But What About All The Brokers?
Guess how many real estate agents there are in this country? More than 1.2 million. During the boomtimes of 2002 to 2004, there was a 26 percent increase. Now, with the number of real estate transaction forecast to fall 7.6 percent this year, the question is how are all these folks going to continue to…
Guess how many real estate agents there are in this country? More than 1.2 million. During the boomtimes of 2002 to 2004, there was a 26 percent increase. Now, with the number of real estate transaction forecast to fall 7.6 percent this year, the question is how are all these folks going to continue to put bread on the table. The National Association of Realtors is predicting that those who came last to the party will be the first to leave: With less low-hanging fruit to pick, those without established networks will find it toughest to generate commissions. We’re curious whether anyone’s noticed a thinning of the ranks among brokers in our corner of the universe. How ’bout it?
Real Estate Downturn Hits Agents [CNN/Money]
Graphic from Lisa Saltman Real Estate
I dont know that most people think ‘being a RE agent” is “easy” – I think people think that with the ability of the internet to publish a listing to virtually everyone and to ‘show’ a listing thorough digital pictures and floor plans, an agent just isnt all that necessary (except due to the monopolitic tactics brokers foster), and not worth 6% to the seller.
I accidentally watch Million Dollar Listing sometime, because it come on after Project Runway and I can’t be bothered to change the channel. Those brokers are a bunch of self-absorbed babies, and don’t seem to be working all that hard. The plastic surgery nightmare lady Dia just breezes by Open House that her husband is running (BTW: that man looks like he needs a good dermatologist, is that a melanoma on his nose?). Dia eats some of the poorly laid out cheese (not cut and on paper plate !?!) and then breezes off to her massage appointment.
Please, I have never paid a 6% commission and have sold over 12 properties in Brooklyn. One that just went into contract yesterday. If your paying higher than 4% you my dear are a fool!
I’d never buy or sell without being repped by a professional. To me, it’s like the saying about attorneys, “He who represents himself has a fool for a lawyer.” Would a legit writer rep himself on selling a book and negotiate his own contract? If the realtor’s firm gets you more traffic, and thus gets you 6% more money than you’d get all on your own in a slow market, doesn’t that earn their commission? I just don’t get it.
Here’s the breakdown on a $108,000 commission (if you’re lucky enough to land one):
I take home half of this check if I happen to be the listing agent and the buyer is also my customer (rare occurence). Half the check goes to my agency: $54,000.
If I am the listing agent only, or if I am the buyer’s agent only, I get half of half. $54,000 half goes to my agency: $27,000.
If I am a co-listing agent (in other words, there are two agents selling the property), and we don’t have the buyer, I get half of half of half. $108,000 cut to $54,000, I split that with my co-agent. I get a check for $27,000. I split that with my agency. I end up with $13,500.
Being a successful real estate agent is like winning the lottery — that’s how hard it is and how much luck is involved to become Jerry Minsky (one of Brownstoner’s pet agents) or any other top “celebrity” agent.
You folks who disparrage brokers might as well be disparraging lottery winners.
Most agents make 30k a year. Negotiate the commission if you want to, or don’t use an agent at all if you prefer, but please stop fussing.
interesting insights into the trails and tribulations of brokers. still, a 6% commission on anon 9:48’s $1.8M brownstone is $108,000. plenty of folks out here who follow things through only to end up at a dead-end, deal with crazy people, etc. for less per annum than the commission on this one hypothetical sale. I worked almost 2500 hours last year for two-thirds that much. please pardon me if I don’t get out my hankie for real estate agents.
seth godwin has a good quote on brokers. I won’t retype it from his book but it basically says this:
Anyone on a percentage should realize that profit margins SHOULD fall as their sales get bigger. If he was a real estate agent he said he’d be plowing back part of his 6% (already higher in new york than the USA due to barriers to entry) into incentives, customer systems, staff, etc etc. Not just taking it to the bank.
Of course he points out that because brokers are on a percentage when the market booms, a lot more people become brokers which reduces the number of sales per broker on average.
But still. 21% more brokers over the last few years? prices went up by a lot more than 21% and then look at the previous 10 years. Prices outstripped number of brokers by probably a factor of 2.
Nevertheless, brokers have to realize that they cannot be on a fixed percentage of an appreciating asset when they have to do no more real work per sale in 2006 than then did in 1986. It was just as hard to sell a top apartment in the 80s as it is now. A fixed pure profit percentage has come under pressure like it or not, they have to give some back if they want to survive. Particularly in a downturn.
Anon 9:48,
In this market you probably will end up having to hire a broker or at least make your brownstone an open listing to agents if you plan on selling it.
I just sold a prisitine townhouse and like you tried to do it myself, offering 3% to buyers agents. Nothing materialized, so I increased the commission to 6%.
Shorty thereafter, the place sold.
You may think you can “do it yourself,” and who knows, maybe you’ll get lucky, but if no real buyers show up, you won’t be moving anytime soon.