Dina - no overcharging.
Not all of us work on a flat rate or flat percentage.
If I say - this is the hourly rate, by doing x,y and z - it should take this long, and cost this much - and then the client turns around and has you doing all of these other things that weren't included - and racks up a bill - who's fault is that?
I mean, if you read a resteraunt review that says the average price for a meal is $50 per person - and then you go in and are ordering expensive bottles of wine, multiple plates of everything, desserts, etc etc - do you try to claim the resteraunt ripped you off when the check comes out to $200 per person? Of course not.
You saw the prices on the menu, you knew what everything cost - and you asked for it anyways.
I'm beating a dead horse - i'd really like to see you explain that one. Seriously. 7 pages of the same crap over and over and over again, conversation going absolutely nowhere - and i'm the one beating a dead horse.
Right.
Done you with you people now. - Thu Jun 26 2008, 10:23
Edison - i think you're getting trulia mixed up with the Pentagon and the DoD.
LOL - Wed Jun 25 2008, 22:01
Admit it - you guys want to argue and throw fireballs as much as CC does.
That's okay - but, just be honest about it. - Wed Jun 25 2008, 18:56
Sylvia - thanks for that.
In the month that this post has been up here - nobody, not once, ever thought of that.
really. - Wed Jun 25 2008, 18:55
Elvis - my point is - if you know the question is designed simply to stir the pot - why are there now 311 responses to begin with?
His latest comment about who gets it and who doesn't is irrelevent to this fact.
We still have people like Rosie coming in here 3 weeks too late to point out that Zillow isn't accurate, and that attorney's cost money, and that an agent could have blah blah blah...
The horse isn't just dead, it's buried and decomposing now.
we can stop beating it at any time. - Wed Jun 25 2008, 18:03
Ya know what - if it's so inflamatory - and you can see right through the act like all of you claim - then why are you answering?
seriously - what is left to say on the subject? - Wed Jun 25 2008, 17:02
Dina - i'm not going to get into all the ins-and-outs of it here. Beyond the scope of this conversation.
I will simply say that it simply has to do with transparency, and up-front expectations.
When you spell out the terms and conditions of an agreement in extremely detailed language, and everyone is aware of exactly what is going on, and what it will cost throughout the entire process - when you face situations like that - they might be shocking, but at the end of the day - it's what everyone agreed to. - Tue Jun 10 2008, 12:45
Dina.
As a matter of fact, yes - there is an EXTREMELY detailed breakdown of anything and everything that was done when a client gets an invoice. It's called transparency - and it makes clients confident that they're actually getting what they paid for.
An example:
Some years ago - I took on a client that wanted a website. We quoted them a price of roughly $50,000, and a timeframe of about 2 months. During the first month they went absolutely nuts going back and forth on what they wanted, wasting time, and wasting money. We tried to reign them in and explain to them that they were wasting thier time, and more importantly our time in the process. They didn't want to listen.
At the end of the first month - they got an invoice for $76,000. Naturally they went through the roof - until they looked at the breakdown of what all that money was spent on. End result is we a check for $76,000, and had a client that was more willing to listen to us when we said "this is a waste of time, and it's going to cost you".
Were they happy about going so far over budget? Obviously not. When reality is staring at them in black and white - there's very little arguement that can be made though. As i've said about two dozen times now - that transparency is one key item that is missing from the real estate industry that would make everyone feel a little better at the end of the day.
As for the rest of the stuff you wrote - it's all pretty much crap.
I've said about 2 dozen times now that technology is simply a tool that is supposed to make life easier and cheaper. Are realtors going to completely go away? I doubt it. But again, as has been said about two dozen times now - the function and capacity of realtors is going to change significantly. You can either get with that program, or you can keep operating like it's 1998. Your choice. No skin off my back either way.
If you have anything useful to add - by all means do so.
I'm really getting tired of the circular converastion though. If anybody has anything new to add - great. Otherwise - is there anything left to say? - Mon Jun 9 2008, 11:12
Chris:
A good part of what I do is write chunks of code, run them against the server, and then wait 15-20 minutes for the results to come back. It's an ebb and flow sort of work environment. I'll wrack my brain for a long time, and then have a ton of sitting around waiting for code to finish doin what it's doin. Means i have a lot of time for stuff like this.
As far as outsourcing my job to india - it's happened before. not a big deal. It all comes back to the states sooner or later. :)
As for girlfriend, family, etc...
the girlfriend just got out of the shower - so i'll have to answer the rest of your questions later. :) - Fri Jun 6 2008, 22:26
JR - but isn't that better off for you in the long run? That should be a red flag on that person as "potential problem client".
Also - here's a good example of some of the things i'm talking about (and even what you just mentioned JR)
http://www.trulia.com/voices/Home_Buying/Is_it_reasonable_to…
Of all those responses - maybe 1 or 2 were realistic.
Everybody's talking about "oh sure - we can do that, no problem!".
1 person is realistic and says "ya know, that's probably not the best use of time...."
- Fri Jun 6 2008, 17:29
Sylvia - I actually quote NAR stats fairly regularly.
Regardless of how easy it is - the point still stands that there seems to be very little effort to work smarter vs harder. Easier to go with the kitchen sink strategy, and complain about it on trulia?
There is a huge human aspect to it. No denying that. The one factor perhaps you're leaving out - is that at the end of the day, the human aspect is most concerned about the number game. If you can go to a seller and lay it all out there for them, and show them why the kitchen sink strategy doesn't always work, and show them how they get the most return for the least effort - that little human aspect called "greed" kicks in.
As for NY - i left NY a few years ago. Chances are I worked with someone JR knows though. :) - Fri Jun 6 2008, 17:20
JR - so then don't even try? Just tell people what they want to hear right off the bat? - Fri Jun 6 2008, 16:59
re: punch out at the end of the day.
I wish i knew what the end of the day was. I have a fouton in my office and a drawer full of hygene products in my desk...
Deb - re "briding the disconnect"
So do it? JR does? Again, goes back to transparency. That's where most of the distrust comes from.
re: technology has created more work...
no offense, but then chances are you're not using it correctly. I mean, this is what i've been talking about. Nobody seems to want to sit down, look at thier day, look at the work they put in - and say "how can i do this better?" You have these tools that you use, that create more work for you. That's not a help, that's a liability. - Fri Jun 6 2008, 16:59
I don't think technology is the sole answer to the solution. However, I think it can assist in the critical steps in the process that are missing.
When you work with a homeowner to sell thier home - you do CMAs right?
Why do you not to the same type of intelligence against your own work? If putting the ad in the newspaper is pointless, and you have the statistical data to back it up - why not take it to the seller and say "Look - just like i showed you with comps, here's the data - this is why we don't waste time/money doing this..."
If you can convince a seller through CMAs that thier home is worth 300,000 and not 400,000 like they think - surely you can convince them that a $250 newspaper ad is a waste of time.
So we've established that there's ineffeciencies in the process - but what's being done about it? - Fri Jun 6 2008, 16:49
An even better example.
A lot of talk gets thrown around about the time, effort, and energy put into marketing/advertising properties.
Yet not once has anyone talked about looking at any sort of intelligence as to the effectiveness of thier campaigns.
In fact, if you go into the agent2agent section - there was a thread about "how many of you look at the just listed emails..." and most people said it goes straight to the spam folder.
Great, so somebody spends all this time and effort putting together these emails - only to have them ignored. Is that then an effective use of time? Obviously not.
Nobody questions whether or not realtors work for thier money. It's more a question of are you working hard, or are you working smart? - Fri Jun 6 2008, 15:53
I don't pull punches. I don't think i've even thrown any here yet.
And I again refer you to the countless postings on here about what agents do. How much of that is needless? How much time and energy is wasted on buyers that aren't going to buy, and sellers that ultimately are irrational and not worth the time?
In terms of "using the tools available to you" - how many actually use those tools to make thier jobs/lives a lot easier? Some do, I know because I used to work with them. Most simply snap some pictures, throw 'em up on mls, and go back to conducting themselves the way they always did.
You've obviously gone beyond that a bit - but again, based on what you've said here - you're not the average agent. I refer you again to Bay's post. (no offense bay!) - Fri Jun 6 2008, 15:49
Well JR - as this thread should clue you in to... a growning number of people DO care.
As far as your calander and all that - you are definately the exception, not the rule. I personally think that's great that you do that - and wish more of you did.
As far as the rest of it goes. It seems you have no problems questioning my credibility, my knowledge of the industry, or my ability to understand the complexities of what you do.
The one thing you have NOT done however, is argue any of the actual points that i've made. This is a fairly common tactic for politics, and may work in some arenas - but the fact remains that while you may be a cut above the rest (based on what you say here), the majority of the industry does not operate as effectively as they could (and should). Many agents waste time, energy, and resources - and if they simply took advantage of some of the tools available to them - could reduce thier overhead considerably.
You can question my ability to make that statement all day long. Get back to me when you have an answer to the statement it's self though. - Fri Jun 6 2008, 15:30
Really JR - you give your clients a detailed breakdown of all the work you did to get thier deal to close?
Good for you, really - that's far beyond anything most agents do.
As for "posted on here over and over again" - that's great for trulia - but with those postings comes the simple "the average client has no idea how much work we put into thier deals".
Then - make them aware of that work. I mean, that's what you do - right? - Fri Jun 6 2008, 14:39
Debra - you said it yourself....
There is little honesty and integrity in society Today.
Yet - somehow realtor's should not be subject to some scruitiny?
They cover all these costs out of pocket up front before they get paid. There's no reason to think that perhaps some of them are going to use thier position to get a little more out of it in the end?
I know not all realtors are crooks, but let's face it - some are.
The problem is - as has been said here many many times by the realtors of trulia - most people have no idea what an agent does. There is very little transparency in the industry - yet people are expected to fork over a percentage for the "work" that was done.
Simple way to clear up any issues. Keep a log of all the time, effort, money, and other resources you put into buying/selling a home with someone. Make your work more transparent to the average consumer. If it really is all you claim it is - then most people would have no problems... - Fri Jun 6 2008, 13:42
Eh - it's not feedback from agents JR.
More a matter of "This is what we need to do our jobs more effectively" - and we make it happen.
So in that regard - yes. When real estate professionals come out and say "These are the problems I face, this is what I need to be successful" and I can help make that happen - yea, I think that gives me better then average insight.
Am I an expert on it? No. I never said I was.
Do I have ALL the answers? No, and I never said I did.
All I have said is that there are tools out there, and there are ways of doing things that HELP, and that CAN make life easier for everyone.
Am I an expert on how you do your job? No, but I am an expert on some of those tools and services... - Fri Jun 6 2008, 13:33
wow - raggin on my name, tellin me I don't know anything about real estate - even though the things I worked on to help agents do thier job, was at the request of those agents...
That's the level this has dropped to?
Way to be professional guys. - Fri Jun 6 2008, 13:29
Well again JR - perhaps i'm not an agent - but when I helped develop that service, it was with the direct feedback of agents, and by and large, they loved it.
Perhaps you'd like to go tell some of the top brokers and agencies in NYC that they're idiots because they haven't walked in YOUR shoes. - Fri Jun 6 2008, 13:28
As a matter of fact JR - there's one extremely simple tool that I do have first hand experience with, that eliminated a LOT of the overhead you were talking about.
There was a service back in NYC that did virtual tours, as well as extremely detailed buyer-oriented surveys of EXACTLY the type of things you're talking about. Every detail about the property was documented, illustrated, photographed, and mapped.
The end result? The clients (RE pros who used the service) spent less time running around town showing properties to people who just wanted questions answered. The potential buyers could view everything online about the property (once they were screened and deemed not to just be curious neighbors or tire kickers), and the only time you had to run all over the place, is on the off chance that a) some detail was overlooked, in which case the answer was gotten, and added to the online info. or b) someone was very serious about buying.
Again -i'm not saying there's never need to put in work - but the tools are out there to minimize the need for repeating the same work over and over. - Fri Jun 6 2008, 13:16
oooo - somebody's gettin a little testy!
well JR - i'll tell you what. Considering that I work in technology, and have done extensive work with the real estate industry - until you've walked in MY shoes - you can STFU about the effects technology will have, because you have NO IDEA.
how's them apples? - Fri Jun 6 2008, 13:11
Elvis - not *all* the information comes from realtor's.
Some of it, especailly relating to past sales history, taxes, etc - come from public records.
The faster the government gets up to speed (which is starting to happen more and more) - the more accurate and up to date that information would be.
Some places, such as Cook County Illinois - are already working on commercial applications for businesses to tie into the county assessor's records online.
What do you think that's going to do regarding the accuracy of sales history and tax data for sites like zillow and trulia?
This says nothing of the fact that most of the data on these sites comes from agents as of today. Can you say with 100% certainty that the same will be true a year from now? how about 5 years from now? - Fri Jun 6 2008, 13:07
JR - no basis in reality?
Go back and read bay's post about how much she drives around and the way she operates...
Did I say realtor's don't EVER have to drive for any reason? No. Just that the tools there are out there make life a lot easier and a lot cheaper - should one choose to use them. - Fri Jun 6 2008, 12:58
The other thing that I think a lot of people fail to take into consideration - is generational differences.
The majority of people in the real estate market right now - view the internet as a tool to help them do things faster. It's convenient, it makes life a little easier.
However, there is an entire genereation of people about to enter the market - to which the internet isn't simply another tool in the bag - it is the ENTIRE bag. You and I may remember the time before the internet, and are accustomed to an "old fashioned" way of doing things, to which the internet is simply a suppliment. To this generation - the internet has always existed, it is the first place they turn, and they simply do not understand why there would ever be any need to complicate things with other people.
So - for the current generation of home buyers - realtors, and the current model may work just fine. For the people out there in thier late teens and early 20s - it will be such a foreign concept to them, that it will not even be considered an option. Using the internet, conducting business more effeciently, cutting out the middle man, all these things we've been talking about. It will not be something that would be "nice to do" or would "like to see" as many of us view it - it will simply be what they expect.
That my friends, is when you will be in trouble. - Fri Jun 6 2008, 12:25
Dina - it's actually not terribly expensive, and is being built into a lot of new higher-end homes.
Google X10 or home automation sometime.
It's not nearly as expensive or difficult as you might think, and there is a huge market for it.
And for the record - i'm actually very anti-gadget. I don't even carry a cellphone. - Fri Jun 6 2008, 10:49
Dina,
That's great, but again - you can't claim that all real estate agents are EXPERTS simply because they have a liscence if that's the case. The fact remains, it's still a bit of a crapshoot in terms of what kinda agent you're going to get when you walk in the door. Even agents admit that, and suggest people go out and interview multiple agents before deciding which one they go with. That's the point behind the "low bar of entry" arguement.
In terms of money made - (as in CC's original post) that's another issue entirely.
The point is, for the umpteenth time now, that consumers are looking for a faster, easier, cheaper way to get things done.
No one argues that agents spend countless hours driving around and showing homes and yadda yadda. The point is, do they NEED to? No, probably not. Perhaps 15, 10, even 5 years ago that was the case. NAR's own statistics show that buyers are being much more pro-active, and are using the internet to find thier properties more then they are using agents to find them. 36% of buyers do this compared to 30% who find thier homes through a realtor. Logically, this would represent a significant reduction in the amount of work, effort, and resources that an agent has to put into finding homes for buyers. Perhaps not the full 36%, but obviously it makes everyone's job easier. Nevermind the fact that with the internet, the information realtors use to get thier listings out to other realtors, and the overall marketing that is done - can be done much faster, cheaper, and easier.
The fact is the market is changing, what people are looking for is changing, and tools that both agents and consumers have at thier disposal is changing. Consumers have caught on to this, and want to make the move into current times. Why are agents so reluctant to do so?
The issue of the 3% agent commission is an issue because it's based on the old model of doing things. It's based on the notion that agents absolutely must spend all this time and money and effort to get the job done. That is no longer the case - so then where is the justification for that commission?
There was a time when in my job as a developer - i could have demanded anywhere from 150-200k/year for my services. As that market evolved however, the work became cheaper and easier to complete - and those salaries could no longer be justified. The same concept applies here.
There are cheaper, faster, easier ways of getting things done. Justifying the curent compensation is becoming more and more difficult to do. As the average consumer realizes this, they no longer wish to pay a higher rate to compensate for an agent's poor resource management, and poor decisions in conducting thier business. The tools to work more effeciently are there. Whether realtors choose to use them or not is thier choice, but ultimately the consumer does not want to be left holding the bag for a realtor's poor business decisions.
As i've said before CC's presentation of these ideas might be a little harsh - but that's the underlying point behind it. You can feel free to argue this all you want, but those are the facts. - Fri Jun 6 2008, 10:46
Dina - i never asked what your degree is in.
Someone - and i'm too lazy to go back and find who - said that realtors have degrees, and that in fact they knew 2 people who were realtors that were "rocket scientists". My question was - what bearing does being a rocket scientist have on the real estate market. ZERO.
This whole subject came up to the point that the bar of entry is extremely low for realtors - where as for other liscenced professions (such as doctors or lawyers) it is set much higher. It's easy to sit there and say "you have to have a realtor to make sure you get a good deal" - but what guarentee is there that your realtor has any clue what they're doing? ZERO. - Fri Jun 6 2008, 09:42
you guys are repeating yourselves now, and it's going nowhere. - Fri Jun 6 2008, 08:55
Dina:
1) re: Marketing?????
again - if you can explain how physics or film history applies to knowing the first thing about marketing. Be my guest.
2) I never went to college either, and by all accounts here - I make a heck of a lot more money then the brokers of the world. I guess me and Bill got somethin in common. Missed the point entirely - again.
3) I never said word one about electronic lockboxes.
4) re: Know it all's
eh - whatever. you can come down off that horse at any time.
5) I never said a word about the foreclosure rate and realtors. Feelin guilty about somethin?
6) I never claimed to be smarter or know more about anything then anyone else. Again - feelin a little self-conscious?
7) Nobody ever said trulia will replace the realtor. The point is the average consumer is looking for a faster, easier, cheaper way of doing business. If realtors adapt to that change in the market place, and can provide the services consumers are looking for - good for them. If not - then look in the mirror and practice this line...
"would you like fries with that?" - Fri Jun 6 2008, 08:42
Jennifer...
Couple issues with that.
First - how many agents refused to even consider showing the property, simply because it's FSBO?
There have been more then a few (the solid majority) of agents on here who have flat out said they refuse to show FSBOs.
Second - how many times has the inverse been true? How many times have homeowners set a ridiculous price for thier property, whether an agent is involved or not? This idea that somehow FSBO means the person is crazy and has no idea what they're doing is kinda silly. Having an agent doesn't automatically make someone a reasonable or intelligent person. There's plenty of nutbags out there WITH representation. - Thu Jun 5 2008, 12:33
JR - i actually came here for legitimate research purposes.
As I said when I posted my "why is an agent nessecary" thread - I didn't come here with any chip on my shoulder. I came here because I was in the process of purchasing a home, and wanted to know as much as humanly possible about the process.
During the course of that purchase (which ended up not happening, thanks to some agents), and my time on here - it was only then that I got a bad taste in my mouth in respect to the average agent.
If you notice - i said "average" agent. I do know there are some people out there who really do a bang up job, and really truely are worth thier weight in gold. They appear to be few and far between however. - Thu Jun 5 2008, 12:30
Daniel
I agree that as a consumer, we have the power to choose.
Why then all the negativity from the RE industry if someone dares even consider NOT using an agent? - Wed Jun 4 2008, 23:09
Bay - on a personal level - it's great that you go out of your way like that. It really is, and it's good to know there are some decent people in the world.
On a business level - it's absolutely mindbogglingly stupid. It's a prime example of what I was talking to Daniel about just a few posts ago. Needless expenses and waste that clutter the industry, that are then used to justify practices that frustrate more people.
I suspect this is the reason why there is not more transparency in the RE field, as if the average person *really* knew what that 3% commission was going to, they'd probably be a bit peeved.
Actually, i KNOW they'd be a bit peeved, as this is the exact reason why so many of us grind our teeth in dealing with these kinda situations.
If you personally want to go out of your way to help somebody. Fine. But don't stick the rest of us with the bill. - Wed Jun 4 2008, 22:37
TMan - yea - i always get a chuckle out of "because agents have your best interests at heart when negotiating deals".
No - the ONE AND ONLY person who has MY best interests in mind - is ME. - Wed Jun 4 2008, 19:58
You're right Bill...
it is shallow to try to bully people into drinking the kool-aide, regardless of your position.
There's a whole forum full of agents who need to hear that message. :) - Wed Jun 4 2008, 19:14
Well Daniel - and thein lies the problem.
"We need to charge this much because we don't manage our business correctly".
If i went to my clients and told them I had to raise thier rates because I had clients that weren't performing and not paying me, how long do you think i would have those paying clients for?
I brought this up awhile back about managing problem clients, and choosing who you work with and who you do not work with. Again it goes back to applying very simple business concepts that the rest of us use in every single industry to maximize profits and minimize losses.
It's a pretty simple concept - that i assume you grasp.
For everyone else, let me lay it out real simple.
Better Resource Management = Less work = more money = more time for more clients = even more money. - Wed Jun 4 2008, 19:13
Are you saying i'm uneducated? How's about the handful of people I know who bought thier homes WITHOUT an agent, who came out perfectly fine on the other side? - Wed Jun 4 2008, 18:20
Daniel - the problem is the arguement you make there flies directly in the face of a lot of what is said about why agents NEED thier commission rates as they are.
You're saying that the technology simply increases profit margins. Fair enough. That's what technology is in place for.
The standard arguement however is that agents are paid barely more then burger flippers at the end of the day - and technology or not, anything less then they get is an insult because of all the work they put in. I call BS on this idea. - Wed Jun 4 2008, 18:17
Actually James - I don't promote people use discount brokerages or do it themselves.
I simply argue this idea that ONLY a realtor can handle these transactions.
There's a pretty big distinction there. - Wed Jun 4 2008, 18:14
James - the problem is the same can be said of any profession to a certain degree. That's how it works in a free market. If you're no good at what you do - you will fail. The same can be said of doctors and lawyers.
The point is that the bar of entry is low. That point still stands.
The bar for survival might be higher then the bar of entry - but it still doesn't take a whole heck of a lot to get your foot in the door. - Wed Jun 4 2008, 18:11
Dina - don't look now - but you're sort of proving RS's arguement there.
If you want to be a lawyer or a doctor - you have to go to law school or medical school. These are highly specific schools that deal solely with the profession in which you want to enter. There is however no required degree to become a realtor.
What you're saying - is that some realtor's also have degrees, but that those degrees do not nessicarily represent anything to do with real estate whatsoever....
see what i'm getting at here?
I mean, if you want to tell me how a degree in a field such as Astrophysics or thermodynamics translates to the real estate industry - by all means - i certainly am curious. If you would like to explain how my girlfriend's degree in Film History would apply to her career as a Realtor (if she choose to pursue that path) would apply, again - explain away.
You're making a big leap in logic by trying to claim that because *some* realtors have college degrees - that the bar of entry to the real estate industry is just as high as that of a doctor or lawyer. That is simply not the case. - Wed Jun 4 2008, 17:35
Let me ask you guys a question.
are you upset because a seller possibly left some money on the table? or are you upset because a seller left money on the table, and you didn't have a shot at getting some of it?
If at the end of the day, a house is sold, and all parties walk away happy - beyond that - what business is it of yours whether they COULD have gotten more, or if YOU think it was a good deal? If the buyer and seller are both happy - and go about thier lives, what do you care in the first place? - Wed Jun 4 2008, 14:07
And for the record - we understand exactly how complicated the industry and the process in general are.
That is PRECISELY the problem. - Wed Jun 4 2008, 13:31
Great.
You posted a list of forms.
The fact remains that the buyers and the sellers of the world are who dictate the direction the industry will take. As of right now, the buyers and the sellers of the world are beginning to speak up, and say they are not happy with the current model in which these transactions take place.
You can post all the forms you want, you can talk about how much of an expert you are - but it doesn't change that one simple fact. People are looking for a faster, easier, cheaper way to get things done. If you're smart, and you capitalize on that - you can be on the bleeding edge of the industry and probably make money left and right in the process.
If not - that's fine. Change happens slowly, and you will be probably be able to operate as per the norm for some time. Just don't be supprised if 5-10 years from now, you're sitting around talking about "the good old 80/20 days". - Wed Jun 4 2008, 13:30
Daniel.
The problem is- with the technology that's out there today - buyers and sellers don't want to pay as much as they did in the past, because they shouldn't HAVE to.
NAR's own statistics show that 36% of home buyers find thier home online - not through a realtor. 30% find thier homes through realtor recommendations.
What exactly are you spending all that money on? Even sites like trulia are what, $40/month for unlimited listings? Come on.
Again - if you step back and look at the overall process - there's plenty of places to trim the fat out of day to day operations. That reduces YOUR cost, which should in turn reduce costs to the buyers and sellers of the world.
I see a lot of talk about the investment realtors make in terms of marketing and the pre-sales work that goes into finding a buyer. However, I see very little thoughtful analysis as to the ROI on all that work. Perhaps at one time all that up-front cost and all that work was 100% critical to selling a home. Obviously, times are changing - so the model realtors use in approaching a sale should change with it. - Wed Jun 4 2008, 10:15
Well Dina - actually, a lot of industries do try to remove illogical and ineffecient aspects of thier operations. In fact, a lot of them strive to do it through technology. Not co-incidentily - that leaves a LOT of people who rely on those ineffeciencies to make thier money jumping up and down screaming about how it's not fair... - Tue Jun 3 2008, 17:03
I'm curious as to why someone put money down before they even identified potential properties?
That seems to be working backwards. Sure a realtor could have helped in that situation - but i would argue so would a single shred of common sense.
also - i'm not arguing in favor of discounting or rebating commissions. My stand is that the entire process is illogical and ineffecient. If you remove the illogical and ineffecient aspects of the industry - then profit margins increase considerably, everyone has an easier time of things, and there's no need for the "standard practices" that exist today. - Tue Jun 3 2008, 16:28
although JR - my experience, you're probably better off going with V2 in Costa Rica... much easier to work with, and thier code is of much higher quality. - Mon Jun 2 2008, 13:08
JR - as far as outsourcing programming jobs to India - if you think you can get better value there, go for it.
There's enough programming to go around for everybody. I get paid at the end of the week regardless. - Mon Jun 2 2008, 13:07
William.
No - you could think of it as part of the negotiation period. Typically you get NDA's signed (since a lot of times you're dealing with private data), go in - talk to the (potential) client, find out what they want, find out what they already have, get a rough idea of what it will take to get 'em from point A to B - and most importantly, guage thier level of commitment. If they really don't seem all that interested in working WITH you - or you run into people along the way that you feel are going to be road blocks - it's a red flag. At the end of all that - you figure out A) whether or not you even want to take them on as a client, B) the terms, conditions and rates for an agreement if you DO take them on.
It saves everyone a lot of time. Really. I mean, there's been people on here in this thread talking about driving people around to view 20-30-50 houses and at the end of the day they get nothing out of it. That's a perfect example of a situation where having a "feeling out" period like that could have and should have alerted you that "hey - this person probably isn't serious, and therefor probably isn't worth my time right now."
It's no different then when you see a house on the market that's priced ridiculously high, and the seller will not budge on price. You know they're not going to come down - you know your client isn't going to pay thier asking price - do you keep beating your head against the wall for nothing - or do you advise your client "hey - maybe this is one we skip for now... this really doesn't look like a good situation". - Sat May 31 2008, 01:00
And I will grant that i'm not 100% right - there are exceptions to the statement that I made about commission coming out of the buyer's pocket. However, if i'm not 100% wrong - that means you're not 100% right either.
So - that said, it's kinda hard to claim some sort of "victory" - when in reality you're no more right then I am. Really we're arguing over semantics - and there is no clear "right".
Although if I knew this were some sort of contest - perhaps i would have put a little more effort into it.. :) - Fri May 30 2008, 17:32
JR - re : "then I need $1200/hr to cover those non-buying buyers".
No - perhaps you need to do again as is done in other industries. Don't take deadbeat clients. LOL
All joking aside, seriously. The root point that we're getting at with a lot of these gripes is that the entire industry is really a little cockeyed. There's all these practices and policies that make zero sense, that exist solely to compensate for other practices and policies that make zero sense.
Again - take what we do in software for example. Many of the places I've worked will offer up to X hours free consultation - as that is our estimate as to how long it takes to get the free part of the work done. If the client or potential client is disorganized or hassles us to the point that it goes beyond that - then we start making decisions about whether or not this client is worth our time, if we need to work out a payment schedule with them as an insurance policy, or if we just cut our losses and walk away.
I mean, what you're saying is - "we need this astronomical rate to cover the fact that we bend over backwards wasting time with people we know aren't going to buy". That makes ZERO business sense. - Fri May 30 2008, 17:17
JR - if there is zero gain, and the seller is paying out of pocket to cover commission, then yes - obviously that is an expense to the seller. In the grand scheme of things - how many times does that happen?
Typically - the commission is ultimately being paid by the buyer, albiet at the seller's expense. (if that make sense). - Fri May 30 2008, 17:12
JR -
1) nobody said you would have to collect from the buyer. Collecting on the seller's side is still fine. Yes - it's a change in the model, and yes there would be issues to work out to make it happen, but that doesn't mean it *can't* happen, just that issues would need to be worked out.
2) Then do what people do in every other industry - build the unpaid time into your hourly rate.
I've billed out at anywhere from $100-$500/hr (depending on what company i was working for). Did i ever get PAID $100-$500/hr? Of course not. Because built into that rate is also a buffer for time I work off the client's clock. - Fri May 30 2008, 17:08
James - now you're just being an idiot.
really - get a life.
you're a "pro" ? - Fri May 30 2008, 17:04
JR - the point I was trying to make is that everyone claims "oh - but the agent is free". Well - no really it's not, it's built into the price you're paying for the house.
Just like people who go to vegas and are psyched because they got a fee limo ride ($80 value) and a free hotel room ($200 value) - after spending $40k at blackjack. It's not free - it's built into the money you just spent.
The seller is not PAYING anything, they are taking a slightly reduced profit. There is a HUGE difference between the two (ask the IRS - they'll tell you). Just like the casino is not PAYING $280 for your hotel and limo - they're just taking $39,720 in profit instead of $40,000.
Are there cases where the seller has had to come out of pocket to pay commission - i'm sure there are. That's a sale that really stinks for the seller - and I imagine they were in a crappy position if they took a deal knowing that's how it was going to end up. - Fri May 30 2008, 17:02
JR - honestly - i think if that's how it worked, and you documented the work you put in, and there was an hourly rate schedule associated with it, most people would probably be perfectly happy to pay under that model.
I think the problem people have now - is you get paid a percentage off the top, regardless of how much work is done, or what the sales price ends up being. There's very little transparency - and that's what makes people jumpy. - Fri May 30 2008, 16:57
James - you keep making these wild claims - with nothing to back it up other then a few articles about foxton's. Meanwhile foxton's went under because the market in that area tanked, and they simply weren't making as much money.
This is no different then the countless agents who have had to find work - or companies like Countrywide who are on the verge of the same thing. - Fri May 30 2008, 16:54
JR - this is true - but really, the seller is ultimately the one paying for it.
It's like people who go to vegas, and are all excited because they got thier room comp'd - and the casino shuttled 'em around in a limo. ALL FOR FREE!!!!
meanwhile they're down 40k at the tables.
But it's ALL FOR FREE! - Fri May 30 2008, 16:53
Fine james - we'll adjust your hourly rate.
($100,000 * 0.03)/60 = 50/hr (you said 40-80 hours so i split the difference
($1,000,000 * 0.03)/60 = 500/hr
question still stands - how much is your time worth? $50/hour or $500/hr? - Fri May 30 2008, 16:49
I don't think it's a dirty tactic, and I don't hate all realtors. I think some of you do provide a valuable service to some people, and even some of the agents I argue with on here - I think are for the most part pretty reasonable.
What I do hate - is as has been demonstrated in this thread (see James Graham's ignorant posting) - is this idea that somehow the mere mortal is too ignorant or stupid to comprehend real estate. That ONLY agents are capable of making a real estate deal happen, and that without an agent it is ASSURED that you will get screwed 6 ways from sunday. Lawyers? what do they know about writing contracts or the law - they're not agents!
That's what I can't stand about the industry.
There are people on here - that even though we go back and forth quite a bit - people like JR, and Chris, and Elvis - that are much more reasonable then some, that I honestly wouldn't have any problems taking advice from.
Also - in terms of incompetence vs strategy - I don't know whether it's one or the other myself. I'm simply raising the question of - why is it a crime if a discount broker does it, but it's smart strategy if an agent on here does the same thing?
One last point regarding discount agents - there seems to be this perpetuation of this myth that discount brokers have no even remote conception of the real estate market. That's clearly false. When you're dealing with a discount broker, you're still dealing with liscenced agents - you're just dealing with them in a different way. It's not like you're callin these guys up and getting a highschool kid working part time answer the phone and write your offer. - Fri May 30 2008, 16:45
Sorry James - but I think you're full of it - on all counts.
And as many people on here can tell you, no, i am not a lawyer. (nor do I play one on TV) - Fri May 30 2008, 16:30
Stephen - this idea that the seller pays for the agent is kind of... niave at best.
Tell me - if i buy a house for $300,000 - and out of that $300,000 - the agents get $18,000 and the seller gets $282000 - who REALLY paid that $18,000? The seller? Not really - they're just not getting quite as much as they would have without one. They still have ZERO out of pocket expense, where as ALL the out of pocket expense comes on the part of the buyer. - Fri May 30 2008, 16:29
Also William - my comments about the model changing is in response to Dina's claims that it isn't - and that everything is exactly how it's always been.
Clearly we all see/know that that's not the case. - Fri May 30 2008, 16:22
William - but the fact of the matter is - it's not selling at $527,000. I could just as easily sit there and throw out - but, what if the house sold for 1 BILLION DOLLARS?!?!! Where's your missing 35k then?!?!?!!
Obviously - that would be silly.
Nevermind the fact, that the whole point was that Dina assumed the house was priced low out of incompetent pricing model. I personally don't think that's necessarily the case. I think it's fairly obvious that they did what any other agent would consider doing (and what many agents have recommended doing on here, and what many banks are doing with REO property around the country). Priced the home low, expecting a bidding war in a market where buyers are looking for deals.
That's kinda the bigger point I was getting at here. - Fri May 30 2008, 16:21
Actually James - in most industries, people are compensated on a per-hour rate. Saying "isn't it worth 3%"? is kind of logically flawed (not to mention mathmatically flawed).
Going by your logic - if you close a deal on a $100,000 house, and make 3% (that's $3,000) - and put in say 25hrs worth of work total. - that breaks down to $120/hr.
How then can you justify a rate of $1200/hr if you put in roughly the same 25 hours of work on a $1,000,000 house?
If you're being paid for your time and your expertise - then which is the more accurate assessment of that time and expertise? $1200/hr or $120/hr?
This is also why the DOJ is looking into revising laws regarding commission - and why more and more people are turning to discount brokers. $1200/hr? You REALLY think you're worth that much? - Fri May 30 2008, 16:05
James - you posted 3 articles about foxton's.
Great - good for you, you found 1 so far. I asked for 3.
If these guys are shutting down "left and right" - surely there is more then 1 that is filing.
I would also ask - given the current market, how many real estate agents have started looking for a new line of work, and how many mortgage brokers have gone under? - Fri May 30 2008, 15:52
Also - i'd like to see some evidence of discount brokers "filing left and right".
If you're gonna throw out bogus claims like that - back 'em up with somethin.
Show me even 3 that ever even got off the ground that have gone under. - Fri May 30 2008, 15:22
fine - so each person is different.
Let's assume that this person just said "you set the price - i don't know. I need to get at least X to cover my outstanding loans... beyond that, you decide."
Now with that assumption - again, it's supposedly a crime that the house was priced so low - but now they're in a bidding war over it. What exactly is the crime?
Let's take the same property Dina is talking about here - she said the bids are up to 562,000?
Okay, let's say it sells for 562,000. 6% off the top is 33,720.
562,000 - 33,720 = $528,280. Sounds right about in line with this broker put it out there for.
Except - if it's still selling for 562,000, and you're not taking that %6 right off the top - you're taking say 1% for the discount broker, and we'll say a standard 3% for the buyer - that breaks out to 22,480 off the top. that's over $11,000 that goes straight back to the seller.
How exactly can you argue that a situation like this does not result in more money for the seller? $35,000 left on the table? Where?
Numbers don't lie. - Fri May 30 2008, 15:11
Dina - re : "the model has not changed".
In a previous thread, I used the model of the recording industry as an example. Record execs thought the same thing back when MP3s were first gaining popularity. "Oh - no effect on us, that's just child's stuff". Our model won't change...
Jump forward a decade or so to today - and who buys CDs anymore?
Is CC's delivery of his message a bit harsh? Sure it is. However, I think the underlying message is the same. With tools like the internet - the curtain has been pulled back, and the mystique about the home-buying process has been lifted to some degree. Buyers are more aware of what's on the market, are more aware of how the process works, have greater access to information, and are becoming more and more inclined to do it themselves. If that's not a change in the model - I don't know what it is. 10 years ago, you had NO CHOICE but to use an agent if you wanted to have any hopes of finding a decent property. They held all the information. Today? Obviously not the case. What's the NAR statistic? 36% of people find thier homes online, and only 30% find it through a realtor's recommendation? That should tell you somethin right there.
Also - as far as "take to court over thier pricing strategy" - I thought sellers set the price? Now you're saying it's the discount broker's fault? Seems like, if a house is priced too high - blame the seller. If the price is too low, blame the discount brokers.
Although - it's funny. You assume that they don't know what they're doing - as the price was too low. Yet - you're in a bidding war. Ever stop to think that was on purpose? I've seen quite a few "experts" on here suggest doing the exact same thing. Oh - wait - i forgot, it's a discount broker, so there's no way they know what they're doing. Right?
I can see your point behind the statements you make - but they're just flawed. - Fri May 30 2008, 14:47
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