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
Many real estate agents appear to be clueless and stupid because, quite frankly, they are. The reason? There’s a huge turnover in this business. Many try and most fail. I’m sure many of you have worked with agents who are destined for the dust heap. Go with an agent who has been in the business for at least a couple of years and knows their shit…
Hey, 2:32, give it a try. You think it’s so easy? Believe me, you wouldn’t last two minutes…
I personally just don’t see what agents bring to the table. If I’m going to look at a property, it’s not the brokerage stamp that interests me. It’s the price, the location, the square footage, and the amenities. And anyone who can scrape together the money to buy a place should be able to write a half-intelligible ad for the Times.
And bk, I think that’s my new favorite quote of the year.
I think much easier to sell FSBO in hot market where there is very little inventory and surplus of buyers.
But in balanced or buyers market maybe need broker more.
Many people can market there own property successfully – but plenty of people can’t. And ends up as big mistake.
But I do agree that many agents seem to be totally clueless about product they are selling. Maybe that is a tactic. And maybe they are just stupid people.
Aguayo charges 6% because they don’t co-broke. Which means only Aguayo customers are allowed into a property. They covet their listings. So if Corcoran charges a 6% commission they could easily end up with only 3% of it (as opposed to Aguayo’s 4%) if an agent from another firm brings the buyer. Aguayo’s 4% commission is not in the seller’s best interest, it’s in their own…
I love to rent my apartments on craigs list with “no brokers please” addition. It makes me happy plus potential tenants would save few $$$.
I sold my apartment on Clinton Avenue through Aguayo and Hubener for 4% in 2001. I didn’t negotiate that, that was what they offered. At the time Corcoran wouldn’t match, and just suggested I up the asking price to make up for difference. I passed. (That said I feel like I didn’t get great advice about moving the apartment, and it sat on the market until I suggested dropping the price 15k).
As usual, we only hear the happy, fuzzy fsbo stories. The guy from Tiffany Place that was featured on Curbed.com back in April still has his place on the market.
“I’ve sold and bought FSBO before and both times thought both seller and buyer saved their end of the commission.”
The key word here is ‘thought’. You’ll never really know will you?
I sold my co-op without a broker. It was just as easy as past times when a broker was involved. If you put an ad in the NY Times on the web with decent pics you are reaching the serious buyers here in NY. In my opinion, broker fees are a waste of money.