The End of Real Estate Agent's Big Commisions?

Question

Do you think that the Internet will (sooner or later) put an end to people paying huge commissions just to sell their house?

In my mind the only reason people don't freak out when you tell them it's going to cost $18,000 to sell their $300,000 home is that it comes out of the money before they ever get the check.

I mean really. Think of the advertising you could do for $18,000.

Answer 1

There will always be agents... People need someone to trust, and with the anonnymity of the net... on that large of a purchase... The'll be around till Jesus comes back.

Answer 2

The general public is very short sighted when it comes to commissions.

Here's the reality of 6% Commission.

6% Total
3% to Listing Agent
3% to Buyer's Agent.

Depending on the brokerage firm you are with you will have to split that with the firm.

Let's go with a Keller Williams, or Century 21 who typically collect 30%

9000X30%=2700.00

Now let's pay all the fees related to being in Real Estate

Conservatively estimate at 100 per month.

Since the average agent does 1-2 deal PER YEAR I'll take Half of that for fees. 600.00

Here is the reality

9000
-2700
-600
$5700.00 Profit. X 25% Income Taxes

That leaves $4275.

If you did one of these deals per month you would make at the end of the year $51,300.

The chances of most agents selling one $300,000 home per month in this market is NOT likely since most agents do 1-2 deals PER YEAR.

And people wonder why 85% of the agents leave the business in the first year.

It's not a mystery if you do the numbers.

Answer 3

Do you realize that for the work a Realtor does even if the commission is 18000 the amount they get in the long run is not that much and in most areas the commission is not that large. I make on average per house $1500-3000$ and that is after months of work. A 18000 co mission may be split in 2 which is 9000 and then the company takes a cut which may be close to 50% now we are at 4500$ which may come after months of work and a million late night calls from the clients, gas and advertising. If you are in a bad market it may be that much over a 2-3 month period. Do you buy all your products from the source? NO. Don't hate the Realtor because you think they are unnecessary. We do alot of work that a Civilian would never know about. In addition 30% goes to taxes so even if its a 4500$ comission the agent gets 3150@ for MONTHS of work. More power to you if you sell your house on your own but do not hate on hard working professionals.

Answer 4

I think that the tide is definitely turning for this issue in light of the fact that housing is in such bad shape and so many people need to sell who don't have any equity to forfeit to a 6% commission. Many sellers could immediately drop their prices if they knew that they wouldn't have to pay that high a commission. Keep in mind that the sellers are the ones who are paying for the representation of the BUYER as well as the SELLER since that 6% is split. Just look at any closing paper....the column for all commissions come from the seller's costs. Some would say that there is an inherent conflict of interest with this traditional scheme, and that the movement is going towards flat fees as well as hourly wages.

Answer 5

The agent does a lot more than advertising. I'm sure that real estate websites have changed the agent's job considerably. But someone still has to show the house, then handle all the paperwork on a sale. Will commission structure change, though? Wouldn't surprise me.

Answer 6

just like their are still car sell people, their will be realtors, I not sure about the big commisions.