It isn’t hard, based on the kind of people I know that are realtors. But the 3% vig is usually split between the realtor and broker, or at least it used to be. Might vary by state as well, since in WA I think everyone is a ‘broker’, but you usually still have to split part of it with the owner of the agency. Or something. I just don’t think you’d get the whole 3%.
In this scenario I would be a one man operation, so I wouldn’t have to worry about splitting it.
Surely there are solo realtors out there who are unaffiliated with a larger company.
Looks like 75-100 hours of work/education, then pass a test. That would save like $10-15K on a $450K home, so it’s a $100 to $200 an hour return on your time, not factoring in any extra time you spent preparing the listing, staging, etc that they would do for you.
Pretty amazing when you consider the median household income in the US is $70K, which is like $35/hr if it’s one earner, but in reality it’s often two earners.
Looks like the total cost for training, testing, and administrative fees is $500-1,000.
And of course you earn/save 3% on your purchase as well if you represent yourself as a registered realtor. So in reality if you’re selling a house and buying a house around $450K each, you’re saving like $27K off like 100 hours of work. Call it 150 hours, fuck it. $180 an hour.
Yeah, a quick google search looks like you’re probably right. My mother was an agent way, way back in like the 80s, and for some reason I remember she had to work under a broker at the time. Things might have changed.
Old high school friends/acquaintances who I thought were mediocre in every way seem to be way overrepresented as realtors on my Facebook feed.
3 Likes
So in this case their purchases skew towards their 5% over-valuation and sellers’ 10% under-valuation. What they should do, then, is offer 10% less than their valuation and buy way fewer homes. Even if accepted offers skew towards their over-valuations, they’re still getting them at 5% less than fair value.
One thing left out of this is that I don’t think most people were choosing regular offers over theirs, given the financial incentives for sellers. So their offers would skew towards their over-valuations and fair value offers that were towards the high end of the offers received.
In reality, being your own realtor also saves you all of the scamming you’re subjected to by the average realtor who’s getting kickbacks for steering you towards lenders and such. Could save you a few basis points on your mortgage, for example.
It’s a super low barrier to entry profession. Think of how stupid your median retail financial advisor is, and then consider that it is a couple of orders of magnitude harder to become a mutual fund salesperson than a real estate agent.
1 Like
Just wait until you build a house, and the builder steers you towards a specific lender but gives you a 10k discount to go with them.
(This is currently happening to me, and I’m really concerned about getting hosed on the rate, but I won’t know until we start getting to close. I’m super suspicious of this arrangement)
There’s an important lesson in there about the use of data analytics. Effective data analytics identifies global insights that are not available to the participants at the local level. What Zillow did was the exact opposite - they put themselves in a position where the local participants had better information about the “right” price for a house than their data analytics models! So they basically offered to transact with people where there was an information asymmetry, and they were the ones with less information on each transaction. Oops.
2 Likes
10K seems like enough that unless there are some weird terms, you could just immediately refinance and come out at least a few K ahead even if this lender doesn’t have a competitive deal. You just have to decide if it is worth the hassle.
1 Like
Feels like there’s a business opportunity here for the enterprising individual:
-
Get a realtor’s license. Cost: 100-150 hours, $500 to $1,000.
-
Offer your services at 1.5% with the caveat that all you’re doing is listing it on MLS and fielding offers. The owners are on their own for staging, advertising, open houses, etc, etc. Have a PDF file or printed materials available to walk them through all that stuff.
-
Offer your services on the sell-side at the full 3% because the listing agent will capture anything you give up anyway, and give your clients a housewarming gift in the neighborhood of 1.5%, with the caveat that you’re only entering the picture when they’re putting in an offer - they’re on their own for shopping, showings, etc. Assuming you can structure that in a way that works well for taxes, it should be an easy way to undercut the market. Let your clients know that here you’re also making less than the average realtor by not scamming them for kickbacks.
Honestly #3 might be a huge waste of time compared to just scaling #2.
Feel like if that was a good choice it’d be done already.
I think the main barrier there is that people are not actually interested in an efficient transaction when they are buying a house. Emotions run super high and you are going to capture market share with interpersonal skills, not discounts. People are morons when they buy houses.
2 Likes
You almost have to be getting hosed. I know you’re in California and assume you make good money as a doctor, so I’m going to assume the home price is pretty high. A difference in 10 basis points is probably a difference of $10K over the life of the loan. So I would assume your interest rate is at least 0.2% to 0.3% higher with their lender - they’re not giving you the whole kickback.
I just refi’d with Better.com and I have to say, it was a really smooth process. They had a good rate too, so you might check with them. Their system is really slick and really leverages technology the way you always thought mortgage companies should.
2 Likes
Here’s one reason why it might not be:
Another is that I assume 80-95% of new realtors end up with big firms. People who are smart enough to do this and pull it off probably already have a decent source of income and aren’t real interested in trying to build it up from scratch.
My plan would be to use social media, mock the normal realtors on social media, and blatantly cut through the bullshit. I actually wonder why there isn’t a huge tech startup doing this entirely online.
I’ll make sure to check it out before I actually go to closing. Thanks.
Only thing that’s making me hesitant from automatically going with someone else @anon38180840 is that my situation is kind of weird, but common in my direct local area. A benefit I get through work is that they’ll put up 10% of the house as an interest free loan due in 10 years. My understanding is that a lot of mortgage companies don’t particularly like that kind of arrangement, but this local place has worked with a bunch of my coworkers and it’s gone smoothly with them.
Sounds like lennar. The rate they quoted us was excellent. Locallly I like Patelco credit union if you want a sanity check.
Less profit for them… Do they actually need to know? I guess it depends on exactly how it’s structured and what the financial disclosures for the mortgage ask you.
As long as you compare to some other lenders, you can’t go wrong. Maybe you can get them to knock a few basis points off to get it closer, too. I think this is an area a lot of homebuyers leak money. From the reaction my realtor got when I asked him about shopping around for a lender, it’s an unusual request and most people just take their recommendation. People seem to worry a lot more about $10K in the sale price than $10K in extra interest on the loan, which is ass backwards if I’m thinking about it correctly. For the sake of home value, I’d much rather pay $10K more and save $10K on the loan than pay $10K less for the home and pay $10K more in interest on the loan.