I'm a Realtor, but I'm not here to turn this into a pissing match - if you believe that representation doesn't benefit you, then don't use a Realtor. In the same way, if you believe you can represent yourself successfully in court don't use a lawyer or if you can adequately assess your financial future, don't use a financial advisor. Expertise exists for a reason - because I can tell you a lot about water rights, land use, zoning, negotiations, market and pricing, and I can connect you with other professionals to meet your needs. Many people find those professional services to be worth their time and money.
All that said - yes, I think we will see changes to the cost (commissions et al) of real estate services. But when I hear people talk about "normal" real estate transactions or comments like "you don't need an agent for residential" I know this person is either very new to real estate or very experienced. The newbie doesn't know what they don't know, and the experienced person likely has sufficient knowledge that they will only bring in an agent to supplement that knowledge. The majority of people do not transact enough real estate such that they may think they know more than they do.
As an outside observer my impression is that the sell-side realtor provides a lot of value (especially if he/she has a small construction crew on standby) but the buy-side realtor contributes less. Also, the incentives are misaligned for the buy-side realtor - they get paid more the higher price you pay.
The main reason RE agents play a significant role is the artificial stronghold around the MLS. It's not their Nobel prize winning brains providing irreplaceable services.
Similarly, how are real estate agents a guard on investing?
I'm not convinced they are bad, mind you. Curious on your angle, though.
Perhaps fractional ownership was used in limited circumstances before, but some tech co thought they can make it mainstream and didn't stop to think if they should. Cue unforeseen consequences.
Perhaps this statement should be restricted to just say the costs of investing in real estate would be reduced. Small difference I know, but I think it’s an important distinction.
It's especially important in this case because of the implications: One of the parties who "invest" in real estate is construction companies, who hold the real estate while they're building it. Lowering their costs makes them more profitable, so you get more construction -- which lowers housing costs by removing the realtor's vig and by the increase in the housing supply.
That’s not good. Not like this, at least. Maybe this was more appealing to people in the past because it wasn’t so overtly bad for communities and society.
I'd be happy about it too, but am overwhelmed by guilt when talking to my intern, our newly hired engineer, my younger siblings, and many of my friends who rent at ever-increasing rates.
That $230,000 was taken from the pockets of my non-homeowning friends. I don't understand how so many seem to be cheering the rising prices, oblivious to what it's doing to our society.
Nope! First of all, it's come from no one's pockets until you sell. Until then it's just a hypothetical, theoretical gain on paper.
Second of all, when you do sell it, the money will come from the pockets of your willing buyer :-)
Edit: if you still want to feel bad about something, let it be this: that the rise in your home's value represents wealth that has been created "by the community" in the sense that it's only because of many variables of the surrounding community that the land has become more desirable and therefore more expensive; and your ability to capture all of that increase via your untaxed monopoly on the ground rent creates a deadweight loss for the broader economy.
But that's why we created the universal land value tax and used it to replace all other taxes! (Hello from the year 2078!)
You bought a house and you live in it. Feeling guilt over something that isn't your fault makes no sense. If it makes you feel _better_ to try to help solve the problem, that's great; but that's totally different than guilt.
Just like it's not right to feel bad that you can't keep up with the Joneses, its not right to feel guilty that the Smiths can't keep up with you.
If the food in your fridge or the clothes in your closet were suddenly drastically more expensive and you could make a profit selling them, would that be a good sign for your society and community? Would you view it as a sign of prosperity that your well stocked pantry was now a source of funds you can tap by selling to starving people?
Housing is a basic human need and it’s all but unaffordable. Even if you personally profit surely you can see that this is corrosive to society as a whole.
1. Through the years you own your home, you will pay roughly 1% of the notional value of the property in state and local property taxes EACH YEAR. You already know this.
2. When you sell your house, agents will eat 5% and the state you are in will take another ~3%. Other closing costs, the expense and the hassle to spruce up the house for sale. Round it off to a 10% haircut of the selling price.
3. If you're single the first $250K of capital gains on your primary residence is exempt from federal income tax. Beyond that the IRS will take its cut. Include the Net Investment Income Tax (NIIT) and you're looking at 24% tax on any capital gains, assuming you will be in a high tax bracket when you sell. And depending upon the state you live in, there will be capital gains taxes paid to the state.
Now look around you at the prices of groceries and meals. I have seen these costs roughly double in the last 8 years.
So it's not just that your house has appreciated in value -- it's more that the value of the dollar has gone down. And the plumbers and electricians and construction workers needed to build a new house have also gotten more expensive. By buying real estate you have managed to preserve your buying power somewhat so it's not eaten up by inflation.
You're not as rich as you think, but at least you're better off than the intern and your younger siblings. (edit: formatting)
Would that alleviate your guilt?
Even if it really did increase 10%, you'd be giving up a lot of that difference in all of the various costs involved with selling a house and moving, even if you could cut agent costs to $0.
I have some friends who became real estate agents and thought they'd use their position to flip houses while being their own agents to save on costs. They're learning the hard way that even when you're not paying agent fees, buying, selling, and holding homes is expensive.
How good an investment is it after you remove the realtor fees, closing fees, HOA, taxes, repair and compare it to a steady 7% on average on the SP500?
At a minimum your house MUST go up 10% over a couple years to get even.
Not disagreeing, but zillow and redfin both track their estimate accuracy: https://www.redfin.com/redfin-estimate https://www.zillow.com/z/zestimate/
Mine is the only one of 36 with a view of trees rather than road or other homes, so I perceive that as higher value too. That wouldn’t be evident until I sell it of course, but I find recent prices for these homes kind of insane. This change occurred before anyone even set foot in them; I’m just packing to move this week.
you're not doing labour. You're injecting capital into the system. The person who sold the house to you, presumably, is using the proceeds of their sale (and profit) to do something else productive.
I don't get why so many people consider taking asset risk as "doing nothing".
A competition where we all try to outbid each other on land does nothing for the economy.
Just lock up housing so that a single individual can’t own more than 3 homes.
Get married you get six houses you can own.
If that’s not enough maybe you need to reassess whether it makes sense to dump money into a house or put it to some actual better use.
Like creating jobs or new products.
There are multiple factors that pushed the prices artificially up since 2020. They will look retrospectively obvious (as the 2008 subprime crisis seem obvious now). I'm usually not in favor of timing the market but I believe we are currently in the single worst time to buy a house in history.
Rates are, barring a crash(which will also hammer home prices) likely staying elevated for another year, possibly more. Those rates also allow me to make thousands per month, risk-free, in interest off my savings. I'm able to rent for $3-4k/month, while mortgage+taxes+insurance+maintenance would set me back around $5k/month. Housing inventory is poor, so if I did buy I'd have to opt for a suboptimal location and/or construction.
The one circumstance I could see that would possibly make me regret holding off is financial repression by the fed where rates are held below inflation and houses keep appreciating, but I don't see a big risk to that over the next year.
I do expect rates to hold, and maybe even rise, since we're running huge deficits(requiring massive treasury issuance) and going into an election year (where no politician will choose austerity). I think it will eventually drop housing prices. Even in the best case for housing, values will likely stay flat in nominal terms.
I know it’s a huge difference. As a parent I’d almost be willing to pay even more, though. I can’t rely on someone not selling my home from underneath me and then needing to find something else when vacancies are well below 1%.
I’ll probably feel some pain from this purchase eventually, but I’m prepared. I can also keep in mind that the alternative downsides of renting were serious and constantly present, with no real upside. Rates are extremely high here.
Effectively, rising house prices harm me too, not just first time buyers
House prices increasing are only a benefit to people treating it as an investment, and if it's your primary home, then that means planning for trading down.
Hypothetically (I expect the inverse to happen), if my value increases at this rate until my kids are moved out, I can sell this place for $1.5M. That would get me a LOT of house in one of those towns. But why? Who does that benefit? And does it push locals out of those towns, over time?
I don’t want to maintain some kind of housing homeostasis where values remain the same and no one moves. But the time scale here is ridiculous and it’s dramatically changing my region in bad ways, and I don’t see any net positives outside of very few people’s bank accounts.
Yet like I said, I do expect it to go the other way. I expected to lose 10% by now, not gain it. There should be a correction at some point, or things are going to be radically different where I live very soon. People are really at their limits.
I would REALLY hate to do this electronically.
We might replace people with something like ticketmaster or the "get a flight/hotel/car" mess.
I don’t plan to sell or leave to another place. I’m just disconcerted by buying a home and having the value increase before I ever set foot in it. That’s not normal, and it signals bad things are coming (to me).
It's only worth 10% more when you sell it for 10% more. Right now home closings (the finalized deals) are 50% lower than before the pandemic and lower than in 2007. So selling your house to get that 10% increase is going to be hard.
But even if you did sell it, then it isn't quite worth celebrating yet, because it is likely that your 10% increase estimate is because the entire market is selling 10% higher.
So the problem with this is that if you sell your house and take your handsome 10% profit, you still can't pop the champaign because as it turns out... having a home is one of those sort of necessary things of survival. So if you want to go out and buy another home that is roughly similar to the one you previously had, then it will cost you 10% more than the last time you bought a house, which just so happens to be roughly the same price that you just sold for, so you end up not really making anything.
But wait, there's more. Because you sold you need to pay closing fees, which includes generally 6% (see article) in agent fees, plus various closing costs which generally come out to around 10-15% of the home price. So you gained 10% in the sale price of your home, but you lose 10% or more when you close the deal, which wipes out your "profits".
Oh, but you only bought a house "recently" which means you probably lost 10-20% in closing fees when you bought it. So your investment is actually more like 110% - 120% of the value of the home. So again, gaining 10% value just brings you up to even. But add the seller closing fees (mentioned above) and it pulls you back down, to losing money.
Oh, and now with the cash in hand you buy the next house which is 10% more than before and interest rates are probably several percentages points higher than before as well. So not only is the house 10% more, plus you lost 10% in your last deal, but now your payment will be higher even on the same loan amount thanks to higher interest rates.
People underestimate interest rates all the time too. Let's say you had a $400k loan before at 4.5% interest. Well the 30yr fixed payment on that is around $2,500 /mo. Now lets say you do all the shenanigans above and end up with another $400k loan again in 2023, but it is 6.5% interest. It is only a 2 point increase in interest, not a big deal right? Wrong. The same loan amount but on 6.5% interest is $3,000 /mo. So you are now paying $500 a month more for the same loan and home value as just 18 months ago and you would pay 20% more over the lifetime of the loan.
Just to instill the shock and awe effectively, I will use the same real numbers as above. Let's say you had a $400k loan at 4.5% interest before (the early 2022 rate). You would have paid $851,626.85 over the lifetime of your loan on that.
Now the same loan ($400k) but at the late 2023 rate of 6.5%, because you wanted to sell your house for that 10% profit, remember? Now the same loan amount will cost you $1,036,344.62 over the lifetime of the loan. The house just got $150k more expensive even though the sticker price on Zillow looks like it has been flat since 2022.
So... still excited about your 10% home value?
I’m not excited at all, and I expect the home to be a financial burden for a very long time. I’m more so upset that so many of my friends and family are brutally priced out of having stable housing and it’s only getting worse.
Ideally I’d live here for 20 or 30 years, but we’ll see. Above all I want to be close to my kids, and it doesn’t seem like they’ll afford to live here.
For the rest totally agree, disrupt the middle man in real estate is OK++.
Most people who've only lived in one region don't realize that the other half of the country does real estate transactions completely differently.
I think if you're buying a house for the first time, trying to wing it is probably not the best idea.
I think you might be mixing up hedge funds and market makers (commonly knows as high frequency traders)?
In any case, I agree that hedge funds are more of a compensation scheme. My opinion of them is relatively low, but that's from the point of that investing in them is a bad idea. I don't think on net they have any bad effects on the rest of the market.
As an outsider we don't want any side to win. If RedFin wins they could become the new NAR.
"Disrupt" doesn't always mean, for the benefit of consumers.
There's a LOT of people buying up multiple properties and then renting them out.
Often these days they're renting them out on the short-term holiday market like AirBNB and Stayz. Ultimately these rentals are often a net-negative on the neighbourhood community they're in. In small amounts that's fine, but in large concentrations it's an unsustainable burden, and the majority of the benefit goes to those not living in that neighbourhood.
Those that don't do short-term rentals are often putting the least amount of effort/investment into the property. Minimal maintenance, often deferring or only doing the minimum required upgrades in terms of energy/water efficiency makes them unpleasant to live in.
That's aside from the often onerous and arbitrary requirements forced on tenants.
Examples include being forced/"strongly encouraged" into payment methods that add costs to your rent. Being required to hand over all sorts of PII to a huge range of platforms. Then there's third party rent management platforms/companies like RealPage that coordinate rent increases to maximise revenue; not because of any underlying cost increase, but because they can force market prices up.
E.g., even in North Korea there are black markets where prices go to the equilibrium value.
Demand creates supply, but not necessarily at the price point you want.
The best housing policies work with the market, and use regulation to keep NIMBYs in check, update zoning as necessary and allow builders to build enough m2 to satisfy demand.
Making it a neutral investment by adjusting real estate taxes based on changing value of the land.
The real problem is a lack of supply which is mostly political (although some areas have geographical constraints that make it harder to build... but that's largely solvable by building vertically)
Sadly, this has been the cornerstone of american culture for the last seventy years. AirBNB & the chase of "passive income" are only exacerbating this.
Now if you want to say that you should buy a house betting on significant capital gains over inflation, that's foolish.
Realtor here - if you believe that, don't use Redfin or Zillow or their competitors, because they are yet another middleman adding friction. I'm not going to go into a monologue here, but both are leeches on the system that add more cost. Yes, it's wonderful that they have made more info available to the public - for that they are to be commended. But if you understand how they actually make money they are adding more friction and contentiousness and I do not believe they are actually saving your, the consumer, money.
>I don’t even think houses should be investments
It's a sensitive and emotional topic certainly, but I would encourage you that if you feel that way, try to imagine what set of laws or social changes would need to happen in order for that to not be the case - like what would that world look like? Because each time I try to do that thought exercise with people, I continue to come back to a belief that the alternatives are not superior to the system we have. Real estate is an asset. Cars, bennie babies, stocks, bonds, gold - there are lots of types of assets in the world, but real estate with its permanence and immovability is a very, very special type of asset. Thus, it is very difficult to separate the asset from its investment potential.
when has silicon valley ever actually disrupted anything, rather than creating a new, well-funded middleman?
Market makers don't charge fees. (I mean, maybe they charge their LPs, but that's a different matter)
This isn't really an argument against doing it. People also need to eat (more than they need a house, in fact). Farmers still should be able to get paid for helping to meet that need. People need to drink water. If you sell them water, there's nothing wrong with that. Just because something is a basic human need doesn't somehow mean that it's wrong to profit from filling it.
> I'd prefer real estate investors drive for their properties to generate regular income, though, rather than the common practice of buying property with the main goal of selling it later at a decent profit.
I'd prefer no real-estate investors other than home owners, honestly. They don't seem to add value to the world.
They take 6% out of most housing transactions and add very little value. They managed to put themselves in the critical path by lobbying and regulatory capture. You don't get access to the listings and MLS open houses unless you go with a realtor. They also made the process artificially complex.
Most other countries seem to rely on direct customer to customer for most transactions, with a notary making sure the contracts are binding. Why can we not do that in the US?
I feel like these institutions exist to pressure unsure people into making unsure decisions by trying to get them to gloss over details that might not matter.
I don't feel too guilty about taking up her time for 3-4 hours a week for 2 1/2 months.
Even if we assume she did the same amount again, if not double, lets say 10 hours/week for those 10 weeks, her 'hourly rate' (which I figure similar to a contractor, as there are of course other expenses) still comes to $300/hr, which is approaching associate/partner levels at a "reasonable" law firm (not white shoe or corporate).
As a buyer I got an excellent rate from their recommended lender, I got a solid lawyer rec, and I got experienced guidance throughout the whole process. Was it expensive? Yes, but was it worth it? In my case, very much so.
What counts as "guidance" anyway? A realtor can't be relied upon for structural issues, you'll need an inspection. They can't tell you anything about the market that you couldn't dig up yourself in 5 minutes searching Redfin. HOAs, contract language, and other legal matters will need a lawyer. You're basically gonna have to find a dedicated professional for anything that matters.
The limited benefits I can think of are:
- you're buying in a tight market, and they can find some off-market listings through their network
- a reputable buyer's agent might make your offer seem more legit
Trust me, I hate the idea of middlemen, and I do hope the system can get more efficient.
6% of that is 90,000. Buyer and seller agent each take 45,000. That’s about a Tesla for each of them.
Good realtors make a fortune without creating any productive value in economy. The house stays the same, just a big tax on exchange. Add that to lending fees, title fees, escrow fees and you’re easily looking at ~8% of transaction gone poof.
No you didn’t, they suckered you on a good rate and screwed you with stealth fees on closing costs.
With a few hours of hunting I saved $50k, beating their rate and cash to close. “Preferred lenders” are almost always a scam, but as always DYOR
Realtors are everywhere.
In the Netherlands selling a house is mostly exclusive to realtors, and there are good non-realtor alternatives available at a fixed fee for more than a decade. But the consumer wants a realtor. Note that in NL the realtor agreement is exclusive, meaning you cannot use multiple realtors, contrary to many other countries. The result is a much lower realtor fee or appr. 1.5%.
That said, is this actually going to change how Redfin operates? They used to rebate part of the agent fee in certain markets, but at least in my market, they no longer do. Now they're the same price as everyone else while providing a slightly worse service.
Let me be clear. Redfin is only breaking ties now because the NAR is fatally wounded. Redfin now thinks they can scoop up a lot of market share in the chaos that is going to happen in the next year. They’re not doing this for altruistic reasons.
[1] https://www.housingwire.com/articles/re-max-settles-buyer-br...
This sounds like they're making a case for cartel behavior.
With the general unaffordability of housing, realtors are a good target right now. Not that they have anything to do with interest rates or have more than minimal impact on asking price, most people aren't going to think that far.
That said, if Redfin can open up access better (and still securely!), this could work out in the long term too.
In 2005 NAR got their friends in the TX legislature to pass a law limiting what discount brokers could do - regulatory capture at its finest, and most blatant: https://www.npr.org/templates/story/story.php?storyId=496379.... IIRC the feds actually sued to overturn this law on antitrust grounds. I think they were successful but using Google to search for non-current events can be extremely painful so I gave up.
As some rando, I can't pay for access to the local MLS (or any MLS anywhere else).
I could take some classes and get a Realtor™-brand (don't forget to pronounce it real-tore or they get huffy) License and get access that way, but what the hell?
We ended up going to a local real estate attorney in town, and paid less than $1000 in fees for the whole transaction - didn't even use an escrow company, I handed the seller a personal check in the attorney's office. (biggest check I've ever written, had to write the numbers small to fit in the small box on my check!)
Perhaps Redfin should drop a line to Lina Kahn at the FTC.
Buyers are free to find & view FSBO homes on their own, they can easily be found on Zillow and any other listing site. MLS even accepts FSBO listings for a flat $300 or so fee, no agent required
I did this years ago, and it all went well. There's a substantial opportunity for Redfin here if they can connect buyers and sellers directly and charge a reasonable fee for all the boilerplate involved. At the time there wasn't an infrastructure to find homes with this selling arrangement so it was literally a "for sale by owner" sign in the yard.
I'm curious about the specific wording here:
> NAR membership is required for agents to access listing databases, lockboxes, and industry-standard contracts
Is it possible even in places with this regulatory capture for them to facilitate direct sales? Is it only NAR "databases" "lockboxes" and "contracts" that are unavailable to them, and if Redfin brings their own for both buyers and sellers they're in the clear?
I think real estate agents do add some value, after all there are things about properties that you won't know just by looking at online listings and having somebody familiar with an area out there doing some legwork for you is indeed a real job, but it's certainly not commensurate with the 3% of the entire transaction they're extracting.
FTFY
Wow, they’re really pulling out the big guns. I applaud their efforts to decouple MLS access from NAR, that seems to be the biggest hurdle in advancing the industry.
Technologically it's a market that's ripe for disruption, but socially as well: there just isn't enough boom left in the market to fund 1.5MM people working in it full time.
Possibly I’m a cynic but I suspect Redfin’s endgame here is not to reduce transaction costs but to capture those for themselves instead. Perhaps part of my cynicism is looking at transaction expenses in jurisdictions without realtors - usually there’s some middleman who tends to capture a single-digit percentage of transaction value (either a notary or the government or both or others). Funny how that pattern seems to repeat itself.
Houses have a huge transaction cost, unlike say trading cost. Yeah the value goes up and down due to supply and demand but the transaction fees are zero at many internet exchanges now.
That said, I don't think consolidating the fees in a tech company is necessarily a win for the greater society.
I briefly had my license and the entire industry is like a giant pyramid scheme with fees on top of fees on top of fees.
I’m half tempted to reopen my license just to get involved with Redfin because I have no real estate relationships to lose.
All that said - Redfin can also go pound sand. They exploit information asymmetry where the public doesn't understand real estate services and think Redfin et al are somehow standing up to big bad exploitative realtors. Look man - the new boss is the same as the old boss and Redfin et al are not doing you any good. Find a good agent you trust in your local market, or go your own way if you think you can do better.
Still demanded 10% of the yearly rent though :)
I get these aren’t the same brokers, but brokers delenda est
If they pull this off they will crack open innovation and some long overdue lower cost options into the real estate markets.
Read the Redfin post. The rules the REALTOR association imposes to get access to MLS data is monopolistic.
There is no monopoly because there is no single 'MLS'
Of course, this probably comes at a cost to realtors who get their margins squeezed even more.
We sold and bought our house in 2021. We bought for $1 million and sold for almost $3 million over 8 years. When it came time to selling the house, my realtor was able to extract an extra $100k from the buyers as well as make it an all-cash offer with no contingencies.
When we bought our new house later that year, the house we were looking at was on the market for about a month. We were going to give an offer at list price, but she could tell the selling agent was a bit desperate, so she was able to get it $100k below list price, something that is unheard of in the SF Bay Area.
Overall she netted us $200k over both transactions, and she was singlehandedly the reason for this. That's what you get when you have a really good agent.
Now you may have been able to do this with a discount broker or not, nobody will know. But they didn't net you $200k.
Particularly, on the sale, we kept hearing "wait, you'll get more offers. wait, you'll get more offers. AirBnB investors are going to love this". No other offers turned up.
Smart, observant, motivated people generally improve outcomes regardless of what they are involved in. There are amazingly good thieves, con artists and pimps, but is that something we want people pursuing professionally?
The process _could_ be streamlined and made less of a hassle, but since so many take a cut, there are perverse incentives.
I skew progressive/liberal on many policy issues, but on this one, I'm fiercely in favor of the libertarian argumentation. Realtors have an eff-ing insane monopoly / cartel. Sorry, it makes me crazy.
If you go back in time and/or to some markets, 3% of a $100,000 house = $6,000. That makes a bit more sense in terms of hourly compensation.
But I agree with your overall sentiment that the real estate market is a cartel.
As a buyer and seller of multiple homes, I've not had success with RedFin and I've had varied success with realtors.
That said, a good realtor is absolutely worth 6%. A bad realtor (of which there are plenty) is actually worse than DIY / RedFin.
I say this because I want everyone with the position that "Realtors are never 6% value" to consider that they may have simply not worked with a good realtor yet.
First home so had no idea how this was supposed to work, but seemed other real estate agents didn't treat Redfin as a "real" realtor in any case.
On one end is a traditional realtor arrangement, with the 5% commission divided between the two agents. On the other end is for sale by owner, with potentially no commissions. Adjacent to that is a flat fee listing service, which costs about 2.5% in buyer's agent commission. If you sell through Redfin, your total commission is reduced to 4% from the industry standard 5%, with 1.5% going to your agent. If you buy through Redfin within twelve months of selling through them, you get an additional 0.5% off the commission for a grand total of 3.5%.
Not bad. It can save you $10k or more at jumbo mortgage house prices. Redfin has already done well by doing good and offering a differentiated product in the middle of two other offerings.
I have sold two properties, one using a flat fee listing service and one using Redfin. The former was a fair amount of work, while the latter was way less, comparable to a traditional realtor in the level of service offered. I would recommend Redfin to anyone.
Redfin offers a 1.5% listing fee, and lowers that to 1% if you buy and sell. However you'll still be expected to pay the typical local buyer's agent commission.
https://www.statista.com/statistics/257344/top-lobbying-spen...
It's a grift.
In at least most places you can submit the paperwork to your county/state recorder & transfer money between each other completely outside of "the system" for a few dollars. And/or hire your own title agent to facilitate and hold the money.
There's also nothing that says you have to pay each agent exactly 3%. Commissions are negotiable on both sides like anything else. Especially in this sort of situation where they're no shopping/showing and you're paying them just to perform the transaction.
2-2.5% each is routine in some markets and price points. I built our last couple houses on empty lots, found the lot on my own, and my agent was happy to shuffle some paper for a couple hours for 1% (several thousand dollars) and give me the other 2% at closing.
…and for the people who end up looking at dozens of houses before deciding, negotiating, losing an offer, rinse repeating, 3%/$hours_spent_on_you could be a pretty low hourly rate for them.
We had negotiated ours down to 1.5%, which I thought was fair, but that was continent on the sellers realtor also accepting a 1.5% fee. The sellers realtor would not accept 1.5%, nor would the sellers reduce the price by 1.5%.
Since someone was going to get that 1.5%, I insisted the commissions be matched to be fair to our agent, and the sellers agreed to pay from their proceeds – after a somewhat heated back and forth.
It was dumb.
Why did you have to do that? is it your state/city law? because I know that's not a general requirement. You can always sell/buy directly.
And that's before I bring up how everyone, from the titling company, to the attorney, to the inspector, also insisted we "needed" a realtor, with multiple potential vendors refusing to talk to me without one.
It felt, at the time, like a racket, with everyone in on the grift.
Unless there are cities or counties with weird laws I’m not familiar with, you can always direct sell/buy. Due to where my place is, I get almost a monthly or bimonthly letter from a couple of well known developers in the area that usually highlight “no banks, no realtors” an they are looking to pay cash and handle all paper work themselves.
It seems that the grift in your case was every body’s else’s convenience but yours, and that convenience costed 6%
----
We bought our current house without an agent. Happens that the seller was an agent, but we worked with them directly.
That escalated quickly.
It is incredibly user hostile.
In general the best markets are have low transaction fees, efficient, trustworthy, maintain minimum quality bar, and many balanced players on both ends.
In this scenario NAR has created an inefficient market.
Same with most states having a very hefty permitting processes that takes more than half a year for new construction.
Not saying we abolish permits, but Americas solution to housing crisis is making the permitting process faster and transparent.
We can’t call ourselves capitalists when the markets are rigged.
Gotta let the builders build, the sellers sell and the buyers buy.
do they have processes in place to not just become another NAR?
