Are brokers overpaid?

There are two ways, I look at this
1) hours spent & services provided
at $60,000 per $1,000,000 of home value this seems, consider a home that takes 90 days to sell. This translates in to $666 dollars per day over over $1300 a day for a $2,000,000 property... And we know the broker is not working exclusively on your behalf 24/7
2) price of home sold via broker vs by owner. I've seen no evidence of this, but if there some unbiased studies not published by the NAR or an entity paid for by the real estate industry I would be interested. That said my own experience and the few personal experiences I'm aware of makes me doubtful.

Dividing compensation by days on the market does not, in my view, bear any relation to the amount of work that is performed if measured only by time spent. There are some studies by, if I recall correctly, a couple of Chicago economists. But I personally haven't found them compelling and, unfortunately, cannot site them for you.

oops. Did I actually write "site" for "cite???"

If a person sells his house, and pays the broker, and the person is satisfied with the price received for the house, and the process (including service) to get to that price, AND the person looks at the amount paid to the broker in the transaction out of his proceeds and feels it is fair in context of the price and process/service, ... is the broker overpaid? Should the government regulate it?

On a personal level though malcolm, I wouldn't want to hire a broker who felt he wasn't worth it. Maybe then he doesn't feel my property is worth it either and is trying to convince me to sell low, or is messaging to the market that a low price is acceptable.

Yes, anyone who earns $1mm/year for basically being a $10/hr tour guide is overpaid....

Seriously, in a world where Wall Street has barely suffered for the mess it has created and law partners make a million dollars a year, you think *brokers* are overpaid?

I disagree. I DO offer flat-fee consulting as one of my pricing options -- but in general, thinking about per/hr. $$ is a fallacy. It simply penalizes a listing broker for being "good" -- pricing the property at the exact point where it will sell quickly and for top dollar. Similarly, it penalizes a buyer's broker for being "good" and pulling the right property instantly out of the haystack.

ali r.
DG Neary Realty

No they're not, if/when they can get it. If we're going down that road, I've got some better candidates to regulate.

I suspect if all brokers were forced to charge flat rates that approximated the 6% most sellers would balk. Brokers would have you believe your not paying 6% because they've achieved a higher sales price. The beauty of this argument is that it's almost impossible to prove.

> Seriously, in a world where Wall Street has barely suffered for the mess it has created and law partners make a million dollars a year, you think *brokers* are overpaid?

imho if you need to use Wall Street as a barometer for "fair value" then you are over-compensated. only over-compensated public employees do the same (like LIRR retirees getting phony disability: 'hey, wall streeters earn more!').

I agree the logic is flawed. This is like saying Miami is Cold because it's only 85 compared to 110 in Riyadh.

> Instead of a percentage fee, why shouldn’t we be paid, if not on a project basis, at a substantial rate per hour?

that's true. i'd prefer to pay per hour instead of a % of house price. is that an option? or brokers/brokerages are colluding to charge the same way to keep rates artificially high? it surprises me that rates seem to be similar in the sector, shouldn't they compete in price? i guess we are getting there with the introduction of internet services that add transparency and let the buyer do most of the search work.

Ali while normally I appreciated your views on things, comparing yourself to a wall street moron who killed our economy, may not be the smartest thing to do.

Also if you want to start discussing lawyers and their rates, then that is fine, but keep in mind that they bill by the hour, even if at ridiculous rates. I promise you that even if you felt that you were worth $600 per hour, that you would not get close to the number of hours to earn the split commission on lets say a $2 million apartment, which would be $60,000. This equates to 100 hours of work. So if we assume you worked 8 hour days that is 12 1/2 days. While we know apartments will linger, i will assume for now that you are smart in deciding what apartments to sell and therefore there is no way you spend this much time.

Now the other thing we are also assuming is that your time is worth that much. Sorry to say it just is not. No matter how much experience you may have, the lawyers making those rates, have to actually attend school to get their license, and most of the time you are paying for connections at those rates. So really lets say a good broker is worth at most $200-300 per hour, even that is high, but this then says you need to work 200-300 hours to make that $60,000 commission.

You make it sound as if a real estate broker is the most important person in the transaction and that you deserve an artificially high fee for just being there. Then you wonder why people hate brokers and what they represent, it is exactly the reason you brought up, it reminds us all of the greed of the wall street people.

Just remember the one difference, while they get ridiculous compensation they also make money for their shareholders. You set a price point that you hope you are able to get and are not able to take a $1 million apartment and get the seller $1.5 million, just because you are that good.

why somebody should say that he's overpaid?
I just don't get this

Mike, I know you had a lousy broker, and I'm sorry for that. But it wasn't me. For my customers, I am the most important person in the transaction. I help shepherd, advise, price, negotiate, corral, cajole ... and those are services they're willing to pay for. The best justification I can give you of my pricing is that of experience: my clients tend to hire me more than once.

ali r.
DG Neary Realty

Ali missing the point. I am sure if I used you and had a great experience I would use you over and over again also, as of course we always want someone we are able to trust. This goes more towards the question of compensation. I am more then willing to give my broker the 5-6% including cobroke because that is the going rate. The point is that the rate is crazy ridiculous and there is no real justification at the end of the day for it to be that high, as Malcolm points out there is no more real time spent on a higher priced home then a lower priced home, so why a flat percentage.

And last point is you seem to have no issues helping people who bought during the top lose more money as there home already lost its value and now you are taking a large chunk out on top of that. So I guess comparing yourself to wall street would be correct as they kept paying themselves fees for mismanaging peoples funds.

Are brokers overpaid?

Most of them, yes. I've met a dozen or so brokers over the last years across 3 transactions. I have only been impressed by one. Turned out I know more about NYC real estate than about half of them. And I don't know much about anything. Too many of them are failed other things, turning to real estate as a next job, at which they do no better...

Then again, the one who impressed me, had a terrific feel for the market, an encyclopedic knowledge of buildings and comps, and "played" the negotiation very well... just was a shame she worked for the other side...

On a typical "hourly" rate, of course they are overpaid. Ali's argument about "value added" is correct, as far as it goes, but ultimately that is his client's value...

If a broker views his profession as a "profession" then he should be paid by the hour (like a lawyer, or accountant, or doctor).

More interestingly, why are broker's fees so high in New York? In most countries I've lived in, broker fees are more like 2-3%....

Ali, I recently came out with a flat fee service for buyers out there who wish to represent themselves in the transaction and who from the get go, had no interest in taking on traditional buy side representation. I expect it to be <5% of my overall business, very small market, but its out there none the less. I got BLASTED on The Real Deal for it, granted, it was also because the writer took things I said out of context and gave the impression that I though no brokers could be trusted. Completely out of context. Anyway, in terms of flat fee, the market will innovate no matter what and brokers should understand this as the natural evolution of any industry. Rather then being a threat, it should be adapted to. Free markets always evolve via innovation and new ideas. Some work some fail. Some cant take it

95% of the brokers I have met are totally worthless. I've been following real estate and reading sites like streeteasy and curbed for many years and I know far more about real estate than most brokers I have met. I'm not saying I know a great deal - but rather most brokers know very little. The amount of work and training it takes to officially become a broker is minimal. I've spoken with brokers who have been in the business for three years and didn't know that there is a transfer tax and that the seller usually pays it except on new construction and then it is sometimes paid by the buyer. Most brokers couldn't find another job so they buy a couple shiney suits and call themselves a broker. To be honest, the ones who should be most upset about it are the ones who have been in the business for years and know the market well. I met one a few weeks ago and he knew all the buildings in the neighbrhood in which he worked and really knew the marketplace and seemed like a straight-shooter. He is the exception.

I'm not the biggest fan of brokers, but I wonder how many people on here would sign up for a job where you have to front your own money and you run the risk of earning nothing based on the whims or irrational decisions of others.

In every deal, brokers are accepting risk -- the risk that their time will be worth nothing in the long run, the risk that the apartment will take three times as long to sell due to factors outside of their control, the risk that it will cost them quadruple in marketing dollars what they budgeted, etc. Of course there is going to be a hefty markup for assuming that risk, as there should be.

I don't mean to sound preachy. I work in a job where a significant (50%+) portion of my take-home is bonus/discretionary. But even with zero bonus, I can pay all my bills and live decently if I show up to work every day, regardless of what I accomplish or how long it takes me to do it. That's a real luxury that I never take for granted.

As for brokers being idiots.... People will, naturally I think, gravitate toward the jobs for which their skills will earn them the most money. People with the skills required to be a really great real estate broker can probably make a lot more money with a lot more security elsewhere. So you have a few great ones who stay because it is their passion, and the remainder are those who can hack it and are happy that real estate pays better than acting, modeling, theatre, etc.

I am not sure of the risk you are referring. With the assumption the apartment will sell, the seller is giving the broker an exclusive to sell and collect the commission.

There are many jobs out there where you do things upfront and then collect money and fight to actually collect. Most brokers fees are built in at closing and there is never a real risk of not collecting the fee that is due.

You could argue that marketing should not come out of their pocket and I am all for that. So still you are back to the seller paying out of pocket expenses for marketing, and then potentially an hourly rate to cover time. See then there is no risk for the broker and there goes this insane idea of a markup for risk.

Also I have spoken to many people who have become brokers over the years and really most could not make it in other employment and figure this is easy money. While i do not think it is easy money because there are to many brokers, the amount paid is just out of line.

What lad said. Myself, I like getting paid for my SE time, with the money appearing in the bank without fail, and if I had to be entrepreneurial would starve in a few months.

It seems as if a lot of posters who bad-mouth brokers as brokers don't choose well. If you don't know anybody who can recommend one, it's easy enough to research and find someone suitable. I'll be leaving my place in a body-bag, but if I had to sell I'd be hard-pressed to choose among all the good brokers.

Brokers (a generalization) make a point of how much preparation goes into the sale of a property. The comps. The understanding of every detail, nuance. In reality, when I ask a seller's broker about a property - storage? pied a terres? sublets? - I consistently hear - "Not sure. I'll get back to you". I think the amount of time and energy spent selling is greatly exaggerated to rationalize a 6% commission. I think a lower amount (2-3%) is more consistent with the value that a broker represents. And since this is NY, where multimillion dollar listings are common place, it is still a nifty payday.

regardless, fee based services are going to enter the marketplace. Its inevitable. Realdirect.com already does it. Burkhardt. Demsker. Its coming whether the brokers or the firms care or not. You cant stop the free markets from innovating. What the market can do is decide which models work and which fail. And Im sure the failed ones will learn from mistakes, and go where demand is, and over time, innovate further.

Some out there simply cant accept this and will naturally have feelings of hate, fear, and uncertainty about the long term sustainability of their chosen "independent contractor" profession. Lets face it, 70% of brokers out there are getting by. That seems to be the nature of this business. Hot one year, cold another. The lifespan of a broker is something like 13 months. That speaks volumes

Multimillion dollar listings may be the norm in Manhattan, but here in Red Hook they are the exception. I tend to work with properties that absolutely cannot sell themselves. And with buyers who can use my help. It's more than comps - it is truly knowing the market, zoning, community board issues, mortgage options; knowing when to push, when to sit back. It's a real skill, and requires years of accumulated experience to fully mature.

Look: I love my job. And I am lucky enough to be married to someone with a steady income - otherwise I could never ride out the long stretches of zero compensation. Over the past few years there have been many such dry spells. That uncertainty is not for everyone. If it was - and if the payday were as "nifty" as you describe - all y'all would be brokers.

Tina Fallon
Realty Collective, LLC

Look at me logged in as my broker again. ^^^^ Sorry.

> regardless, fee based services are going to enter the marketplace. Its inevitable. Realdirect.com already does it. Burkhardt. Demsker

much lower transaction fees is great news imho, both for sellers and buyers. that event and higher transparency in the sector thanks to internet are the 2 biggest positives coming to the mkt lately imho.

"all y'all would be brokers" - No, I don't think so. A broker, by defintion, does not create, produce, repair, or heal anything. A middle man. A broker. Nothing more - selling somebody else's stuff. I wouldn't do it no matter what it paid. I am not sure the world would be any less livable if there were no real estate brokers.

Mikev, I'm not sure about the assumption that all apartments will sell. But, for argument's sake, let's say they will. No one can tell you with any amount of certainty how much time it's going to take, how much marketing money you'll need to spend, or when your payday is going to come. Then there's the buyer side, which has absolutely zero guarantees.

sjtmd, sadly, commission-based professionals and one-man shops (like real estate lawyers) are often so focused on where the next paycheck is coming from that the people supplying the current paycheck get screwed. But they need to put food on the table the same as anyone else, so that's just the (unfortunate) way of the world.

Seriously, though, why do brokers in NYC get 6%?

In London, a similarly complicated, high-end, market, they get 2-3%.

What is it about the oligopoly here, that allows this completely ludicrous fee structure to survive...?

usual answers.
gov't not prosecuting/enforcing the laws
strong real estate lobby interests combine with lining politicians pockets
oligopoly and coercion amongst the big brokerages.
and don't under-estimate control of the listings.

sjtmd
about 18 hours ago
ignore this person
report abuse "all y'all would be brokers" - No, I don't think so. A broker, by defintion, does not create, produce, repair, or heal anything. A middle man. A broker. Nothing more - selling somebody else's stuff. I wouldn't do it no matter what it paid. I am not sure the world would be any less livable if there were no real estate brokers.

So you're an Md then? Or you work in a soup kitchen?

What the fuck is it that YOU do that is so valuable to society?

you want to stir up this board just post something to do with brokers and our compensation. the main reason that we aren't overpaid is that we are only paid for results.

what percentage of real estate agents and/or brokers have degrees?

Also, I must say that shows like "Selling New York" and "Million Dollar Listing" help the agents on those particular shows but not the industry. It's clear from watching those shows that anyone with half a brain can do the job...there is little skill or intelligence required. There is no way to justify the going rate of approx. 6% other than to say,"That's New York for yah".

dg156
4 minutes ago
ignore this person
report abuse what percentage of real estate agents and/or brokers have degrees?

Also, I must say that shows like "Selling New York" and "Million Dollar Listing" help the agents on those particular shows but not the industry. It's clear from watching those shows that anyone with half a brain can do the job...there is little skill or intelligence required. There is no way to justify the going rate of approx. 6% other than to say,"That's New York for yah".

Are you paying for education or results?

dg156
4 minutes ago
ignore this person
report abuse what percentage of real estate agents and/or brokers have degrees?

Also, I must say that shows like "Selling New York" and "Million Dollar Listing" help the agents on those particular shows but not the industry. It's clear from watching those shows that anyone with half a brain can do the job...there is little skill or intelligence required. There is no way to justify the going rate of approx. 6% other than to say,"That's New York for yah".

Are you seriously basing your opinion on what you see on a reality television show?

To me it's fairly clear that it's easy to be an attorney. From what I've seen on Law and Order.

shows like selling new york and million dollar listings are essentially infomercials.
They're financed and paid for almost entirely by real estate interests.

are law and order and csi miami paid for by the pba and other such interests? what about the reality shows about the penal industry? bet there is a legal interest behind that

dg156
16 minutes ago
ignore this person
report abuse what percentage of real estate agents and/or brokers have degrees?

Also, I must say that shows like "Selling New York" and "Million Dollar Listing" help the agents on those particular shows but not the industry. It's clear from watching those shows that anyone with half a brain can do the job...there is little skill or intelligence required. There is no way to justify the going rate of approx. 6% other than to say,"That's New York for yah".

Far more intelligent and articulate people have tried to argue against the current model for years, yet it hasnt changed. for fun go to this website.

http://www.theburkhardtgroup.com/properties.php?statusID=18595,27116,18599,18596,18597,27115,18598,18600&typeID=21791&locID=&custID=&thisfil=1036

Keith seems a nice guy, his model can certainly save a property owner money if they chose to list with him. then why only one listing.

Now for more fun, go to this website:

www.corcoran.com

Which seems more successful?

of course not.
big difference is that the brokers are real, and the brokerage firms firms known.
These shows are pushing real product.

LAW & ORDER is fictional, the lawyers and firms made up. What a stupid comment
and this is all public data and made available by HGTV and parent company. It's an old model
partner up with outside firms , advertising is pre-sold and product content is cost free.

ok...so what about "cops"?

anyway, this bit of the arguement is semantics. the bottom line is this: we're paid for results only. and people have (and have for some time) other options. but the current model with full service brokerages commanding full fee's is alive and well

What to pay real estate agents and brokers is the question? Assigning the appropriate value to the job...what are the demands of the job, the required skill set, required education, level of difficulty, degree of independent decision making, etc.

You have to like cold calling, be pushy, and have no fear or hatred of rejection. It
helps to be superficial and have some acting skills. It's 5% real estate knowledge,
90% sales and marketing and the rest hard work and perspiration. You also can't
be worried about job security. The industry will treat you like a temp/consultant and your only
as good as your last sale.

Watc the film Glengarry Glen Ross
http://www.youtube.com/watch?v=y-AXTx4PcKI

Foxton's (UK) tried to enter the NY market a few years ago at 3% (if I'm not mistaken) and failed fairly quickly. Maybe they were a little too early for their largely web-based approach (data sites like SE were less evolved; I'm not sure ACRIS was live or had much historical info) ... maybe it was their atrociously, relentlessly British descriptions of apartments, so staid and dry-rot that they probably wouldn't even fly in modern London, let alone NY ... maybe it was the Excelsior! market at the time, so sellers didn't really care about saving 3% ... I'm not sure if they were REBNY/MLS-connected, or whether they paid a buyer's agent from another firm anything or they were trying to be self-contained. But epic fail.

Other than Foxton's, there's been no real large-scale push to get away from 6%. No big brokerage makes it clear that the fee is negotiable ... it's a secret that, on occasion, a broker will admit to in an article. And a big part of the reason someone uses a broker is because he's not comfortable with direct negotiation, so it's really too much to expect him to negotiate a fee schedule with a brokerage.

I have no doubt that there's major collusion in the RE industry on fees, and that the natural course of things otherwise would be similar to a money-manager's schedule, in which the more $ under management, the lower the fee percentage rate. So you sell a $30K retirement condo in Florida, and maybe 10% is well-deserved. You sell a $10 million property, and there's no reason it should be above 1%, really. Including staging, marketing, photos, pointless two-ton supplement in the Times, etc.

if you'd like to learn what it takes to be a successful commercial airline pilot watch "airplane"

dg156
26 minutes ago
ignore this person
report abuse What to pay real estate agents and brokers is the question? Assigning the appropriate value to the job...what are the demands of the job, the required skill set, required education, level of difficulty, degree of independent decision making, etc.

Only very stupid people WATCH others do something and assume that it's easy.

alanhart
3 minutes ago
ignore this person
report abuse Foxton's (UK) tried to enter the NY market a few years ago at 3% (if I'm not mistaken) and failed fairly quickly. Maybe they were a little too early for their largely web-based approach (data sites like SE were less evolved; I'm not sure ACRIS was live or had much historical info) ... maybe it was their atrociously, relentlessly British descriptions of apartments, so staid and dry-rot that they probably wouldn't even fly in modern London, let alone NY ... maybe it was the Excelsior! market at the time, so sellers didn't really care about saving 3% ... I'm not sure if they were REBNY/MLS-connected, or whether they paid a buyer's agent from another firm anything or they were trying to be self-contained. But epic fail.

Other than Foxton's, there's been no real large-scale push to get away from 6%. No big brokerage makes it clear that the fee is negotiable ... it's a secret that, on occasion, a broker will admit to in an article. And a big part of the reason someone uses a broker is because he's not comfortable with direct negotiation, so it's really too much to expect him to negotiate a fee schedule with a brokerage.

I have no doubt that there's major collusion in the RE industry on fees, and that the natural course of things otherwise would be similar to a money-manager's schedule, in which the more $ under management, the lower the fee percentage rate. So you sell a $30K retirement condo in Florida, and maybe 10% is well-deserved. You sell a $10 million property, and there's no reason it should be above 1%, really. Including staging, marketing, photos, pointless two-ton supplement in the Times, etc.

Alan, you were doing GREAT until your last paragraph. The more valuable the commodity, the less wililng you are to pay someone to help you sell it or buy it?

Foxton's (UK) tried to enter the NY market a few years ago at 3% (if I'm not mistaken) and failed fairly quickly
--
Big boys control the listings. That's a very big hurdle.

I really haven't read every anything more compelling than a bunch of "it's not fair" type arguements from what I would presume are normally intelligent people. my 2 year old articulates better.

Riversider
less than a minute ago
ignore this person
report abuse Foxton's (UK) tried to enter the NY market a few years ago at 3% (if I'm not mistaken) and failed fairly quickly
--
Big boys control the listings. That's a very big hurdle.

This is true. And the big boys deliver. It's a proven commodity right? You need to sell your place. It's far easier to be convinced to pay a slightly higher fee IF IT ACTUALLY SELLS than to be convinced of a new business model isn't it?

>So you sell a $30K retirement condo in Florida, and maybe 10% is well-deserved. You sell a $10 million property, and there's no reason it should be above 1%, really. Including staging, marketing, photos, pointless two-ton supplement in the Times, etc.

That's right alan, look out for the big guy.

wrong-the new firms are locked out of knowing what's out there and this limits their ability to
come in representing the buyer and build a presence. This is also against the law.

It's probably worth pointing out that the 6% cited above has been established by the market, not by collective bargaining or a monopoly. There is no set rate for real estate commissions. Corcoran can charge 6% because of the services they offer. Lots of other companies take less. Every listing agreement is negotiable in terms of services provided and fees paid, as well as listing period - in fact, nearly every term of that agreement can be altered by a consensus between the seller and the listing agent.

Tina Fallon
Realty Collective, LLC

Riversider
4 minutes ago wrong-the new firms are locked out of knowing what's out there and this limits their ability to
come in representing the buyer and build a presence. This is also against the law.

you must know something i don't. how are they "locked out"? the information is very very accessible.

usually, if anything it some little bullshit firm that managed to huckster someone into listing with them that is often nearly impossible to co-broke with. because there fee's are too low they don't want to share what little money they might make. and they sure as hell don't want to have their owner figure that out.

Alanhart: protect the rich from the powerful brokerage industry!

Interesting thread here. I'd like to clear up what I consider to be a couple of misconceptions:

1. It's not true that most seller are unaware that commissions are negotiable; in fact, I don't recall an instance when a seller didn't ask that question.

2. Antitrust laws prevent me from discussing commission percentages specifically, but let me say that New York's situation is no different from what I encountered when selling real estate in D.C., Maryland and Virginia. Nor is it different from what I've heard about elsewhere.

3. Even a cursory look at commissions in broker databases demonstrates that there is no single number as a standard, though commissions do often tend to vary somewhat as the selling price escalates.

malcolmnc
7 minutes ago
ignore this person
report abuse Interesting thread here. I'd like to clear up what I consider to be a couple of misconceptions:

1. It's not true that most seller are unaware that commissions are negotiable; in fact, I don't recall an instance when a seller didn't ask that question.

2. Antitrust laws prevent me from discussing commission percentages specifically, but let me say that New York's situation is no different from what I encountered when selling real estate in D.C., Maryland and Virginia. Nor is it different from what I've heard about elsewhere.

3. Even a cursory look at commissions in broker databases demonstrates that there is no single number as a standard, though commissions do often tend to vary somewhat as the selling price escalates.

Why would anyone let anyone else know that there fee is negotiable unless the subject is broached by the perspective client? Does that make business sense?

malcolmnc
1 day ago
ignore this person
report abuse I'm one and I think the answer absolutely is yes: http://malcolmcarter.wordpress.com/2011/04/21/the-high-road-we-make-too-damn-much-money/

You and many others have tried this. A self-hating broker you hope to capture the business of those who don't want to use brokers by empathizing with them. It's really pathetic honestly.

The major brokerages by policy refuse to discount beyond a token amount. Anyone hear of
one of the big boys agreeing to 3-4%. In my opinion they have collectively decided against.

Why collectively decide? It's not in anyone's individual interest to compete on price.

Riversider
15 minutes ago The major brokerages by policy refuse to discount beyond a token amount. Anyone hear of
one of the big boys agreeing to 3-4%. In my opinion they have collectively decided against

Taking an apartment that was listed at 6% to 5% is not a token amount. It's about 17%.

Go to your dentist and tell him to cut his fee's for service by 17%. THEN tell him if you get a cavity despite his efforts you won't pay.

It's not in anyone's individual interest to compete on price.
Answer: OPEC

is not a token amount. It's about 17%.
There are firms that would do it for 3% if given the chance.
Your argument is not dissimilar to that used by the stock brokers before deregulation
who said $20 less $120 is 17%. We all know what happened to fixed commissions after
deregulation. This terrifies the big real estate brokerage firms.

Riversider
5 minutes ago It's not in anyone's individual interest to compete on price.
Answer: OPEC

is not a token amount. It's about 17%.
There are firms that would do it for 3% if given the chance.
Your argument is not dissimilar to that used by the stock brokers before deregulation
who said $20 less $120 is 17%. We all know what happened to fixed commissions after
deregulation. This terrifies the big real estate brokerage firms.

There are firms that will do it for less. They do have a chance. They're out there. Some of them are frequent posters on this board. No one's biting. The public doesn't want lower fee's. They want their homes sold.

And there were other tiny phone companies out there before American Tel & Tel was busted up. What's your point?

Excellent point Alan.

Do you use Boost Mobile, or Verizon/ATT.

And why?

Cunt

or are you actually saying that the folks at PDE, Corcoran, BHS, Halstead et al meet Mafia style in a basement and collude to keep the fee's at 6%?

Why not make it higher than?

who killed jfk?

"'m not the biggest fan of brokers, but I wonder how many people on here would sign up for a job where you have to front your own money and you run the risk of earning nothing based on the whims or irrational decisions of others."

You'd be surprised at how many bored housewives and kept gay men there are in this city.

Not to mention captivating housewives and boring gay men.

jim_hones10
15 minutes ago Excellent point Alan.

Do you use Boost Mobile, or Verizon/ATT.

And why?

The biggest expenses involved in running a brokerage are rent and labor. Foxton's failed as a discounter because 2% commissions couldn't cover those costs. There are now several models out there that are attempting to discount, but ultimately it's going to come down to not paying rent (which appears to be the model of many new firms, not giving their agents desks and thus essentially pushing the cost of office space onto them) and/or labor.

I think you will see the development of a class of brokers who are simply willing to accept less for their labor, but it's unlikely that those will be the best practitioners. Maybe a good analogy is the stratification of the legal profession -- there are cheap lawyers and there are expensive lawyers, and in any given situation the customer can pick which one to hire.

I don't buy the stock brokerage analogy, though -- any share of Goldman Sachs common stock is pretty much like any other share of Goldman Sachs common stock, and I don't care that much who I buy it from, whereas apartments even in the same building differ from each other, and that makes me (and numerous other people) care at least somewhat about who we're dealing with in the transaction.

Also, since the goods are not perfect substitutes for each other, the cost of making the market can't be pressed down to zero, no matter how much computerization you throw at it.

ali r.
DG Neary Realty

The standard is 5% in this market, of which the broker takes home one quarter (split between seller's broker, buyer's broker and their respective agencies). The average apartment takes around 90 days to sell in this market and another 90 to close. So for six months in, the broker will will take home around $11K on a $1M listing. Still sound like a lot of money? In addition, only the most elite brokers receive any benefits from their agencies Virtually all pay for their insurance out of pocket.

Less than 5% of brokers make over $100K/year. Less than 2% make over $200K. Just sayin'.

Yep the broker is just a foot soldier. The firm he work for gets the dough.

"The standard is 5% in this market"

Which market are YOU in?

Here in New York City, it's 6%.

Matt, you sound bitter, what's wrong? You can always use the burkhardt group, or go fsbo.. Lol.

just to add it really is not the point how the commission is split. It is not my problem that in this idiotic environment a buyers broker who may not have worked that much at all is able to bring a person into an apartment, stand back and let the seller's broker answer all the questions, then they get 50% of the commission for themselves and their firm. I know the answer i will here is that they then help with a board package if there is one, but really is that worth 50% of the commission?

And the other problem not being discussed is it is not the length of a listing, it is the fact that there are so many brokers that you do not really get the chance to go at multiple listings at the same time, unless of course you have a great reputation. The 90 days waiting for close, does not mean you are doing nothing, you should be hustling on your next listing.

So really cut down the amount of people calling themselves brokers, cut the commission, cut the excessive back office and you will still make a bunch of money at the end of the day.

Maybe you are left then with a high end brokerage or two dealing with the high end apartments where people do not care where they throw there money out.

The arguments here are not based on any sort of reality as to what you are providing and what that is worth. It is not my concern that brokers entered a career that is based on a commission, that people should have to pay a high amount to cover that career choice.

Ali there are plenty of great brokers who work on their own and are able to afford lower commissions because there is not excess back off spending. so i do not agree that if you lower commission you are left with crappy brokers. It's just the excuse that brokers throw at us that the fees are there because of the excellent service we get and this will not change.

Also say lowering the commissions is a big deal from 6% to 5%, etc. Keep in mind when you go to a dentist they do not say wow you are worth $2 million so i will charge you $2000, but the next guy comes in and is worth $1 million and pays $1000. That is how the real estate market works and that is really what is wrong with it as the costs are the same.

Dentists are paid based on the services performed. Not on the assets of the patient. That said
doctors have been known to cut the price for someone who can't afford to pay or stretch out payments.
As far as the buyers broker is concerned. Hes done just as much as the sellers broker. This is sales,
the value is in money brought in. ABC(always be closing). A broker's productivity is measured in how many times he closes, and if one broker takes longer or has to do more before closing, then he's less
efficient and not as good as far as his employer is concerned. Any discussions to the contrary are b.s.
or pure public relations.

Mike, if you don't like it why don't you just sell or buy real estate yourself?

All of you are bitching like little girls as if there aren't other options, when in fact there are. The fact is NONE of them are as good as shutting the fuck up, and paying the 6 percent. Which is why it isn't going anywhere.

Also, Mike, doesn't the dentist get paid whether his treatments are effective or not?

the fact is sellers have a choice. we get paid for results, nothing less than a closed transaction that results in the sale of the property. there are tons of other options, ranging from true DIY to discount brokers. a couple of years of a terrible sales market hasn't changed a thing. streeteasy has not brought about any more for sale by owners than there were 3-4 years ago. deal with it. or don't, and try to do it yourself (and fail probably, but that's another story)>

Yes and so does the broker who brings you a not so great buyer who closes just not in the 90 day timeframe everyone would like.

and seriously it is great when brokers say buy and sell yourself which there are plenty of people who would like to do just that, but of course the system does not really truly allow for that at least on the selling side.

Oh and jim when was the last time you heard a broker tell a seller that since there apartment is worth less then they paid that they want to greatly reduce the fee to help them out. Just as you said a dentist would if a person was not doing well.

Mikev
less than a minute ago
ignore this person
report abuse Yes and so does the broker who brings you a not so great buyer who closes just not in the 90 day timeframe everyone would like.

and seriously it is great when brokers say buy and sell yourself which there are plenty of people who would like to do just that, but of course the system does not really truly allow for that at least on the selling side.

Oh and jim when was the last time you heard a broker tell a seller that since there apartment is worth less then they paid that they want to greatly reduce the fee to help them out. Just as you said a dentist would if a person was not doing well.

In order:

1. What is a not so great buyer? If they're paying the agreed price in the time alloted in the contracts (writeen by the attorneys btw) and agreed to by all principals they're a buyer, period.

2. wha, wha, wha, wha

3. the last time i heard that was the last time i heard that a hospital was going to refund all of the dead cancer patients that chemo couldnt save.

you're a loser mike, and im far too smart for you. stop before you make a worse fool of yourself. look at your arguements. honestly

i actually love the whole fee negotation arguement. Because as long as you are really willing to walk away froma listing (or a rental client) than there isn't really any tactic they can take.

so hfs, when it gets quiet here, you switch over to jimboner to rile everyone up?

columbiacunty, shut your fucking hole.

arguements. look at them. they look more interesting with the extra e.

oh, and mike, i'm sure you've already realized the depth of honesy's intelligence. mud puddle comes to mind.

Aboutready it's so sad when folks feel it necessary to pick up other peoples battles for them. About as sad as when they correct others for usage errors and spelling mistakes.

so...hfs...looks like its working.

wouldn't have mentioned it but for your false claim of superior intelligence, honesy.

irony. not your strong suit (takes intelligence).

funny that you think after all these thousands of postings that I'd feel compelled to come to cc's "defense" here. no, not at all. I just can't stand you.

Ar, are you and your offspring going to be at the stuytown easter egg hunt tomorrow?

was that supposed to be clever on some level? not.

the kid-related events that used to happen here and I think are starting again are quite nice. but our kid is too old.

clever? no. I thought you could come by and introduce yourself. not that i'd like there, we're invited guests. That's before brunch at the Waldorf.

I can't stand you either, but i'd love for you to come by and say hello, what do you think? maybe you can cc both?

jimboner was hoping to get an early start to get the eggs. he'll be on the second avenue bus at 6:30 am.

and speaking of stupid (you diseases greying old bitch) i was referring to the fact that you stuck up for mike, not cc.

honesy, you're just a stupid nasty broker, who distorts. I like many brokers. if I'd had no prior experience, your postings would convince me to never hire one.

enough fun for you hfs.