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Originally Posted by DDDDave
Sell one a month and you can call yourself a "Million dollar" producer who makes let's see -( $1,440,000 * 2% =) $28,800. Gross. Closer to $20,000 net. But it's all worth it to get to work with people who have attitudes like yours. 
BTW, why do you care what the realtor makes, you don't pay it anyway? |
I understand the fallacy of the assumption that a "million dollar producer" has got to be doing well for himself. I also get the idea that your regular agent doesn't walk away from the deal with 3-6% of your selling price. I understand that realtors have to work pretty hard for the money they earn. But honestly, if you are only managing one closing a month, shouldn't you be thinking of other work? What I object to is the "you don't pay it anyway" line that lots of realtors hand down. They seem to talk a lot about the idea that only the seller pays the realtor, so the buyer shouldn't care.
Do realtors expect us to be so naive as to think that we as buyers are not paying a higher price for a house because it is represented by a realtor? I think that many realtors get a bad name because they are the list-and-forget type. They work sellers into listing a house with them, put it up on MLS, and just sit back and wait for the commission to happen. Maybe they'll have an open house... but we all know that less than 1% of houses are sold through having an open house. An open house is really just a chance for the realtor to advertise their services and reach new potential clients.
Some real-life examples from my recent past might serve to illuminate. I recently sold my own home "by owner" to a buyer who was working without an agent. We negotiated a fair price between us. I was better off because I didn't have to pay $10K in commission to a realtor. The buyer was better off because he didn't pay an inflated price for the house. When he sells the house in 3 years or in 8 years, he will have a better profit because he was able to buy the house at a lower price than he would have paid with a realtor. It was my first FSBO and the buyer's first FSBO purchase. There were a few hangups, but the deal ultimately went through on schedule.
Along with selling our house, we were moving to a new area and buying a house. Prior to this relocation, I did contact a local realtor who helped us get our bearings in the local market. He did his job and forwarded immense amounts of listings my way. I screened all of the listings for the ones we thought were best. He drove us around to 50-60 houses in the area, though most were what I have come to refer to as "dogs of the MLS". We finally found a perfect house that was being offered FSBO. The owners were willing to pay an agent in order to get their house sold. If I was less scrupulous, I might have gone back to the owner's without my agent to make an offer. I know that this happens in cases where the seller is not willing to work with an agent. I felt that my agent had be working hard with me, and deserved to be compensated for his efforts, so I chose to work with him to close this house. I realized that doing so was going to cost me.
Let's get down to numbers. In this case, the house was being offered at $129K. I, not my realtor, did a market analysis, looked up what the seller paid for the house when they purchased, looked at local appreciation rates, searched for comparables, etc. I came up with the minimum number that the seller should be willing to take away from the sale. Without the realtor's 3%, I figured they needed to get out $121K to see the average market value with appreciation that they should expect. I won't bore you with all of the details of the negotiation, but we settled on a price of $125K. After realtor's commission, the sellers got out with $121,125. I hit pretty close to my mark. I know that without the realtor's commission hanging over the seller, I could have negotiated to $123K at least. I figure that the seller paid the realtor at the closing, but I paid in for that as well.
If I had the whole purchasing thing to do over again, I would definitely do it differently. Take a week to visit the area and canvas FSBO houses myself. I think that I could do as well or better by myself than I did with a realtor. I don't regret my decision to buy the house that I did. I just think that I would do it differently if I had another shot at it.
Sorry for the very long post. I think that I stayed fairly well on topic and I hope that some here will find my input useful.