtor's fee.

Are they really working for it though? 3% of a $1M property is $30k. I don't know how many hours they're working on just that one property, but I can't imagine it's more than 10 hours a week (I suppose in crazy markets like that, however, that it's possible they only list a single property). There's a good chance their compensation is in the $500+ an hour range! Are you kidding me?

Would you ever hire...anyone(?) at $500/hr for anything? Heck, even $200/hr?

I feel like most people if faced with two options, doing it yourself or hiring an agent at several hundred an hour would absolutely DIY. You can hire an attorney for 2-3 hours to draw up paperwork at a fraction of that, and that's a person with an actual professional degree.

The difference, here anyway - is selling a house in 2 weeks versus 6 months.  The difference can be $50k or $100k (or even more) in house price.  Is that worth it to you?

How many hours total go into selling a property?  And buying a property.  Yeah, it may be 10 hours total on occasion, but I am expecting it is far more than that typically (nevermind the buyer's side - I've got friends who looked at hundreds of properties with an agent for over a year and never bought).  That, actually, should also be taken into account when you consider their working hours - a fair bit of their hours as a buyer's agent will be "unpaid".

Like I said, that one property has now been on the market for 6 months, and the price has dropped $120,000.  Six percent of the original asking price is $60k.  Would it have been better to work with an agent?  The size and location of the property would put it at about $1.2 million or so - but it needs work.  So the original selling price of just over $1M was probably pretty reasonable.  But it hasn't sold.

I'm pretty sure we paid our lawyers who wrote up our trust $200 an hour.  Maybe more.

[ReadySetMillionaire]

How many hours total go into selling a property?  And buying a property.  Yeah, it may be 10 hours total on occasion, but I am expecting it is far more than that typically (nevermind the buyer's side - I've got friends who looked at hundreds of properties with an agent for over a year and never bought).  That, actually, should also be taken into account when you consider their working hours - a fair bit of their hours as a buyer's agent will be "unpaid".

This thought came to my mind. I actually had friends look at 58 houses before buying. I remember that exact number because they were proud to talk about how many houses they looked at before buying their $130,000 home. 

I remember thinking they should have written their real estate agent a check for at least $5,000.

[Metalcat]

"Do Mustachians hate real estate agents?" is a pretty click-baity kind of question and also indicates that you didn't bother checking out the real estate section of the forum.

We're not dumb people, we do our research extensively about everything and are generally pretty well aware of the value that real estate agents provide.

We legitimately question if that value is commensurate with compensation as it's organized, but most of us don't hesitate to use realtors when the situation is appropriate.

RE is still first and foremost a sales profession, and anyone who doesn't understand the value of sales, doesn't understand sales. However, not every transaction requires a professional salesperson, and not every house sale or purchase requires a realtor.

But really, coming here and asking "Do Mustachians hate real estate agents?" and then immediately telling us that you are a real estate agent, just seems like baiting us to give yourself an opportunity to pitch how valuable your services are.

It just doesn't sit all that well with me for some reason.

[Omy]

Most realtors work for FREE until the transaction closes. On "easy" transactions we are rewarded well. On tough transactions, we may be lucky to see $20/hour.

A good realtor is on call for their clients 7 days a week, and we work a lot of evenings. We pay for photographers, staging, marketing, etc. - all of this out of pocket hoping that we will get to settlement to get paid.

We may show a hundred homes to a client without them ever deciding to buy...so we get zero on those transactions for all of our time, gas, and wear and tear on our vehicle.

Some homes take months to sell - they are unique, or the first buyer loses their job and can't settle, or there is some issue with title or the roof or the septic system. If your seller is out of state there are even more challenges selling a vacant property.

We take this all in stride and do our best to absorb the stress for our clients. It's challenging and emotionally rewarding most of the time.

It's a misconception that we are raking in the dough without doing anything. The agents who aren't doing anything will not get referred and will leave the business to find much easier ways to make money. The agents who make it LOOK easy are working hard for their clients to make the process as stress free as possible.

I negotiate hard for all of my clients. If I save them $10k, I might "lose" $100 after taxes. But they refer me to everybody they know. I treat my $80,000 buyers and my $800,000 buyers exactly the same so they will refer me to everybody they know. I have a fiduciary responsibility to my clients and I take that very seriously...and have lifelong clients (and friends) because of it.

[nereo]

I read this topic last night and have been dwelling on it.  Might be too late to offer my opinion, but here goes:

I don't hate real estate agents (I'm using one now).  There are many circumstances when the right agent is incredibly handy, and there are many people who would benefit or prefer to use an agent for a myriad of reasons.

What I despise is that the system has 'baked in' the need to use an agent. The RE industry has thrown up barriers and built moats in order to make using an agent the default.  Controlled access to the MLS database is just one example, setting up viewings is another. In the end there's nothing terribly complicated about the process, and certainly fee-only attorneys could draft and review contracts for far less than the commission earned on most homes, particularly in HCOL areas.  This is how it works in Quebec under such systems as Duproprio.

Like others I think the commission-based model is bonkers. Consider two otherwise similar homes, one in the most desireable of locales and the other 10 miles away in the exurbs.  The agent representing the exurb might get 1/2 the commission (due to lower sale cost) as the other home, but will most likley have a much heavier workload (travel to the site, lower density of buyers, septic systems, etc).  It makes very little sense.  Also, as a client your agent will inherently have a different interest; they benefit from dropping the price for a quick sale (volume selling = massive profits), while you typically want to highest price, even if it means keeping it on the market a couple more months.

Finally, I find the entire culture of associating a property with a realtor's face off-putting. Almost every listing shows the realtor's photoshopped mug, and more attractive agents do better than more homely types. It's not unlike how the greatest correlative factor to restaurant tips is the attractiveness of the server. I'd rather the connection between realtor and home were less connected, and (when using a realtor) they acted more like case officers, assigned to ensure that the contracts met local codes and ensuring prospective buyers could tour the home, regardless of whether they were under contract with another realtor.

"Do Mustachians hate real estate agents?" is a pretty click-baity kind of question and also indicates that you didn't bother checking out the real estate section of the forum.

+1. 

[fattest_foot]

The difference, here anyway - is selling a house in 2 weeks versus 6 months.  The difference can be $50k or $100k (or even more) in house price.  Is that worth it to you?

How many hours total go into selling a property?  And buying a property.  Yeah, it may be 10 hours total on occasion, but I am expecting it is far more than that typically (nevermind the buyer's side - I've got friends who looked at hundreds of properties with an agent for over a year and never bought).  That, actually, should also be taken into account when you consider their working hours - a fair bit of their hours as a buyer's agent will be "unpaid".

Like I said, that one property has now been on the market for 6 months, and the price has dropped $120,000.  Six percent of the original asking price is $60k.  Would it have been better to work with an agent?  The size and location of the property would put it at about $1.2 million or so - but it needs work.  So the original selling price of just over $1M was probably pretty reasonable.  But it hasn't sold.

I'm pretty sure we paid our lawyers who wrote up our trust $200 an hour.  Maybe more.

This just sounds like you're arguing that we should have to subsidize people who can't follow through. If I only look at 3 houses and have a pre-approval, I probably require just a minimal amount of investment. But I'm apparently subsidizing the people who waste your time by looking at houses they can't afford, can't make a decision on, or can't qualify for.

Once again, an hourly rate seems like it would fix all of these issues.

[afox]

My biggest grip with RE agents:
from what ive read RE agents spend the majority of their time finding new business. since the fees are so high an agent needs relatively few transactions to make a living most of their time is spent advertising/finding new buyers/sellers to represent. this is extremely inefficient as nothing is produced or gained by anyone from the process of procuring new business. This is the result of non-negotiable fee rates that are too high. If agents were to compete based on fees there would be fewer agents, agents would spend more time being productive (providing services to buyers and sellers), and buyers and sellers would save money that would get spent elsewhere.

and then there is the fee based structure that rewards agents for quick sales that are not in the best interest of their clients (incentive for sellers sell for too little, and for buyers buy to pay too much): https://www.youtube.com/watch?v=n0rV3ydBhUw

[nereo]

@BeMurda - perhaps your thread would have seemed less click-baity had you worded it a bit differently.  Something like "What is your opinion on using a real estate agent?" Putting emotionally charged words (e.g. "hate") in a title will come off as click-baity to some of us, even if that is not your intent.

FWIW I've found Malkynn's opinions to be deeply insightful, even when I disagree with them.

Also, it's possible to change the title by clicking 'modify' on the original post.

[Wrenchturner]

"Do Mustachians hate real estate agents?" is a pretty click-baity kind of question and also indicates that you didn't bother checking out the real estate section of the forum.

We're not dumb people, we do our research extensively about everything and are generally pretty well aware of the value that real estate agents provide.

We legitimately question if that value is commensurate with compensation as it's organized, but most of us don't hesitate to use realtors when the situation is appropriate.

RE is still first and foremost a sales profession, and anyone who doesn't understand the value of sales, doesn't understand sales. However, not every transaction requires a professional salesperson, and not every house sale or purchase requires a realtor.

But really, coming here and asking "Do Mustachians hate real estate agents?" and then immediately telling us that you are a real estate agent, just seems like baiting us to give yourself an opportunity to pitch how valuable your services are.

It just doesn't sit all that well with me for some reason.

Are you for real? Please take your imperiousness elsewhere. The title relates to the fact clearly stated in my original post that people on other PF forums literally call realtors childish names, stereotype badly, and rudely shout down anyone related to the industry. The title is not a characterization of this forum, it's a question. I am a new member here so I wanted to start a conversation, I'm literally asking for people's thoughts on the topic. And this has been a very engaging and interesting thread so far. Notice I am not attacking people who don't see the value in realtors and literally said I understand why some people wouldn't want to use one. AND I said in the OP that they will eventually go the way of the dodo, like many similar jobs. Jesus, what more do you want from me.

I also think the dynamic of "what's ok for me to do as a side hustle and make a lot of money at" vs. "what's ok or ethical for realtors to charge in a normative sense" is very interesting and under-explored. Many people here would probably be very happy making an extra $80-$100k a year as an agent on evenings and weekends, with a good ratio of hours of work to compensation and a fairly interesting job if you like real estate. But there is also the question of - is there something wrong with that since you might not pay that fee for a realtor yourself? Does it depend how wealthy your clients are? I know because I feel that tension in my own life based on the common criticisms people make of realtors.

...weird flex but ok.

[Metalcat]

Are you for real? Please take your imperiousness elsewhere. The title relates to the fact clearly stated in my original post that people on other PF forums literally call realtors childish names, stereotype badly, and rudely shout down anyone related to the industry. The title is not a characterization of this forum, it's a question. I am a new member here so I wanted to start a conversation, I'm literally asking for people's thoughts on the topic. And this has been a very engaging and interesting thread so far. Notice I am not attacking people who don't see the value in realtors and literally said I understand why some people wouldn't want to use one. AND I said in the OP that they will eventually go the way of the dodo, like many similar jobs. Jesus, what more do you want from me.

I also think the dynamic of "what's ok for me to do as a side hustle and make a lot of money at" vs. "what's ok or ethical for realtors to charge in a normative sense" is very interesting and under-explored. Many people here would probably be very happy making an extra $80-$100k a year as an agent on evenings and weekends, with a good ratio of hours of work to compensation and a fairly interesting job if you like real estate. But there is also the question of - is there something wrong with that since you might not pay that fee for a realtor yourself? Does it depend how wealthy your clients are? I know because I feel that tension in my own life based on the common criticisms people make of realtors.

Funnily, I wasn't criticizing real estate agents at all, I was criticizing the click bait nature of your thread title.

Had it been titled "I'm a real estate agent and I want to know what Mustachians think of the industry" I wouldn't have even blinked at the title.

I respect realtors as I respect any sales professionals. My post specifically states as much. It's legitimate to question the utility of a realtor in a specific transaction as it is always legitimate to question the necessity of any sales professional. That doesn't mean that sales professionals don't have value. It means their value depends on the context.

I didn't bother having a realtor when I bought my most recent place because I really didn't need one. However, I would never sell my rental property without one, especially since the market here s blazing hot right now.

I'm not part of any other PF forums, this is the only one I'm part of and I have literally never seen a single criticism of real estate agents ever here. In fact, I've seen several posters who are flippers or invested in rental speak highly of their realtors, so the premise of coming here to pitch the value of your industry seemed kind of ham-fisted to me.

You can tell me to go elsewhere all you want, but I'm providing genuine and dispassionate feedback as to how your content is coming off within the context of this community, at least to this reader who actually has a lot of respect for talented realtors.

Take it as you will and do with it what you want.

Btw, I work in an industry that is FAR MORE hated than yours where my own clients will say to my face on a daily basis how much they hate my profession and how they feel we are all out to take their money, so don't assume that I don't get what it's like.

[LiveLean]

When we bought our first home in 1999, I found the process so slimy and frustrating that, two years later, I went out and got my real estate license when I realized you could obtain one in two weeks of classes. I had no intention of working in the business, and never have, but I wanted the education to help my real estate investing down the road. I dutifully renew it every two years for $50 or so.

When I took the class in 2001, there were a dozen things I noted that my Realtor did wrong and a few that were unethical. I would have reported him to the Florida Real Estate Commission, but the statute of limitations had passed.

The one thing I will argue with Realtors about forever is the notion of the transaction agent/broker. No, you cannot fairly represent both parties in a transaction -- but this is considered standard procedure in the field. Can you imagine having a transaction lawyer? Ridiculous. (Thankfully, most people get their buyer's or seller's agent, but my wife and I were young and dumb in 1999 and went with the listing agent.)

Now that we're back in a frothy real estate market that's starting to resemble 2007, I notice how all of my friends who were real estate agents up until 2009 before finding other lines of work, surprise, are agents again. I'll use a Realtor again when we sell our house on the condition that s/he not become a transaction broker and that s/he has been working exclusively as an agent for a minimum of 10 years.

[Metalcat]

FWIW I've found Malkynn's opinions to be deeply insightful, even when I disagree with them.

Well that there is a damn civilized compliment.
Thank you.

I can be a little...um...direct though, so I'm not surprised when I trigger the occasional reaction.

[Bloop Bloop]

"Do Mustachians hate real estate agents?" is a pretty click-baity kind of question and also indicates that you didn't bother checking out the real estate section of the forum.

We're not dumb people, we do our research extensively about everything and are generally pretty well aware of the value that real estate agents provide.

We legitimately question if that value is commensurate with compensation as it's organized, but most of us don't hesitate to use realtors when the situation is appropriate.

RE is still first and foremost a sales profession, and anyone who doesn't understand the value of sales, doesn't understand sales. However, not every transaction requires a professional salesperson, and not every house sale or purchase requires a realtor.

But really, coming here and asking "Do Mustachians hate real estate agents?" and then immediately telling us that you are a real estate agent, just seems like baiting us to give yourself an opportunity to pitch how valuable your services are.

It just doesn't sit all that well with me for some reason.

Are you for real? Please take your imperiousness elsewhere. The title relates to the fact clearly stated in my original post that people on other PF forums literally call realtors childish names, stereotype badly, and rudely shout down anyone related to the industry. The title is not a characterization of this forum, it's a question. I am a new member here so I wanted to start a conversation, I'm literally asking for people's thoughts on the topic. And this has been a very engaging and interesting thread so far. Notice I am not attacking people who don't see the value in realtors and literally said I understand why some people wouldn't want to use one. AND I said in the OP that they will eventually go the way of the dodo, like many similar jobs. Jesus, what more do you want from me.

I also think the dynamic of "what's ok for me to do as a side hustle and make a lot of money at" vs. "what's ok or ethical for realtors to charge in a normative sense" is very interesting and under-explored. Many people here would probably be very happy making an extra $80-$100k a year as an agent on evenings and weekends, with a good ratio of hours of work to compensation and a fairly interesting job if you like real estate. But there is also the question of - is there something wrong with that since you might not pay that fee for a realtor yourself? Does it depend how wealthy your clients are? I know because I feel that tension in my own life based on the common criticisms people make of realtors.

I didn't think this thread was click-baity either. I mean, the responses on this thread alone show that some Mustachians do have a disliking of real estate agents. Sure, "hate" is an emotive term that's probably not necessary, but given the other threads on the front page - "What's the stupidest thing you're lusting after?" - it's hardly rare to see adjectives being used in a hyperbolic way.

So no, I didn't think there was anything wrong with this thread. Other people's opinions may differ.

I also don't think there's anything wrong with what real estate agents do. If you don't like them, don't use them. You can do your own advertising etc. It's like car dealers. Some people trade-in at the dealer. Some do private sales. You've got a choice.

I also agree that lots of people seem quite happy with "side hustles" that gain them a $ or $$, but when it comes to "main hustles" that gain $$$ or $$$$, suddenly they become selective. It's not an inconsistent philosophy (I think for a lot of people it's more about being diversified and self-sufficient, than investing into work that they see is for "The Man"), but it's important to note that those of us who do work for "The Man" are not less virtuous as a result.