Posted on: 27th Feb, 2010 06:48 am
Written by a former Realtor to help educate consumers about Realtor Commission Points
Have you ever seen an 800 lb Gorilla? You have if you’ve purchased or sold a home and seen the astronomically high real estate commissions at closing! Everyone agrees that the profit-to-work margin has spiraled out of control! This transfer of consumer wealth in the form of so called ‘Earned’ realtor commissions has soared disproportionately and has gone completely unchecked over the last 20 years as home values have increased. Why has it you ask? For one, consumers have simply allowed it, but many say it’s due to the millions paid each year to their Washington Lobbyists! Realtors have a very strong lobbyist presence in Washington constantly lobbying Congress. Even throughout the Housing Melt Down there has been no questioning of the absurd real estate commissions collected and the huge role realtors have played in it. Yet Congress continues to turn a blind eye to this obvious past and present depletion of Consumer’s Home Equity! When ever questioned, it’s always ignored and immediately slid under the radar.
Where is the outrage over realtors who pushed buyers into homes they knew they could not afford to maximize their commission? Where is the outrage over realtors who shopped lenders on behalf of buyers to find the highest risk, No Doc loans, Interest Only Arm loans or Negative Amortization loans, so they could sell their buyers the absolute highest priced homes for personal gain? Realtors would completely cut off lenders who didn’t offer these loans before 2006. Where’s the outrage over these realtors and their Absurd commissions that helped fuel the American Housing Melt Down? The answer again, silent consumers and Washington Lobbyists!
Until the late 70’s, a 3% commission ($1,800) on a then $60,000 home was not so bad to pay a realtor for searching neighborhoods by knocking on doors to find a Seller (For Sale By Owner) willing to pay a 3% commission for bringing a seller and buyer together. But today, to take 3% =$12,000 to 6%=$24,000 of Equity from a $400,000 transaction when the actual effort and skill level needed to sell real estate has been substantially lessened by access to the MLS (Multiple Listing Service) and the internet, is Outrageous and Absurd!
Educated consumers realize that the buyer, in effect, actually pays the realtor in the form of forfeited equity and that realtor commission is the exact same as paying Points. Uninformed consumers need to be made aware that giving away 3 to 6 Points of their Tax Free Home Equity for entering a sales price into the MLS, setting up an auto email, opening a few doors and writing a contract is absolutely ridiculous and totally avoidable now days! The 3 to 6 Points Commission days are a thing of the past for educated consumers!
Consumers need to know:
1. Realtor Commission Points are 100% Negotiable and can be rebated to the Buyer or Seller! Google Search ïƒ Realtor Rebate to see over 300,000 sites offering this savings.
2. Realtors tell buyers that “The Seller pays the Realtor Commission.†This is a joke! Obviously the home could be sold for much less to the Buyer if the Realtor would be willing to accept less in realtor Commission Points, so who is paying the Realtor?
3. To open a few doors, tour a few homes and write a contract which requires on average approx. 4 hours is equal to $3,000 per hour on a $400,000 purchase!
4. The MLS gives access to thousands of realtors who all sell from the same menu.
5. The negotiating skills of the majority of realtors are marginal at best.
6. The fact that realtors make more money when a Buyer pays more for the home can affect the true negotiation of the lowest sale price.
7. Many realtors will only show listings that pay them 3%, avoiding all lower commission listings of 2% or less, regardless if it’s the best deal for the buyer.
8. Realtor’s “Preferred Lenders†avoid structuring the loan with the realtor sharing anything to pay for closing costs as this would cut into their Commission Points.
9. $12,000 of Tax Free Home Equity given away in realtor Commission Points is equal to approx. $19,500 of an average person’s pre-taxed Gross Income.
10. $12,000 of Tax Free Home Equity given away in realtor Commission Points can cost the Buyer up to an extra $80.00 per month in mortgage payment.
11. $12,000 of Tax Free Home Equity given away in realtor Commission Points can cost a buyer as much as $30,000 over the life of a loan, equal to $52,000 of their gross income!
12. Realtors often tell Buyers that the seller (including bank owned/foreclosures, short sales) won’t pay closing costs when they absolutely will and do most of the time.
13. Many realtors will attempt to refer, steer or coerce a borrower to their “Preferred Lender†for even more compensation, even above the 3 to 6% Commission Points.
14. Some realtors will lead clients to believe Realtor Rebate is illegal, Not true! Florida, like most states, allows Realtor Rebate. Only 10 states don’t allow this Rebate.
15. Realtors often receive extra compensation from their “Preferred Title Company.â€
16. In addition to the 3% to 6% Commission Points, Realtors charge another $300 to $700 administration fee at closing which can be waived.
17. MLS listings are now available to anyone at Realtor.com or Realtyweb.net and other sites, eliminating the need for clients to give away so much of their Tax Free Home Equity in realtor Commission Points.
18. Realtors are not motivated to negotiate the lowest price on a home. Many will often tell to the buyer there are “Back Up Offers†or “There are other offer coming in,†to create urgency in effort to increase the buyer’s offer.
19. $400,000 home pays the listing agent $12,000 and the selling agent (Buyer’s Agent) $12,000. At 6 Points, that’s $24,000 of lost Tax Free Home Equity
20. Realtor Points can be used to pay for closing costs
21. Realtor Points can be used to buy out of the monthly PMI payments
22. Realtor Points can be used to pay for the FHA MIP, USDA & VA Funding Fees
23. Realtor Points can be used to pay for up to 6 months of Interest Payments
24. Realtor Points can be used to pay for Rate Reduction
25. Realtor Points can be used to pay for the 1st full year of home owner’s insurance
26. Realtor Points can be used to pay for taxes and ins. escrows
27. Realtor Points can be used to pay for a Home Warranty
28. Realtor Points can be used to pay for upgrades and repairs
29. Realtor Points can be used to help the seller hold a 2nd mortgage for the Buyer
30. Realtor Points can be used to pay for the seller’s closing costs
31. Realtor Points can be used to make a low rate and low cost loan to buyers after closing
32. Realtor Points can be used to Donate to Charity
In short, there are many nice people who have Real Estate Licenses. It seems like everybody has had one or has one, but they are not Brain Surgeons and should not be paid like one. They simply have access to a menu called MLS (same menu as thousands of realtors do), a lock box key to open doors and can write offers. Buyers shop endlessly for a .125% in a tax deductible interest rate, on a loan that they won’t keep over 36 to 48 months before refinancing or selling, yet will needlessly give away 3 to 6% of their Tax Free Equity in realtor points. This is called ‘Diving over Dollars to Grab Pennies.’ Consumers should shop realtors as hard or even harder for the best deal as the Tax Free Equity needlessly given away in realtor points is gone forever!
QUESTION: If you were buying a new car and ABC dealership was demanding Full Sticker Price (i.e. 3% realtor commission points), but XYZ dealership was willing to sell you the same exact car for ½ price, would you pay Full Sticker Price at ABC dealership? Would you care about how much ABC dealership’s internal costs were, how much they spend on their building lease, advertising, commission split salesman is on with the owner, how much profit they want to make on you just because of what other dealerships are making on buyers? It’s the same with realtor Commission Points, buyers don’t have to pay Full Sticker Price anymore!
Fact: it takes no more effort to sell a $400,000 than it does a $100,000 home. Realtors will gladly sell as many $100,000 homes as they can at a 3% commission which pays them $3,000. Most Realtors will even admit it’s generally a much easier job selling a $400,000 home than selling a $100,000 or less home as well. So, why not settle for the same commission or maybe a little more and rebate the rest to the consumer on a higher priced home if it’s an easier job?
Consumers need to be educated that Realtor Rebate has been completely legal for years in most states and the massive savings benefit it is for consumers. Unlike a few years ago, when realtors were on a 50/50 split with the real estate company they worked for, many realtors are now on a No Split Commission pay plan where they keep up to 100% of the commission points and don’t have to pay their company anything but a small $350.00 transaction fee. When a consumer encounters a Realtor charging a full 3 to 6% in Commission Points, they should simply find a Realtor who is willing to give them a much better deal and will ‘Share the Equity!’
Below is the 3% standard commission structure for Buyer’s Agents
$100,000 @ 3% = $3,000 A fair fee for the job.
$200,000 @ 3% = $6,000 A lot to just give away!
$300,000 @ 3% = $9,000 Way too much to give away!
$400,000 @ 3% = $12,000 Unbelievable amount to give away!
$500,000 @ 3% = $15,000 Just a plain absurd amount to give away!
$600,000 @ 3% = $18,000 There should be a laws against this give away amount!
$700,000 @ 3% = $21,000 Buyer is not thinking straight and needs mental help!
$800,000 @ 3% = $24,000 Buyer needs to be committed to a mental institution!
$900,000 @ 3% = $27,000 Buyer needs to be returned to their mental institution!
$1,000,000@3%= $30,000 Buyer is a Flat Liner, pull the plug!
If the U.S. Dept. of Justice is stepping in to inform consumers about these absurd realtor commissions, it’s bad! Click on the U.S. Dept. of Justice web sites to learn about Realtor Rebates.
realtor
Have you ever seen an 800 lb Gorilla? You have if you’ve purchased or sold a home and seen the astronomically high real estate commissions at closing! Everyone agrees that the profit-to-work margin has spiraled out of control! This transfer of consumer wealth in the form of so called ‘Earned’ realtor commissions has soared disproportionately and has gone completely unchecked over the last 20 years as home values have increased. Why has it you ask? For one, consumers have simply allowed it, but many say it’s due to the millions paid each year to their Washington Lobbyists! Realtors have a very strong lobbyist presence in Washington constantly lobbying Congress. Even throughout the Housing Melt Down there has been no questioning of the absurd real estate commissions collected and the huge role realtors have played in it. Yet Congress continues to turn a blind eye to this obvious past and present depletion of Consumer’s Home Equity! When ever questioned, it’s always ignored and immediately slid under the radar.
Where is the outrage over realtors who pushed buyers into homes they knew they could not afford to maximize their commission? Where is the outrage over realtors who shopped lenders on behalf of buyers to find the highest risk, No Doc loans, Interest Only Arm loans or Negative Amortization loans, so they could sell their buyers the absolute highest priced homes for personal gain? Realtors would completely cut off lenders who didn’t offer these loans before 2006. Where’s the outrage over these realtors and their Absurd commissions that helped fuel the American Housing Melt Down? The answer again, silent consumers and Washington Lobbyists!
Until the late 70’s, a 3% commission ($1,800) on a then $60,000 home was not so bad to pay a realtor for searching neighborhoods by knocking on doors to find a Seller (For Sale By Owner) willing to pay a 3% commission for bringing a seller and buyer together. But today, to take 3% =$12,000 to 6%=$24,000 of Equity from a $400,000 transaction when the actual effort and skill level needed to sell real estate has been substantially lessened by access to the MLS (Multiple Listing Service) and the internet, is Outrageous and Absurd!
Educated consumers realize that the buyer, in effect, actually pays the realtor in the form of forfeited equity and that realtor commission is the exact same as paying Points. Uninformed consumers need to be made aware that giving away 3 to 6 Points of their Tax Free Home Equity for entering a sales price into the MLS, setting up an auto email, opening a few doors and writing a contract is absolutely ridiculous and totally avoidable now days! The 3 to 6 Points Commission days are a thing of the past for educated consumers!
Consumers need to know:
1. Realtor Commission Points are 100% Negotiable and can be rebated to the Buyer or Seller! Google Search ïƒ Realtor Rebate to see over 300,000 sites offering this savings.
2. Realtors tell buyers that “The Seller pays the Realtor Commission.†This is a joke! Obviously the home could be sold for much less to the Buyer if the Realtor would be willing to accept less in realtor Commission Points, so who is paying the Realtor?
3. To open a few doors, tour a few homes and write a contract which requires on average approx. 4 hours is equal to $3,000 per hour on a $400,000 purchase!
4. The MLS gives access to thousands of realtors who all sell from the same menu.
5. The negotiating skills of the majority of realtors are marginal at best.
6. The fact that realtors make more money when a Buyer pays more for the home can affect the true negotiation of the lowest sale price.
7. Many realtors will only show listings that pay them 3%, avoiding all lower commission listings of 2% or less, regardless if it’s the best deal for the buyer.
8. Realtor’s “Preferred Lenders†avoid structuring the loan with the realtor sharing anything to pay for closing costs as this would cut into their Commission Points.
9. $12,000 of Tax Free Home Equity given away in realtor Commission Points is equal to approx. $19,500 of an average person’s pre-taxed Gross Income.
10. $12,000 of Tax Free Home Equity given away in realtor Commission Points can cost the Buyer up to an extra $80.00 per month in mortgage payment.
11. $12,000 of Tax Free Home Equity given away in realtor Commission Points can cost a buyer as much as $30,000 over the life of a loan, equal to $52,000 of their gross income!
12. Realtors often tell Buyers that the seller (including bank owned/foreclosures, short sales) won’t pay closing costs when they absolutely will and do most of the time.
13. Many realtors will attempt to refer, steer or coerce a borrower to their “Preferred Lender†for even more compensation, even above the 3 to 6% Commission Points.
14. Some realtors will lead clients to believe Realtor Rebate is illegal, Not true! Florida, like most states, allows Realtor Rebate. Only 10 states don’t allow this Rebate.
15. Realtors often receive extra compensation from their “Preferred Title Company.â€
16. In addition to the 3% to 6% Commission Points, Realtors charge another $300 to $700 administration fee at closing which can be waived.
17. MLS listings are now available to anyone at Realtor.com or Realtyweb.net and other sites, eliminating the need for clients to give away so much of their Tax Free Home Equity in realtor Commission Points.
18. Realtors are not motivated to negotiate the lowest price on a home. Many will often tell to the buyer there are “Back Up Offers†or “There are other offer coming in,†to create urgency in effort to increase the buyer’s offer.
19. $400,000 home pays the listing agent $12,000 and the selling agent (Buyer’s Agent) $12,000. At 6 Points, that’s $24,000 of lost Tax Free Home Equity
20. Realtor Points can be used to pay for closing costs
21. Realtor Points can be used to buy out of the monthly PMI payments
22. Realtor Points can be used to pay for the FHA MIP, USDA & VA Funding Fees
23. Realtor Points can be used to pay for up to 6 months of Interest Payments
24. Realtor Points can be used to pay for Rate Reduction
25. Realtor Points can be used to pay for the 1st full year of home owner’s insurance
26. Realtor Points can be used to pay for taxes and ins. escrows
27. Realtor Points can be used to pay for a Home Warranty
28. Realtor Points can be used to pay for upgrades and repairs
29. Realtor Points can be used to help the seller hold a 2nd mortgage for the Buyer
30. Realtor Points can be used to pay for the seller’s closing costs
31. Realtor Points can be used to make a low rate and low cost loan to buyers after closing
32. Realtor Points can be used to Donate to Charity
In short, there are many nice people who have Real Estate Licenses. It seems like everybody has had one or has one, but they are not Brain Surgeons and should not be paid like one. They simply have access to a menu called MLS (same menu as thousands of realtors do), a lock box key to open doors and can write offers. Buyers shop endlessly for a .125% in a tax deductible interest rate, on a loan that they won’t keep over 36 to 48 months before refinancing or selling, yet will needlessly give away 3 to 6% of their Tax Free Equity in realtor points. This is called ‘Diving over Dollars to Grab Pennies.’ Consumers should shop realtors as hard or even harder for the best deal as the Tax Free Equity needlessly given away in realtor points is gone forever!
QUESTION: If you were buying a new car and ABC dealership was demanding Full Sticker Price (i.e. 3% realtor commission points), but XYZ dealership was willing to sell you the same exact car for ½ price, would you pay Full Sticker Price at ABC dealership? Would you care about how much ABC dealership’s internal costs were, how much they spend on their building lease, advertising, commission split salesman is on with the owner, how much profit they want to make on you just because of what other dealerships are making on buyers? It’s the same with realtor Commission Points, buyers don’t have to pay Full Sticker Price anymore!
Fact: it takes no more effort to sell a $400,000 than it does a $100,000 home. Realtors will gladly sell as many $100,000 homes as they can at a 3% commission which pays them $3,000. Most Realtors will even admit it’s generally a much easier job selling a $400,000 home than selling a $100,000 or less home as well. So, why not settle for the same commission or maybe a little more and rebate the rest to the consumer on a higher priced home if it’s an easier job?
Consumers need to be educated that Realtor Rebate has been completely legal for years in most states and the massive savings benefit it is for consumers. Unlike a few years ago, when realtors were on a 50/50 split with the real estate company they worked for, many realtors are now on a No Split Commission pay plan where they keep up to 100% of the commission points and don’t have to pay their company anything but a small $350.00 transaction fee. When a consumer encounters a Realtor charging a full 3 to 6% in Commission Points, they should simply find a Realtor who is willing to give them a much better deal and will ‘Share the Equity!’
Below is the 3% standard commission structure for Buyer’s Agents
$100,000 @ 3% = $3,000 A fair fee for the job.
$200,000 @ 3% = $6,000 A lot to just give away!
$300,000 @ 3% = $9,000 Way too much to give away!
$400,000 @ 3% = $12,000 Unbelievable amount to give away!
$500,000 @ 3% = $15,000 Just a plain absurd amount to give away!
$600,000 @ 3% = $18,000 There should be a laws against this give away amount!
$700,000 @ 3% = $21,000 Buyer is not thinking straight and needs mental help!
$800,000 @ 3% = $24,000 Buyer needs to be committed to a mental institution!
$900,000 @ 3% = $27,000 Buyer needs to be returned to their mental institution!
$1,000,000@3%= $30,000 Buyer is a Flat Liner, pull the plug!
If the U.S. Dept. of Justice is stepping in to inform consumers about these absurd realtor commissions, it’s bad! Click on the U.S. Dept. of Justice web sites to learn about Realtor Rebates.
realtor
Joe, some of that was very funny. Everything is negotiable. You can try selling the home on your own to avoid paying the commissions. Many people are doing that. The commission is negotiable. I am sure you can find a realtor hungry enough to accept the deal under your terms.
I just bought a home 3 months ago--I had been following the homes listed on realtor.com and yahoos reallty and called the realtor listed and she told me it was short sale--ok well did not want to go that route---she seemed nice enough, she even referred me to a mortgage broker guy who she said knew the area for USDA loans well and would help.
Ok its my own fault for not asking how much these 2 vultures would take at closing but they both came to closing and sat there waiting for their checks---I had purchased new home and builder closed at their title company-- the builder had given all kinds of incentives for buying this new home and paid good portion of closing---that disappeared as this broker and realtor hauled in thousands that ended coming out of my costs---so home price jumped up almost 20000 that was financed as closing waas rolled in and it was zero down loan.
I know I know I will have the realtors on here screaming its my own fault but yeesh come on this realtor woman made thousands for doing nothing---when I sell this home I will sell myself and just make sure to use real estate attorney and should be fine --never using realtor again if I can help it! I already know about staging from HGTV so don't need their advice and with internet sites can post home--hoepfully this is years form now when I want to down size and market goes up again!
Ok its my own fault for not asking how much these 2 vultures would take at closing but they both came to closing and sat there waiting for their checks---I had purchased new home and builder closed at their title company-- the builder had given all kinds of incentives for buying this new home and paid good portion of closing---that disappeared as this broker and realtor hauled in thousands that ended coming out of my costs---so home price jumped up almost 20000 that was financed as closing waas rolled in and it was zero down loan.
I know I know I will have the realtors on here screaming its my own fault but yeesh come on this realtor woman made thousands for doing nothing---when I sell this home I will sell myself and just make sure to use real estate attorney and should be fine --never using realtor again if I can help it! I already know about staging from HGTV so don't need their advice and with internet sites can post home--hoepfully this is years form now when I want to down size and market goes up again!
It's funny to see these realtors make buyers think that what they do is this huge benefit. It's pathetic to see consumers fall for it.
They think because the realtor was able to negotiate the price down that they are some kind of hero or something, when what they do can be done by anyone with half a brain.
If they only knew how much money they were giving away they would work thru a discount realtor.
They think because the realtor was able to negotiate the price down that they are some kind of hero or something, when what they do can be done by anyone with half a brain.
If they only knew how much money they were giving away they would work thru a discount realtor.
Mods, please make this a sticky for future readers. Very informative.