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No more 6% commission – these brokers will sell your house for a flat fee

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  • No more 6% commission – these brokers will sell your house for a flat fee

    https://www.cnbc.com/2017/09/15/no-more-6-percent-commission--these-brokers-will-sell-your-house-for-a-flat-fee.html

  • #2
    With flat fee, what is the incentive for broker to maximize the owner's take?

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    • #3




      With flat fee, what is the incentive for broker to maximize the owner’s take?
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      Great study from Freakonomics years ago that broker's don't maximize the owner's take, unless it is their own. To "maximize" it usually means leaving the home on the market longer. Once they net out everything to "maximize" the client's sale price it is usually only worth a few extra bucks to the realtor. The 6% commission gets divided between both realtors and then they both have to share with their real estate company. Most rather finalize the sale and move to the next sale.  Here's a good video with the authors of the book. https://www.youtube.com/watch?v=pbFkw_roJqI  

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      • #4
        We used a flat fee agent for selling our previous house. We probably saved around 7-8K doing it. Great experience.

        With Zillow and others online technology out there making buying and selling very easy, full service 6% commission agents are not as necessary IMO (especially if market is good). Some markets even have agents that will "share" there commission if you use them to buy a house (https://kermathrealty.com/buyerrebates.php).  Im really surprised this isn't more common to tell you the truth.

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        • #5
          I've used Redfin a couple of times as a buyer and been happy. That said, it seems like some traditional 6% agents will blackball listings with flat fee brokers. So much for fulfilling the duties of an agent.

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          • #6
            Redfin is probably the best 'happy' medium --used them several times over the years.   Traditional realtors HATE them, but understand the shift in the industry finally.

            OTOH - the flat fee agents actively get blackballed by other agents who refuse to show listings (so much for fiduciary as buyer's agent)

            Same thing about seller's agent -- they look out for #1-- not the seller themselves.   'best pricing' is usually = fast sale for minimal work.  which can leave tens of thousands on the table if under priced --- or the opposite on overpriced low volume seller agent without good knowledge.

            Best thing about Redfin is its historical tools to allow yourself to be best listing agent and pricing of the house based on sales, DOM, and region issues -- even neighborhood issues --- like local crime, or that friday evening football game - or the occasional flashmobs that happens

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            • #7


              We used a flat fee agent for selling our previous house. We probably saved around 7-8K doing it. Great experience.
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              Selling, maybe I'll try it someday.

              Buying, hard to care when the seller has already decided to fund a silly industry.

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              • #8
                Why does blackballing matter? I have never used a list of properties from an agent, I've always selected out the ones I wanted to see, seen them, and then tell the agent. An expensive formality.

                Years ago, I thought this was the biggest, most obvious area to disrupt in the country. Huge, unearned premium in the space. However, Im not a real estate agent and not in the position to throw away medicine to start a crazy business, and just seeing an opportunity doesnt mean you know what to do. Idea was to start some flat fee/tiered or very low 1-2% total type agency/company.

                This was in response to the promise of the internet not actually delivering in RE due to incentives. Zillow et al, instead of making things better for the consumers have been subsidized by the RE industry (as thats who adverts there) themselves so no change came immediately from them.

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                • #9
                  Flat fee listings or FSBO listings don't get shown by other 'buyers' agents with an active buyer.  It's really that simple -- these listings tend to languish and then eventually go to traditional seller unless in a very hot market with saavy buyers that really don't trust a buyer's agent's 'recommendations'.   It's still a very protected industry and agents absolutely dislike Redfin, but willing to work with them since they really have hit a threshold that won't allow for not showing those listings.

                  That is why we've used Redfin several times now and if ever sell, would probably use them too.  The hybrid model of fees with commissions keeps most people happy.

                   

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                  • #10




                    Flat fee listings or FSBO listings don’t get shown by other ‘buyers’ agents with an active buyer.  It’s really that simple — these listings tend to languish and then eventually go to traditional seller unless in a very hot market with saavy buyers that really don’t trust a buyer’s agent’s ‘recommendations’.   It’s still a very protected industry and agents absolutely dislike Redfin, but willing to work with them since they really have hit a threshold that won’t allow for not showing those listings.

                    That is why we’ve used Redfin several times now and if ever sell, would probably use them too.  The hybrid model of fees with commissions keeps most people happy.

                     
                    Click to expand...


                    But they get on websites, which people use right? Then the agents would have to show them properties their buyers are interested in whether they like it or not. There are ways to sabotage that part too, but agents have almost zero say in my process unless they know a city/muni thing that is important.

                    I mean I could definitely be an early adopter but am pretty sure a lot of people use Zillow and the like.

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                    • #11
                      Yes, many use zillow/trulia to start, but then bail to the agent.   If they see a FSBO/flat fee listing, the agent will usually come up with litany of reasons not for closing with them.   It happens even with Redfin listing agents unfortunately.  It's just the realtor agents protecting their livelihood.

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                      • #12







                        Flat fee listings or FSBO listings don’t get shown by other ‘buyers’ agents with an active buyer.  It’s really that simple — these listings tend to languish and then eventually go to traditional seller unless in a very hot market with saavy buyers that really don’t trust a buyer’s agent’s ‘recommendations’.   It’s still a very protected industry and agents absolutely dislike Redfin, but willing to work with them since they really have hit a threshold that won’t allow for not showing those listings.

                        That is why we’ve used Redfin several times now and if ever sell, would probably use them too.  The hybrid model of fees with commissions keeps most people happy.

                         
                        Click to expand…


                        But they get on websites, which people use right? Then the agents would have to show them properties their buyers are interested in whether they like it or not. There are ways to sabotage that part too, but agents have almost zero say in my process unless they know a city/muni thing that is important.

                        I mean I could definitely be an early adopter but am pretty sure a lot of people use Zillow and the like.
                        Click to expand...


                        It is very easy for the agent, the expert, to say, that they know the house and--  it needs a new roof, the owners are unreasonable, the house has termites, it was built on an Indian burial ground, the basement leaks like a sieve, etc.

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                        • #13










                          Flat fee listings or FSBO listings don’t get shown by other ‘buyers’ agents with an active buyer.  It’s really that simple — these listings tend to languish and then eventually go to traditional seller unless in a very hot market with saavy buyers that really don’t trust a buyer’s agent’s ‘recommendations’.   It’s still a very protected industry and agents absolutely dislike Redfin, but willing to work with them since they really have hit a threshold that won’t allow for not showing those listings.

                          That is why we’ve used Redfin several times now and if ever sell, would probably use them too.  The hybrid model of fees with commissions keeps most people happy.

                           
                          Click to expand…


                          But they get on websites, which people use right? Then the agents would have to show them properties their buyers are interested in whether they like it or not. There are ways to sabotage that part too, but agents have almost zero say in my process unless they know a city/muni thing that is important.

                          I mean I could definitely be an early adopter but am pretty sure a lot of people use Zillow and the like.
                          Click to expand…


                          It is very easy for the agent, the expert, to say, that they know the house and–  it needs a new roof, the owners are unreasonable, the house has termites, it was built on an Indian burial ground, the basement leaks like a sieve, etc.
                          Click to expand...


                          Im sure that happens, probably not infrequently. For people who arent professionals and take that at face value Im sure it works too. Just crazy how unprofessional what turns out to be most other professions are. We are a little hamstringed when assuming everyone we deal with has honorable intentions that we are used to with our colleagues and field in general.

                          P.S. I think every house has termites. We are but their tenants.

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                          • #14
                            Worked in real estate for a few years - we never avoided FSBO or other similar non-agent set up. But if the situation did come up, we would make our our clients aware that (based on the listing notes) the seller is unlikely to pay the buyers agent commission, so they would need to cover that expense if it went through on top of the sale price. Most of the time our clients weren't too interested after that. Frankly there really aren't that many of these situations out there so I don't even think it came up once a year.

                            I wouldn't mind seeing more disruption in the space. There are a ton of awful agents out there that make you shake your head - some sort of cheaper service can replace them, no doubt. The good agents aren't going anywhere - there will always be a market for there services, in my opinion.

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                            • #15




                              Why does blackballing matter? I have never used a list of properties from an agent, I’ve always selected out the ones I wanted to see, seen them, and then tell the agent. An expensive formality.

                               
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                              In colder markets, that probably works. When we recently sold a house (in a low-inventory "hot" market), we had gotten 20+ offers (and accepted one) before the listing even showed up on Zillow (took ~1-2 days from the time the agent "submitted" it to it showing up). I hate the system as much as anyone, but none of those buyer would have even known the house was for sale if they didn't have a buyer's agent...

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