Realtor Commissions. The Great Hush Hush Exposed.

Are 6% Realtor commissions “customary” or “prevailing,” or the “average?” (hint=no). Do you get what you pay for? (hint=oftentimes no) This post is long but it uncovers the unspeakable… COMMISSIONS!

Why does it matter? Because on a $500,000 home each percent is $5,000! Any ignorance about commissions may lead to a royal ripoff. The trick is that less commission isn’t always more “savings”, but the flipside is also true, because a higher commission isn’t always followed with better performance. Knowledge is power.

Background: Ever wonder why there are nearly no Realtor blogs discussing commission structures openly? (probably not, but for the other 3 of you…) It all has to do with an AntiTrust price fixing case against a few Realtor brokers decades ago. (I just covered it in my AntiTrust Law class, this is my last semester at AU! for those that are curious followers.)

These brokers got together for a dinner at Congressional County Club in MD. The organizer was F0LEY, the then President of the Local Board of Realtors. He got up and said he was changing his firms rates to 7% from 6%. (insert tons of details here). 

His excuse was the market was horrible and tons of homes were listing, but nothing was selling, so they were in dire straits. Ultimately, several were found guilty of conspiracy to raise commission rates in violation of the Sherman Act, an Antitrust law.

Fast forward 30 years, the Realtor community is still terrorized and instructed to NOT TALK ABOUT COMMISSIONS publicly with other agents. And to even get up and leave a room if somebody talks commissions. I have seen it, it is pretty funny when the word commission is mentioned and everyone freaks out and becomes a lawyer “You can’t talk about that!”

It got so bad that the Virginia Assoc. of Realtors’ legal counsel didn’t want to say “6% commissions” when teaching agents, so he referenced a number of hypothetical “chickens” instead of using actual percentages. He happened to use the number 600 chickens. Hum, if that isn’t a wink wink to the number 6, then I don’t know what is. (see Blog post on topic or video see minute 11:20) Gimme a break.

In my opinion, in the end, this chill effect & gag order has the opposite result. Instead of colluding to increase prices, the new silence solidifies what the consumers (and press) think is the “Normal” Realtor Commission. And the press make it worse with headlines like: “Chipping Away At Realtors’ Six Percent” (link). Or Wikipedia’s “The median real estate commission charged…  6%”. This is WRONG. (more…)

  • 21
  • February
  • 2011
Posted in Listing Advice., Realtor Commissions, Realtor Rebates | 53 Comments »

Redfin Increases Fees 50%. “Advantage” Leaves Off Seller Subsidy. Oops.

Update 11/2012: Redfin does it again! Congrats! First they increase fees by 50% (post below in 2009), then 3 years later in 2012 they cut their rebate yet again, this time almost in half for a typical $475k homes. A 0.88% rebate, down from the 2008 2% rebate. And there is no more firm-wide published % for the r ebate, so the % rebate continues to drop quietly (based on a $600k home in April 2012, vs Nov 2012). Nobody will be the wiser. Unless you follow my blog.

So I’m a big fan of Redfin. I love their MLS search engine (better mapping vs. my faster and don’t worry, they love a good debate, as long as they get link love (helps with Google).

This is a 2 part story. 1) Redfin Increases rates and 2) Fuzzy Math on Redfin’s “Advantage” calculation.

Part 1:
Many people might not know, Redfin two months ago increased their buyer agent commissions by 50% (more…)

  • 6
  • January
  • 2009
Posted in Buying Advice, Realtor Rebates, Redfin | 27 Comments »

60 Minutes: Redfin Saves $27,000 vs Client Saves $152,000!

Last week 3 people texted me (or would that be “text me”)
saying “Turn on 60 minutes,” yet I missed it! (see it)

America was lured in by the… 20 year long regurgitated story “Attack on the 6% Realtors” and comments about “saving thousands.”

After watching such a biased infomercial, of course Redfin seems like a no-brainer. Well my blog readers have a brain (more…)

  • 24
  • May
  • 2007
Posted in Buying Risks., Don't Miss Best Of, Listing Advice., Realtor Rebates, Redfin | 25 Comments »

Go FSBO! Save $20,000! Realtor Tells All!!

You’ve seen the magazine headlines about selling For Sale By Owner and saving $20,000! Well I’m going to tell you exactly how to do it! Other Realtors will hate me for it, but I think consumers deserve to know all the REAL options available. The inside scoop.

First the “facts.” Did you know that the National Association of Realtors, (NAR) the group that put out ads that say now is the time to buy and now is the time to sell (see blog) came out with a report that shows the average FSBO home sold for (more…)

  • 29
  • April
  • 2007
Posted in Don't Miss Best Of, Listing Advice., Realtor Rebates | 55 Comments »

Realtor Rebates. Free Money or Expensive Savings?

This blog is supposed to be about the inside scoop on real estate right?

Well lets talk about a huge hush hush: Realtor Rebates!

Wow, I said it, and I put it in writing. A non-Rebate firm educating their customers (more…)

  • 6
  • February
  • 2007
Posted in Buying Advice, Don't Miss Best Of, Realtor Rebates | 56 Comments »