advertisement
Looking for something on the site? Search for it here! Also see Clark's Greatest Hits

Jun 05, 2008 -- Consumers win the battle of Real Estate commissions

Finally, some great news for consumers in the housing market! For ten years, the real estate industry has done its best to keep the power of the internet away from its potential customers. The National Association of Realtors (NAR) and its affiliates have been engaging in anti-competitive practices, conspiring to fix commission prices on real estate sales. Well, they've finally backed down. This is going to make a big difference in how you will buy and sell property in the future.

Before the internet, the only way to know which homes were for sale was to find an agent with a Multiple Listing book, a monthly publication that listed all the available properties in a particular market. It was like a closely guarded secret. But the internet broke open that secret. Non-traditional players jumped into the game and began offering discounted services, or menus of services, letting the consumer pick only those which were necessary. The NAR did all it could to shut down these non-traditional companies. But very soon, real estate commissions will be allowed to float with the free market, and you as a consumer will be empowered. Sellers will be able to pick and choose the specific services they need to sell a property, and buyers will have online access to all available listings - regardless of commission rate. This is a long overdue victory.

That said, experienced agents will still be in demand. Houses with unusual or unique features will still require special marketing techniques. Some buyers will still need talented agents to help them navigate through the purchase process, or to fully understand their specific market. But not everyone needs this level of expertise. The free market now offers you a choice, and for Clark, this is cause for celebration!


Unfortunately, Clark won't be able to answer any questions submitted via commenting. If you have a question, please try posting it to our message boards.

Avg. rating: N/A

Add your comment

Security Image * Please enter the code shown at left
what's this?

What others are saying

  • Commissions
    I'm a Realtor and I agree with Clark about commissions. That is, Clark's central point: The free market should determine all fees and there's a place in the market for limited service brokers.
    The problem is, too many people here -- real estate agents and consumers -- are missing the central point. Just remember, limited service is just that. Most of us get paid roughly the same but we don't all offer the same level or quality of service. Realtors who are not committed to the highest level of professional service need to find the door marked Exit. And that goes for doctors, lawyers, painters, customer service reps and so on. If you have a bad experience with a doctor, find a better one. The problem isn't the profession, it's the professional.
    I do wish Clark devote a piece to recognizing Realtors for helping carry out his mission of saving more, spending less and avoid getting ripped off.
    What say you, Clark?
    (BTW, I'm a big Clark fan.)
  • realtors are all crooks
    I think all realtors are crooks! check out my short video

    http://www.youtube.com/watch?v=fdCVHbeH6rM
  • RE Commissions
    ->>>"The seller pays the commission, not the buyer.."

    -- Sorry Gail, that's an untrue statement ...
  • Real Estate Commission
    Let's just put things into perspective.
    For those of you who think we agents make too much money, think about this.

    In my area, an average sale price is about $135,000. Avg days on the market are about 150. Typically, my brokerage fee is about 3% of the purchase price. After splitting the fee with my brokerage (that's right, we don't get to keep the full amount!), plus any marketing expenses and my time (yes, my time is as valuable as yours), it breaks down to an earning of about $94 per week for this listing. Even if I had a closing per week, that is still only $376 per month. Plus, I have to pay taxes out of this. It doesn't even take into account what my friend Gary below mentions about e&o insurance, office fees, gas, etc... Can any of you support a family on that? Anyone? Yes, I make waaayyy toooo much money!
  • Real Estate Commissions
    Wow! You are being misleading!
    Do you expect every seller to be as savvy as you are, Clark? How can you expect a seller to decide which service they can do without? How can they know what they are giving up? Seems like not much of a victory to me if sellers are giving up representation. As we all know, you get what you pay for...
  • Real Estate Commissions
    Why is it that people don't mind paying an attorney 33% commission to represent them, but hesitate when it comes to paying 7% to a professional who pays e&o, advertising costs, office expenses, gas & insurance, professional fees, etc. & receives between 3.5% if cooperated with another REALTOR or 7% gross before taxes. It is a great deal for the consumer, if they have hired an experienced agent because they owe nothing unless their agent gets them their price- so what's the problem?
  • Real estate commissions
    As a Realtor and business professional for over 35 years it never ceases to amaze me how consumer ignorance leads to consumer ripoffs. Anyone who hires a professional should always know what they are getting before they hire them. There is a place for discount Brokerage firms, however the consumer thinks they are hiring a"full service brokerage company & agent" when they are not. I personally attest to many, many homesellers who hired a discount broker thinking they were saving money when in fact they either undersold their home, got little or no activity, or no communication from the company.
    The internet is only a source for information, nonregulated, but most importantly, it doesn't provide intelligence - that is something you get from professional representation.
  • Real Estate Commissions
    For years I have been totally disgusted at the commission that agents get. They do hardly any work for the amount of money earned. They always want you to lower the price of your house, but they are never willing to lower their commission. If I ever sell a house again, I will do it by myself. I hope that there are some good ones out there...the ones I have met are terrible.
    My last realtor walked into my house a Sunday afternoon around 6:30 PM after I had left the house (never called to say she was coming) and when the alarm went off, she called me upset because I had set the alarm.

    Thank you Clark, for me NEVER AGAIN with an agent!!
  • MLS and commissions....
    I agree, lets celebrate...

    I think the new issue, is agents telling potential buyers (or sellers) their rates need to be higher than 2 years ago because it now takes "more time and effort" to sell a house ...

    This coming from agents that haven't had a closing in 2 or 3 or 4 months.?

    My brother has been a realtor for 14 years .. while every greedy agent is looking to get 6 or 7%, he's had 22 closings in 4 months using flate fee's or lower rates of 3.5 or 4%.

    -- paying more doesn't mean you get more in todays market.

    Thank you Howard!
  • Helpful Website for Homeowners/buyers in Georgia
    I'd like to recommend this website for those of you readers in Georgia:

    http://www.qpublic.net/ga/

    Many of the counties, including mine, offer up their tax assessment records on this site. So, for example to link to my county, I would use:

    http://www.qpublic.net/ga/houston

    It varies from county to county, but some counties include the purchase price, purchase date, and general reason of the sale of each house with a mapping system. This is a GREAT tool for buyers, as it provides you insight into how homes have sold in the area in the last six months to year. Admittedly, the counties can be slow in updating info, but every bit of info helps.
  • RE Commissions
    Clark,
    Great story. But remember, Agents work for a Broker. Although agents would sometimes love to lower their part of the commission, the broker makes the decisions for the agency. That said, the commissions have been negotiable for a long time between the 2 agencies - the selling agency and hopefully a different agency for the person who is buying the house.
    If you're looking to buy a house, find a buyer agent. The seller pays the commission, not the buyer, and the buyer needs to have someone represent him/her. Just like in a divorce, never think that everybody is served if you are represented by the same person or company.
  • Commission
    As someone who has used 2 realtors over the course of a year, I believe that the commission is to much. If they can't sell a house there only idea is to lower the price. I could lower the price if I didn't have to pay a realtor. What I would like, is that a realtor stands for what they say. They all talk a good game. I say put your money were your mouth is. If you sell my house by a certain date, they you get the full commission. If you don't we lower the commission. If you have to drop the price lower than what you originally told someone, you drop your commission. That is just my 2 cents. Thanks
  • RE Commission
    The bottom line is there are still sharp agents w/ years of experience in the RE business that are worth the commission. I am in this line of work (i am sure you figured that out) and I am very good at what I do. Think about this.. If I can't negotiate for my own money, how in the world will I be able to negotiate for someone else's? I really enjoy your show Howard. Lot's of knowledge that is hard to find in most books or classes these days. Thanks for all the info!
  • realtor commissions
    clark, your avg. realtor makes very little, there are too many of us, and believe me i work very hard for my clients and get thier houses sold. Id love to work for 4.5 to 5 %, but I would need at least 20 listings to live after the splits. That is why we charge about 6%,,If folks didnt buy at such high levels couple of years ago, the 6% wouldnt mean anything, it is just no one wants to pay for there mistakes, me included
  • real estate commissions
    Everyone forgets that the 6%/5% or whatever percent is not what it takes to sell that particular property...it is in fact the cost of doing business based on how much work one does in a year. Clark is very quick to tell FSBO's to get 3 market analyses from Realtors because its "free"...no its not free... if we got paid for every bit of pro bono work we did we would not have to charge 6% to sell each property...so Clark in future tell your FSBO guys if they are so smart to sell their house by themselves then they should be doing their own research to come up with a marketing strategy.... And by the way for every Buyer that we show 10 properties to and then they decide not to buy or go and buy a FSBO, because they think they are going to get a great deal if they do so behind our back, or decide to buy a house directly from the Listing agent because they think they are sooo smart but don't realise that the listing agent works for the Seller...and I can go on and on and on...well all those people fall into "the cost of doing business"
    .... and by the way 80% of people who take the Real Estate Exam don't make it in the industry..now if it was sooo easy then wouldn't everyone be doing it ?
  • Real Estate Commissions
    Sometimes Clark gets is right, and sometimes he does not. He is misleading and wrong on this subject, at least for the Atlanta market.


    Why can I say this? I actually work in the Atlanta real estate market.


    Fact:
    All real estate fees for service are negotiable and have been since I have been in real estate. It's a free market. The agent can charge what they feel they are worth for the services they provide and the customer can either use that that agent or not. Nothing is making the consumer use one agent over the other. Clark, you know this. It's incorrect to imply that consumers havehad no choice. There is nothing new about this. In fact, over the recent years many agents have opened up their one man/woman office and operate solely on being cheap. Seller's can interview as many agents as they want to, they can interview 50 agents if they want and compare how much each agent charges for the services they provide. Consumers control their choices.

    Real estate fee for service have been floating. If a seller doesn't like what one agent charges for their service, then they can find another agent that is cheaper and offers fewer services. It's not a hard concept to understand.


    But I guess Clark is always trying to beef up his importance or knowledge, to drive a new audience to his site and radio show and increase his ratings. But it is terribly wrong and misleading to imply that the consumer has no choice. I have competed with fee vs service for 15+ years now.


    And NO ONE was stopping the "virtual" companies from marketing, advertising, buying Google ad-clicks to tell the whole world that they offer cheap rates for reduced service.


    And if a home buyer doesn't have any equity in their house because they got a 100% loan, and two years later can't afford their mortgage payments, it's NOT the agent's fault the buyer didn't put down money to have equity in their house. But the seller can put a sign in his yard, put an ad in the newspaper, put an ad on Craig's list, put home flyers on cars in the Kroger parking lot, call a reduced fee for service agent, or sell it himself. Bad mortgage loans are not the agent's fault. But even then, the seller doesn't have to use any agent, he can simply sell it himself or let it go to foreclosure. The seller still has choices.

    Buyers and sellers have choices. They don't even have to buy a house. But it is totally their decision how they want to go about it.
  • real estate comissions
    I think Real Estate comissions have a big impact on the housing market. I have heard over and over how someone couldn't afford to sell their home because of the real estate comission fee. I was a realtor when I was 20 years old for a few years. It is not a real difficult course nor does it take a rocket scientist to do this work. I think the pay for realtors is too much. I hope that the problems we are experiencing now will change the fees that realtors charge. It is already happening, but not fast enough. I sold a home in NC, and asked for a reduced fee. I got it because the market is so slow, but the realtor earned over $1000.00 per month while my home was listed. I can assure you she made more money than my physician does considering the amount of time she spent on my listing.
  • Real Estate Commissions
    Clark,
    For years I have listened to your show and marveled at your knowledge on most subjects. Well, when you drop the ball you really drop it. Not only is your information incorrect, but you are on the anti-consumer side.Real Estate Commissions have never been fixed.In fact Realtors by penalty of losing their licenses cannot even discuss commission with other Realtors. Discount Brokers jumped on the bandwagon when the market was good and with lies of ommission on many occassions left the homeowner with unsold homes, prepaid commissions, and, oh yes, those mean old Realtors doing both sides of the transaction and getting paid only for one. They have been guilty of misleading the public and because of the presentation of their menu's have left the consumer having only a portion of marketing they thought they were recieving. I have been a Realtor for 25 years. Your information is incorrect. You have believed a lie.You need to research further. I can furnish you with these statistics and site examples for you.
  • when do new real estate commission rules take effect?
    when do new real estate commission rules go into effect?
  • Georgia's MLS
    "www.georgiamls.com" is open to the public as well.
  • Example of MLS transparency
    "www.oahure.com" is a great example of providing information to customers for the Oahu, HI market.

    They deserve to be commended for their efforts.
send to a friend  view as printer-friendly  RSS feeds
advertisement
advertisement
THIS WEEK'S POLL
advertisement