Real Estate Crash thread

[J. Barron DeJong]

More about my perceived value of the service rendered. I paid $1200 to get my taxes prepared last year (had a weird tax year last time around), and good market advice on buying/selling a house is worth more than that to me, even if it doesn't take any longer than preparing my taxes.

But the tax prep industry is one of the worst about lobbying to keep it’s cut of the pie!

For years they’ve been lobbying against the IRS sending out pre-completed tax statements that could just be reviewed and signed, which would cover the majority of tax filers.

Finally, next year the IRS is at least trialing a free tax prep option, but only in 13 states.

[east or bust]

More about my perceived value of the service rendered. I paid $1200 to get my taxes prepared last year (had a weird tax year last time around), and good market advice on buying/selling a house is worth more than that to me, even if it doesn't take any longer than preparing my taxes.




PhDs in comp lit also have extensive post-secondary education, and they make bupkis [shrug]. The value of the service doesn't have to be tied to how much education they have. Hell, based on what I hear from my wife, plenty of women's hairdressers outearn CPAs.

For the sake of discussion, let's say it takes 10-20 hours of work by an agent to buy or sell a house. (That's just my WAG, those who know better, please chime in). Using your value of "less than $100/hr", that means an agent would be making something under $2k to buy/sell a house. Personally I wouldn't feel confident that I'm getting good advice at that point.

Let's build on that hypothetical math. Why is 2k to buy/sell a house unfair to the realtor? If they are good at what they do what's a reasonable number of houses to buy/sell in a month? Year?

Let's say a middle of the road realtor sells 5 houses a month. That's $120k gross a year. If you're a baller realtor maybe you sell double that. Why should someone with minimal overhead business expenses need, or deserve, to make more than that?


I know a few people that work a professional job and do realty work on the side (not trying to say being a realtor isn't a profession). If we use the numbers above and that person sells 5 houses in a year and makes $10k gross I'd say that's a pretty good side hustle.

[oldnew_guy]

So what you guys are saying is that unless the NAR artificially inflates the fees for RA's they won't be able to make enough money to pay their bills?

[RootSkier]

Let's say a middle of the road realtor sells 5 houses a month.

The percentage of Realtors who average five or more closings a month is miniscule.

[dan_pdx]

But the tax prep industry is one of the worst about lobbying to keep it’s cut of the pie!

For years they’ve been lobbying against the IRS sending out pre-completed tax statements that could just be reviewed and signed, which would cover the majority of tax filers.

Finally, next year the IRS is at least trialing a free tax prep option, but only in 13 states.

Ha! That's a tangent, but I'll allow it. Agreed that the US approach to income taxes sucks and pre-filled tax statements would be a huge step up while at the same time putting fuckers like H&R Block 6 feet under.

The reason I mentioned the cost of tax prep was not to indicate support for collusive / anti-consumer practices in either industry, just as a benchmark for value received. The weird tax year I mentioned included an interstate move, W2 income, RSU income, unemployment, severance, different W2 income, rental income, my wife's sole proprietorship income, and some other bullshit. Even if the IRS filled that one out for me, I'd have to hire a CPA to check their work.

[dan_pdx]

Let's build on that hypothetical math. Why is 2k to buy/sell a house unfair to the realtor? If they are good at what they do what's a reasonable number of houses to buy/sell in a month? Year?

Whoa, where did I say unfair to the realtor? I don't give a shit about what's fair to the realtor, I'd like to keep more money in my pocket just like everyone else. I'm just saying that the service you get for $2k is probably not the same as what you would get for $5k or $10k. Would you choose the cheapest lawyer/contractor/car mechanic/restaurant etc.? Why would it be different for RE agents?

This is not a hill that I'm fighting for here. It sounds like we have different ideas about what we'd be willing to pay for an RE agent's/broker's services, and that's fine.

[Foggy_Goggles]

Ok, so some Realtor(TM) make a pile for what looks like not much work but don't making about trading time for money. Most of us are trying to get out of that game. It pays by the job. Efficiency should always be rewarded.

And you too can be a Realtor(TM). I think a majority of them don't make boo fuck. Also, please don't equal a paycheck with benefits too commission based self employment income.

So yeah, I'm as surprised as anyone that the commission structure has stayed largely unchanged for so long, but don't player hate and reverse engineer what you think someone else should make.

[PNWbrit]

The percentage of Realtors who average five or more closings a month is miniscule.

^ This is the problem. Too many realtors with not enough to do other than rationalize their ridiculously high commissions.

[XXX-er]

I know a few people that work a professional job and do realty work on the side (not trying to say being a realtor isn't a profession). If we use the numbers above and that person sells 5 houses in a year and makes $10k gross I'd say that's a pretty good side hustle.

I often wondered how an RE agent survived and if they had other sources of income

A high sales bud told me that 20% or th agents sell 70 % of the houses

[Ted Striker]

The percentage of Realtors who average five or more closings a month is miniscule.

The number that sell five in a year is still a small percentage of the total.

[PNWbrit]

I often wondered how an RE agent survived

Mostly their "professional" association ignoring the Sherman Act.

[east or bust]

The percentage of Realtors who average five or more closings a month is miniscule.

The number that sell five in a year is still a small percentage of the total.

So basically we have way too many realtors?


Snippet from a WSJ article on the topic of the NAR lawsuit:

"In a report released ahead of the verdict, Ryan Tomasello, a real-estate industry analyst with Keefe, Bruyette & Woods, predicted that the lawsuits could lead to a 30% reduction in the $100 billion that Americans pay in real-estate commissions every year and push well over half of the almost 1.6 million agents out of the industry."

[schuss]

Agents gets so much of their time wasted by non-performing customers. They have to build in those non-productive hours spent working to deals that actually close, hence the ridiculous amounts that the industry has become to due to higher sales prices.
Agents like any professional should tell prospective sellers and buyers that they charge a flat fee plus x for their time that will be paid regardless of a transaction closing or not to get their fees down for non-performing customers.

Why should good customers that don't waste people's time pay for the shitbirds? Let the shitbirds eat the cost.

[Ted Striker]

Whats a fair hourly rate?

Sales has no fair hourly rate.

On the buyers' side, RE should transition to fee for service (I've been a broken record on this for pretty much ever). My wife's ratio of offers written to offers accepted is probably 1 in 5.

[Ted Striker]

You will never convince me that realtors(tm) have true fiduciary duties to their clients until and unless the NAR prohibits dual agency nationwide.

Absolutely. The listing agent's fiduciary responsibility to the seller must trump the buyers. The conflict of interest is baked right in.

[stalefish3169]

How long till legal weed in Jackson?

I'd bet the farm Joe's advisors told him to roll out federal legalization, as it polls well, but he's too old and stubborn to let it happen while he's in office.

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[XXX-er]

Sales has no fair hourly rate.

On the buyers' side, RE should transition to fee for service (I've been a broken record on this for pretty much ever). My wife's ratio of offers written to offers accepted is probably 1 in 5.

I take the vue that what an RE agent gets paid and how many there are is market driven/self limiting

if you read all the posts here RE agents should have all given up or been put in jail or tar-n-feathered long ago but such is not the case ??

[Ted Striker]

So basically we have way too many realtors?

Yep. The brokerage firms are pyramids. Bringing new agents onboard as part of your "team" to generate sales (generally though their social contacts) is part of the business plan, and commissions are split up the chain to the top.

[PNWbrit]

Absolutely. The listing agent's fiduciary responsibility to the seller must trump the buyers. The conflict of interest is baked right in.

I think think the UK system had a lot going for it. Negotiable commission for sellers agent (average nationally is 1.18%) no buyers agent. Buyer and seller pay attorneys to deal with the conveyance. For a normal transaction without any undue complications this would cost each $500-$1000

[RoooR]

I often wondered how an RE agent survived and if they had other sources of income

A high sales bud told me that 20% or th agents sell 70 % of the houses

It's probably actually 80% and its a well regarded ratio in almost everything. The Pareto principal.

80% of your sales comes from 20% of your customers.
80% of your sales are generated by 20% of your sales agents.
80% of the work done at your company is done by 20% of the employees.
Fixing 20% of the bugs in a program will eliminate 80% of the issues.
20% of your dishes are used 80% of the time.

[summit]

I think think the UK system had a lot going for it. Negotiable commission for sellers agent (average nationally is 1.18%) no buyers agent. Buyer and seller pay attorneys to deal with the conveyance. For a normal transaction without any undo complications this would cost each $500-$1000

Amazing

[XXX-er]

yeah but its ^^^ british law cuz its like ... britain


20 % of the soldiers kill 80% of the enemy

so I have heard the 80-20 thing but not the Pareto principle

so i actualy learned something on TGR today

[byates1]

I'd bet the farm Joe's advisors told him to roll out federal legalization, as it polls well, but he's too old and stubborn to let it happen while he's in office.

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Law is one thing enforcement another. The amount of private planes that fly into Jackson keep all supplies topped off I'm sure. As a lifelong kitchen guy, now in Bozeman, every single kitchen/restaurant head I've talked w tells tales of epic partying/hard drug existence in Jackson. C'est la vie.

[liv2ski]

Well, if you have the $$$ to fly in on private planes, you are going to bring all the good shit you want with you.

[byates1]

FKNA party on Garth. I'll watch. Them days is behind me.