Income is in America is not based on how much money you need but on how much value you can create and how much of that created value you can negotiate for yourself.

High home prices do not entitle real estate agents to higher salaries. The negotiation skills (some of the group negotiation) used by real estate agents can allow them to earn more income in higher priced markets, but it is not a ‘right’ or ‘entitlement’.

You said that there are more agents today. The reason for that is clear. There has been more earning potential per amount of work in recent years. That, combined with the relatively low barrier to entry to the field, has attracted more people to the field.

Do you know why medical doctors earn so much? Because new medical schools have not been opened as the population has grown. Even if you are willing to spend the 6-8 years of school and residency, the opportunity to invest that time is under very strong competition. That provides a high barrier of entry and results in high salaries (although those salaries have not been as high in recent years due to collective bargaining from insurance companies).

What is the barrier to entry for a real estate license?

This is my point on why consumers shouldn’t randomly call LOs to find one to work with or use a stranger who has sent you a piece of mail promising low rates. Odds are, they don’t have a referral based business and the LO’s busines model is “transactional” vs. “relationship”. Transactional sales people do not see the incentive to develop a relationship with the client…another one will be making their phone ring chasing that fictional rate.

This holds true for real estate agents, too (transactional vs relationship).

With houses, it could be 20 or 30 years between purchases. What’s the incentive not to screw you, take the 20K even if the transaction was quick and easy and they only did enough work for 4K, and move on to the next sucker? Someone like you you prices by the job seems to be the exception, Ardell.

Recommendations to friends and such are only a modest incentive. I’ve actively recommended the agent who helped me with my purchase, but she’s only gotten one sale through me, and that was more chore than lucrative deal.

The 3% is for that type of guidance, but it stays the same whether someone wants or needs that. It also stays the same whether or not the agent can or does provide that guidance. To eliminate these guidances and suggest that an agent doesn’t need to see the house or offer these guidances to most people, is a step in the wrong direction.

It’s like paying a CPA fee to someone, when you do your own taxes. The answer isn’t for everyone to have to do their own taxes. Some people who do their own taxes, may pay more than if they had it prepared by a professional. Some home buyers will buy the house no one else wanted, and pay more for it, if representation becomes a thing of the past.

I still think the CPA model is the best anology for real estate. The parts that are worth the money to hire a professional are the “artform” parts. The reading between the lines parts. Not the data transfer parts.

I contunue to study consumers more than the insiders in the industry, looking for those answers. I even support the half answers. Every day I see this barrier, the one where a buyer goes to an Open House and is treated with huge disrespect and anger for wanting to talk about the buyer agent fee. The really broke part is the part where the listing agent wants to keep the fee set aside by the seller to pay the buyer’s agent, when there is no buyer’s agent.

It’s a brick wall, and I see it more than anyone, I think. I really don’t understand why sellers and listing agents don’t understand why it isn’t fair to put it into the price and then keep it when the buyer doesn’t use it for its intended purpose.

I get it, but legally the buyer has no recourse under the current system. They are not privy to what the listing agent gets, so even if the buyer takes away 3%, the agent can still walk off with the 3% fee.

Getting 3% off the finally negotatiated sale price is near impossible under the current structure. Redfin found a short term answer, but agents are quickly filling that loophole by reducing the commission if the agent isn’t present when the buyer sees the house.

The only answer is for agents to understand, and sellers to understand, that the 3% is a set aside for buyer representation, and is included in the price. No representation, fee comes out of price or goes to buyer. But not enough see it that way yet to make the change. Hard to say don’t take it, even though you “can”. It’s an uphill battle.

Limiting access to data isn’t really a problem at all. Not here anyway. NYC where there is no MLS, yes. But here, not really. Not in a way that isn’t readily sovable if someone cared enough to do so.

He said you have to start selling shirts and ties, but those who sell suits make way more than those who sell shoes.

Same as real estate, I guess. After 10 years, someone makes higher than the median and first year they don’t.

I think the main difference is in 1997 when median was more sufficient, there were fewer licensees. I say licensees and not agents, as many home buyers and sellers get a license to do so for themselves. Also in 1997 it was much more likely that each sale represented 3% to an agent than it does in 2007. That’s where his figures are off.

I think Alan’s point can be summarized by looking at how things work in another field. Since you brought the innocent shoe salesman into the argument, consider a similar situation: a salesman working at Nordstrom whose job is to fit people for and sell them Armani suits.

Is their salary determined by the question “how much do they need to make in order to afford to buy their own Armani suits?”

I bring up barriers to entry such as education for RE agents because in a competitive market place with few barriers to entry you wouldn’t expect to see a near tripling of compensation in 10 years like we are seeing in RE. There is a market imbalance.

There isn’t a healthy, functioning market for your services.

Part of the reason has to do with the MLS structure and how it limits access to a the data, which is a vital tool for competing business models.

Part of it is what you discussed: the inability of a buyer to have an obvious outlet to discuss the hidden fee for the buyers agent that’s essentially tacked on to the price of the home.

Part of it is any easy way to compare agents and pay quality experienced agents such as yourself a premium over newer, less-qualified agents.

There are probably more reasons as well that the market is broken.

You seem to get the last 2, but you don’t seem to be acknowledging the existence of the 1st.