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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Don Green who wrote (14523)	10/26/2003 6:16:55 AM
From: Tradelite	Read Replies (1) \| Respond to of 306849

Don, I'm tired of pixxing matches over commissions so I'm not trying to be argumentative, but misconceptions about the real estate business are so pervasive that it's hard not to reply to certain comments. First of all, do you actually think many Realtors overstate the value of a seller's home to get the listing? Those folks are soon out of business. Having listings is expensive, and if they don't sell, the effort/time/money is a total loss--not to mention a real dent in the agent's local reputation for being able to get things done. Agents get business by being successful, not by being ineffective. Second, do you actually think any Realtor can accurately pointpoint the eventual selling price of a property when listing it for sale? I don't care how skilled a person is, there is no way to predict the behavior or mindset of buyers who make offers on the property and the behavior or mindset of sellers when they receive an offer. The seller has far more to do with getting his property priced correctly and sold in a timely manner than any agent does. The best I always hoped for was to set a list price that would attract agents and buyers to the property....my job was to get their feet in the door....what happened after that was pretty much up to the parties in the negotiations, and it was then my job to help them along toward an agreement, hopefully at the highest price possible for the seller. (And yet you'd be surprised if you knew how many sellers cave in and sell lower than their agent thinks they should, just to get it over with. That's their decision to make, however.) Third, alternative methods of setting agent compensation have been kicked around, discussed to death, analyzed to death, and no conclusions have ever been reached about how to improve it for the benefit of anyone. I can tell you why your idea about determining commission based on how close the selling price is to the list price won't fly. I've seen some naive, newbie, math-challenged agents without a brain and a feverish desire to attract their first clients actually advertise that they will reduce their commission if the house stays on the market longer than XXX days. Talk about rewarding the seller for dragging his feet and turning down good offers!! Those agents don't last long. Likewise, I'm not about to let my compensation be reduced by a several percentage points just because the seller decides to accept an offer way below his asking price . A SILLY CONCEPT, BECAUSE MY PAY WILL BE REDUCED ANYWAY BY THE LOWER SELLING PRICE!! My commission rate (which by the way was established by my brokerage firm, not me) is, was, and will always be based on a set percentage of the selling price, period. That's one of the fairest methods which have been used and provides written assurance that the seller knows exactly how much each offer is going to cost him if he accepts it. Last but not least, many people seem to think that agent commissions create nothing but disposable income for the agent. Each agent is an entrepreneurial business unto himself/herself, and as with any business, gross receipts do not equal net profit. Much money has to be plowed back into the business just to keep it going, and there isn't any benevolent employer granting fringe benefits such as health insurance or a retirement program, either. If you are among those who believe agents are overpaid, don't hire them. As soon as real estate agents are no longer needed, their jobs will get shipped off to India. Meanwhile, they and the companies they work for have survived many changes in the marketplace and look like they'll be around here in the U.S. for a while.