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Are Real Estate Agents worth their Price?


Midnight Judges

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I'm looking to sell my home and buy another and the real estate costs are making my head spin. They want to take 6% (on top of the standard 2% closing costs) and frankly, I don't think they are worth it and I have no idea why they charge a percentage rather than a flat fee. Does the paperwork cost twice as much to compute in a million dollar house as it does for a $500K house or are they simply profiteering from an illogical system?

I want to sell a $375K town house and buy a $600K house. Why would I give an agent 6% of $375K just to list my house on the internet when I can do that myself? I don't think that's worth $22,000 and likewise, buying a 600K house and paying agents up to $36,000 for some stinking paperwork and possibly sitting in an open house (yet another task any homeowner could do themselves). I also do not need an agent to show me around the area because I know the area better than most of them and I have access to just about every piece of information they do when I exercise all my resources.

My folks and other people tell me that it doesn't save money to cut out the real estate agent. How can that be? That $36,000 is not appearing out of thin air, it comes from the buyer essentially. If the buyer and seller agree to cut out the agents, what difference would it make to the seller to lower the price by the percentage they were planning on paying to agents?

So my question is this: Are real estate agents unnecessary middle-men in some cases? Are they overpaid based on the percentage system now that homes have doubled in value over the last 5 years? What am I missing here? I understand they do a lot of paperwork but it ain't $36,000 worth.

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Yes, it worth it. no, I dont think they are overpaid (the good ones that is). You can do it without an agent, but prepare yourself in the event your settlement doesnt go through.

This is the type of answer I keep getting. I don't think it fully addresses my concerns. What is it a good real estate agent does that I would be missing out on $36,000 worth? Why wouldn't my settlement go through without an agent? I have a family friend lawyer who will work my contract for free.

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This is the type of answer I keep getting. I don't think it fully addresses my concerns. What is it a good real estate agent does that I would be missing out on $36,000 worth? Why wouldn't my settlement go through without an agent? I have a family friend lawyer who will work my contract for free.

If you have someone who can handle the contract and paperwork then you should probably be OK selling your house/buying a new one without a real estate agent.

To me, the biggest issue would be the contract and you'd have that covered. The only other issue that could arise (unless I too am missing something) is having your property listed so that everyone in the market sees it when they run a search (instead of just a classified ad) and having someone who can constantly find you new properties on the market.

Without using the MLS listings, you're pretty much looking at a fraction of what's available in the market.

And just to clarify, I don't believe you cover the 6% yourself. I believe you split that with the other party involved so that each of you is paying 3%. There are also discount agents who will give some of that 3% back to you toward your closing costs.

Good luck!

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This is the type of answer I keep getting. I don't think it fully addresses my concerns. What is it a good real estate agent does that I would be missing out on $36,000 worth? Why wouldn't my settlement go through without an agent? I have a family friend lawyer who will work my contract for free.

6% is negotiable...so that alone would bring the fee down....the fact that you have a lawyer in the family is a plus that a lot people do not have but other than that real estate agents have access to a ton of resources that people outside of the industry do not....Networking for instance, you list your house with an agent and its goes into a database that only real estate agents have access to. The general public cannot access this site and only agents can enter homes into the system. That alone gives your house more esposure than it would get doing an FSOB. This not counting open houses, ads, company tours..etc....In addition the percentage fee does not go directly to the agent it is split up between the two agents involved then they split it again with their company.....in short no I don't think they are over paid....yes you could do it yourself but it may take quite awhile and involve a lot of headaches...especially since the market is slowing down. :2cents:

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There is no reason that a smart person should not be able to sell his home without a Agent.

Just do a search for FSBO , there are plenty of companies that are local that will save you tons of money.

When you purchase a home the seller is paying their agent so that is when having a buyers agent is worth it because it does not cost you anything unless you are purchasing from someone else doing a FSBO.

You can list on MLS for about 300 bucks regardless of if you are a agent or not.You do not have to have a agent to list on MLS.

If you plan on putting your house on the market FSBO prepare your self for a ton of agent calls trying to scare you into using a agent.

Someone buying your home will most likely have agent, at that point you can cut a deal with their agent for a percentage or flat fee if you wish.

Everything is negotiable

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I am a mortgage loan officer and a recent homebuyer. I can tell you that a real estate agent is absoutely worth it. Let me try to answer your concerns.

I'm looking to sell my home and buy another and the real estate costs are making my head spin. They want to take 6% (on top of the standard 2% closing costs) and frankly, I don't think they are worth it and I have no idea why they charge a percentage rather than a flat fee. Does the paperwork cost twice as much to compute in a million dollar house as it does for a $500K house or are they simply profiteering from an illogical system?

You are going to be stuck paying 3% on the sale of your house whether or not YOU hire an agent because the seller is responsible for paying BOTH the buyers and seller RE agent. If you are selling your house and buying another one, your agent SHOULD be giving you a break. If he she isnt, PM me and I'll put you in contact with someone who will. The flat rate system IMO is absurd, but thats the system in place. Luckily, YOU wont be paying the 6% on the new $600k house.

I want to sell a $375K town house and buy a $600K house. Why would I give an agent 6% of $375K just to list my house on the internet when I can do that myself? I don't think that's worth $22,000 and likewise, buying a 600K house and paying agents up to $36,000 for some stinking paperwork and possibly sitting in an open house (yet another task any homeowner could do themselves). I also do not need an agent to show me around the area because I know the area better than most of them and I have access to just about every piece of information they do when I exercise all my resources.

Listing it on the internet IS NOT the same as listing it in MRIS, the realtors database. MOST people just hire an agent and the agents ONLY look on MRIS. So that 6% is really buying you access to buyers. The more buyers you have access to, the more your house is going to sell for. Again, since you wont be paying your agent for finding you a new home, and most likely will still have to pay the buyers agent for your current home, your real outlay is $11,250. A good agent will pay for themselves in the negotiation process.

My folks and other people tell me that it doesn't save money to cut out the real estate agent. How can that be? That $36,000 is not appearing out of thin air, it comes from the buyer essentially. If the buyer and seller agree to cut out the agents, what difference would it make to the seller to lower the price by the percentage they were planning on paying to agents?

Your parents are right, see above.

So my question is this: Are real estate agents unnecessary middle-men in some cases? Are they overpaid based on the percentage system now that homes have doubled in value over the last 5 years? What am I missing here? I understand they do a lot of paperwork but it ain't $36,000 worth.

I agree with you that RE agents are overpaid due to the incredible increase in home values over the past 10 years, but now that that boom has slowed, RE agents are more valuable than ever. Especially in selling your current home because there are a lot of homes on the market right now and not so many buyers. If you FSBO your home, you will get lowballed by a savvy RE agent. You of course can turn them down, but are you prepared to carry the old mortgage AND the new one? Will you be able to find a new place that will accept a contract contingent upon the sale of you current home? Do you know how to write a contract that is appealing outside of the final $$$ numbers?

Thats my professional opinion. If you have any more questions, feel free to post them or PM me, and I will do my best to answer. Also, if you are looking for a good lender, PM me, ill give you the old ES discount.

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Without using the MLS listings, you're pretty much looking at a fraction of what's available in the market.

And just to clarify, I don't believe you cover the 6% yourself. I believe you split that with the other party involved so that each of you is paying 3%. There are also discount agents who will give some of that 3% back to you toward your closing costs.

Good luck!

Thanks to everyone for their helpful responses.

As far as MLS listings go, I have been able to find every house I scouted in person on the internet. If you check all the real estate companies, prudential, century 21, wiechert, long and foster, dialdebbie, FSBO, the Washington Post-you will have just about every house on the market. I also know the area quite well so I have found properties simply driving around, and I can always find them on the internet. I think it's a matter of being resourceful. Agents hoard certain information from buyers. #1 is how long the property has been on the market and #2 is how many square feet it is. You can find this info on Prince William and Fairfax county websites. I have consulted a few agents, I gave them my criteria, and they came back with small lists of appropriate properties when I found dozens. They were highly recomended agents. :rolleyes:

I have also been told by a Weichert agent that they are trained to act as if every property they show you is beautiful and perfect. That is, they don't give you their true opinions and expertise, they just want to make a sale. I guess that's obvious to some but I would prefer a genuine opinion for the amount of money I might pay them.

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I work in the settlement business, so I have to work with agents a lot. Apart from the listing up to contract writing part, I can't help you as far as their worth. I CAN tell you that once the contract is written and ratified and everything goes to a settlement company, agents are pretty much worthless. 90-95% of them at least. Most of the time they don't want to be bothered, won't even attempt to get any of the information we need, they always tell us to call the people directly. Don't return calls, nothing. We should never ever have to speak to a buyer or a seller, nor should they ever have to speak with us. But that never happens. Agents don't want to do their job, so they point us in their direction and vice versa. Then they get to settlement, check their commission to make sure it's right, and don't care about anything else, except to finally call incessantly after the fact (FINALLY they call!) to check when they will have their money. This doesn't apply to all realtors of course, just the vast majority. They are quite frustrating people to work with, in my opinion.

I have also had to deal with several buyers/sellers that complain that after the contract was written, their agent disappeared and did nothing to help them out through the rest of the process. They feel like they dont deserve any money and want to know how they can get out of paying them. It's not possible to do that, of course, but a lot of agents really do suck, to be honest.

Just an opinion from the other side. If you want a couple of good names, just let me know!

EDIT: Oh, and with the guy who said he thought maybe the 6% was split between you and the buyer, not true. The seller pays it all. I guess anything can be negotiated, but I have never seen it done.

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I work in the settlement business, so I have to work with agents a lot. Apart from the listing up to contract writing part, I can't help you as far as their worth. I CAN tell you that once the contract is written and ratified and everything goes to a settlement company, agents are pretty much worthless. 90-95% of them at least.......They are quite frustrating people to work with, in my opinion.

HAHAHA, we should swap stories.

The problem with RE agents is that its easy to pass the test and its an easy job. So it attracts the wrong people. People that just want to make a quick easy buck. This isnt all of them, but its a good portion. I hate working with housewives moonlighting as agents, mostly for the reasons Tizzod gave. After the contract is written, they disappear. HEY, I NEED A FREAKING ADDENDUM HERE!

If you DO decide to go with an agent, and seems like you have your mind made up not to, but IF you do, dont just pick one, and DONT use someone you know. Pick 3 or 4 and interview them like they are applying for a job. Because they are. Make sure they are doing at least $20 million a year because these are the professionals, not the part timers that just want to make a quick buck.

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I am a mortgage loan officer and a recent homebuyer. I can tell you that a real estate agent is absoutely worth it. Let me try to answer your concerns.

You are going to be stuck paying 3% on the sale of your house whether or not YOU hire an agent because the seller is responsible for paying BOTH the buyers and seller RE agent. If you are selling your house and buying another one, your agent SHOULD be giving you a break. If he she isnt, PM me and I'll put you in contact with someone who will. The flat rate system IMO is absurd, but thats the system in place. Luckily, YOU wont be paying the 6% on the new $600k house.

I am also in the fortunate position that I have a potential buyer for my house that does not have a real estate agent. If buyer and seller both don't have an agent, then can I avoid paying the 3% ($11,000)?

Also, if the seller does not have to pay an agent, they should have no qualms about lowering the price by the amount that would have gone to an agent. In that respect, the money is indeed coming from the buyer. Seems like all us buyers/sellers would be wise to simply boycott agents.

Hell, I can become an agent myself for $800 and six months of night school.

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I am also in the fortunate position that I have a potential buyer for my house that does not have a real estate agent. If buyer and seller both don't have an agent, then can I avoid paying the 3% ($11,000)?

3% what? You don't have to pay anything to the buyers agent. It's all negotiable, just make sure it is known up front.

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I am also in the fortunate position that I have a potential buyer for my house that does not have a real estate agent. If buyer and seller both don't have an agent, then can I avoid paying the 3% ($11,000)?

Also, if the seller does not have to pay an agent, they should have no qualms about lowering the price by the amount that would have gone to an agent. In that respect, the money is indeed coming from the buyer. Seems like all us buyers/sellers would be wise to simply boycott agents.

Of course. If there arent any agents, then you dont have to pay anyone. Sounds like you are in a great position. PM me if you are in need of financing on the new place.

Hell, I can become an agent myself for $800 and six months of night school.

Yeah, but then you'd have to boycott yourself. :laugh:

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I say that agents ar definitely worth it. I just went through buying a house, and there several issues that if I didn't have an agent that would goto bat for me, the deal would have fallen through several times.

I'm curious exactly what would have gone bad without the agent. If you don't mind expanding on this I'm all ears.

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Thats my professional opinion. If you have any more questions, feel free to post them or PM me, and I will do my best to answer. Also, if you are looking for a good lender, PM me, ill give you the old ES discount.

I agree with what PleaseBlitz has to say.

As for paying a percentage instead of a flat rate, remember that your agent is going to be paying to market your house -- ads in homes magazines, newspapers, etc. A more expensive house requires more marketing.

And you'll definitely need marketing expertise, because right now houses are going on the market and sitting there for months. The "bubble" hasn't burst, but it's no longer a seller's market. Just a couple of years ago, buyers were getting into bidding wars and waiving home inspections. Now it's the other way around.

I definitely wouldn't FSBO my house in Northern Virginia right now. There's too much inventory -- you'll never get any attention from buyers.

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I've only sold one house in my lifetime...and I would say no, they are not worth their price (hopefully I don't offend any ES Real Estate agents :)). Or maybe I should ammend that to it depends on the market as to whether or not they are worth the price?

My only experience selling a house....agent comes out to home and looks it over, we discuss listing price. Agent lists home. Home sells within one week. Agent never visited the home other than that first night - no open house or anything like that. Agent calls after home inspection and mentions a couple of minor things to take care of. I do them and call agent back to let her know. Between the first visit and closing I might have spent 10 minutes talking to the agent - TOTAL.

Day of closing the lawyer shows me check cut for $22K to real estate agency.

SkinsNut73 goes into cardiac arrest :)

Meanwhile, my lawyer, who did a ****load of paperwork/title search/etc only took a $600 fee. I'm thinking he got the **** end of the stick...but I wasn't telling him that.

So I sold in a hot market and the 3rd person who looked at the house was the one who bought it. Maybe if things were slower I would have appreciated my agent more?

It just seemed like a LOT of money for so LITTLE work on their part....

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I'm curious exactly what would have gone bad without the agent. If you don't mind expanding on this I'm all ears.

First was a problem with the price of the house, they had it WAY over what it should have been, so our agent checked into all houses that were sold around it, so we got them to lower it. There a problem with a possible leaky shower. They weren't going to pay for repairs or anything else, our agent basically told their agent to lick his *****, and the offer was off the table. A few hours later, they gave us 3 grand to fix it. It cost me less. There were some other issues with closing date. We wanted it before Christmas, they wanted it mid Jan. We got concessions, and we moved in Jan 3, but closed on Dec 27. I may be forgetting one or two other items, the deal was almost off 3 different times, but those were the major ones.

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