The Sacred Six Percent Commission Under Attack
The Times examines the question of how long six percent can continue to be the standard real estate brokerage fee in an era when the democratizing effects of the Internet is enabling buyers to do a lot more of their own leg-work and techno-savvy start-ups are willing to undercut the old horses. We’re sure plenty…
The Times examines the question of how long six percent can continue to be the standard real estate brokerage fee in an era when the democratizing effects of the Internet is enabling buyers to do a lot more of their own leg-work and techno-savvy start-ups are willing to undercut the old horses. We’re sure plenty of you who have sold in the last couple of years have stories of agents who did agree to cut the commission to five, or even four, percent. Of course, given what the market has done, a one or two percentage point cut still results in absolute fees way above where they were a decade ago. The authors of Freakonomics found that commissions do not align the interests of agents and their customers. Why? On the margin, the agent doesn’t have much incentive to get a higher price; instead, he’d much rather get the deal done and move on to the next one. The financial advisory business began migrating to the salary model a few years ago for this very reason. Think that could ever happen in real estate?
Last Stand of the Six Percenters [NY Times]
Illustration by Scott Pollack
I’m going to do FSBO in the next couple of months for my brooklyn heights co-op. Does anyone have any sense of the role of seasonality (i.e., best time of the year to sell) or any MAJOR pitfalls to avoid in FSBO?
Anon 10:02, it really was your money. It reduced the profit of the sellers, so they likely passed at least a portion of that cost on to you.
My neighbors just sold their unit FSBO. They asked for a lower price than a broker would have charged and were able to move it really quickly. They could have squeezed a bit more out of it if they had been willing to bring a broker in and sit on it a while, but since they were able to cut out tens of thousands of dollars worth of expenses by forgoing the broker they got a lot of interested parties in the door FAST.
Anon 9:14 Me thinks you may be that you may be that stupid.
there should be a cap of 10K fee per million dollars of value in a property for brokers. anything more is entirely unjustifiable – i dont care how experienced they are. when i bought a townhouse in clinton hill the “broker” was a very experienced guy with years logged in the area. But all he did was open the door and shuffle paperwork between lawyers and then took a 35K check or something.not my money. 35K?? anyone can find 10 or so potential buyers in NYC without spending that kind of money. its a crime really.
Is anon at 7:59 really comparing the legitimacy of a seller’s profit to that of the brokers?
I am just misreading that right? no one is THAT stupid.
As always The Times just generalizes and then whammo so does a great majority of readers. The truth is if brokers did not work hard last year they certainly are this year. Buyers respond less to sellers who particularly are in denial this year over the dwindling market place. They get to push their losing proposition FSBO and buyers get to pass on them. An experienced agent definitely does count for something oh and for the anon blogger who felt that ALL brokers are being compensated oh so much did we forget about the real crooks who made out these past few years (sellers) yes try comparing their profits to anyone elses.
We have to accept the “bubble” was not the norm. The truth is, buyers ultimately need to be allowed to determine the price. It’s an auction essentially, to sell a home. If it’s worth more, they’ll bid it up. And if NObody is putting in offers at all, or none at the amount you want, then get a clue, it’s priced too high. Secondly, getting more traffic and getting it early on is really important. The fact that owners are willing to hire a place like Aguayo to save a buck, in order to get a fraction of the potential buyers looking at the place? Stupid. I can’t figure out how they get any listings. And no, I’m not a realtor. I’ve just always had very good ones. Because I hire experienced ones; I don’t hire newbies or babies who promise me the moon and the stars just to get my listing. And then can’t deliver. I know exactly what my property is worth, I don’t need the snow job.
Is this FSBO vs. Broker discussion made worse because of the reluctance of city brokers to use MLS? I know that when I have bought houses in other areas, the searches were made infinitly easiser by having a centalized database to conduct my search. By forcing you to conduct your search across many sources, brokers maintain more control over the market and inflate thier involvement.
Just do an advanced search on the NY Times website. Type in key words like “owner” and “no brokers.”
Every other site is so small and the listings are so old, what’s the point of looking unless you have absolutely nothing better to do.