Thursday, March 12, 2009
Jeff Collins posted an excellent piece on the Lanser On Real Estate Blog today that realtor commissions nationally fell by 34% since market peak in 2005. Orange County realtors, it would appear, are really getting the shaft on commission earnings as estimates indicate a 50% drop since the 2005 peak.
Realtors across the nation no doubt earned well as the home buying market soared to stratospheric heights. But let's not forget that they earn well on the way down as well, particularly in Orange County where single family home prices have fallen dramatically over the last 18 months, but in my view still remain hopelessly out of alignment with real take home incomes here and the reality of current financing opportunities.
I mean, we are still observing idiots being advised by local realtors to put their 4 bedroom, 2.5 bath P.O.S homes up for sale at borderline $650,000.
When will these people finally get a clue that their house is not worth this much money anymore? I completely understand why realtors around these parts do what they do. Their payday is dependent upon the home sales price, so let's do all we can to make the transaction attractive, and get paid our 6%.
My view is that realtors in the United States of America, if paid at all, should be paid a flat fee for their services. Those services may have value for people who want to buy or sell real estate, but don't want to deal with all of the hassles themselves. I will admit that there might be some value there that consumers would be willing to pay for. But regardless of a realtor's efforts, overhead costs, etc. they are performing the same sales services regardless of the value of the home. I mean, realtors cannot demonstrate that they do more work or incur more costs when selling a $640,000 piece of crap house than they would selling a $900,000 piece of crap house. So why should I as a seller (or buyer) pay a fee that is a relational function of the transaction value? That kind of arrangement makes no f&%king sense!
Everytime I complain about this real estate commission ridiculousness, do you know what the response is from realtors?
Don't blame us. The brokerage house makes us do it.
Just explain to me like I'm 4 years old, what on earth should convince me that what Realtors do is worth 6% of a Lake Forest, California single family home price?
I didn't think so either.