DallasAggie0 said:

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That's primarily because getting a sales license in real estate is easy as **** and almost all of the courses are geared towards residential real estate. They really need to have some sort of higher level education requirement for commercial deals. If you asked 99% of residential realtors to explain a TI amortization rate you'd get a blank stare.

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I agree. I've said for a long time that there should be three different licenses TREC gives. Residential, Commercial, and Farm and Ranch.

When I was a commercial broker (in a previous life), I didn't have any experience in residential sales, and if I had tried to represent a home buyer I would have screwed it up.

What 26.2 said about commercial brokers laughing at realtors in commercial transactions is absolutely true. The residential people didn't know what they didn't know, so their clients got screwed and the landlord's broker came out like a rose. My favorite story was when a realtor had a client and came in like a big-shot demanding 3% commission on the lease. The Landlord Agent "reluctantly" agreed, since in our market tenant rep brokers got 4%.....

Farm/Ranch is a totally separate business as well, which is what I do now. Realtors will get into them, and are clueless on the issues involved in rural land transactions..

I didn't like the 3% model when I sold 2 of my homes so I found a flat fee agent. For reference though, I was in an extremely expensive housing market, and the flat fee guy was a well respected, top agent in the market. I paid a low flat fee on my end and paid the buyer's agent 2.5% (pretty standard in the market I was in). I was pleased with the services I received, and the price my homes sold for. In one of the transactions, the buyers agreed to use our agent so I agreed to give them a slight discount in price that would have gone towards the buyer's agent. We both were happy with the arrangement.

My latest home purchase was a new build. I used an agent that rebated back 2.5% of her 3% commission. She assisted on comps, builder negotiation, etc. to ensure we got a good deal on the home. She got paid well for doing some work, and I got a nice chunk back for doing part myself. All in all, we both walked away happy.

I do find value in realtors and examine each of my transactions separately to determine the level of services I need, the market I find myself in, and the amount of personal time I have to commit. That's why it's important to be honest with yourself and whatever realtor you choose to work with.

DadAG10 said:

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DallasAggie0 said:

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Now, in the case of a commercial property with cash flows and other variables then it's absolutely warranted.

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And what do you do?

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Still no answer.

Bitter Old Man said:

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I'm not a Realtor, but I am in the real estate business and I deal with them everyday. As long as I've been in business and worked with Aggies, I have noticed one prevailing trait amongst our kind. Aggies are cheap-asses. Aggies will jump through all kinds of hoops to save a buck, without ever looking at the bigger picture and considering opportunity costs.

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And everybody is trying to screw them over, they are going to DEMAND that things get fixed their way,...............

oh well...............

Create Account said:

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Realtors,

Not debating the long held practice of 3%, but how would you itemize / break down your value for the 3% commission?
-Perform CMA and suggest list price
-Help with staging, decluttering, etc.
-Marketing - photos, MLS listing, schedule showings, keybox
-Negotiating contract, inspecting report, etc.
-Closing

On the buyer's side?
-Finding the right property
-Perform CMA on target property and suggesting offer price
-Writing contract
-Negotiating contract
-Help with inspection, finding insurance, finding mortgage
-Closing

Has there been any interest in providing these services a la carte for a flat fee?

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On the sellers side, I do all you said and:

I send my crew out to cut the yard, put down new mulch, some landscaping, pressure wash the fence & drive, make small repairs and clean the inside. I pay for all of that out of pocket.

I pay for Adwords, FB marketing, newspaper ads, open houses, professional photos, flyers, custom riders for the home, etc.

I am walking the neighborhood to talk to neighbors about the home, on the phone to other agents and making random cold calls.

One the buyers side:

I try to stay away from buyers because they're not as costly, but they're a lot more work. You are dealing with the lender, usually driving them around, eating with them, picking crap up for them, etc.

i think some of it depends on the market.

we've sold two houses in college station--one with a flat fee (creekview) and another with a realtor.

creekview was great, but i think we probably could have gotten more money with a local realtor who knew how to market the house and could reach out to local potential buyers.

our second house was another tough sell but our realtor busted her ass to do open houses, and reach out to potential buyers. she earned that commission.

i do kinda think that the buyers should pay the buyers agent commission, but that's besides the point.

maybe it would be different in a super hot market where you put a for sale sign up and the house is gone in an hour.

Be happy to help on the next one. Local, flat fee brokerage.

I actually referred my parents to Creekview for their house in Dallas and I thought Creekview did a lousy job. The CMA they sent my folks was worthless. Their rep at Creekview had office hours and was pretty much only available during those times. It was odd. Now, the house had multiple offers and sold for over list in a matter of days but that just speaks to the market. Joe Blow could've put it on MLS and it would sell. I think if my parents didn't have me to bounce questions/comments off of it may not have worked out as well as it did.

yeah main reason we used creekview was that if we bought a house with them they'd refund 2% of the buyers commision, and we took a huge bath the house we sold so we thought we'd make up a bit of money.

ah well. we had some bad luck with houses. life goes on.

Bitter Old Man said:

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This typically pairs with a level of arrogance that they know more than the experts and are going to go around the system.

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The arrogance part can't be stressed enough. Every argument against paying realtors, etc. boils down to somebody saying they cost a lot of money, real estate is easy, and they don't do anything. That's 3 strawmen. Sets up a ton of hubris in your own abilities. Most FSBO's or self represented buyers never go back and back-test their transaction to market data, because they are scared of the answer they'll find too.

My experience as a lender for many years is that most, not all, the cases of appraisals coming in higher than sales price is with FSBO sellers.

I appraised a FSBO recently that was listed around 4,300 square feet. The property had a detached garage with an office/living space above the garage that the seller thought he could include in the gross living area total. No.

In addition, the property had received a garage conversion at some point in the past. It didn't have central heat and air. Again, the seller thought he could just lump that in with the gross living area total. Hey, it did have a supplemental window unit.

When all was said and done, it was a 2,400 sf house with a 400 sf garage conversion and a 1,500 sf music room above a detached garage.

The guy could have used some professional guidance from the start.

No offense to agents, but we have purchased our last two homes and represented ourselves to take a three percent discount on the sale price. I mean with the internet and a slew of great real estate sites, why would anyone with some house buying savvy and negotiation skill sets need a buyers' agent?

Archie86 said:

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No offense to agents, but we have purchased our last two homes and represented ourselves to take a three percent discount on the sale price. I mean with the internet and a slew of great real estate sites, why would anyone with some house buying savvy and negotiation skill sets need a buyers' agent?

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Like I said, I don't care to work with buyers. With that said, if I do, I find them what they are looking for. I fire up my Mojo dialer, map out the area they are looking for, narrow down the properties, and cold call houses that aren't even currently on the market.

You're not finding the properties I am. You aren't finding properties other agents may be aware of but aren't listed yet. There are others you aren't finding, either. You are finding what's available to the public, at or above market value.

Archie86 said:

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No offense to agents, but we have purchased our last two homes and represented ourselves to take a three percent discount on the sale price. I mean with the internet and a slew of great real estate sites, why would anyone with some house buying savvy and negotiation skill sets need a buyers' agent?

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Because maybe with an agent you could have gotten even more than 3% off the price? I don't see how you can get accurate comps and know what a fair purchase price is without using a buyer's agent who has access to the MLS. Especially if you are relocating and buying in an area where you have not lived.

I'm curious what his County Appraisal District counted the square footage as? Seems that would have clued him in.

aggiebq03+ said:

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I'm curious what his County Appraisal District counted the square footage as? Seems that would have clued him in.

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People see what they want to see. I couldn't recall what the tax records said, so I went back to look.

Here's how they have it broken up.

Main - 1,235 sf
Attach Addt - 272 sf
Encl Garage - 360 sf
Second Flr - 1,382 sf
Gazebo - 164 sf
Det Garage - 825
Det Liv Qtr - 825
Bath House - 96
Open Porch - 156
Open Porch - 223

The tax records lists the gross living are as 2,889. They have included the garage conversion in the GLA calculations, which is wrong since it does not have central heat and air like the rest of the house. Part of the detached garage has central hvac and has a kitchenette which is why I said the living area in the detached garage is larger than what the tax records indicate. Part of the first floor of the garage is finished out. Still, it's not part of the house, but it is more than just a garage.

Anyhow, in this case, I'm not sure a realtor would get it right. It was just a mess and I almost missed the garage conversion. It matched so well with the house, I almost walked right through it without questioning it. If not for the supplemental window A/C, I don't think I would have caught it. And now that I think about it, it had a small addition on the back of the house that included a bathroom and utility room that didn't have central heat and air. It must be what the tax records calls the attached addition or the bath house.

Would like to know your thoughts further on the unrepresented buyer portion of the conversation with a hypothetical: A guy who is an experienced commercial broker with a brokers license in the state of Texas. He has experience doing smaller deals at the beggining, most of which were on standard TREC or TAR contracts. When buying his home he represents himself, fills out his own contracts, and runs the whole transaction on buyer side. The selling agent has a 6% fee. Why would it not make sense to knock it down 3%? Either way the seller is paying 6%. It's not like the commercial broker in this case doesn't have the right to represent himself and take a commission, Everyone I know in the commercial brokerage business does this.

Anyway, wanted to know your thoughts when it's a non residential guy but he makes a living doing investment sales and/or other commercial brokerage. This has been a good thread. I'll hang up and listen.

Blahhead, are your clients investors? I haven't heard of many realtors cold-calling non-MLS homes. Seems like that would take up a lot of your time. Curious how often you're doing that.

There is no difference in licensing requirements between commercial and residential. In your scenario, the buyer has a Texas Real Estate Broker License. He may or may not be a 'Realtor' (probably isn't) but that simply means he hasn't joined the 'association.' A buyer who is licensed and representing themselves, regardless of what niche they focus in, has the ability to take the commission being offered to the buyer's agent. Therefore, the way he could approach it is...I'll take 3% off the sales price or I'll take my 3% commission. It's not a big difference to the seller one way or the other. In my experience, and on houses I've purchased for myself, I always take the commission versus a drop in sales price. If I'm buying a $300k property, I'd rather put $9k in my pocket and have a $240k loan amount versus buying the place for $291k and having a $232,800 loan amount. The difference in that monthly payment is minimal so it makes more sense to pocket the $9k.

As long as you are fine with adding to your taxable income jmazz

No problem at all with that.

Tonyperkis said:

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Blahhead, are your clients investors? I haven't heard of many realtors cold-calling non-MLS homes. Seems like that would take up a lot of your time. Curious how often you're doing that.

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The majority aren't investors. It works out because it provides me with listing leads either way. I am usually making some type of cold call around four to five days a week.

I gotcha. The unrepresented buyer that was being discussed earlier in the thread was an unlicensed buyer I assume. That's why I was confused with everyone's point of view.

TXTransplant said:

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I'm just a lowly buyer/seller, but having done both multiple times (both with agents and FSBO), here is my take on it.

The buyer doesn't have a leg to stand on when it comes to negotiating the commission. The seller has already agreed to pay the seller's agent 6% (or some other percent that has been agreed to in writing). How much the seller's agent decides to give the buyer's agent is between the two of them and the two of them only. If you're doing FSBO, it's up to the agent to negotiate commission with the seller, unless the buyers happen to just be really generous.

The exception might be if the buyer is also selling a house and negotiates some sort of discount for doing both. But it would still be tied to the seller's contract.

I would have never dreamed of trying to "negotiate" with my buyer's agent. As a buyer, that is none of my business. There is a reason why real estate agent commission is almost always on the seller's side of the HUD statement.

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Blahhead said:

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Tonyperkis said:

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Blahhead, are your clients investors? I haven't heard of many realtors cold-calling non-MLS homes. Seems like that would take up a lot of your time. Curious how often you're doing that.

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The majority aren't investors. It works out because it provides me with listing leads either way. I am usually making some type of cold call around four to five days a week.

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Where are you based out of?

Austin.

With my dialer you can really blow through a lot of calls and even instantly drop a pre-recorded VM message for that specific neighborhood. They let you do a map based search and then filter against the DNC list, etc. With that said, any four line autodialer will allow you to knock out a ton of calling.