Comments

If a consumer pays a fee of 6% their listing agent pays 3% to the selling agent; 99.9% of all sales are co-op sales with one company listing the house and another company representing the buyer.

An effective agent will have an assistant who gets paid $25,000-$45,000 per year, sucking up more of the 3%.

Advertising and marketing ca suck up 10%-20% of that 3%.

The broker takes a 20%-50% cut of the agent's fee right off the top.

Annual fees for licensing, MLS dues, continuing education can run $4000+.

Computers that deliver the info consumers demand cost money, and NO, the broker doesn't give those machines to the agent for free.

I run a pretty tight ship as an agent, and my profit margin on fees earned is roughly 20% of gross commission income. 80% of what I earn goes back into keeping the business going.

Posted by Erick Blackwelder at December 18, 2004 1:22 AM

Surreal estate agents to me are dog meat - never met an honest one over 10 transactions - what a delight to cut them out TOTALLY, baby - zip - nada value added by "agents/brokers" ... sorry Erick.

Posted by Freeman at December 18, 2004 10:25 AM

For me this whole issue is about empowerment. The real estate industry has existed in a knowledge-vacuum - now the internet has empowered Joe Bloggs (UK cousin of US John Doe) with information and power (the customer always had the power - to spoil a great quote from the film Usual Suspects, 'the greatest trick the sellers ever pulled was convincing the cusumer they had no power!').

I'm all for tearing down the walls...

...i think I'll change my opening statement and say in this instance the Internet has provided a leveller which leads to empowerment - is that so bad?

DK

Posted by DK at December 20, 2004 6:08 PM

Tom - Greetings from Atlanta. The realtors rant and James Suroweicki's claim that brand's are "fragile" both hinge on consumer's increased access to information. Hold me I'm fainting. Marketers / Realtors are looking at technology in a fear based, brand pushing, ego-centric model. Start trying to figure out how to flip the model and have the consumers drive the marketing/realtors plans and have the marketers' / realtors provide them with emotional futures/legacies; in other words something that their products/services can enhance in the consumer's day-to-day life - something that can create an empathetic bond, something that can help them have an on-going relationship. Brands arent' dead and commissions aren't over, but emotional marketing is being born. Changing marketing into a conduit of "enhancement" of emotional futures in coming of age. And, embracing technology to bring consumers into the fold in music to a true marketers' ears.

Posted by Wendy at December 20, 2004 8:17 PM

Tom - I'm back, and I've been thinking. Let's say the realtors are trying to "avoid a loss." They are trying to avoid a worse case scenario [lost income] and they are committing the "error of ommission" or they just aren't talking about it [outloud]. So the opportunity cost is their consumers'future emotional day-to-day life. Honesty is destroying the "family." The realtors have decided that it is better to remain quiet than to speak up, or if they do speak up it is just with a left-brain factual "blip" on a website meant to drive them to a face-to-face meeting or telephone call. Right? What's really going on? ...Could it be that the real issue is that most of us don't want to hear from our consumers? Could it be that most of us don't know how to have an emotionally honest conversation? Could it be that most of us don't really want to hear what they have to say? Could it be that our companies wouldn't let us fulfill own our dreams, so why should we care about our consumers'? What about the fact that if you aren't emotionally honest with yourself you sure as hell can't understand your consumer? Emotional honesty...could it be that is what your Texas audience was most afraid of? I think that is the hardest job for us marketers, finding, maintaining and stewarding the empathetic bond with our consumers. Consumer behavior is more than a business practice, maybe they were finally seeing that. What do you think?

Posted by Wendy at December 20, 2004 10:44 PM

Spot on. I spoke to a realtor in Munich the other day and they are beginning to offer services for a retainer (to include advice like regulations concering work environment, optimal size, total cost of ownership/rent etc). The retainer is like a prepayment on a successful transaction. They seem to do that precisely for the increasing transparency and lack of need for pure matching services...

Posted by Florian Dargel at December 21, 2004 7:50 AM

I have been reading the comments on Tom's post. And I find them the same types of attitudes that more and more people hold for Realtors.

I won't get into an "I'm right and you're wrong" argument. One gentleman’s comments here said he had used the services of a real estate agent 10 times and they were all bad experiences. Why? Isn't the definition of insanity doing the same thing over and over but expecting different results? Were you actually expecting different results?

Sure, as a real estate agent, I might find myself to be a little biased, but to brand all real estate agents as crooks and cowards is a little immature. It has been my experience with nearly 20 years in the real estate business that most consumers just want to feel protected, kept informed and get the best service possible.

There is real value in using the services of a professional real estate agent. Millions of homes are bought and sold each year with the services of a real estate agent. Could those consumers have purchased or sold property on their own? Sure, but I don't want to give myself a root canal if I can hire a professional dentist to do it.

If you, as a consumer, feel that your more knowledgeable, have better negotiating skills, have a better understanding of evaluating pricing , and most importantly, have a better knowledge of local and state laws, then do it all on your own. I don't really care. You're not my target market anyway. I don't feel like predator. I spend a considerable amount of time educating my clients for free. They appreciate it and they appreciate the fact I want to educate instead of blind fold.

Have access to all the MLS listings you want. Get all the information from housevalues.com, realtor.com and all the other sites that attempt to empower consumers. When it comes right down to it, there will always be a large portion of the population that needs the services of a professional real estate agent to assist them in the purchase or sale of a home. It’s just a fact. There isn't anything wrong or demeaning about my profession. Cut the commissions. Give more access to information. It doesn't matter to me. Because in the end I know that most people still want to feel protected, informed and receive exceptional service.

So Tom, there's my response. Yes, we could and should try improve the services offered to our potential clients. But building a relationship, even online, is a two way street. Consumers need to be just as honest as the agents.

Posted by Consumer Friendly at December 26, 2004 8:07 PM

Vioxx Causes Heart Attacks

Posted by Vioxx at January 9, 2005 11:49 AM