Mudmoon18

Sales Manager

Realtors overpaid?

Do you think realtor commissions are too high for the value they provide a seller/buyer?

For context the national standard is 3% to buyer’s agent/broker and 3% to seller’s agent/broker. So a $500,000 home sale would have $30k in commissions paid out. $1M home would have $60k commissions paid out. This just comes out of the sale of the house.

Are realtors overpaid? (details in the post on standard commish if you don’t know)

Attached poll

Generally way overpaid A little overpaid About right I didn’t know they made that much

*Voting in this poll no longer yields commission.

🐱 Off-Topic

🏠 Real Estate

38 comments

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funcoupons

WR Officer

👑

If that’s the going commission rate it means the employer and clients feel the realtor is worth that much. Sounds like it’s about right to me. 🤷‍♀️

I don’t really give a fuck about what realtors or any other salesperson make though. It’s not me paying them. Even if they are overpaid - good for them. Glad they’re earning.

Mudmoon18

Politicker

Sales Manager

I should have worded my question better. What I meant to ask was if you were the buyer or seller do you actually get that much value from them or do you feel like you get ripped off because that’s just how you sell real estate.

Agree that if it’s not me paying them then yeah go crazy bro make your money.

Beans

Big Shot

Enterprise Account Executive

That is the real question.

funcoupons

WR Officer

👑

No, I wouldn't say I'd get that much value from a realtor which is why I'd much prefer to go direct.

poweredbycaffeine

WR Lieutenant

☕️

All depends on the quality of your realtor. A good one is worth every penny. I fired two, one for missing an offer deadline and the other for ghosting a showing, before finding the right one.

funcoupons

WR Officer

👑

This is true. Realtors are a dime a dozen so if you're going to pay one, make sure you're paying a good one.

UrAssIsSaaS

Arsonist

SaaS Eater

This is the correct answer. A good one is irreplaceable

buckets1

Politicker

My agent negotiated for me to buy my townhome for $30k less than an identical unit in the same complex that sold the week before. The listing agent we bought from was a Redfin agent, who focus more on volume and less on building long term relationships. Anecdotal for sure but after that experience I’ll be hiring a realtor when I sell. Less hassle for me and worth the commission they’re paid.

Mudmoon18

Politicker

Sales Manager

Ah so you directly experienced using a good realtor and indirectly witnessed someone (that seller) using a bad realtor and this makes you sure that you'll hire a realtor when you sell, but similar to a thread above the bigger issue is the discrepancy between good ones and bad ones. Could be said that good ones are worth more than what they're paid and bad ones are way overpaid?

buckets1

Politicker

@Mudmoon18 for sure! There are bad one out there and it sucks cuz you can only gather so much for personally vetting them. Luckily I’m pretty tied to my current metro area with lots of family in the area so when I upgrade I’ll be able to hire the same realtor again.

JustGonnaSendIt

Politicker

Burn Towns, Get Money

Although this is the standard, it is certainly negotiable.

You can also save money by representing yourself instead of using a realtor as either the buyer or seller.

However, you often get what you pay for.

Have a generic house in a generic market and need it to move fast? Pay the Realtor for their expertise. If you can take your time, maybe you do it yourself.

Have a unique property / high-value property with a very narrow buyer profile? Pay the Realtor for their expertise.

Realtors are certainly salespeople and deserve a cut of the deal for helping it happen, IMO. Definitely worth their value in most circumstances.

Sunbunny31

Politicker

Sr Sales Executive 🐰

Our realtor made the difference for us, and I don't regret the commission. She did a boatload of work to get the best possible outcome both times we worked with her.

DrSmallprint

Politicker

Account Executive

My first relator had my house sitting on the market for six months with little to no interest.

My second relator came up with a plan on exactly what changes needed to be made and how to approach the sale. generated tons of interest and had the house told in under 3 weeks. She earned her 3%.

FinanceEngineer

Politicker

Sr Director, sales and partnerships

Some places, like NYC, it can be 5% as I am currently in contract with that amount. Moreover, they handle all of the marketing, registering, and hand holding for the docs abs board packages. So I think it is a little high, but not too bad.

RickC137

Opinionated

Account Executive

When you say marketing did they do anything beyond MLS and zillow listing?

FinanceEngineer

Politicker

Sr Director, sales and partnerships

Create and print out the take aways, and then have to physically be there for showings and get buyer agents interested as well. Not a lot, but can be a decent amount of time

RickC137

Opinionated

Account Executive

Makes sense

Justatitle

Big Shot

Account Executive

3% is the going rate. I have a close friend that is a high end realtor and it’s common that they lower their commission to 1-2%. There is a ton of work that gets put in to earn the commission and realtors are not salaried so they can go months without earning a paycheck. To me the 3% is justified.

Mudmoon18

Politicker

Sales Manager

Going months without a paycheck has nothing to do with the value they provide to the buyer or seller though. From a seller side what is the "ton of work" that the realtor does for the seller?

Justatitle

Big Shot

Account Executive

My father in law wanted to sell his house for 1.5 million and tried doing it on his own for 6 months with no success, agreed to a deal with a realtor and she sold it a month later for more than he was initially asking for, in addition to that, realtors have connections and it is what they do 24/7. I think it is worth it.

Chep

WR Officer

Bitcoin Adoption Specialist

I like the idea of cutting out middlemen but not likely the state will ever let that happen

LordOfWar

Tycoon

Blow it up

Some of them actually work enough to earn it, most don't.

Tip: don't sign exclusively with an agent until you see how they work.

Boutdamtime

Politicker

Client Executive

Honestly yes they don’t do shit for the money they earn and the entire market is basically a Ponzi scheme lol.
That being said I’ve used the same agent three times now because I like him and he helped me get in on the Ponzi scheme, sell my first house, then buy my dream home. So I’m totally fine with him making some coin cuz at the end of the day he helped me get a home in one of the most competitive markets in the US.

peachykeen

Politicker

sae e-commerce

Housing market can be all over the place from year to year. Budgeting what you do make could be very difficult. So, sounds about right to me.

Mudmoon18

Politicker

Sales Manager

What do you mean?

Beans

Big Shot

Enterprise Account Executive

I don't blame the realtors for this disaster of a market, they're reaping the rewards of a supply/demand issue.

countingmyinterest

Politicker

Account Executive

A little more nuance onto that. They also split the commission with their majority broker and the firm.

I've heard of firms having up to 70% commission splits with their agents. So an agent sells a house worth $1m, he gets $30k. Of that $30k, it's not uncommon for 50-70% to go to the broker.

Of course, this changes with how much volume the agent is bringing in.

In commercial real estate, it's a whole different ballgame. Lots more gatekeeping with deals is involved and not a lot of good deals are public. Also with residential, they might know of off-market deals if they do their own lead generation too.

Mudmoon18

Politicker

Sales Manager

True, varies greatly depending on the broker rates. But what do you think about the whole payout from a buyer/seller perspective of 6%, regardless of who it goes to did you and the buyer get $60k of value?

countingmyinterest

Politicker

Account Executive

I mean seller pays 6%. As a seller, I want a deal closed and if they can find a qualified buyer and close it. Otherwise that would mean me having to field through all of the buyers out there, dealing with inspectors, title agencies, contractors if they want walkthroughs of the house. The whole process of selling a property is a PITA.

Buyer pays nothing, so great for them.

nemix

Politicker

SDR

A good realtor is worth 3% in my opinion. Someone who actually knows what to look out for and tells you when not to buy something. Too many idiot realtors who encourage overpaying for shit properties, waive inspections, and overall having 0 real estate knowledge. I see at least 3 RE posts on reddit everyday about new home buyers who bought a house with a shit roof, or foundation after 1 month because realtor said to waive inspection and overpay so they get the house lol.

Mudmoon18

Politicker

Sales Manager

What about from a seller perspective? Do you think they're less helpful or valuable?

nemix

Politicker

SDR

Are you going to spend the time it takes marketing on your own , doing the showings, then facilitate the negotiation between multiple parties? Not including doing research to make sure your actually selling your home for the right price.
I don't have the time nor want to do all that shit so idc about the commission lol.

CuriousFox

WR Officer

🦊

They deserve it.

1nbatopshotfan

Politicker

Sales

In the process of buying now. Our agent has been worth every penny. Huge value provided. Information on quality of house, her thoughts on price, matching schools districts for two young kids etc.

Mudmoon18

Politicker

Sales Manager

What do you think about from a seller perspective?

UrAssIsSaaS

Arsonist

SaaS Eater

2 Thoughts.

1) I will never say another salesperson is overpaid. Were all out here busting our ass so get what you can.

2) I bought a house a couple years ago and would not have been able to make it work without my realtor so whatever the commission amount its worth it. I would not be in my current house without her.

IanJ

Executive

Enterprise Business Development

It's not quite that clear-cut.
Like a lot of traditional sales roles, the earnings are subject to the 80/20 rule.

They do have a bunch of costs associated with selling properties and maintaining their relationship with the banner they operate under (Re/Max, Century 21, etc.).

That said, the amount of commission they get paid per deal is often higher than the work they put in.
I've found the properties I was interested in, they only had to set up the viewings.

PS - open houses are not for the seller's benefit. They are for the agent to find more buyers that they can find homes for.

AnchorPoint

Politicker

Business Coach

Never been in real estate, however, I am betting it is not nearly as easy as it looks. Yes the best rise to the top just as in any other profession. And rarely do they get both sides of the commission and if they work under a broker house, they do not get all of the commission.

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Mudmoon18

Realtors overpaid?

Are realtors overpaid? (details in the post on standard commish if you don’t know)

38 comments

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