01-19-2009, 08:02 AM
I am astounded that realtors in this country make 6% on houses and I've been told up to 10% commission on land. With the increase in prices over the last few years their commissions have increased far beyond the normal wage increase.
We bought a house here in 2005 after meeting the seller when walking by his house and soon after agreeing a price between us. Sadly he was under contract with a realtor so of course had to pay a huge commission. We dealt with the escrow company and all other parties directly. As a first time buyer here I was shocked at the amount the realtor made for the little work they did.
I have bought and sold in the UK, which I found to be easier in some ways and certainly cheaper. I got 3 estimates from 3 realtors and went with the highest price. The basic commission was 2% but when my realtor found a buyer who offered me slightly less than asking I accepted on the basis he took a lower commission of 1.75%. He agreed. In the UK one realtor acts for both parties and each party gets a conveyance lawyer to handle escrow and anything else unusual. The lawyers' fees are about the same as one pays here for escrow.
In Canada the realtor fees are also less, as you pay a higher percentage on the first chunk of the sale, and much less on the balance. Overall it works out to be less than 6%.
With prices so high now for homes isn't it time for a shake-up in the US real estate world? I've had several discussions with realtors here who try to convince me they are worth every penny as they bring in buyers and advertise. This may have been true in the pre-internet days, but now we are all on line and we can all read the MLS website which shows property for sale via realtors and by owner.
When we bought our house in Hawaii I soon learned how little the realtor knew of the market. I simply did my homework and checked on the real tax website for all transactions carried out in my area. I learned the price of land, the price of homes, when homes were built, the permit values, how much the pools cost, how much solar cost, when the sales took place, etc. I felt informed to make the right offer by what I learned myself.
Given the information out there and the tremendous reach of the internet I just don't undertand why a greater percentage of real estate transactions are not listed as "For Sale by Owner". I do understand not everyone can be home to show all potential buyers around at all hours, but I've had realtors put me off for days when I've called to see a property because they are "busy" or realtors who just don't bother returning calls. From a buyer's persepctive, realtors make it no more easy to see a home than a motivated home owner/seller would!
If people still prefer to have a realtor guide them through the transaction, how about paying them what they are worth - on an agreed fee basis, or certainly not more than 2% of the sale price?