Chipping Away At Realtors' Six Percent
Lesley Stahl Reports How Realtors' Commission Fees Are Under Assault
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Hi-Tech Real Estate Moves In
In Full: Realtors' sacrosanct commission rates of 6 percent may be in danger due to emerging online competition from Internet real estate sellers and buyers. Lesley Stahl reports.
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Stahl's Reporter's Notebook
Only On The Web: "60 Minutes" correspondent Lesley Stahl talks about her upcoming report on how online real estate sales are lowering agent commissions and driving down home prices.
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(CBS/AP)
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How is he making money?
"The average agent processes eight deals a year. We have an agent that can do that every week," Kelman explains.
"Are you spinning me?" Stahl asks.
"I mean, seriously," Kelman replies.
There's no way to independently check the number of deals his agents close in a week, but it is clear that they do make it easy for their customers who can sit home at night in their pajamas and click on the Redfin webpage to read critiques of houses in their price range, see what comparable homes in a given neighborhood have sold for and to even tour a house they might be interested in.
Redfin displays, for free, information that's part of the package you pay a traditional agent to get. "So, for example, if we were looking for the turkeys in this market, we could find properties that haven't sold in the past 45 days," Kelman explains.
If you like the house, you can click the "start an offer" button. A Redfin agent at his or her computer in the office contacts the seller's agent and negotiates a price. Redfin then coordinates all the paperwork for a loan and closing the deal.
Willis and Takeuchi say the Redfin agent helped them come up with an asking price. Eventually, they sold for $10,000 under, which Willis says they're happy with. It was in their range, he says.
"But perhaps they've left quite a bit of money on the table if it had been put in the hands of somebody that really knew the business," argues Deborah Arends, who has been a top RE/MAX agent in Seattle for 18 years. She says that Redfin customers get the "Wal-Mart treatment" when what they really need is an experienced, hands-on professional. And besides, she says buying a house is a high-touch business, not high tech.
You have to go and see it for yourself. "This is not like buying books on Amazon.com. Real estate is typically people’s largest investment," Arends argues.
"If someone comes and challenges you and says, 'You don’t do enough for the six percent.' What's your response?" Stahl asks.
"My response is, 'I'm not the agent for you,'" Arends says.
Some agents have been known to lower the commission, but Arends says to give clients her ultimate, she needs to charge the full six percent.
"Now here's what Glenn Kelman of Redfin says: 'The price of homes has gone through the roof, pardon the pun, over the last several years. And yet your commission has still stayed at six percent,'" Stahl remarks. "You're not lowering your commission to give the buyers this advantage. You're just raking in the money?"
"Wish that were true," Arends says. "I think what's happened is a lot of expenses have gone up, everything from postage to gas, which affect real estate agents' profits."
Produced By Rich Bonin
© MMVII, CBS Interactive Inc. All Rights Reserved.


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See all 1510 CommentsPatty Hartman, Realtor
Prudential Fox & Roach
Delaware
The bottom line in my opinion is EVERY other business is either regulated with respect to fees or has changed it's methods of doing business. I for one am 150% in favor of federal regulation limiting the sales comission to 3%-4%.
We see it too often from shows like 'flip the house' where often times with some minor cosmetic upgrades a house can double and triple in price in a snap of a finger with a help a 'appraiser' - REALTOR who will ROB 6 percent PROFIT from the sale!!!
It is just really sad to see all these foreclosure. Really, it should never happen in the first place. Home prices are just too inflated - and you know by WHO.
Next time try getting all the facts.
Scott Farrell
COO
Helen Adams Realty
Charlotte, NC
I am always amazed by shows such as 'Flip the house' where often times with just some minor cosmetic upgrades a house would sell for double or triple its real value, of couse with the help of an 'appraiser' who often will be the REALTOR that will RIP 6 or more percent from the final sale!!! It's ridiculous to put it mildly. Some body of government should realy step up and regulate this industry.
It is just sad to see so many foreclosure due really to unrealistic and inflated prices.
Alas, again CBS news did not report accurately the facts about Realtors receiving a 6% commission. First of all, the commission rate charged by Realtors has always been negotiable.
The couple who supposedly saved $26,000 by not using a traditional Realtor should know that statistics from NAR show that for sale by owners received approximately 20-25% less for their homes by not using a full time professional Realtor.
How about the commissions charge by Insurance agents, Financial planners, and doctors and lawyers? Are these fees negotiable?
Tell the couple that SAVED $26,000 that maybe they acutally undersold their property.
And if you want furhter information, please check complaints against "I SOLD MY HOUSE.COM" by FDIC, State of Massachusetts and New Hampshire and HUD.
Gee, I wonder if it's because they too are tied into a mortgage company doing business as East-West mortgage.
Ernie Esposito
RE/MAX
If someone wants to pay upfront to (hopefully) sell their property, God bless them.. the other 97% of the population will make sure a professional does the job..
Alas, again disappointed that CBS news did not report accurately the facts about Realtors receiving a 6% commission. First of all, the commission rate charged by Realtors has always been negotiable.
The couple who supposedly saved $26,000 by not using a traditional Realtor should know that statistics from NAR show that for sale by owners received approximately 20-25% less for their homes by not using a full time professional Realtor.
How about the commissions charge by Insurance agents, Financial planners, and doctors and lawyers? Are these fees negotiable?
Tell the couple that SAVED $26,000 that maybe they actually may have undersold their property.
And if you want further information, please check complaints against "I SOLD MY HOUSE.COM" by FDIC, State of Massachusetts and New Hampshire and HUD.
Gee, I wonder if it's because they too are tied into a mortgage company doing business as East-West mortgage.
Ernie Esposito
RE/MAX
Phillip Jones, Broker
Your Choice Real Estate, Inc.
The Best Value in Real Estate!
151-18 College Drive
Orange Park, FL 32065
904-298-2679
www.ycre.net
Discount firms have a place in our industry, but buyer beware. You get what you pay for. Also, who in their right mind would buy a house sight unseen?
Finally, your segment makes it sound like a REALTOR makes 6% on each sale. Statistically it is more like about 1% after splitting other REALTORS and the Brokerages.
Phillip Jones, Broker
Your Choice Real Estate, Inc.
The Best Value in Real Estate!
151-18 College Drive
Orange Park, FL 32065
904-298-2679
www.ycre.net
Phillip Jones, Broker
Your Choice Real Estate, Inc.
The Best Value in Real Estate!
151-18 College Drive
Orange Park, FL 32065
904-298-2679
www.ycre.net
While many would like to believe that your report is factual; it is not:
1. Most realtors discount listing fees as competition amoung other agents has required them to in order to get listings. The 6% is the exception not the norm and the seller's choice. There is usually a good reason when a client is charged 6%. In Atlanta, my charge is $600 to list and $1,000 to close and that is a high rate. The buyer's agent gets the 3%, just like with the company you featured. Most agents will "rebate" the buyer's agent fee if the work justifies it.
2. The complaint that the NAR is against them is pure nonsense; they can join the NAR. What the NAR requires is that the client be given the full protection of a "Realtor" no matter what the fee is. That is their complaint as they are having a problem complying. Who do you think is right?
3. Where did you get your facts and why did you not research you obviously "anti-realtor" story. Your comparison to the brokerage industry forgot to mention the billions that private investors lost relying on internet shopping for advice.
Andrew Margolies
404 259 5181
I do 55 transactions a year in Manhattan, New York (the ONLY area where the market is getting stronger, not weaker..), and I WORK for my income. My clients get TOP dollar for their homes. How much extra do you charge to get up from your desk and SHOW your listings???
How long do you require your clients to sign and exclusive??
So for MAYBE a solid 40 hours of dedicated total work over a 3 month period (avg lsiting contract) you make more in 1 traditional work week than others make in 480 hours??? And you are trying to STILL justify your comission?? The reality is the cats out the bag and there will be much more discussion on this topis and I would bet many changes coming..Yuo as a realtor can't expect to do business today with technolgy and housing prices where they are as you did in 1965...
Susan Mitola, Realtor
Keller Williams Realty
One question: Is caldwell banker a sponsor of 60 minutes? Your site says so. This is curious. Can you please post an explanation of when they became a sponsor and the amount of money CB has paid to CBS in advertising fees in the past 12 months?
Susan Mitola, Realtor
Keller Williams Realty
Thank you for your comments and for visiting our website. I trust you found it informative. To address your concerns; 1. We do not charge anything to show our listings. We will gladly show them to prospective buyers and make every effort to sell the home for them. If we are successful, we will earn the buyers agent co-op the seller offered when they signed up for MLS Assist. 2. The lock-box we offer in our $449 MLS Assist service is an Electronic Supra E-Key lock-box, only local Realtors have the ability to open it so the sellers home will remain secure at all times. Have a great day and best of luck with your business.
Regards,
Phillip Jones, Broker/Owner
Your Choice Real Estate, Inc.
The Best Value in Real Estate!
151-18 College Drive
Orange Park, FL 32065
904-298-2679
www.ycre.net
One question: Is caldwell banker a sponsor of 60 minutes? Your site says so. This is curious. Can you please post an explanation of when they became a sponsor and the amount of money CB has paid to CBS in advertising fees in the past 12 months?
The only useful service that I have received from a realtor is her knowing the code to the lockbox. The flat, guaranteed commission rate gives the realtor no incentive to do her job.
One example: When I put my home up for sale, one realtor encouraged me to quote a lower price. I did research on comparables, took her to the homes that were on the market, and then justified my selling price to her. Using the Dummies guidebooks and articles from HGTV, I set up my home for display during the open house.
The result: I received 5 bids in the first weekend and sold it for $25,000 over the asking price.
There is so much information out there; the buyer's and seller's represent themselves best--it is, in fact, one of the largest investments we have. Why should we trust other people with it?
By my account you had 3 representatives and a pair of %u201Csatisfied clients%u201D for the Redfin side of the argument, but your representation of the traditional model only featured Ms. Arends point of view. Responsible journalism would have been equal coverage for each side, and your segment would have left your viewers with more answers than questions.
As a reputable news show you owe it the millions of Realtors to fairly represent their side of the argument. To portray us as greedy and money-hungry is not accurate as there are many of us out there who believe in integrity and serve our customers with their best interest in mind
One question: Is caldwell banker a sponsor of 60 minutes? Your site says so. This is curious. Can you please post an explanation of when they became a sponsor and the amount of money CB has paid to CBS in advertising fees in the past 12 months?
John Robertson
Coldwell Banker Triad Realtors
Winston-Salem, NC
Firstly, the %u201CE%u201D agent that %u201Csaw the light%u201D and crossed over to the other side should have done so if she was conducting transactions and offering her clients a mere 4 hours of her time for 12K. If all we had to do was send a few emails and sit in front of a computer, I suppose we could charge less and offer our clients %u201CMcRealty Service%u201D.
Any professional agent knows the significance of being technologically savvy in today%u2019s market. In this age of internet anonymity; we can%u2019t rely on our computers to establish a rapport with the clients whose trust in us is paramount in creating a successful business relationship.
I work an average of 60 hours per week in order to offer my clients the level of service they deserve. We also can%u2019t forget the basic costs of running a brick and mortar business. On the issue of the %u201C6%u201D %. In most transactions there will be a minimum of 4 parties sharing the commission. Red Finn also handles the financing on every transaction; did we dissect the profit margin there?
R. Kirk-Stacey, Associate Broker,
Re/Max Alpha Realty, NC
Shame on you. Do your homework girl... when did you start to lose it? This real estate piece was so biased and unresearched I am embarrased for you. Ratings, ratings, ratings, ratings...
Well, at least your hair looks good.
Shape up or retire soon.
eddy murrow
David C. Wall, Sr. Realtor, ERA Showcase, Port St. John, Fl. 32927
Your story was weak.
Your story was weak.
In Central IL, commissions are all over the place. New construction and high end housing commissions tend to be lower percentages. Middle brackets see a trend of other percentages, and vacant lots yet another. You simply cannot make a blanket statement that ALL commissions are 6% across the nation when you only represented one city.
Million dollar homes are the exception in a lot of cities, not the rule. Everyone does not make $30,000 gross. Those sales, as well as the 20 hour sell, are more the exception, these days, not the rule.
My homes are listed online, my clients can get pre-approved online, view homes online, get a price for their home online, and many other services, guess what - FOR FREE!
I have sold FSBO's for as little as $3000; have rebated 30% of my commission back to clients who otherwise could not have closed without my help. I have also referred clients to discount brokers because they had to have a certain amount from their homes that left little/nothing to pay for commissions and repairs.
Not all of us are about the buck, Ms Stahl. Please don't put us all in the barrel together. There are Realtors who truly care about their clients, not just getting paid.
A true Real Estate pro knows the market - not in a single price range, but all inventory in a wide range of prices. How many buyers and sellers have the time to visit 3 to 3 houses per day year after year? No virtual tour can make up for this knowledge.
How many transactions does a typical buyer or seller negotiate in a lifetime? Can it possibly compare to the experience of someone who handles this daily?
I could go on like this for hours, but why bother? There should always be room for a "Listing-only" or "Discount" business model. As an educated and experienced Broker, I don't compete for that sector of the business. The median price of a property marketed through my office is just over $1.5 million. Our clients feel that we provide a service that is worth more than the fee they pay for it.
As with any other professional service, Real Estate brokerage comes in many forms, and has both excellent as well as disgraceful practitioners. Those of us who really delight our clients are well compensated, and receive referral business in turn.
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