Posted by Greg Perry at 9/26/07 9:51 p.m.

A return to principles. I like that.
Greg

Posted by Mack McCoy at 9/27/07 12:29 a.m.

Funny thing, if you're going to split a doubleheader, it's much more fun as a fan to win Game 2.

Fact is, fundamentals always win out. A lot of people get their home sold and leave money on the table, in good times and bad, because they coast - they don't do everything possible to maximize exposure and to present the property in its best light. Ask any FSBO who sold his house to a gal he met at Lowe's - the market's great, I did great, didn't need no stinkin' agent. Chances that the one buyer he found on his own was going to net him the most money? Hmmm.

Then there's the buyer - how many homes did she see? Did she really find the best property, for her needs, for the price? Hmmm.

If you're an experienced amateur, perhaps you don't need a full-service realtor. Perhaps. Another funny thing, though: builders hire professionals to market their developments.

You said it, brother: It isn't cheap to operate in this industry. It has a few people making a fortune, a lot of people earning moderate incomes, and some barely surviving. Sure, a Realtor can make $100,000 a year - if they sell five million dollars worth of property. Every deal doesn't pay 3%, and you can spend quite a bit of money just being in business full time, let alone marketing yourself and your listings to get to the $5M production level.

Iggy's House? What was that, $500K in commissions and ad revenue, and it cost them $5.1M to bring it in? Yeah, something's gotta change there. I mean, look at those ratios: if they were able to get all of their customers to pay full commissions (they give back 3/4 to buyers and list for free, so let's say they effectively get 1/8 of a commission per deal), they would still have lost $1.1M doing it.

I'm not a member, but does Costco still offer real estate services? I remember when JLS was doing it with them ...

Anybody thinks that real estate commissions are high should look into the cost of an auction.

Posted by Greg Perry at 9/27/07 2:10 p.m.

Hey Larry, saw you quoted on the Foxton Inman article. Good job.
Greg

Posted by Larry K Cragun at 9/27/07 4:40 p.m.

Thanks,You are a reader you are.

Posted by Sam DiBello at 9/27/07 7:30 p.m.

Wow! It is actually refreshing to see someone "just say it". Good job Larry!

Why don't we all just speak candidly about those companies that demonize their own industry in order for them to succeed, while at the same time use the very infrastructure that has taken decades, billions of dollars and millions of individual non-cooperating agents to eventually build? Like the kid who saws at the very limb he's sitting on, these discounters are poised to fail as they discover the real cost of doing business…and their own dependence on the technology and information provided by the very companies they so delight in bashing.

Again, good job!

And by the way… congrats on the opening of your new KW Kirkland office!!

Posted by Larry K Cragun at 9/28/07 8:27 a.m.

You too Sam.

Posted by buddhabrad at 9/28/07 2:14 p.m.

Same boring arguments were made by full-service stock brokers years ago.

Worked out great for them.

The truth is, that if a home is truly an investment (a notion with which I will not debate here), then as with any investment, the minimization of transaction costs will flow directly to the bottom line of the investor.

Posted by Mack McCoy at 9/28/07 2:40 p.m.

buddahbrad,

Well, some are and some aren't.

And if you're truly educated and experienced enough to do your own property evaluation, but not so successful that your time isn't better spent elsewhere, then you really don't need much in the way of service from a professional. The minimization of maintenance costs flow directly to the bottom line of the investor, too, and many property owners insist on doing their own maintenance.

But all service providers are not created equal, and while it's possible that you can get just as good service from a salaried person who's watching other agents make full commissions ...

Posted by Larry K Cragun at 9/28/07 4:20 p.m.

Still brad, Foxtons down, two to go.

Posted by Mack McCoy at 9/29/07 10:54 a.m.

Well, one of them, at least, really isn't in the real estate business, except as a way to develop whatever technologies they're working on.

Funny thing (I just love to write, "funny thing"): There are venture capitalists who are essentially subsidizing people's real estate commissions. Whoda thunk it?

Posted by Larry K Cragun at 9/29/07 11:46 a.m.

I am not so sure venture capitalists are as smart as they and many think they are.

Posted by Mack McCoy at 9/30/07 1:13 p.m.

Or, the con (see: cheat, lie, misrepresent) is in pretending that they're in the real estate business when they're hoping to take an advertising business public, a la Iggy's House.

Foxton's lost $16.1 million in 2005. How does a real estate brokerage firm lose sixteen million dollars in a year?

Posted by Larry K Cragun at 9/30/07 4:47 p.m.

..... and to add to that Mack, while making enemies of so many customers that came to save money. Part of the fascination of this company is in how many people did business with them and absolutely hate them.

Posted by JD@Preview at 10/1/07 12:46 p.m.

It's not that it's so expensive to operate in this business, it's that the standards for getting in the business are so low that the shear number of agents makes for a situation where we spend an inordinate amount of time and resources getting the next transaction as opposed to doing productive work. I maintain that a higher standard (Bellevue Community College's 2 year AA in Real Estate *should* be the standard for licensure)will make for fewer, better agents doing more real work. I think I could easily do enough exceptional full service transactions at 1/2 of a 4% total commission to make a very comfortable living and still take off 2 months a year. The more ambition among us should be able do *very* well. From a standpoint of agents and consumers, which, by the way, is where the *real* business of real estate happens, it sounds like a slam dunk win-win. It's the "industry" (brokers, NAR and MLS) side of the house that will scream bloody murder and resist. Their business model is predicated on how many agents pay them fees and as such is a numbers game best served by too many agents barely making threshold. I think agents in general are far more sophisticated than we once were and that we should expect more. I don't, however, expect it to change unless we get organized with consumers and if I learned anything from the collective bargaining process with engineers, it's thatagents are much the same in that organizing them is the functional equivalent of herding cats.

Posted by Larry K Cragun at 10/1/07 2:18 p.m.

:) JD... what business do you know of that locks out competition so it doesn't have to incur marketing cost?

Posted by sandykaduce at 10/2/07 10:14 p.m.

JD--I agree with you.

I don't think any of the problems with our industry can be solved unless they are solved at a brokerage level, starting with hiring practices. The future is fewer agents, not more.

Posted by Mack McCoy at 10/3/07 4:00 p.m.

Not to be such a Pollyanna, but what are those problems, exactly?

Fair disclosure: I'm 'way more cynical than your typical New Yorker. But compared to real estate practices in New York City - c'mon down with your bad selves and dress me down, New Yawkers - Seattle is a real estate paradise for buyers and sellers. When we hear of a pocket listing, or a listing that sold without proper exposure, it's a story - in New York, it's business as usual. I don't have the time to search this, but a broker in New York told NY Magazine something to the effect of, if I can't find a buyer in my roladex within the three day turn-in time, I shouldn't have taken the listing in the first place.

Anybody wanna guess how many of our transactions wind up on an attorney's desk? Wanna guess the percentage in New York?

I'm all for self-criticism. Be here now. But I prefer accuracy, except when I'm exaggerating.