In response to the article's title: Good. A real estate agent, both seller's and buyer's, is ultimately a sales/marketing job. The buyer's agent side is nearly pointless with modern...
In response to the article's title: Good.
A real estate agent, both seller's and buyer's, is ultimately a sales/marketing job. The buyer's agent side is nearly pointless with modern tools/sites/searches. The only real "service" they provide is the fact that, as a buyer, you have to have one to just look at houses and see some behind-the-scenes details that should be public anyway, but are otherwise there to get their 2-3% commission for little-to-no work being done. Then there's an extra layer of the pyramid scheme that requires agents to also have to work for a brokerage on top of it.
The U.S. has 2.5 to 3 million real estate agents — which is far more than any other country, relative to the size of its housing market. For example, the U.S. has about six times more home sales each year than the U.K. does, but 26 times more agents. Massive oversupply of agents and all this time they've been able to keep their commissions high by this anti-competitive BS.
What is up in the air is how a buyer's agent is going to get paid after the new rules go into place. Right now the seller pays the buyer's agent, this is no longer going to be required, and with a lot of people buying houses with only the minimum of 3% down coming up with another 2-3% in cash to pay an agent is a big ask. It's also unknown at the moment if the buyer is going to be able to roll the agent's commission into the mortgage. Maybe it'll be the mortgage company that ends up setting the buyer's commission by having a max allowable.
Of course, in a perfect world, we wouldn't need buyer's agents at all. Nearly every house I've looked at as a buyer had a bluetooth enabled lockbox to control access. Doesn't take much to put that unlock app in the hands of a buyer instead of an agent, or actually make the seller's agent earn their commission by being present for showings.
I largely agree, but I don't think it's just sales and marketing. Real estate has a lot of traps for the unwary and local advice from someone with experience is useful. Some markets are especially...
I largely agree, but I don't think it's just sales and marketing. Real estate has a lot of traps for the unwary and local advice from someone with experience is useful. Some markets are especially complex (like New York City.) The article talks about how having full time, more experienced agents might help.
Our buyer's agent, also a personal friend, had to work quite hard for us. For the house we wanted, somehow the bank got a notion that there might be an HOA involved somewhere, even though no one...
Our buyer's agent, also a personal friend, had to work quite hard for us. For the house we wanted, somehow the bank got a notion that there might be an HOA involved somewhere, even though no one could actually point to the existence of one. She did a lot of research, and at points felt like a deal might not even be possible, but was eventually able to convince the bank that the house was not encumbered.
In this specific instance we definitely felt that she earned her commission and we're both grateful for her help. Of course this is only anecdotal and I'm sure there's plenty of cases where they don't do much more than a few cursory searches and a little paperwork to get the commission.
While I'm sure there are complicated situations where a realtor has to do more work, do you think it's worth the thousands of dollars they make in commission? Is the issue so complex and require...
While I'm sure there are complicated situations where a realtor has to do more work, do you think it's worth the thousands of dollars they make in commission? Is the issue so complex and require such expertise that they should get paid 3-14k for what amounts to no more than one part time or full time week's worth of effort?
I think that’s mostly inertia from when real estate prices weren’t so absurd. The commission percentage stayed the same as the home values ballooned, and it seems that was mostly due to cartel...
I think that’s mostly inertia from when real estate prices weren’t so absurd. The commission percentage stayed the same as the home values ballooned, and it seems that was mostly due to cartel effects.
To do some math to back you up, a 3% commission on an $80k home is $2,400. Would need to help 42 buyers to cross 100k. A 3% commission on a $250k home is $7,500, and only need to help 13 buyers....
To do some math to back you up, a 3% commission on an $80k home is $2,400. Would need to help 42 buyers to cross 100k.
A 3% commission on a $250k home is $7,500, and only need to help 13 buyers.
So yea, a percentage based system is not tenable these days.
Yeah, I agree, our buying agent did a great job handling pricing negotiations. I was ready to pay asking and he talked me down, said "Okay, I know you willing to pay asking, but with a cash offer,...
Yeah, I agree, our buying agent did a great job handling pricing negotiations. I was ready to pay asking and he talked me down, said "Okay, I know you willing to pay asking, but with a cash offer, we can get less. Let me handle it, worst case you pay asking". He got 15k off the asking price. He saved me more money than he got in commission.
I think your average realtor would be very keen to point out that they are not real estate lawyers. All of the legal documents they help to generate are undoubtedly boilerplate DocuSign contracts...
I think your average realtor would be very keen to point out that they are not real estate lawyers. All of the legal documents they help to generate are undoubtedly boilerplate DocuSign contracts with data populated from Multiple Listing Service (MLS) listings.
Honestly, in 2024, realtors are, in my opinion, a net-detrimental to society for a whole host of reasons (e.g. their ability to distort the housing market, create conflicts of interest, act as gatekeepers to basic information).
By controlling listings and manipulating perceived demand, realtors can drive up property prices, making housing less affordable. Something they are already incentivized to do because of their commission structure. The traditional model where realtors have exclusive access to MLS databases creates barriers to entry, making the buying and selling process more complicated and expensive than necessary.
Further, realtors are overpaid, primarily because their commission-based fees do not reflect the actual workload. By charging a percentage of the property's sale price, realtors earn huge commissions, particularly on high-value transactions, irrespective of the effort involved. (Is it really harder to sell a $325,000 home than it is to sell a $125,000 home?) In 2024, with sites like Zillow and Redfin, I just don't see what kind of utility most realtors are going to provide. Especially buyer's agents. These platforms enable buyers and sellers to access market data and property details independently, obviating realtors' services. Beyond that, relatively simple software can handle the paperwork at a significantly lower cost.
The NAR settlement is a welcome evidence that the value added by realtors is being increasingly scrutinized as their main roles—listing properties, showing homes, and handling negotiations—can now quite obviously be performed through less costly means. Alternative like discount brokerages and flat-fee services (e.g., for purchase contracts) offer comparable services at a fraction of the cost.
On top of everything else, realtor fees contribute to the overall cost of housing, exacerbating economic disparities and making homeownership less accessible to lower-income families. Yeah, it's "only" 2-6% of the purchase price, but that's still a lot of money. Particularly for first-time homebuyers that don't have a lot of money for a down payment to begin with.
My biggest concern is honestly what these people are going to do with themselves instead. There are a lot of people who have made careers in real estate that we are rendering obsolete. Maybe those sales skills can be put to use somewhere else, but I'm not sure. Certainly, we don't need a glut of salespeople in our society, if you ask me.
My biggest concern is honestly what these people are going to do with themselves instead. There are a lot of people who have made careers in real estate that we are rendering obsolete. Maybe those sales skills can be put to use somewhere else, but I'm not sure. Certainly, we don't need a glut of salespeople in our society, if you ask me.
I don't know the US system at all, but I'm fairly sure in the UK that sort of thing is why you employ a conveyancing solicitor (probably "real estate lawyer" in US English) The estate agent who...
I don't know the US system at all, but I'm fairly sure in the UK that sort of thing is why you employ a conveyancing solicitor (probably "real estate lawyer" in US English)
The estate agent who handled the purchase of our house did basically nothing. They mostly just forwarded emails between me, my solicitor and the seller's. I didn't even meet the agent in person until I went to pick up the keys! My solicitor was the person who highlighted all the potentially legal issues and made sure the contracts were as much in our favour as possible. He was expensive but worth it.
I could easily replace the agent with a few hundred lines of python.
There was a gold rush leading up to and during COVID where all the people I knew growing up who (to be blunt) didn't have any marketable skills all got real estate licenses and spammed all their...
There was a gold rush leading up to and during COVID where all the people I knew growing up who (to be blunt) didn't have any marketable skills all got real estate licenses and spammed all their friends on Facebook advertising their new businesses and how much money they were making. Most of them have stopped now as the market is heavily oversaturated and I'm getting a bit of schadenfreude seeing all the people who were profiting heavily off of the insanely inflated housing market having to scale down their glamorous lives.
The 440k number is from the Bureau of Labor Statistics for "full-time agents". The National Association of Realtors has 1.5M registered agents (note, Realtor and Real Estate Agent are not one in...
The 440k number is from the Bureau of Labor Statistics for "full-time agents". The National Association of Realtors has 1.5M registered agents (note, Realtor and Real Estate Agent are not one in the same). The former is a trademarked term by the NAR, the latter is a job. You have to be the latter to be the former (and registered with the NAR), but it's not a requisite, just something that pretty much all of them do. The 2.5 - 3M agents is an NPR number: https://www.npr.org/2024/03/22/1239486107/realtor-fee-commission-homes-for-sale
But how many of them actually work in real estate? Would it be like saying the US has 100 million fast food workers because of all the people who ever worked in a restaurant at any point in their...
But how many of them actually work in real estate? Would it be like saying the US has 100 million fast food workers because of all the people who ever worked in a restaurant at any point in their life?
Unknown, but considering that most states require real estate license renewal every two years, it's a safe enough number considering the people doing no business aren't likely to continue to pay...
Unknown, but considering that most states require real estate license renewal every two years, it's a safe enough number considering the people doing no business aren't likely to continue to pay to get it renewed and keep up with being in a brokerage, etc.
To be fair, I could pull my current salary by helping 5 people buy homes at a 3% rate in my area. Don't really need to be a full time agent then. Do 3 weeks of work and call it done.
To be fair, I could pull my current salary by helping 5 people buy homes at a 3% rate in my area.
Don't really need to be a full time agent then. Do 3 weeks of work and call it done.
Having bought two houses from the same very experienced agent, I think we got a lot of value for her fee. Especially the first time, she showed us a lot of houses, helped us find a good inspector,...
Having bought two houses from the same very experienced agent, I think we got a lot of value for her fee. Especially the first time, she showed us a lot of houses, helped us find a good inspector, and steered us away from some houses that had issues or were overpriced.
We needed less the second time in terms of guidance, but we were missing out on a lot of houses because it was during a supply crunch. The house we ended up buying we only got because she knew about it before it came on the market. So again, it felt like good value.
I wouldn't have a house without my agent. She found the FSBO, and convinced the owner that her clients with a wheelchair and desperate to find a house, would love it, and then got her to agree to...
I wouldn't have a house without my agent. She found the FSBO, and convinced the owner that her clients with a wheelchair and desperate to find a house, would love it, and then got her to agree to an asking price offer on the spot. (I'm in a market where we're still going over asking regularly. )
I won't say they're needed for everyone. But I don't think I could have bought a house in the new system - didn't have extra money for the realtor, didn't have the ability to take point on the house hunt, and had special needs due to the accessibility. She also helped me with things I didn't know about - identified moisture before I did, or other issues that would make a house not ideal.
There's this idea that all of us should be able to be experts about everything because of the internet and such and I just think it's very reasonable to want a professional to handle any number of tasks. I'm not mad about the change or anything but I'd definitely not have been able to pay a realtor if it hasn't been out of the seller's cut.
Yeah this was bound to happen. I think a lot of people entered this field because it was kinda "easy". It was relatively easy for people to switch from one career into real estate. It became a...
Yeah this was bound to happen. I think a lot of people entered this field because it was kinda "easy". It was relatively easy for people to switch from one career into real estate. It became a common separate career. Then, the market was flooded with realtors, well beyond demand. I remember seeing something in my area talking about how there were something like 4 realtors in our region for each house listing in MLS, which is crazy.
The Bureau of Labor Statistics recorded 440,000 full-time real estate agents and brokers in 2023, about 72,000 less than the year before.
…
With interest rates remaining relatively high, deals have become so scarce that many Realtors now sell only a few homes a year. A survey of about 2,000 real estate agents conducted by the Consumer Federation of America found that 49 percent of them sold fewer than two homes in 2023. And Realtors will soon face new rules that could result in sweeping changes to how they do business and how they get paid.
Under the new rules starting in August, real estate databases no longer will include offers of compensation for buyers’ agents. That means those agents can no longer count on a cut of the seller’s windfall. Investment bank Keefe Bruyette & Woods has estimated that as much as 30 percent of the total U.S. commissions revenue might be lost as a result.
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Economists who study the real estate sector have long believed that a “decoupling” of buyer and seller commissions will convince a significant number of Realtors to abandon the field, though estimates vary as to how many.
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Experts see a silver lining in a potential exodus of Realtors: Those who remain might be more experienced and competent. “This will be good for consumers because agents on average will be better at their job and will charge more competitive commissions,” Gilbukh said.
A “Realtor glut” has persisted since the industry’s pandemic high point, said Brobeck, who also sees a departure of real estate agents as probably a good thing for home buyers.
…
Under the rules coming in August, agents will feel more pressure to justify their compensation, Brobeck said, because buyers will be more likely to press for a lower commission. That should also create space for discount brokers serving first-time buyers, he said.
…
Contracts under the proposed new rules should bring more clarity to the relationship between buyers and their agents, several analysts said. That could cut down on “ghosting” incidents, in which prospective home buyers will talk to an agent while searching for a home, only to finalize the deal with a different agent, or put their housing search on hold.
In response to the article's title: Good.
A real estate agent, both seller's and buyer's, is ultimately a sales/marketing job. The buyer's agent side is nearly pointless with modern tools/sites/searches. The only real "service" they provide is the fact that, as a buyer, you have to have one to just look at houses and see some behind-the-scenes details that should be public anyway, but are otherwise there to get their 2-3% commission for little-to-no work being done. Then there's an extra layer of the pyramid scheme that requires agents to also have to work for a brokerage on top of it.
The U.S. has 2.5 to 3 million real estate agents — which is far more than any other country, relative to the size of its housing market. For example, the U.S. has about six times more home sales each year than the U.K. does, but 26 times more agents. Massive oversupply of agents and all this time they've been able to keep their commissions high by this anti-competitive BS.
What is up in the air is how a buyer's agent is going to get paid after the new rules go into place. Right now the seller pays the buyer's agent, this is no longer going to be required, and with a lot of people buying houses with only the minimum of 3% down coming up with another 2-3% in cash to pay an agent is a big ask. It's also unknown at the moment if the buyer is going to be able to roll the agent's commission into the mortgage. Maybe it'll be the mortgage company that ends up setting the buyer's commission by having a max allowable.
Of course, in a perfect world, we wouldn't need buyer's agents at all. Nearly every house I've looked at as a buyer had a bluetooth enabled lockbox to control access. Doesn't take much to put that unlock app in the hands of a buyer instead of an agent, or actually make the seller's agent earn their commission by being present for showings.
I largely agree, but I don't think it's just sales and marketing. Real estate has a lot of traps for the unwary and local advice from someone with experience is useful. Some markets are especially complex (like New York City.) The article talks about how having full time, more experienced agents might help.
Our buyer's agent, also a personal friend, had to work quite hard for us. For the house we wanted, somehow the bank got a notion that there might be an HOA involved somewhere, even though no one could actually point to the existence of one. She did a lot of research, and at points felt like a deal might not even be possible, but was eventually able to convince the bank that the house was not encumbered.
In this specific instance we definitely felt that she earned her commission and we're both grateful for her help. Of course this is only anecdotal and I'm sure there's plenty of cases where they don't do much more than a few cursory searches and a little paperwork to get the commission.
While I'm sure there are complicated situations where a realtor has to do more work, do you think it's worth the thousands of dollars they make in commission? Is the issue so complex and require such expertise that they should get paid 3-14k for what amounts to no more than one part time or full time week's worth of effort?
I think that’s mostly inertia from when real estate prices weren’t so absurd. The commission percentage stayed the same as the home values ballooned, and it seems that was mostly due to cartel effects.
To do some math to back you up, a 3% commission on an $80k home is $2,400. Would need to help 42 buyers to cross 100k.
A 3% commission on a $250k home is $7,500, and only need to help 13 buyers.
So yea, a percentage based system is not tenable these days.
Yeah, I agree, our buying agent did a great job handling pricing negotiations. I was ready to pay asking and he talked me down, said "Okay, I know you willing to pay asking, but with a cash offer, we can get less. Let me handle it, worst case you pay asking". He got 15k off the asking price. He saved me more money than he got in commission.
I think your average realtor would be very keen to point out that they are not real estate lawyers. All of the legal documents they help to generate are undoubtedly boilerplate DocuSign contracts with data populated from Multiple Listing Service (MLS) listings.
Honestly, in 2024, realtors are, in my opinion, a net-detrimental to society for a whole host of reasons (e.g. their ability to distort the housing market, create conflicts of interest, act as gatekeepers to basic information).
By controlling listings and manipulating perceived demand, realtors can drive up property prices, making housing less affordable. Something they are already incentivized to do because of their commission structure. The traditional model where realtors have exclusive access to MLS databases creates barriers to entry, making the buying and selling process more complicated and expensive than necessary.
Further, realtors are overpaid, primarily because their commission-based fees do not reflect the actual workload. By charging a percentage of the property's sale price, realtors earn huge commissions, particularly on high-value transactions, irrespective of the effort involved. (Is it really harder to sell a $325,000 home than it is to sell a $125,000 home?) In 2024, with sites like Zillow and Redfin, I just don't see what kind of utility most realtors are going to provide. Especially buyer's agents. These platforms enable buyers and sellers to access market data and property details independently, obviating realtors' services. Beyond that, relatively simple software can handle the paperwork at a significantly lower cost.
The NAR settlement is a welcome evidence that the value added by realtors is being increasingly scrutinized as their main roles—listing properties, showing homes, and handling negotiations—can now quite obviously be performed through less costly means. Alternative like discount brokerages and flat-fee services (e.g., for purchase contracts) offer comparable services at a fraction of the cost.
On top of everything else, realtor fees contribute to the overall cost of housing, exacerbating economic disparities and making homeownership less accessible to lower-income families. Yeah, it's "only" 2-6% of the purchase price, but that's still a lot of money. Particularly for first-time homebuyers that don't have a lot of money for a down payment to begin with.
My biggest concern is honestly what these people are going to do with themselves instead. There are a lot of people who have made careers in real estate that we are rendering obsolete. Maybe those sales skills can be put to use somewhere else, but I'm not sure. Certainly, we don't need a glut of salespeople in our society, if you ask me.
Perhaps they can be telephone sanitizers?
I don't know the US system at all, but I'm fairly sure in the UK that sort of thing is why you employ a conveyancing solicitor (probably "real estate lawyer" in US English)
The estate agent who handled the purchase of our house did basically nothing. They mostly just forwarded emails between me, my solicitor and the seller's. I didn't even meet the agent in person until I went to pick up the keys! My solicitor was the person who highlighted all the potentially legal issues and made sure the contracts were as much in our favour as possible. He was expensive but worth it.
I could easily replace the agent with a few hundred lines of python.
There was a gold rush leading up to and during COVID where all the people I knew growing up who (to be blunt) didn't have any marketable skills all got real estate licenses and spammed all their friends on Facebook advertising their new businesses and how much money they were making. Most of them have stopped now as the market is heavily oversaturated and I'm getting a bit of schadenfreude seeing all the people who were profiting heavily off of the insanely inflated housing market having to scale down their glamorous lives.
Sounds like these are just people who hold licenses and not actual real estate agents. The article mentions 440,000 full-time real estate agents.
The 440k number is from the Bureau of Labor Statistics for "full-time agents". The National Association of Realtors has 1.5M registered agents (note, Realtor and Real Estate Agent are not one in the same). The former is a trademarked term by the NAR, the latter is a job. You have to be the latter to be the former (and registered with the NAR), but it's not a requisite, just something that pretty much all of them do. The 2.5 - 3M agents is an NPR number: https://www.npr.org/2024/03/22/1239486107/realtor-fee-commission-homes-for-sale
But how many of them actually work in real estate? Would it be like saying the US has 100 million fast food workers because of all the people who ever worked in a restaurant at any point in their life?
Unknown, but considering that most states require real estate license renewal every two years, it's a safe enough number considering the people doing no business aren't likely to continue to pay to get it renewed and keep up with being in a brokerage, etc.
To be fair, I could pull my current salary by helping 5 people buy homes at a 3% rate in my area.
Don't really need to be a full time agent then. Do 3 weeks of work and call it done.
Having bought two houses from the same very experienced agent, I think we got a lot of value for her fee. Especially the first time, she showed us a lot of houses, helped us find a good inspector, and steered us away from some houses that had issues or were overpriced.
We needed less the second time in terms of guidance, but we were missing out on a lot of houses because it was during a supply crunch. The house we ended up buying we only got because she knew about it before it came on the market. So again, it felt like good value.
I wouldn't have a house without my agent. She found the FSBO, and convinced the owner that her clients with a wheelchair and desperate to find a house, would love it, and then got her to agree to an asking price offer on the spot. (I'm in a market where we're still going over asking regularly. )
I won't say they're needed for everyone. But I don't think I could have bought a house in the new system - didn't have extra money for the realtor, didn't have the ability to take point on the house hunt, and had special needs due to the accessibility. She also helped me with things I didn't know about - identified moisture before I did, or other issues that would make a house not ideal.
There's this idea that all of us should be able to be experts about everything because of the internet and such and I just think it's very reasonable to want a professional to handle any number of tasks. I'm not mad about the change or anything but I'd definitely not have been able to pay a realtor if it hasn't been out of the seller's cut.
Yeah this was bound to happen. I think a lot of people entered this field because it was kinda "easy". It was relatively easy for people to switch from one career into real estate. It became a common separate career. Then, the market was flooded with realtors, well beyond demand. I remember seeing something in my area talking about how there were something like 4 realtors in our region for each house listing in MLS, which is crazy.
From the article:
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Mirror, for those hit by the paywall:
https://archive.is/62g3P