By the hour

From HousingWire:

Realtors don’t deserve 3% commission?

Should Realtors and other real estate agents be just paid hourly, or should we stick with the 3% commission?

Some posts on other forums suggest paying Realtors by the hour.

Really? Really.

Look, 3% seems like a lot of money given that median home prices are north of $230,000. Showing a few properties, sitting through the signing – does that really deserve that kind of commission?

And with online listings services growing so much, most of the work is done by the house hunter long before they hire that blazer-clad thousand dollar smile.

I get that dry cleaning for those gold blazers and all that hair spray and those scarves cost a lot, but come on.

So what? $25 an hour plus gas seems fair, right?

I mean, nurses make $25 an hour and they have to deal with sick people.

So why so greedy, Realtors?

OK, ask a lot of buyers if that 3% commission seems fair and if they’d pay their Realtor by the hour, and that’s typical of the response you’d get.

But the fact is, I can say something that real estate agents can’t say aloud: Buyers can be stupid.

They don’t see the hours of market research that goes into every transaction. They don’t see the hours whittling down lists of potential properties to a manageable number so that clients don’t have to spend every hour of their weekend looking at properties.

They don’t see the time spent marketing properties that are for sale.

They don’t see how many buyers and sellers end up changing Realtors for no good reason, or who end up not buying or selling at all.

That’s not a little thing – if an agent spends 30 hours on a client who ends up not buying, they have to make up that lost income, so it’s built into that commission for sales that do get closed.

But consider the world of hurt opened up if Realtors and agents started charging by the hour. They’d have a great incentive to drag their heels, to be scattershot in looking at properties, and to drag out closings.

Ever wonder why attorneys just love how protracted legal proceedings are?

There’s no law that says agents have to be compensated with 3% commission. It’s up to them and their brokerage. There are a few companies out there like Redfin and Surefield breaking the mold.

And no one says you have to use a Realtor or real estate agent. But as with most any other high-information professional transaction, you’d be a fool not to have representation on your side of the table.

That 3% is a painless payment. It buys you market information, advice and experience that you can’t get shopping listings in your pajamas on Zillow or Realtor.com.

You may be a self-taught expert in your mind, but in reality even experienced lawyers hire other lawyers to represent them in court.

This entry was posted in Economics, General, Humor, Unrest. Bookmark the permalink.

44 Responses to By the hour

  1. grim says:

    Oh, by the way, we got zoning approval on Wednesday. It took 3 expert witnesses, an attorney, an architect and planner, but we got it. First pass through.

  2. phoenix says:

    Why would someone wanting to buy a house need to close before the end of the year?

  3. Fast Eddie says:

    Should Realtors and other real estate agents be just paid hourly, or should we stick with the 3% commission?

    To paraphrase Don Corleone, “It makes no difference to me how a man (woman) makes his (her) living, as long as his (her) interests don’t interfere with mine.”

    The bottom line is house agents aren’t really needed, especially today. In fact, most bridge sales roles are obsolete or are dying and will eventually join the buggy whip industry.

  4. Fast Eddie says:

    Actually, I’m being too kind given my experiences with a great number of house agents in the past. Of course, all we had to endure were a series of insults. I wasn’t about to fall for the madness like a sea of folks did during the last decade so shedding a tear as they wither on the vine would be asking for much. In retrospect, the actions of these house tour guides did interfere with my interests leaving nothing but over-priced sh1tboxes with a Pabst and Chesterfield aroma.

  5. Fast Eddie says:

    This one sold for 680K in 2004; 625K in 2011. How’s that for an investment? Take every transaction from 2004 through 2008 in North Jersey and that’s the number of people who’ve lost money. Most can’t absorb the hit so they’re trapped. Add to it taxes, maintenance, interest and a bevy of unexpected expenses and the landscape becomes overwhelming.

    http://www.njmls.com/listings/index.cfm?action=dsp.info&mlsnum=1443519&openhouse=true&dayssince=&countysearch=false

  6. Fast Eddie says:

    This one sold for 650K in 2010 and they were asking 739K, reduced to 719K. Why would they think they’d get more than 650K? It’s an open house during a holiday week; what does that tell you? But then again, they named their kid “Brady” so maybe the desperation is justified.

    http://www.njmls.com/listings/index.cfm?action=dsp.info&mlsnum=1441895&openhouse=true&dayssince=15&countysearch=false

  7. grim says:

    5 – So let’s say they paid an average of $10k taxes a year from 2004 to 2011, and add another $55k from the loss. That’s $135k between taxes and equity. That’s $1,406.25 a month (if we ignore the months on the transaction, just look at full year numbers).

    Ok, so now let’s add the mortgage interest, $168,000 based on their loan amount of $450k. That is another $1,750 a month, bringing the total nut to $3,156.

    I’ll tell you that it is not possible to rent that house for $3k a month. They would have paid more to rent it.

    Now, we need to factor in property tax and mortgage interest deductions. Let’s just do it simple and say they can deduct 25%. That means realistically the actual outlay was $600 less a month.

    What kind of place can you rent for $2,500 a month?

    Did they really do so bad?

  8. Fast Eddie says:

    Did they really do so bad?

    Yes, they lost money. They were told to buy now or be priced out forever. They would have been better off renting in the first place. Property tax and mortgage deductions? What about maintenance? From 2004 to 2011, what’s the cost to maintain a house? Roof? Paint? Windows? Hot water heater? HVAC? Filters? Washers? Fixtures? Stone? Pavers? Garage Door? Plugs? Hoses? Lawn Care? Water Bill? Sewer Bill? Or do we not include those irrelevant numbers?

  9. Grim says:

    Sure but you seem to minimize the equivalent rental cost, they would have easily paid more than $325,000 to rent that house for the same time period. That’s really money too.

  10. dentss says:

    3% commish ? my broker charges 5% …am I out of line to ask for a reduction ?

  11. The Great Pumpkin says:

    I thought you said the muppets haven’t done anything to their homes in ages. You state that they all need to be updated. So which one is it?

    Grim gave you a pretty good breakdown right there of how they saved compared to renting. If renting was better than owning in the long run, the data would show that a majority are renting. The data obviously shows that over 60% of the population believes it’s better to own than rent and I would tend to agree with them.

    Fast Eddie says:
    November 23, 2014 at 9:39 am
    Did they really do so bad?

    Yes, they lost money. They were told to buy now or be priced out forever. They would have been better off renting in the first place. Property tax and mortgage deductions? What about maintenance? From 2004 to 2011, what’s the cost to maintain a house? Roof? Paint? Windows? Hot water heater? HVAC? Filters? Washers? Fixtures? Stone? Pavers? Garage Door? Plugs? Hoses? Lawn Care? Water Bill? Sewer Bill? Or do we not include those irrelevant numbers?

  12. The Great Pumpkin says:

    12- I would add another reason for the low inventory. If someone doesn’t need the equity from a sale of a home for a down payment on another, they are much better off renting it than selling it. I bet that is playing a role in the low inventory. It doesn’t make sense to sell at a low or for a loss. Rent it out, make some money, and wait for a seller’s market to emerge.

  13. The Great Pumpkin says:

    As a landlord, I hope they tighten the lending standards even more. It gives me a raise when less people can buy homes.

  14. Scott says:

    3%? A she told me she’s giving me big favor with 5%, instead of usual 6%.
    Do they spend lot’s of time for marketing?
    Sure many of them spend lots of hours, not for marketing but for manipulating.
    Will they delay the closing if pay per hour?
    Many of them, many of attorneys, already delay to show off their proud positions
    just to see their clients squirming with troubles expenses, even with 6%.

  15. I don’t get the 3% premise either. My guess is that we’re talking about one side of a 6% commission?

  16. heh-heh. I had one of those blazers, but I sprung for the wool one, so mine wasn’t as gold and shiny as the polyester jackets. Century 21 Jaeger Agency on Hamburg Turnpike. I wonder what became of that place? The women in my office used to plan the Wednesday caravan based on the listing realtor’s reputation for food, snacks, and realistic price…in that order, I think.

    I get that dry cleaning for those gold blazers and all that hair spray and those scarves cost a lot, but come on.

  17. chicagofinance says:

    The End Is Nigh (clot TSA Edition):
    BOSTON — A naked man fell through the ceiling of a women’s bathroom at Logan Airport on Saturday, then ran out of the restroom and viciously assaulted an elderly man while he was still in the buff and bleeding, before being arrested, state police said.
    Cameron Shenk, 26, of Boston, was charged with attempted murder, mayhem, assault and battery on a person over 60, assault and battery on a police officer, lewd and lascivious conduct and malicious destruction to property.
    The bizarre behavior began shortly before noon when a woman using a restroom located before the security checkpoint in Terminal C reported that a naked man had fallen through the ceiling and landed in the stall area, state police spokesman David Procopio said. The man had apparently sneaked into the bathroom, undressed inside one of the stalls and climbed into the crawl space above the restroom before crashing through the ceiling, Procopio said.
    The man, later identified as Shenk, then fled the bathroom and assaulted an 84-year-old man he encountered, biting the man’s ear and attempting to choke him with his own cane, Procopio said.
    The reason for the attack was unknown. Shenk scuffled with responding troopers who arrested him, leaving one trooper with a minor hand injury, Procopio said. The 84-year-old man was taken to a hospital to have his injured ear treated.
    Shenk was taken to Massachusetts General Hospital under police guard for treatment of the injuries he suffered when he fell through the ceiling. Police said he would be booked upon release and arraigned in East Boston District Court.
    It was not known Saturday night if Shenk had retained an attorney. A telephone number for him could not be located.

  18. chicagofinance says:

    Marion Barry < Vigoda

    Fish set me up……

  19. The Great Pumpkin says:

    I think these two statements apply to the current economic problems. Statement about the customer being the job creator is dead on. The customer is the creator of all business, not the business owner. That’s why you can take away any business owner and they can easily be replaced as long as there is a customer creating demand. Without the customer, there is no business. Customer is king, not the owner. So why is the business owners taking away all the profit from the customers? Need to create some jobs so that we can create customers. Can’t just sit back on your money and not take risks.

    “If you don’t get it you must not live in the real world. Do you realize how few people it takes to build that yacht? The rich buying all those yachts are not equal to all those middle class people buying cans of soup.”

    “The rich provide relatively few with the means to support our families. Actually, no one, it’s customers who provide that means, and those are overwhelmingly the middle class. Small business is the driver of community economics, and few people in small business qualify as rich. “

  20. The Great Pumpkin says:

    21-* so why are

  21. 1987 condo says:

    My SIL just bought a house that has $33,000 property tax. House has an 1100 square foot carriage house on the property…. Ridgewood…..Current house only has $16,000 tax, Ridgewood as well.

  22. crorkz says:

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  23. Comrade Nom Deplume, Guardian of the Realm says:

    Clot, you want to abuse Fabian or should I?

  24. [23]’87C – That’s what I thought the taxes were on my MIL’s previous house in Glen Rock, but I just checked and now it’s up to $35K. They sold it in 1992 when the taxes were only $16K. Crazy.

    My SIL just bought a house that has $33,000 property tax. House has an 1100 square foot carriage house on the property…. Ridgewood…..Current house only has $16,000 tax, Ridgewood as well.

  25. Liquor Luge says:

    plume (25)-

    Just basking in the warmth. Amazingly, whatever you want to say about our Magpies, Pardew will change things up when it’s not going well and keep working it until a lineup or a formation catches fire. That’s smart soccer.

    Wanker, OTOH, trots out the same ideas and shape that he was using with the Invincibles. However, instead of Vieira, Henry and Adams, he has two Spanish midgets, a central midfielder who chain smokes and four zombies for a back line.

  26. Happy Renter says:

    Went to my first MLS game today – took my 7 year-old boy to see saw the New York v. New England playoff game at Red Bull Stadium.

    NYRB lost the game 1-2 but it was a good experience – stadium is not too big, crowd was decent (lots of kids in attendance, lower ratio of drunken louts than most professional sporting events), traffic wasn’t bad at all getting there (getting out of Harrison probably would have been frustrating if we were trying to leave right away, but we were sticking around for jiu-jitsu classes afterward anyway, so we were in no rush to leave).

    Newark really made a mistake putting in a baseball field; Harrison made the right call getting the NYRB to build their stadium there.

  27. Liquor Luge says:

    renty, you might have seen Thierry Henry’s last home game ever.

  28. Liquor Luge says:

    Only goddam Gooner (along with Vieira) I ever liked.

  29. Liquor Luge says:

    renty, you have to teach your kid that foul-mouthed, drunken louts are a + at soccer matches.

  30. Liquor Luge says:

    “Where were you when you were shit?”

    Best anti-Chelsea chant ever.

  31. Liquor Luge says:

    woops, moderated for filthy football chant

  32. Happy Renter says:

    Clot – the foul-mouthed chants I don’t mind so much, even in second grade I’m sure he hears much the same with his buddies at school or in the neighborhood. But I could do without the drunken man-children breaking out into monkey dances and fist-fights, spilling beer and distracting everyone from watching the actual game.

    It was hard to be certain, but I think every time the New England keeper punted the ball, the NYRB fans all chanted in unison “You suck @ssh0le!”

  33. Liquor Luge says:

    renty, they even yell that at college soccer games

  34. Liquor Luge says:

    Soccer is a filthy, vile game played by nasty, unbalanced and needy people. It’s also the greatest game ever.

  35. Happy Renter says:

    “Soccer is a filthy, vile game played by nasty, unbalanced and needy people. It’s also the greatest game ever.”

    Relatively late in life, I have come to agree with the latter of your statements!

    As to the “filthy, vile game played by nasty, unbalanced and needy people,” I guess it’s relative — we’ve got plenty of that in the NFL, NBA, etc.

    Anyway my kid has taken a liking to it so it looks likely I will have quite a few games to enjoy in my future.

  36. Liquor Luge says:

    Never sit behind the goals or make friends with the ultras. You’ll be fine.

  37. Comrade Nom Deplume, at Peace With The Trolls says:

    [35] renter,

    ““You suck @ssh0le!”

    Isn’t that the state motto?

  38. Comrade Nom Deplume, at Peace With The Trolls says:

    [40] redux

    ” Being miserable and treating other people like dirt is every New Yorker’s god-given right.”

    Mayor Lenny Clotch

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