So, If you get the chance checkout 60 Minutes this Sunday at 7PM.
http://www.cbsnews.com/stories/2007/05/11/60minutes/main2790865.shtml?source=mostpop_story
It's about internet discounters in real estate. Companies like Redfin that charge 3K flat for commission and give back 2/3 of their buyer agency discounts. That's their pitch... that traditional agencies have this industry screwed. I never seen such a biased piece of journalistic reporting my life! 60 Minutes goes onto say that we, as REALTORS don't earn our money. that we take 6% off the top and are driving around in our Lexuses eating up the homeowners of Americas hard -earned money without doing more than 4- 10 hours work. that we are afraid of the internet b/c it is moving so fast, it will take our our industry.
The industry is changing, there is no doubt about that. Previously, client and customers need our assistance for 2 parts.
1- find me a property
2- facilitate the transaction
1- With the internet, the first part of our service has been rendered obsolete. buyers can find properties, do drive bys and then contact us when they need to see it. that is a fact. unless you 85 and living in a cave w/o the net... you do not need an agent.
2- The second part is our added value. this is where we earn our commission. The average Joe sells and buys a house, what? every 7 years or so... I sell them every day. I know my turf. I know where the dump is and where/ when it smells, I know which condos in my area are prone to mold issues and water problems, I know what mortgage agents will honestly compete for your business and give the best deal. I consistently read, study and review mortgage loans b/c it is MY JOB to be educated on all the program that my buyers are eligible for. i am not a mortgage agent, but i sure know a good HUD when I see one. I know which title companies are easy to work with and don't charge ludicrous fees. I know which home inspector will crawl in your dingy attic space and give you an honest, realistic report as to the condition of your home. I know the best chimney sweeps, furnace companies, gas companies and septic guys around. I know how to stage a home, price a home correctly. I make sure my buyers and the buyers coming thru my listings are pre-approved. I know taxes, assessments and condo associations. I keep track of developments and industry in my area.
As for all the FSBOs. you're only trying to save a buck... who can blame you? I would. Why not give it a shot? But I few things I'd keep in mind... Don't let your wife show, girlfriend or god forbid yourself (single ladies) show a house or hold an open house alone. That's dangerous! I know the people I take into your home, shouldn't you? You don't need some creep casing your house and god know what else...
make sure you know the mortgage company your dealing with... b/c I do. i know who consistently misses deadlines and screws things up. I have a neutral escrow account so no one ends up in court fighting over deposits. I know the home inspector is a professional, not mother's brother's neighbor who does drywall for extra cash. Make sure your hiring a good title lawyer who doesn't overcharge... Heads up too! Buyers know you're saving that 20K in commission and they're gonna want their piece of that action!
REALTORS act as a buffer b/t buyer and seller who are emotionally involved in the transaction. So, when the roof unexpectedly leaks, it's your Realtor who negotiates the deal and keeps it together. It's your REALTOR who keep ex-wives and husbands in separate closing rooms, who deal with pesky dads, over analyzing everything the home inspector states.
Personally, I charge 5% for listings. so, let's do some math. i sell a house for 400K. Wohoo! That's 20K. Well, -10K to the other agent. My broker get their half... down to 5K. Don't forgt Uncle sam! Minus another 1500K. Now let's figure in overhead of gas, paper, ink, phone calls, faxes, town hall and registry fees getting all apparoriate info.
Or if I still worked for a RE/MAX, my broker get 5% instead of half. But I also have an office bill of $1700/month, plus the cost of signs and advertising, gas etc...
There is cost to running our business, we just don't make 20K and head for the islands for the weekend!I'd be lying if I didn't admit that I have spent 4 hours with a couple and made 5K before before. But I can give you a laundry list of clients who would have gone into foreclosure if I hadn't worked endless hours on their behalf, countless clients who've said they would have walked away from the deal if i hadn't nursed their fears or calmed nerves while negotiating unexpected basement floods and mortgage questions alike. Answering phone calls 7 days a week, 6AM to 11PM.
REALTORS must be prepared to justify their income or we will lose this battle. We do have value. there are some intelligent, diligent individuals who can pull off FSBOs successfully, but most don't have the time. unfortunately, a lot of people will attempt to FSBO and end up on the losing end.
This our industry, REALTORS need to make a living just like doctors, insurance agents, contractors, web designers. All industries change, a good REALTOR and educated individual can justify their commission and honestly put themselves in their clients shoes. They know when they've worked hard for their money and know the value they've added to each and every transaction.
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