Real Estate Crash thread

[TBS]

Pareto’s Principle applies to Realtors. 20% are great, 80% notsomuch.

Buyer’s Realtor makes a lot of sense for unsophisticated/first-time buyers, or when you don’t know the area. Assuming they are in the top 20%.

Once you’ve been thru the mortgage drill before, you know the ‘hood, and can access the listing services online these days, I see less value.

Whoever upthread said that the way to make money as a Realtor is off other Realtors has that right. Standard split with the house (33-50%) seems egregious to me. Like an Amway pyramid.

Old ski buddy was a commercial broker and ended up going out on his own - said he doubled his net on same sales level. But he was a big producer.

Will be interesting to see what happens on appeal. And with all the other states taking this up…

[fastfred]

I'm all for realtors even though they are easy to make fun of and the endless butt of many of my jokes

20 years ago I was unqualified for a loan and decided to purchase an uninhabitable house it was a messy deal that wasn't going to happen but guess what the realtors were there for me and did everything they could to make it happen and it happened after many delays

[XXX-er]

Last time I used a realtor she sold it in 3 weeks, I thot I might have sold too cheap but my buddy said no you hit it at the peak cuz every thing in town is for sale now and sure enough when i went back every thing had a sign in front of it

the hot producing agent sold it real fast other wise I might have been chasing the market down, Angela was always a very attractive & classy russian/ german princess, always wore driving gloves always drove a white BMW, instead of pulling her over the cops would call her cell and ask her to slow down because she had acted for so many of them

[Whiteroom_Guardian]

I had my best year ever in 2023. Most agents didn't. I'm confident that I'm in that 20%. I treat all my clients the same. 300k buyer budget or $1M+ listing. Its rarely "easy". I've definitely spent hundreds of hours getting some transactions to closing. It's part of the job. Honestly the lower budget and first time home buyers are the most fulfilling. The higher dollar sales are the best paying obviously. I'm at a great brokerage with a great commission arrangement.

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[Ted Striker]

went through three agents trying to buy during the pandemic, the last one was the best of the lot but still set us up with a yes-man inspector whose primary focus was making sure the sale went through

Ugh. I wish my better half wasn't taking a covid-fear break at the time because she works her ass off for buyers, and will talk them out of making a mistake even when it means she was going home with nothing.

...would have loved a flat fee option.

Having been a developer, and married to an agent, I've been in this camp for years. It should be like your lawyer: retainer, billable hours, settled at completion/termination.

Like an Amway pyramid.

100%

In WA commissions are split four ways: Listing agent, selling agent, and managing brokers on both sides.

[Toadman]

Our relator is a friend of the family. It felt weird asking for any kind of discounts. But she has told us stories of clients asking for a reduction in the fee. Depending on the type of property she was always open to negotiating. She has done fee only sales. One was for an elderly women that is a close friend to my uncle. She was a German language teacher in Salem and was basically living on her pension.

When we sold in Seattle during a very hot time in the RE market, we had talked to 3 agents and only one was willing to negotiate the commission. We ended up going with the agent that was not willing to negotiate down on the 3% seller and 3% buyer commission. I got over ruled by my better 2/3rd's. In the end we had multiple offers and sold well above asking. Put the house on the market on a Thursday and it was a Friday 2 hour open house and a 4 hour open house on a Saturday. Accepted offers on Monday at 8am. I think we had 7 total offers, one was sight unseen. Our agent really didn't have to do anything. Two open houses and about $600 in putting together a nice 3 page pamphlet with photos that she also paid for, which was I think $500. I get it that they don't get all of that commission. But for about 10-12 hours worth of work they made $33k in commission on the sale for what amounted to very little work for a house that essentially sold itself.

I can see for a slow market and a house that might have some tix in the boxes making it harder to sell that maybe the standard commission is warranted. All that is to say, it doesn't hurt to ask.

[Whiteroom_Guardian]

Our relator is a friend of the family. It felt weird asking for any kind of discounts. But she has told us stories of clients asking for a reduction in the fee. Depending on the type of property she was always open to negotiating. She has done fee only sales. One was for an elderly women that is a close friend to my uncle. She was a German language teacher in Salem and was basically living on her pension.

When we sold in Seattle during a very hot time in the RE market, we had talked to 3 agents and only one was willing to negotiate the commission. We ended up going with the agent that was not willing to negotiate down on the 3% seller and 3% buyer commission. I got over ruled by my better 2/3rd's. In the end we had multiple offers and sold well above asking. Put the house on the market on a Thursday and it was a Friday 2 hour open house and a 4 hour open house on a Saturday. Accepted offers on Monday at 8am. I think we had 7 total offers, one was sight unseen. Our agent really didn't have to do anything. Two open houses and about $600 in putting together a nice 3 page pamphlet with photos that she also paid for, which was I think $500. I get it that they don't get all of that commission. But for about 10-12 hours worth of work they made $33k in commission on the sale for what amounted to very little work for a house that essentially sold itself.

I can see for a slow market and a house that might have some tix in the boxes making it harder to sell that maybe the standard commission is warranted. All that is to say, it doesn't hurt to ask.

For every one of these quick sales there are 5 other listings or buyers where the agent is spending many hours a week/months and sometimes they never even get to closing. It's not all gravy. With high DOM and less inventory I think we see some of the hobbyist agents "quiet quit" the business. There are too many agents and the barrier for entry is too low. Getting a RE license is too easy in my opinion. I feel that the required hours for the initial class in my state should be doubled from 60 to 120 hours, local MLS fees should be higher, annual required CE hours should be increased etc.

I do think we will all see a big increase in NAR fees and it will be a tough pill to swallow, but full time professional RE agents will be fine. Hobbyists will have to think hard at the end of 2024.

[Toadman]

Latest numbers on the RE market.

U.S. highlights: Four weeks ending November 5, 2023
Redfin’s national metrics include data from 400+ U.S. metro areas, and is based on homes listed and/or sold during the period. Weekly housing-market data goes back through 2015. Subject to revision.

Four weeks ending November 5, 2023 Year-over-year change Notes
Median sale price $368,500 3.7% Biggest increase in a year. Prices are up partly because elevated mortgage rates were hampering prices during this time last year
Median asking price $379,725 4.9% Biggest increase in over a year
Median monthly mortgage payment $2,732 at a 7.76% mortgage rate 11% $8 shy of all-time high set 2 weeks earlier
Pending sales 67,446 -9%
New listings 77,821 1.5% Second year-over-year increase since July 2022. The increase is partly because new listings were falling at this time last year.
Active listings 863,500 -9.4% Smallest decline since July. At their highest level since the start of 2023.
Months of supply 3.6 months +0.2 pts. 4 to 5 months of supply is considered balanced, with a lower number indicating seller’s market conditions.
Share of homes off market in two weeks 36.8% Up from 33%
Median days on market 34 -2 days
Share of homes sold above list price 29% Up from 27%
Share of homes with a price drop 6.8% +0.1 pt. Record high (tied with previous week)
Average sale-to-list price ratio 99% +0.4 pts. Lowest level since April

[Ted Striker]

For every one of these quick sales there are 5 other listings or buyers where the agent is spending many hours a week/months and sometimes they never even get to closing.

Definitely buyers. Wife just lost one. Represented them for about six weeks. Put about 500 miles on the car. Wrote two offers. Earned exactly zero dollars. And when they realized they simply can't afford to live here, they just sent a "well, it's been swell" text. No Don Pardo parting gift or anything.

[I Skied Bandini Mountain]

"Enthusiastic lookers"

My lovely wife has had a bunch of those, almost all of them think they can cash in equity somewhere and buy a huge place for $250,000 like it's 2012 or something.

[Name Redacted]

Definitely buyers. Wife just lost one. Represented them for about six weeks. Put about 500 miles on the car. Wrote two offers. Earned exactly zero dollars. And when they realized they simply can't afford to live here, they just sent a "well, it's been swell" text. No Don Pardo parting gift or anything.

We had an agent who helped us sell an investment property, did a great job, and was helping us try to buy another one. Sold the first condo, but kept getting out bid and ended up not being able to roll the proceeds into another. Mainly because of 1031 exchange time constraints and a crazy market, which we fully took advantage of in the sale, but got kinda screwed trying to buy. Learned a lot, and it wasn't her fault, but I didn't really feel bad because she made 5% on the first sale. We will probably use her again if we ever end up buying in that area, which is a possibility.

[AdironRider]

Woe be the realtors who actually have to work for a commission every once and a while, or gasp, don't seal 100% of their deals.

No surprise the realtor crew here is completely missing the point. Realtors provide little value, notably that a lawyer can't provide for a significantly lower cost, especially on the buy side. There are few instances where lawyers are the cheaper alternative so congrats I guess on being the exception to the rule.

Every realtor I have ever worked with has submitted their generic plug and play contract riddled with errors or missed / brushed off important items like covenants or easements that I had to discover on my own. I see a little more value on the selling side but even then it reeked to high heaven of them just playing favorites with their buddies.

[XXX-er]

I had a pretty good agent who sold my divorce home very fast to a couple who was looking for a town house not even a house

she showed me her MLS book ( cuz it was awhile ago ) and she said to me " see that figure in the top rh corner on the page, that is the commission and that is THE very first thing we look at

pretty much every deal up here uses a lawyer and involves at least one of the big 5 banks

[Ted Striker]

"Enthusiastic lookers"

My lovely wife has had a bunch of those, almost all of them think they can cash in equity somewhere and buy a huge place for $250,000 like it's 2012 or something.

Ha! yeah. They were staying in an airbnb and said "we want something like this" (McMansion on 5 acres with view of Mt Baker). Well, if you could just stretch your budget up to double, no problem!

[dan_pdx]

Ugh. I wish my better half wasn't taking a covid-fear break at the time because she works her ass off for buyers, and will talk them out of making a mistake even when it means she was going home with nothing.

Yeah, based on some of her feedback that I got from you secondhand, she really knows her stuff. Sounded like she ruled out some of the houses we were looking at in seconds, while it took us days to figure out that the floor plan was unusable or whatever. Not like the agent we worked with whose response to "Are those fir floors?" during a remote showing was "Well, I'm not an arborist." Imagine not being able to recognize fir floors as an RE agent in the PNW...

Another RE agent we worked with wrote an offer for us with a $2k escalation clause because that was the number I (ignorantly) threw out and she apparently didn't know / didn't care that wouldn't be competitive against an all-cash offer. Lost that one to a cash buyer even though our top end was about $30k higher. All she had to do to win that one was tell us "look, you need a higher escalation clause because you're probably competing with cash buyers".

[Ted Striker]

No surprise the realtor crew here is completely missing the point.
Realtors provide little value [snip] notably on the buy side.

You're (probably intentionally) missing the point that the disruption everyone's cheering for will be 100% for the owners. If buyers agents disappeared tomorrow it's the sellers who would pocket the difference.

I do agree that a way too large cohort of agents suck.

[singlesline]

I dumped my prior agent after we moved into our current rental (ran out of time, needed somewhere to live at least temporarily) which is like 500 feet from her house and she made zero effort to stop by, welcome us, anything.

I don't think we were tire kickers--we had her look at a handful properties, but we did have her write an offer on one. But it was 2021 and the market was going nuts so it sold before the stated offer deadline (to a flipper who did a big remodel, more than doubled the price, and has now been sitting on the market since August despite two 10% price cuts)...think it was a good time for agents and she clearly didn't need our business when there were cash buyers and bidding wars all over the place.

Not sure what to think about my current agent. Inventory here is super limited so I see the online listing for literally every property that meets my requirements. I appreciate that she's not trying to sell me on properties I have no interest in, but its not like she is out there sifting through a mountain of listings, trying to find the perfect home for me--I am finding everything we want to look at, which is only 1 house every few months.

And we've lost both of the offers she's written for us. First one was our own fault--we were lukewarm on it, it had been sitting on the market, and we delayed making an offer--if we'd made it right away, we'd have been under contract before the eventual buyers even had their showing. They won based on a high down payment and a promise not to haggle over anything small in the inspection report because they were planning a full remodel (which didn't stop them from asking the sellers to contribute to the cost of a beam when it turned out a kitchen wall was structural...)

Second one, I don't really know why we lost (and it hasn't closed yet, so I suppose there's still a chance). We were in at asking with 30% down and all I know is that they countered the offer that came in just before ours--maybe the other offer was cash but below asking? But I can't shake the feeling that our offer could have somehow been better tailored for these sellers. She also agreed that the house seemed over-priced when we looked at it, which may have just been her trying to placate us, but clearly coming in at asking wasn't enough.

[Ted Striker]

the agent we worked with whose response to "Are those fir floors?" during a remote showing was "Well, I'm not an arborist." Imagine not being able to recognize fir floors as an RE agent in the PNW...

Even as a joke, that's lame.

That house in Silver Beach with the shitty shake roof, and improperly built leaky addition... the new owners literally just moved right in, SMH.

[Core Shot]

I like how the real estate crash thread has become a realtors suck thread.
Lulz

Technically it’s like onlyfans without the sex.

[liv2ski]

I feel bad for buyers agents that do lots of showings, maybe write a few offers and nothing. They should have a base comp and signed agreement with the buyers that they get paid say at least $100 an hour for the time spent previewing, showing, writing up and negotiating offers. 0 is why they need to get paid 2.5%-3% when they finally close one, which isn't fair to buyer or seller.

[Ted Striker]

Here's a realtors suck story: there's one in this town whose voicemail message states, "I'm going to be honest. I don't answer my phone. All communication will be by text"

[singlesline]

I feel bad for buyers agents that do lots of showings, maybe write a few offers and nothing. They should have a base comp and signed agreement with the buyers that they get paid say at least $100 an hour for the time spent previewing, showing, writing up and negotiating offers. 0 is why they need to get paid 2.5%-3% when they finally close one, which isn't fair to buyer or seller.

I do think that the current compensation model, which is driven by the alleged NAR collusion, basically prevents this from happening. In the current world where the seller "pays" the buyer's agent (yes, with the buyer's money, but they don't "feel" it), you're never going to get buyers to pay out of pocket for anything.

It does seem crazy that despite HEAPS of technological advances, the commission rate hasn't changed at all in the past century even though a lot of the factfinding effort has shifted to buyers.
Also crazy that commissions are basically the same in states that require a lawyer (paid separately) vs those that don't despite the fact that the agent is presumably doing more work in the latter.

I do think that there's a potential world in which commission rates go down or become flexible, but the current 20% good agents keep making the same money (or more). The good ones will either be able to justify their rates and/or will make it up on volume as most of the bad agents drop out of the market. The NAR serves to protect all their membership, not the 20% at the top--and having lots of lackluster agents who still occasionally close deals is great for brokerages and their ability to negotiate commission splits.

On the flip side, I don't see it having a huge effect on prices. Say commissions are cut in half and go from 6% of sale price to 3%. That's a huge price decrease for consumers, but how much does it really move the needle on home price? Assuming the seller just completely gives up that money (rather than keeping some of it for themselves), you'd only expect the price to drop 3%. A $700k house sells for $679k, and that's a one-time adjustment. That's nothing compared to the price appreciation most places have seen in the last 3 years. That's within the range of variation from a good negotiation, a listing agent who under-prices, good staging vs bad, etc.

It certainly isn't the fault of realtors that houses are expensive right now...they could work for free and places would still have huge affordability problems.

[neufox47]

I feel bad for buyers agents that do lots of showings, maybe write a few offers and nothing. They should have a base comp and signed agreement with the buyers that they get paid say at least $100 an hour for the time spent previewing, showing, writing up and negotiating offers. 0 is why they need to get paid 2.5%-3% when they finally close one, which isn't fair to buyer or seller.

Virtually no one is using a buyers agent if they have to pay them $100 an hour. That’s the whole gambit. It’s “free” according to Realtors.

If the transaction cost of selling a home became 1%, I think there would be an increase in supply.

Lots of focus on the agents themselves but it is the brokerages that are being targeted in the lawsuits. Does anyone other than shareholders of the brokerages want the brokerage system to stay the same?

[Harry]

Here's a realtors suck story: there's one in this town whose voicemail message states, "I'm going to be honest. I don't answer my phone. All communication will be by text"

I’m not a RE Agent, but that’s my M.O. too. Unacceptable for a business though.


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[lowsparkco]

Woe be the realtors who actually have to work for a commission every once and a while, or gasp, don't seal 100% of their deals.

No surprise the realtor crew here is completely missing the point. Realtors provide little value, notably that a lawyer can't provide for a significantly lower cost, especially on the buy side. There are few instances where lawyers are the cheaper alternative so congrats I guess on being the exception to the rule.

Every realtor I have ever worked with has submitted their generic plug and play contract riddled with errors or missed / brushed off important items like covenants or easements that I had to discover on my own. I see a little more value on the selling side but even then it reeked to high heaven of them just playing favorites with their buddies.

No attorney is going to pull comps and price your offer, hire your inspector, negotiate the repairs, hire contractors, hire movers, liaison with lending, evaluate CC&R’s, easements, liens, clouds on title, help you find your replacement housing, etc.

Sucks you’ve hired shitty agents, but a lot of us work hard for the money we make. If you don’t believe there’s any value, don’t use one.

If you paid an attorney on retainer for billable hours for every hour I put into a deal you’d certainly eclipse the commission on most if not all deals.

It’s sad and fucked up that many of you have had so many poor experiences with brokers, but the answer is to fire them, do your homework, and hire someone competent. As mentioned above the barrier to entry is too low, so there are a lot of unqualified brokers. Complain to the state wide agency or their brokerage, not to the internet black hole.