"6% - Realtors’ sacrosanct commission rate of 6 percent may be in jeopardy due to emerging online competition from Internet real estate sellers and buyers. Lesley Stahl reports. Richard Bonin is the producer."

Good timing HA! I don't care what percentage homes are listed for, in my neighborhood they just are not selling like they used to and online competition is not going to make any difference.
I think giving sellers some hope and solutions vs. the "sacrosanct" 6% commission barrier would be more helpful reporting in today’s economy.

May 8, 2007—The long-awaited 60 Minutes segment on real estate will air on CBS this Sunday at 7 PM Eastern and Pacific Times. After dealing with the 60 Minutes investigative reporters for more than a year, here is what we expect.

The segment by Leslie Stahl will focus on the impact of the internet on the brokerage business and focus on the emergence of “Internet” business models and contrast them with “traditional” full-service model. The show will include a lengthy interview with Glenn Kelman, CEO of Redfin, the Seattle-based company that claims to be “the industry's first online brokerage for residential real estate.” The piece will include interviews with sales agents for full-service brokerages in the Seattle area. It may also include some footage from the NAR annual meeting in New Orleans, where a 60 Minutes crew was on site for three days.

The segment may mention NAR’s anti-trust lawsuit over our Internet listing display policy but it will not delve into the topic in any depth. NAR staff spent many hours educating the CBS producers about the issue and they decided not to get into the issue. Nor will the segment likely discuss at length minimum service rules or other issues raised by critics like the Consumer Federation of America like the make-up of real estate commissions.

Once they delved into the charges and counter charges surrounding competition in real estate, the producers found that the whole topic was much more complex and not nearly as clear cut as it appeared. The entire segment was almost killed this spring. However, CBS apparently decided that it had so much invested in the story that it went ahead with a highly abridged version.

Bottom line is that we don’t expect that the segment will make Realtors happy but it could have been much, much worse. Be glad that it’s Mother’s Day and the show will probably draw fewer than its average 14 million viewers.

How to Respond to 60 Minutes

Here are some talking points should you get calls from members or local media:

· (for members) NAR and many brokerages worked for the past 12 months with 60 Minutes producers to educate them about the industry and to correct misconceptions created by the Justice Department and our critics. The fact is that the segment represents a very small part of the issues 60 Minutes explored and the segment that aired could have been much worse.

· [name of your board/association] supports all business models and favors none. Our membership includes at least Realtors who work on a full service basis as well as those who consider themselves to be limited service, fee-for-service, minimum service, and discounters.

· Real estate is a highly competitive business. About one in every 86 adults is a Realtor. During this market slowdown, it has become even more competitive.

· The real estate industry has harnessed technology to for the benefit of consumers, and will continue to do so. Real estate is both high tech and high touch.

· There is no such thing as a “standard commission.” Commissions are negotiable and prices vary. The fact is that commission rates have decreased 16% from 1991 to 2004 (source: Real Trends).

Do You Believe in Coincidences? DOJ Issues Two Year Old “Report”

The week before the 60 Minutes segment is scheduled—and NAR’s Midyear Meeting—the Department of Justice issued a “report” based entirely on a “workshop” loaded with industry critics held in October, 2005.

Much has happened in the world in the past 18 months. For at little perspective: in October, 2005, President Bush nominated Ben Bernanke to succeed Alan Greenspan as chairman of the Fed; the Chicago White Sox beat the Houston Astros to sweep the World Series; and home sales were near record highs in all regions.

DoJ’s report was almost ignored by the media, generating a modest AP story and an article in Inman. Go here for a copy of the DoJ news release: http://www.usdoj.gov/opa/pr/2007/May/07_at_335.html and go here for a copy of the “report”: http://www.usdoj.gov/atr/public/reports/223094.pdf.

Below is NAR’s response.

WASHINGTON (May 8, 2007) – Pat V. Combs, 2007 president of the National Association of RealtorsÒ released the following statement on a government report:

“The real estate industry is dynamic, entrepreneurial and fiercely competitive. Nearly 1.3 million Realtors in more than 200,000 active office locations and branches provide consumers everywhere an extraordinary selection of qualified professionals offering a variety of business models to meet their real estate needs.

“For the past 25 years, the association has conducted membership education and training programs to ensure compliance with anti-trust law. The report released today is based on a government workshop on competition in the real estate industry that was held nearly two years ago.

“The Internet is making real estate even more competitive and more transparent to consumers. Many sources of information are readily available online, but most home buyers and sellers who use a real estate agent depend on that agent to provide information about the buying and selling process and to interpret information about their market. Consequently, most home buyers start the process by searching online for home listings as well as information about mortgages and related real estate services, but nearly 80 percent still look to a real estate agent to find and finalize the transaction. Reputation, experience and professionalism are still noted as the most important qualities to home buyers and sellers when hiring an agent.”

For Further Information on this issue of Operation Tip-Off

Contact Steve Cook, VP of Public Affairs and Strategic Planning, at scook@realtors.org 202 383-1014.

Operation TIP-OFF is a service to Realtor® leaders from NAR Public Affairs. It is a cooperative exchange of intelligence and information on news media coverage of issues critical to Realtors. Operation TIP-OFF will provide Realtor leaders advance information on potentially news-making events. Feel free to share this information and document with your RealtorÒ members.

IMO, 60 Minutes reports are mostly biased towards the left, and that Andy so and so at the end is a royal pain who is tired and needs to be retired. He is preventing someone else from making a living by having his mug on the TV week after weak.

My other peeve is NAR. I only belong because I AM FORCED TO. I really, really hate to pay dues to NAR and it looks like all of our dues went to pay for that fancy building they now own while they keep their heads in the sand regarding our faltering real estate market and sending out LIVING IN LA LA LAND stats. I consider my state's association enough to keep us informed and on tract.

I'm done....and I promise not to watch 60 Minutes this Sunday.

Actually, it looks like its going to be a Leslie Stahl report. Not that that makes it better, but it does sound like NAR worked with her & 60 mins to try to balance out the report

what are your thoughts. i am getting ready for dinner, i will post my htoughts in a bit.

oh and by the way, i bet i coudl list (not sell) every home i walk by if i rebate all of my commission.

Wow is all I have to say. This is bad not only for agents, but for buyers and sellers. The seller won't actually save that much money if you think about it. They still have to pay the 3K and still have to pay 3% for the buyer's agent. Their home will sit on the market for so long it won't be worth it, plus they don't get the staging or advice we provide. I'm also betting that their agents aren't available 24 hours a day like we are. Plus if its a 200K property they don't save ANYTHING. They will only save 3,000. But, what it boils down to is nothing after they pay for marketing, time, lack of negotiating, and extra time on market.

I also hated the fact that I know they edited a lot of what the Remax agent said. She should have addressed the above facts.

I saw it and was struck by the seemingly one sided nature of the story... Discount good, traditional bad.

I was also disappointed that the lady being questioned representing the traditional side was not more prepared for the interview. I wish she had expounded a bit more on the differences between buying a book online and a house (perhaps it was edited out).

All in all it wasn't that surprising. The classic battle between the poor little web designer trying to help humanity fight the evil traditional brokerage.

Awww man did i miss it?

What time did it start here in pst? Southern Cali

What is this 60 Minutes you speak of?

I saw it. I thought it was very negative and destructive for agents. It certainly was very biased but I think most consumers aren't going to think about that. What they *will* remember is the couple who saved $24K in commission costs by allegedly doing everything an agent would have done.

ABC ran a similar piece last year on Good Morning America. Also, very biased. And, again, the agent they interviewed for the other side of this story was not a very good spokesperson either.

But, who knows what was left on the cutting room floor?

This whole topic is kind of like beating a dead horse. MOST homeowners are not WILLING to do the hard work necessary to make selling their home easy. Thats why we have jobs. "Traditional" agents aren't going to go away. Yes, some FSBOs sell on their own, and discounters DO sell houses, but for those of us willing to bust our butts to sell ourselves and our services will do just fine.

Here's something to remember... MOST homeowners will list with the first agent they talk to (most won't even interview a second agent).....put yourself in front of homeowners, and you'll have business.

Here's the 60 minute link.

http://www.cbsnews.com/stories/2007/05/11/60minutes/main2790865.shtml

I've been preachign this for ten years to my agents. People can do a lot of things in life themselves but they don't. The online companies attract fsbos. These fsbos now have access to a lot of the tools we use. Good for them. I'm glad they're using a realtor for at least some of the service.

The fsbo marketing is a dying breed. The online companies are growing. See the trend?

Just saw it. I have encounter buyers at open house using redfin, in my market.

i dont feel threatened by the discounters, and i am mad at the fact that the number of dollars that the buyers saved was brought up without bringing up the fact that statistically they could have made more money with an agent than with a discounter or on their own.

let me tell you how to get all listings you come across

list for whatever price the seller wants, no matter how unrealistic.

cut your commission to a level that no one can compete with you, even if it means it is not worth your time.

let the seller do all of the negotiations for all offers coming in since they know more about htat than an agent who does deals constantly.



we still have accountants, even though we can do our taxes on our own. i would not stop using my accountant. i guess we are in the same boat.

some use turbotax(discounter), some use a cpa(full service)

though that is a weak analogy since the turbotax could be considered a fsbo, it is hte closest i could come up with at 11 p.m.

i am curious what hte discounters on the forum have to say about the show. please respond.

forgot to add that htey were asking why still charge the six percent to sell houses, when home prices go up. if you go by that then we should only be making 6% of what the house sold for 20 years ago!!!!!!!!!!!!!!!!!!!!



well hey it is all relevant! i shoudl be paid more as teh cost of things goes up right? 6% is still 6% no matter what.

i could have worded that better, but i am tired. goodnight

Well these online companies like refin are not discounters as you put it. They are closer to being a fsbo than anything else. Getting mad and psssed over online companies is like getting psssed at fsbos. You're going to take years off of your life because fsbos will be fsbos. They're not going away anytime soon.

Discount companies charge less but don't give any service. Online companies give a lot of the services we give and lower their fees.

We should be learning from them instead of getting psssed. The only thing that ticks me off is seeing agents give away free time and free service. The industry is to be blamed for allowing so many agents to beat each other by giving away free time and skills.

We need to put a cap on this because sometimes even a little bit of information can make or break a sale.

Here's the real root of the issue. Each agent is a BUSINESS and we compete as businesses with each other. Unfortunately MOST agents have no idea how to run a business or set their rates. They cut their throats by cutting their prices and makes it a little more of a challenge to come in at a full fee.

That being said, most agents that gripe about discounters A) don't bother to prospect, B) don't know how to prospect, and C)wait for business to come to them (and are broke because of it), and D)spend all their time complaining about discounters than going and making a living.

Case in point. I started in a new market in January, I have nearly 1.5M in listed inventory, and will close 4 sides between May 24th and June 13 plus the deals I did earlier this year. I'm BRAND NEW to the area and work for a company who's name is unheard of in my county. And yes, we have discounters. And no, I'm not hurting for business. I prospect daily and I earn my business AND I don't even think about what discounters are doing. I have my "product" and it costs X dollars and I go out and sell it! I wish more agents would think this way because it solves SOOOO many problems.

Turbo tax is not a fsbo at all. A fsbo is the guy that walks into the local library, picks up his tax forms, read up on how to fill them out, follow the tables, and mails in his tax. That's a fsbo.

Turbotax is the redfin of taxes. YOU CAN BET MILLIONS OF PEOPLE WILL USE THEM RIGHT OR WRONG, GOOD OR BAD.

A fsbo has to come up with everything himself, but a refin customer simply has to follow their step by step. See the difference?

Fivestang, good for you. I'm glad to see a realtor being positive about his business without all the badmouthing of a competitive model.



It's saddening but you've just described about 90% of the agents in the business. If that's the case then Redfin is right about the industry needing a complete makeover.

So, Redfin has refunded $3 million in commissions...SO WHAT??? Given that they refund 2/3 of the commission That means they've taken in roughly $4.5 million in commissions. At 3% that's about $150 million in actual sales. Yet they have agents that are "able to do" 8 sales a week??? I am "able to do" far more sales than I get and the same appears to hold true for Redfin. If the average sale is for $250k nationwide, that translates into 600 total sales. Since the "average" agent at Redfin is capable of completing 8 sales a week or 416 sales a year - that means they either have two agents nationwide not working up to capacity or many, many more agents then there is work for. These are far from compelling numbers. That is assuming that this money was earned over a 12 month period - chances are it was longer.

Siberian, you are thinking like a 9-5 employee but you want to succeed like a business person. Every business has to start somewhere often at a loss. Etrade, turbotax, priceline, yahoo, aol, these enterprises all lost money or made no money at some point in their history.

Most employee thinking people can see only the "now" reality. These forward thinking companies see what might be tomorrow.

Every one of them went into business knowing, planing to lose money in the beginning. Just as you and newbie agents are willing to risk 1000-10,000 to start a real estate business these big companies are willing to risk 10-50 million for a share of the pie.

Did you make money right out of real estate school? Do you make money now? Enough money? How long did it take you to go from where you were out of re school to now?

That's no different from Refin/ziprealty losing 50 million for a chance at 500,000 million.

so what would be the rebuttle against the "buyer gets 2/3 refund" deal. This agent on the interview was dumbstruck. What is the proper "script" here for a seller or buyer about this. The seller side is easier since they get less service. And well, I guess the buyer is kinda screwed though, if they dont get to go view the property. Who wants to buy a house off of the internet alone....with no showing???? Is this what they do??

we still have accountants, even though we can do our taxes on our own. i would not stop using my accountant. i guess we are in the same boat.

the above line was my way of saying that i am not scared that i will be out of work because of discounters.

i was trying ot make the example that we have turbotax and you can do your own taxes, but still people(like myself) use a cpa. i know that some people will use a discounter, and some people will want full service.

i just dont understand why the interview was so one sided. that agent was not prepared, or the show was edited to show what we saw.

I'm not an agent yet but I'm studying to be one. I can say from the "man on the street" perspective that the general public doesn't like giving up 6%. They just don't. We can't get mad, it is there money to spend as they like. In many cases it takes years of paying on a mortgage just to get enough equity to afford to sell to break even. Who wants to pay for years on a place then walk away with very little profit. This really ticks off Joe Consumer. Not all places see the skyrocket appreciation that other markets have seen. I see change blowing in the wind, I just hope I can figure out the next business model and adapt (instead of complaining) so that I can make it. All business's have to adapt or die. RE is in the beginnings of this cycle I believe. The internet generation will be gaining purchasing power soon and will demand new ways of doing things. They will have access to information other generations never had. We will have to provide a SERVICE worth paying for. I can say that of the 3 house I've bought that I've never gotten service worth 1% much less 6%. Most of my friends feel the same way.

Don't shoot me, I'm just the messenger.

I wish the "man in the street" type people understood that our commissions are built into the price of their homes and it isn't "their" money.

HUH? Home equity doesn't belong to the homeowner? With agents thinking like this the entire industry doomed. I cannot believe what I'm reading. The more you people open your mouth the more the critics are right.

"wish the "man in the street" type people understood that our commissions are built into the price of their homes and it isn't "their" money." -Artiste

Holy Cow.....that is the most profound and ignorant comment I have read on here in a while. It is agents like yourself who truly hurt this industry. If CBS and/or 60 Minutes calls you, please PASS on sharing that great expertise with any reporter.......:dumbfounded:

this is a customer service industry, as long as you provide value to your customer, they will realize what your worth is. the moment that you cannot provide that value you are not woth using, and htey might as well list wiht a discounter.

to keep your "job" make sure that you are worth the money that people are going pay you when the deal closes.

i am not in fear of losing my "job" to a discounter. over half of my listings were fsbo's that made the decision to use me instead of the discounter or continuing to stay fsbo. i can prove my worth to them, and they can get out of my listing agreement at anytime, they choose not to because i can show them worht.

at the end of hte day you are only worht something if you can sell the house.

Interesting how little people understand about the complexities of buying . . . research, disclosures, contingencies, deadlines, financing, keeping the deal together . . . none of this is really seen, so many buyers have no clue what goes on behind the scenes. I would love to talk to your agents, drm7, to see how it really was . . .

Also, no one mentions the commission splits with the broker - on 60 Minutes they said all agents get six percent for every deal - how ignorant and ill-informed is that - if a news entity thinks that, what does the "woman on the street" think?

Please explain this. I have always maintained that the fees are paid out of the "Sellers Proceeds". It is 100% their money and they made a decision to pay Realtor fees, etc. out of their money. My fees are NOT built into the price of there home.

FSBO's tell me they will sell their home quicker because they can do it for a lower price, and because they don't have to pay a commission. FSBO's also at times will advertise a different, higher price to a buyer, who is represented by an agent to cover the agents commission.
So, if an unrepresented buyer buys the home, he will have to bring a smaller check to closing than a buyer represented by an agent. So who pays the agent?

changeagent: I can tell you how it really was. One place stands out in particular. I bought a townhouse in the DC area. I even signed an EBA because I was under the belief that they would look out for my interests. I got an inspection and my agent didn't lift a finger to help me understand what was reasonable and customary for the seller to fix in that market. I changed jobs 7 months later and had to relocate cities. The EBA for the buyers nailed be for the substandard 23yr old HVAC. It was below spec on my inspection but I wasn't told that my seller should have fixed it. Same goes for faucet drips and a couple electrical issues. Fortunately my home warranty covered all the trades for about $300 worth of deductibles. The work totaled over $2000. I wouldn't recommend that agent ($8 million dollar agent) to sell toasters for the "service" he provided me. He almost cost me $2000. I have found that most salesman (all fields including auto, appliances, etc) don't know their product. They go from one sales job to the next and never know their product. They know how much each deal will net them though.

Again, I'm the messenger. I'm studying to be a Realtor/LO. I plan to stand out based on "service" and product knowledge. I'm also willing to adapt to whatever business model evolves in the next few years. A business can't take a firm stance, they have to evolve with the market or die. ALL businesses have to realize this. They will go kicking and screaming into the future. The future happens!

Am I the only one here that sees that what Artiste meant by thier post is that a buyer shouldn't assume they have a right to the buyers agent commission ?

I didn't see the 60 minutes show but wish I had...

drm7: theory and practice are two different things... I hope you can operate as you plan to.

The problem with this industry is that it is far too easy to get into. There are too many people that should'nt be in it, and once someone has a few sales under their belt they deem themselves an expert. It doesn't matter what agents think should happen in the revolving world of real estate... consumers dictate what will happen.

drm7: are you sure that in the particular market you were in it would have been savvy to ask for repairs? It would not serve a buyer to ask for repairs in a seller's market.

Here's the problem drm7. If you want to stand out for "service" your commission is going to have to be high because there are just so many deals that you can do and provide outstanding service. Look at it this way: if you are spending all of your time prospecting - and many agents spend 90% of their time looking for their next customer - how are you going to provide excellent service to the clients and customers that you already have? You are either going to be full-service or not. Until you build up a nice system of referals - which can take YEARS to build, you will be struggling with this problem. Anyone working on low commission must work on VOLUME. By neccessity , they are too busy stuffing the pipeline than to provide effective service. That's just the way it is.

The other problem is that consumers aren't very good at weeding out bad apples. People are all to eager to go with a "name". That's a problem. Teh "name" may have gotten there because they were very good at filling a pipeline and managed to close a ton of deals without providing good service. Unfortuntely people go with form over substance and get what they deserve.

The Redfin model is one of VOLUME. You can't do 8 deals a week -as they claim an agent can - and give any kind of quality. Even in my area where lawyers take over very early in the process, they are forcing the seller's agent to do most of the heavy lifting for them. Since the "negotiating agent" may not be local how on earth can they negotiate properly without seeing the property and knowing SOMETHING about the inventory. This isn't just low service, its NO service - or at least no service of any value. The buyer might as well be representing himself. Note the comment in the article, that the negotiation fell within the buyers "price range". No one said it was a good deal for the buyer.

From what I can see, the Redfin model appears to depend on two things going their way:

1. That standard commissions will stay at 6% (this isn't happening in my area at all)
2. That they can create very high volume.

The two conditions that they need would tend cancel each other out. If Redfin manages to get their volume up past a certain tipping point in a given area, sellers and listing agents will lower commissions for the seller's agent. This is simply because no seller is going to be willing to fork over a significant commission to the other side if 2/3 of it are going to line the pockets of the buyer.

This whole scheme forces the listing agent to carry 99% of the water for the selling side as far as work load - who is going to deal with coop board and management company? who is going to deal with the inspections? who is going to help with board applications? These are all little things that the selling side ususally deals with. Plus, who is going to deal with the 100+ fires between escrow and closing? These are time consuming details that are NOT going to be done by someone who is sitting behind a desk trying to do 8 deals a week! The result I see is pretty obvious. It is more than likely that if Redfin became a large force, listing agents would jack up their side of the split (to compensate them for the extra work and time) at the expense of the selling side (down to 1% or even less). OOPS....there go the profits....and the incentive to the buyer to try finding a house without an agent.

The trouble with a lot of these discount "schemes" is that they try to shake up the commission structure while at the same time counting on it to remain intact. They NEED the standard commissions to stay the way they are in order to be of value or to make any real profit. But as they continue to erode the standard commissions, full service might be as small as 0.5% of full commission. If someone can get full serivice for 0.5% to 1% more - they are more likely to take full service! In effect, discounters and rebaters create their own demise. Of course, bottom feeders like this aren't in it for the long haul. They see quick money and then they are out.

broker: I have to operate that way or I believe I will be washed out. I think the future of RE will drive out most marginal people. The more educated the consumer gets the better service they will demand. I'm in the computer technology field now and you have to constantly keep learning. It is an evolve or die field just like so many others. I want to keep learning.

changeagent: It was a good market for sellers at the time but well ahead of the huge sellers market we just had. I believe that, even in a sellers market, an individual would be a fool to not ask for the major mechanical items to work: hvac, plumbing, electrical, roof, etc. Paint, carpet, cosmetics, etc is up to the buyer but I don't believe any home should be marketed at FULL value with potentially $1000s of dollars in major defects. To me FMV implies that it is mechanically sound, not perfect, but not going to cost the buyer $$$. I personally will pass up a full market value home with major mechanical issues in the future, even in a sellers market. I'm not buying someone's lemon. Also, I don't know 100% if I would have been savvy or not. Again, my EBA didn't interpret or inform me of one thing. He collected his 3% and left w/o giving me a nickels worth of advice.

SW: I'm not bashing the 6% at all. I'm just stating what outsiders are thinking. I'm actually studying to become an agent and want to make as much $$$ as the next guy. It is just that my crowd is restless and ready for change. I believe some sort of business model change is coming. I'm not afraid of it, I want to adapt so I can afford to eat. My crowd buys houses at 50-100% above median home prices around here. We are all educated, white collar professionals. Many of us have had multiple homes and are well aware of the costs of selling and many are trying to figure out how to lower the transaction costs.

I am not trying to instigate anything. I just wanted to share an outsiders view of the industry. Again, I hope to be an agent by this fall. I think that even if commissions drop the number of agents will drop. If some agents aren't making it at 6% then they will have to drop out at anything less. This may reduce the agents while supply stays the same, therefore more sides per agent. I don't know what or how this will come about but I think it will. What will reduce the 90% of an agents time spent prospecting I don't know. Maybe the internet or some new "thing" that hasn't been brought to market yet. If an agent could spend more time on deals and less on prospecting they would be more efficient and could turn more homes. JMHO.

siberian winter is dead on.

Say if 10 selling neighbors pay 6% selling their 10 $100K tract homes, fsbo seller's $100K home (no commishs paid) is fairly valued at $94K. If fsbo can sell for 100K, then good for him but it was a sucker deal for the buyer. Now do you understand?

Why would the FSBO's only be worth 94K? If the 6 neighbors sold for 100K, meaning the market set 100K for the homes value, why is the FSBO's worth Less?

If you say they sold for 100K only to accomidate the Real Estate Commission...welcome to an inflated market. If they were really worth 100K then I see the seller of the FSBO simply making the same 6K that a realtor would have, ie, paying himself/herself the remaining equity in his/her home.

If you are inflating your price to accomidate the Real Estate Commission I think this conversation is done.

Because fsbo is wholesale and agency is retail.

Drm7,
What a load of bull!
You got an inspection and the Inspector should have been the one to go over the report and make his or her recommendations. Just because the HVAC system was old and not top of the line does not mean that you are going to get a seller to cough up the money to give you the buyer a new system. Obviously the system was working properly and was in good repair when you had your inspection or your Inspector would have recommended that it be replaced. Below specs??? So exactly what does that translate to? Did the sold system still work at the time you sold the property? Did it just suddenly die during the buyers inspection??

Something else you should learn is there is no customary when talking about repairs. You should also study on liability. It is you the buyer that based on the Inspection report decides what you want fixed, it is not your agents decision.

The people that are sympathizing with the FSBO are studying to be agents. As I'm reading its almost making me notious. FSBO ends up paying the commission anyway in most cases. They have no negotiation skills, or an understanding of the biz most of the time. The property will sit on the market longer, plus the dollars spent in useless advertising. There are a lot of FSBO deals gone bad that end up in court. I'm not saying that deals using agents don't... but its a lot more common for people selling on their own especially when it comes to earnest money. I think any buyer who buys a FSBO thinking they save money is a fool.

Our services are worth far more than the consumer realizes.

"I think any buyer who buys a FSBO thinking they save money is a fool."
NAR seems to think otherwise.
"Did you know?
. . . the typical FSBO home sold for $187,200 compared to $247,000 for agent-assisted home sales."

http://www.realtor.org/libweb.nsf/pages/fg006#topicc

Pikes,

What I mean is the amount of FSBO sales that end up in court. I guess I didn't phrase it properly. If you're going to buy a FSBO you should still have a buyer's agent.

those figures can't mean that's the difference between what a fsbo pays for a house vs someone who purchases through an agent... rather those are the average values of those that choose to go fsbo vs those that use an agent.... no?

If an agent listed property sells for more money vs. a FSBO property, wouldn't it stand to reason, if FSBO properties sell for less money, that a FSBO buyer is paying less vs. an agent listed property? (maybe a buyer represented by an agent is more intimidating to a FSBO, realizing a better price for the buyer?)
That's how I read NAR's analysis.
If NAR shows otherwise, please let me know.

drm7: In a seller's market (especially when inventory is low), you would be surprised what kind of deals go down - like no contingencies, what-so-ever - if a buyer asked for anything in such a market, the lising agent/seller would be saying "next" and there might be 5 other offers.

Also, just because your system was considered sub-standard down the road doesn't have much to do with how it was functioning when you bought it. You can't expect any aged system to perform as if it is brand new. That is not realistic. As the buyer it was your responsibility to research what you were buying, and if you did not want a place with an older system you could have, should have passed.

Blaming, as you did, the fact that you had to make repairs prior to your sale is just ridiculous, in my estimation. Did you read the report? You probably had to sign that you read and approved it so how can you complain now?

This mentality is typical of someone who doesn't really know the business and what is reasonable to expect or what YOUR responsibilities are. You will find that most agents work very hard make and quite an effort to educate their clients, but it is not the agent's responsibilty to save the client from themselves.

Paul: I'll grant you that maybe the inspector was bad. In the end no one consulted me on how to interpret the report. Remember, my sale was 7 months after my purchase. I went back and reread my report and the hvac unit was not putting out the temp differential it was supposed to according to my report when I bought and the report when I sold. Someone should have informed me of all this and what to ask for and what not too. It was my first home and I had no idea how to read and interpret the reports. Point is, no one helped me. The average consumer will blame the agent as I did. How do they earn their commission if they didn't do anything but write the contract? I got no consulting on any part of the deal. I never said it was the agents decision but that they should consult me and let me know what everything means and what actions I could take.

changeagent: Realtors are supposed to be the experts that is what the commission is for. Why blame me? I signed an EBA expecting that I would get the fiduciary responsibility I was prepared to pay for. I'm a very informed person but I can't know everything. That is why I hired an expert. My experience is very typical these days. All of my friends feel the same way. I have a BS and MS in Accounting and Information Systems, I'm not dumb. I hired a rep for my deal. I got zilch for representation. The guy didn't even know what I should ask for and he sold over $8 million per year. This was back in 1999 before the market doubled in the Fairfax, VA area. He wasn't

Again, blaming me when I hired an EBA is ridiculous. I did my due diligence, even got referrals on the agent. In the end blaming the consumer is exactly why the man on the street has low opinion of Realtors. There is a disconnect between what Realtors think average consumers know and what consumers think Realtors are for. In the end it is the job of the Realtor to educate the consumer.

Since this sale I've finished out over 2500 sq ft with my own hands. I do my own plumbing, wiring, HVAC, tile, wood floor, framing, trim, insulation, decks, etc. I am a much smarter consumer now but many are not.

We, and I say we because I plan to be one, must understand the average consumer's frustrations or we will not succeed. I want to make 6% so don't think I'm bashing it. My plans are to do my own brokerage down the road so 6% sounds good to me.

"Because fsbo is wholesale and agency is retail"

I certainly hope that was a tongue and cheek comment. If you are inflating your price to include your commission, may I request you post your License information as this kind of activity has lead to many inflated property values nationwide and needs to be stopped.

I received the below email from NAR urging REALTORs to send CBS your thoughts on the bit. Below the email, I will post the link for the CBS feedback that was mailed from NAR also.




Dear Fellow REALTOR®:
I am disappointed and dismayed at the biased story that 60 Minutes aired on Sunday evening. I want to let you know that we've been working to stay on top of this story.

One of the most difficult challenges we face is educating the news media about today's real estate industry. There's no better example than this 60 Minutes show. For more than a year, NAR worked with the producers who put the segment together and offered several spokespersons to be interviewed for the show, including myself. Yet, NAR's voice was strangely and noticeably absent from the segment though CBS gave time to two critics who disagree with our policies on the display of listings on the Internet.

At times, NAR and REALTORS® have often been the subject of less than accurate news coverage. Your association and its professional staff is making every effort to get the REALTOR® message out to the news media. The result is that only a fraction-less than five percent-of the vast news media we receive is negative.

We encourage all of you to contact CBS to voice your concerns -- maybe have some of your satisified customers do the same.

Thank you for your support.

Pat V. Combs
President


link

http://www.cbs.com/info/user_services/fb_global_form.shtml

I'm not trying to start anything here, only lending the opinions of my circle of friends. As I stated, I plan to become an agent. My in-laws have been agents for 2 years and a friend for 25 years opened his own brokerage a few years ago after being an agent for 12. I know much more about the industry now than I did on my first house. I have since built 2 homes and sold 1. I am in the process of getting my current home ready for sale and I plan to use a Realtor. I'm not anti-Realtor.

There are so many aspects that a Realtor handles in a sale, that I don't think you appreciate.

For my buyers I schedule inspections and advise them to read the report. Of course I read it too and point out any obvious problems. The buyer must sign every page "read and approved."If they don't read it and sign it anyway, is that the fault of the agent or the negligent buyer?

You said you think the buyer's agent only fills out the contract - what a misconception that is.

I understand your point that you and your friends all feel that agents are worthless and if that is the case, why would you want to be one and how will you hold your head up around your friends?

I can't wait till you do a deal with one of your friends and then you might sing another tune - I know you think you are a cut above and will be a super agent - I hate to break it to you, but in this glut of agents nationwide, the caliber of extremely educated and skilled agents might surprise you.

Anyway, you are entitled to your opinions, but I would like to hear your perspective in two years.

Wrong. If this were true, we would perform what we do without much questioning. Surgeons are supposed experts, but they dont explain every little detail to everyone. You need to be involved and use your due diligence.
As for our commission, this covers our time, the work we put in, our expenses, for putting out small fires, and for dealing with all the crap the average person doesn't want to deal with.
Some people hire stock brokers and financial advisors at a percentage cost to invest their money in investments. Consumers look at these people as experts. Some are better than others. And each investment has it's own risk. If an investment goes bad or doesnt perform that way some may think, you better believe that stock broker gets paid either way. Stock brokers get paid because they know more, have more resources, do all the research the average person doesnt want to do or doesnt have time to do.

We are in the service business. We get paid cause we provide service, not necessarily because we are experts. And we don't give legal advice. Right?

I got that email from NAR too. This is why I hate journalism. Things tend to be so one-sided. I think we should all review the footage and flood 60 minutes with letters.

Yes, I think every REALTOR and real estate agent in general should click that link and send thier feedback.

This is the last time I'm explaining it to you: I want you to go into a neighborhood of homes which are all selling for 100K. Now I want you give a fsbo seller 100K for his house and be happy you got a terrific price for your purchase, ok? That's what I want you to do and that's what you say is the right and legal thing to do. So do that in good health with my blessings.

But IMO, you got suckered paying for commission-fees which weren't being paid because there are no agents involved. You got soaked for 6%, at least. But hey, it's a 100K home and you paid 100K and that's the way it should be, right?

Many agents claim to be experts. First time homebuyer expert, neighborhood expert, new construction expert, condo expert etc., every agent is trying to claim a corner of the real estate market they feel comfortable in.
What does that mean to a buyer, who is looking for that expert to help him find a home? What does it mean to the agent in additional responsibility to make sure, that as "the expert" he is providing that little bit of extra service because of his superior knowledge?
I hope that "expert agents" don't just blow smoke, because when standing in front of the judge claiming they did not know that a major highway was being build on the vacant property behind the house, that the judge will not look very kindly on this self proclaimed "neighborhood expert" who had no idea.
The disclosure to every buyer, to seek expert professional help for inspections or legal issues and to perform their due diligence is paramount and probably should be initialed by them right next to that statement.
I believe that we get hired for our superior, expert knowledge, and that we need to educate our clients and customers of where our limitations lie and advise them which path to take, when we recognize our own limitations.

I agree.
When someone claims to be an expert, at the top of their so-called "area of expertise", if they fumble, there is a long way to fall. I guess some agents like to be put on these pedestals. I would rather be a well-rounded agent.

changeagent: I never said agents are worthless, you are hearing what you want to hear. Obviously I wouldn't want to be one if I believed this. I happen to love the RE field. I never said I was a cut above anyone either. Stop fabricating the debate! I shared my experience and what my circle of friends think from their dealings. We have all bought and sold multiple properties in the last 6-8 years. I plan to work hard, learn, and then apply that to my trade. I believe that the job of the Realtor is to educate the buyers/sellers in every phase of the transaction. Explain the forms, reports, etc. It is up to the client to make decisions but they need information. Obviously this conversation isn't helping anyone to understand what the perceptions are on the street so thanks anyway for the conversation.

I am currently on the schedule for a good agent to perform a CMA for my current home as I intend to sell it shortly and I intend to list with a Realtor. So relax, I'm telling you what I see are some of the barriers to improving OUR public relations. Stop attacking me for the information as I'll have to deal with all these same issues.

I actually watched that program and I agree that they didn't show the viewers both sides of the story. I remember this one deal where I had the buyers and showed them a home listed in the MLS. I didn't know I was going to end up having to do both sides of the deal. My clients wrote the offer and I had to go over it with the seller because she was in a limited service listing where I the buyers agent had to deal directly with the sellers.

The Seller was always calling me for updates and kept asking me for my advice on how to handle things, when was closing, what took place at closing, how did she get there, what did she need to do. I told her I represented the buyer and couldn't give her any advice and she needed to talk with her listing agent but she said they wouldn't help her.

The whole thing just sucked because here I was representing my buyer and having to do all the work. It was unfair to me as well as to the seller who was so upset at times she would start to cry over the phone and I wish people would just get the whole story as to what we actually do to keep deals together and going smoothly.

I actually talked with a FSBO last night; which was actually already listed on the MLS in a limited service listing. This FSBO told me that she had already paid a flat "nonrefundable" fee and was offering the buyers agents 3% but still no offer. She said she thought it would be easy and would save them money but she now knows she will have to get a Realtor to represent her to get her home sold. I will be meeting with her next week.

Some people think it is just putting a listing in the MLS and boom it will sell and they don't understand that marketing the property to other Realtors and to Buyers actually helps tremendously. Unfortunately many people have to learn the hard way that using a limited service agency isn't all it is cracked up to be. I think that limited service agencies shouldn't even be allowed to be members of the NAR because we full service agents shouldn't have to do all the work when representing only one side.

Yes, and on the NAR website you will see their response. NAR Response to CBS

Drm7, you are on the right track to become a great agent. Your concerns from the streets are valid and imperative in today's market. You are entering a business industry where you cannot criticize the members as they will take everything personally.

PP is right on about several of his comments. Particulary about the fsbo seller and buyer. If we were to use NAR' study to defend our service to the public no buyer would use us ever again. If a fsbo sells for less then it means every buyer represented by a realtor is getting ripped off.

People can get a laywer to draft disclosures and contracts for under a thousand bucks.

The real reason why houses sell more through a realtor isn't because fsbos are less competent. In many cases fsbos are more skilled and more informed than even the realtor. There are of course idiot fsbos just as there are idiot realtors that make up statistics on the fly. The real reason why the "average price" of realtor represented homes sell for more is because sellers in higher price range homes tend to hire a realtor.

Take the average of two houses one selling for a million bucks and one selling for 250,000. What's the average?

Now take the average of two houses one selling for 250,000 and second selling for 300,000. What's the average?

The average on a realtor sold home will always be higher because higher priced homes tend to use realtors.

realting: I am definitely not trying to criticize Realtors as a whole. I just wanted to share what my SOI thinks so we can all learn what the obstacles are. 60 Minutes will only exacerbate these general feelings by not showing the whole picture. I have used Realtors in all my transactions. I can only know so much so I rely on experts in their field to help me. I had a lawyer offer to provide me a FSBO contract for under $200. I used a Realtor. The contract is only part of the process for selling/buying a property. I believe someone needs to inform the client in every step of the transaction so the client can make informed decisions.

This is a load of crap that NAR puts out... This is the kind of stuff 60 minutes is referring to in a round about way that NAR twists numbers.

OH!! and by the way, POOR BUYER if you then work with a REALTOR! Guess what buyer, if that statement from Pikes is actually even vaguely true, the you just got bent over 6 ways to sunday and just over paid 59,800 bucks. Nice going NAR!

This is almost too halarious. The more realtors try to defend their service the more the public will find gaps. Service can be replaced by a 5 year old but skills are rare.

Full service or discount service doesn't mean they come with skills. The better realtor will be selling skills from the minute he meets the client.

The idiot realtor will badmouth fsbos and sell his "service" til he's bankrupt.

No fsbo site or web service will bring the skills my agents have but anybody off the streets can do what we do. Just not as good.

drm7: My overall point is that it is easy to distain another field until you enter the field and begin to appreciate some of the nuances that you can't know on "the other side."

Lots of people are smart and believe themselves to be more competent than the professionals they hire - but from my own personal experience, I think that deduction is false and stems from lack of information.

When I sold a house one time before becoming a Reatlor, I seriously thought that the agent's commission was predicated on simply putting the house on the MLS, sticking a sign in the ground, and "filling out some paperwork." I had no clue what my agent did and I was not informed enough to even ask the right questions.

It's kind of like raising a kid . . . it seems simple until you attempt to actually do the day-to-day stuff. Now that I think of it, that applies to most things.

So good luck in your own personal venture into the land of real estate (no pun intended, but pretty good if I do say so).

I would be curious to know if your perspective changes at all. If so, I hope you will report it.

I agree 100% with the lack of information leading people to believe they can do what others do or to underestimating what is involved. I fell into this before I started buying houses. As I stated before, my in-laws are agents and an old friend has his own brokerage so I'm better informed now. I have no belief that I will soar to the top. In fact, I'm quite scared about how long it will take me to make a decent living (if I ever do). Being smart or not is no guarantee of success. Way too many factors involved. I do, however, plan to work hard and learn as much as I can as fast as I can and provide the best service to the best of my abilities.

Good luck to you. I think consciensciousness is underrated, in life.

Thanks, I'm going to need it.

With such Economic ignorance, coupled with such a poor understanding of Housing Prices and the Housing Market is it any wonder 60 Minutes has already announced a follow up program to the one just released Sunday.

:Shakes_Head_in_Dismay:

estatereal I thought you do rebate your services now to go and get ALL that you can? I may be confused.

I thought it was a very good analogy. There's a big learning curve in how to negotiate a deal or market a home. Why do we do a lot of things we "could" do by ourselves but instead we hire someone who knows what they're doing/can do it faster/smarter? Because time is money. That's why people pay plumbers/landscapers/electricians/car mechanics... because they don't have the time or inclination to do it themselves.

Probably because the buyer is the one who brings all the money to the closing.

Fair market value is determined by what buyers are willing to pay for a home, no matter what condition it's in. Fair market value for a home recently sold by my agency was 900,000. The buyer tore it down.

Not sure what major mechanical issues you are speaking of, but where I sell, an engineer inspection is not an opportunity to renogiate the price unless there's a major problem with the heating, electric or water. I recently sold a house where the inspector said it needed a new roof within a couple of years. This was not an opportunity to renegotiate it is was informing the buyer of what they were buying. everything else in the house was in excellent condition.

I hope you'll get back to us once you've worked as an agent for a year and let us know if you still feel the same way.

Sorry I seem to be picking on you, DRM, but the expert you hired was the ENGINEER. And if you think all the agent did was fill in the contract...again, get back to us after you've been an active agent for a year.

And you'd like to be paid enough to survive, too, wouldn't you?

NOZZ: 60 Minutes called me, they want to know why you can't figure out the diff between an agent-sold home and a fsbo one and why even though the prices aren't the same, the sellers net the same amount of money in the end.

I told them you figured it out and you do understand it. It's your pride that's got you all twisted in knots trying to defend a misunderstanding you had. Happens all the time. I used to bartend and know alot about people like you and stuff, you see.

Anyways. We'll leave it at this. I don't care about your insults or need an apology, they say more about your character than mine.

As I was reading, all of this one thought popped into my head about something that happened to me. For years I cut my own hair because it was long, and in general just needed to be trimmed. But when it came time for it to look better than just alright because I went into real estate and I needed a more professional look.
Initially I went to a discount hairdresser and came home crying. After it grew out(I actually wore clip on pony tails for a few months while it grew out) I went to a better salon. The hairdresser this time did a wonderful job and I will stay with this salon as long as possible. And in many cases this is true in real estate. So in the beginning I was like a FSBO, then we went with a deep discounter, and then found the right person to do the job.

We just dealt with a former FSBO after they realized it was not as easy as it looked but first went to a "friend in RE who discounted", and then became unhappy after it did not even get one look. They withdrew the listing from the friend, came to us and we sold it quickly .

But you know in this market these people who think they can do it themselves will find out the hard way because it is no longer a seller's market.

where did i say that? in md we are allowed to rebate commission, however i have never condoned it nor have i mentioned that i would do it.

I work at Keller Williams. Right now I pay about 80 a month with no office or cube. I get a 70/30 split until I do 2.1 mil for the calendar year, then everything after that I get 100.

Let me make a different point using your same hairstylist analogy.

The guy who has been cutting my hair for the last 20 years is what I call 'operating in his gift'. This guy is so good, I was out of town 1000 miles away, someone saw my haircut, knew what town I was from and said, 'Did Fred cut your hair?'

He was this great straight out of beauty school.

Anyway, right out of school he worked at a discount hair salon. If you had gotten your hair cut by him at the discount salon, you would have come away thinking, 'Wow these discount places have great haircuts!' when really it is just him. He loves cutting hair, is gifted at it and takes extra classes.

Now he has his own salon and charges top dollar for the same fantastic cuts that he would do if you snatched him out and put him in SuperClips.

MY POINT? It is the agent, not the type of agency they sign up with.

We all know REALTORS who are awful. Who get in thinking like FSBOs, 'This will be a piece of cake.' When the first deal goes off the path, they are at a loss, and they don't even know where to begin to try to keep the deal on track.

There are some discount agents who are gold!!

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