Darrell Catmull

Realtors, Prepare to Lose Your 6 Percent

Aquapura, now you're making sense, stop it! Everyone is much more comfortable complaining about and defending the symptoms not the cause. Education Education Education is to a professional as is Location Location Location is to real estate.

Realtors, Prepare to Lose Your 6 Percent

The brokers only used the means given to them. NINJA loans were and are stupid. Banks, Wall Street and hedge funds, not real estate brokers, caused the crisis. Plus Fannie Mae has great solutions to curb the crisis. Where are the hedge funds solutions? Clearly the brokers had no hand in the crisis other than they profited like buyers, sellers, investors and REITS alike. Did you know that there are areas of America (Iowa) that have enjoyed a steady increase in values on an average of 2.7% per year with no huge market swings? The elitist caused this crisis by handing out stupid loans allowing 54% appreciation in just 29 months (Salt Lake City).

Real Estate Brokers might take a hit but I'm not sure what you all think is going to lower the commissions? As I stated discount brokers have been around forever. Why do you all think this is new? If Google and Zillow now have a right to our MLS data then yes that's a problem for REALTORS. Short of being forced to sell our data, nothing is stopping Google or any other entity from competing at a discounted commission or comparable commission. Folks you’re focused on the money not the problem. Bad service at any price is bad service.

This is about the value an agent provides and whether you agree or not. You get to choose the agent! Would you like me to find you three discount brokers to interview? RIGHT NOW! There in every state, every county and every city! A good agent provides value, whether it’s worth a percentage is arguable and nothing is stopping competition. It’s like lambasting the athlete that gets 20 million a year. I bet once that pie is cut up he really takes home half the face value of the contract if that.

Oh ya, the forms we fill in are only there because attorney generals deem most agents incompetent to pen out a clause or addenda on their own. Why not make it harder to become an agent? The NAR won't have it! Those forms were all created and paid for by agent’s dues and fees. They were NOT created by government for us or For Sale By Owners. Office Max, the internet all have fill in the blank forms. What’s stopping anyone from selling or buying a home without paid help? Why are you blaming brokers for high commissions? I see nothing in the way of competition! There's fixed fee, discounted commission and Pay for performance brokerages all over, why aren't they more successful? Oh I know it's because Big Brother needs to step into this fight because the consumers are too apathetic and scared. They can’t organize and make a difference without government? Phewy! I can create a business plan on $3000, 2%, 3%, $995 or any other amount but why would I choose $995 when over 80% of the property sold averages over 2.74% each side? Would you tell your boss, no don’t give me a raise, that’s idiotic.

Realtors, Prepare to Lose Your 6 Percent

The 6% commission is actually a 3/3 a commission. 3% goes to the listing agent and 3% goes to the selling agent representing the buyer. On a rare occasion the listing agent sells the home and keeps the full 6%, but it is rare. The commissions have been under attack for over a decade. Our board and MLS in Utah have never prohibited discount brokers from setting their price nor has the NAR. Discount brokers have been around forever. I know of two discount brokers who could not make it in the business because: 1) their revenue stunk 2) People end doing business with a professional who charges what their worth, most likely 6-7% split 50/50. Some even add transaction fees on top of that.
Jeff, your article is not researched well and is more of a tirade than informational. The truth as to why it costs 6% to list your home with a competent broker is because there are too many large brokerages with in expensive office buildings. Furthermore they need more agents in the house to subsidize the high expenses. As a broker I know the game of the big brokerages. They go to the specialty schools hire an eager newbie. That newbie predictably will do 1-6 deals with family and friends in the first 6 months. The big brokerages know that the newbie will be out of the business in 4-12 months, in debt up to their eyeballs, if not bankrupt. NEXT!
The solution which the NAR will vehemently fight against is to make it harder to get a license; The NAR likes their 1.2 million dues ($104). The states need to require: 1) at least an associate’s degrees to enter the field or 2) require that all new agents operate under an apprentice for a period of time or until certain points have been achieved. Under this model, similar to appraisers after the S&L scandal, the industry would then attract people with a sense of direction, commitment and understanding of patience and discipline. Right now we get 18-year olds to retirees who just want to earn a buck or two, “part-timers.”
I personally have a punch-list that includes 180 items from: to-do’s, calls, meetings etc. that I do for a client and this is just a starting point, it’s customized for each client. PLUS I have to prospect for new business at some point in the week.
Jeff, I assure you the commissions are huge but your tirade is focused on the symptom vs. the cause. Perhaps your right, the commissions will come down. But consider this: If I average more than 2 clients a month, with my system, I would have to hire one assistant for every 12 additional clients (1 averaged). This is exactly why you see the trend of “teams” in big brokerages. That 6% gets cut up like a pie. The real disservice to consumers would be cutting the commission for the sake of cutting the commission. The right thing to do is to make it harder to become an agent. Then watch the commissions go down naturally or watch the service and reputation of agents do a 180. I’ve been financially broke many a months because I truly have the clients’ best interests at heart, and didn’t sell a property even though I easily could have. I know many who fall in the same category of ethics but like all things the bad guy ruins it for the good guys.