No doubt the Internet can easily solve the database problem of letting buyers list houses and sellers find them. But there's a lot more to it than that.

Most people buy/sell a house only a few times during their lives. That means they don't get a chance to become an expert at mortgages, home inspections, closing costs, staging, pricing strategies, negotiation, and all the other things that go into a real estate transaction. We get to do taxes every year.

Can someone sell a house by themselves? Sure. Are there lots of dangers with that strategy? Definitely. The seller may stubbornly stick to an unrealistic asking price. They may not do small "curb appeal" fixups or staging that attract buyers. They may inadvertently misrepresent something about the house and find themselves sued after the sale.

The same goes for buyers. If they are coming from somewhere outside the area, they have no idea whether the schools are good, or the neighborhood is friendly, or whether the neighbors are mostly yuppies or blue collar or gay or whatever. Yes the agents are working for the seller, but even at that most states have laws about what an agent can tell you--they can be held liable for their representations.

Remember that the 6% commission is often negotiable. If you're selling a $500,000 house, $30,000 is a lot of money. If you're not going to be a client that needs hand holding about the process and your house is a cream puff that will sell quickly, negotiate a lower rate.
 

Estate agents are parasites.
The world would be better off without them.
 

To Mr. Anonymous #1 -- everything you're saying makes sense. What I wonder is this: how many real estates do those things? Did I just get a lemon? I'm not sure...I wonder if most real estate agents do the bare minimum knowing a house will sell eventually and they'll get their cut no matter what.

And with the recent boom (Although it's slowing down) I think there's been enough business for all of them, so maybe they have less to worry about in terms of performing.
 

Don't think about the hours your agent put in - what do you care? Think about the value you get, is it worthwhile to you - and don't forget the risks you expect the agent to navigate you past, that's worth something too.

I've had a stellar agent (which was *way* worth what we paid!) and crappy agents (causing anger and frstration as well as costing us directly and indirectly). I've had an agent who was superb at helping me buy, but then I learned couldn't sell.
I've come to believe a real key is to somehow form a very clear expectation in your head of what help you need in this particular transaction (ask friends about what help they wished they'd had) and then interview agents in a structured way - you should take it seriously.

And, look ahead to the closing process - there are lots of players - ask how your prospectivce agent finds you the right help, ask how you'll predict/contain costs (it gets pretty surprising)
 

I'm with Wayne. A good agent is worth way more than they are paid. A bad one is much worse than having none at all. And the vast majority of mediocre agents, well, you can take them or leave them.

I think the only way to find a good one, especially as a seller, is to do some serious networking. Then ask a whole bunch of questions to clarify expectations.

But most folks aren't even willing to do a little basic due diligence. They'll just go with Aunt Edna's hair stylist's niece or whoever is the first agent they get a hold of.

There's a house in our neighborhood that had a for sale sign out front for nearly 6 months. One day I noticed the sign changed to another agency. Within 1 week they added "Under Contract" to the new sign. I don't have any idea what else changed, but apparently there was a significant difference between the agents listing that house.

Oh, and congrats on getting your house under contract Ben!
 

Certainly they're parasites. The reason they're parasites is simple: The market permits it.

Let me ask you this: Why are you paying triple the asking price on the most expensive purchase of your life? If you buy a $15 pizza, you pay $15. If you buy a $150 hard drive, you pay $150.

If you buy a $1,500,000 house, you pay around $4,500,000.

Everything about real estate is an astonishing scam, perpetrated by the higher prestige that comes with "owning" a home and the fact that people cannot do simple third-grade math to see how badly they are being ripped off.
 

Wayne - thanks for stopping by.

I don't really think of it in terms of "hours worked." If I had received awesome service and the help I needed, it wouldn't have mattered if she had worked 5 hours or 5,000.

It's more the impression that she didn't do a heck of a lot for that commission; that's what I wanted to get across and get a feel for other people's experiences.

I bet that a great agent makes a huge difference; next time I'll have to find one!
 

Chris - thanks for being here as always. I'm glad the house is sold, it's a huge relief. Hopefully next time it's a better experience.

And I would agree with you - next time I'll do more networking and asking around before making a choice. That blame is squarely on my shoulders.
 

The federal government should prosecute the Realtor association under the RICO statutes. My friend tried to sell his house and the Realtors blacklisted his property. They tell you lies and take your money, REALTORS suck! Suck Suck Suck, and they are the lowest form of human.
 

My moms a real estate agent so I know better about what they actually do. First of all you sound like you got a dud agent. Real estate agents need to know all about every little housing and legal regulation that might pop up during the selling process. What if a neighbor wants to set up a fence on your property, or share your driveway. Maybe your house needs some work to get up to standards, you need to know what they are, and how to get passed the inspection. They also need to know the market incredibly well. If you come to them asking about a house in some obscure area of the county, they need to know where that is, and what kind of real estate activity goes on there.
I've also seen some real estate agents that seem pretty wishy washy, but when you get a good real estate agent you would know. All those things that you mentioned? That's all things GOOD real estate agents do. As with any service industry, you only get exceptional service a small percent of the time, but don't base every real estate agent on one or two bad experiences.
 

For most real estate agents, the key is turnover. At 6% commission, every $1000 increase in home sell price nets the real estate agent just $60, even less if the agent is splitting his commission with the buyer's real estate agent. In other words, real estate agents don't have a significant financial incentive to invest a lot of time and effort into selling your home for the *best* price. And as stated earlier, few people will ever buy/sell a home more than 1 or 2 times in their life. Thus there isn't a big financial incentive for agents to build strong relationships either. Real estate agents don't want to be your friend - they just want to minimize the amount of time your home is on the market/spend looking for a home. If they're fast and efficient, that's what you remember and they get your recommendation. In other words, real estate agents don't do due diligence because it doesn't make sense for them to - they get better overall returns (financial and social) for buying/selling the home fast.
 

I have worked with two buyers agents who provided immense value. They listened to what I said I was looking to buy (which of course was a fuzzy description), then they found it. They didn't take me to scads of bogus houses. They both succeeded on almost the first house they showed me. Why is this valuable? Well, randomly pick an agent and spend a month being dragged to crappy houses until you faint.

Similarly, a good selling agent can sell your house for much more than 6% higher than you if you sell it yourself.

If you work with a realtor different from the above, get a new realtor by asking around. One trick is to see who is selling all the houses in a gentrifying area. They tend to be good--but not all.
 

I read a blurb in the WSJ a year or so ago about a very senior RE agent who works for the seller on an hourly basis (~$100/hr). He gets ~$200K/yr. gross for fulltime work and you only pay for what you use. That is, if you have him doing showings every weekend or other efforts, you'll pay more. You also pay all of the incremental costs for marketing, but he presents you with a "Chinese menu" of marketing choices. Anyway, a very good model. Also, WTF should the seller pay the buyer's agent commission??? The buyer's agent is working against me (if I'm the seller). The value add of the buyer's agent is 100% to the buyer. You can make an argument that the buyer's agent adds value to the seller by bringing the buyer to the table, but that's just extortion because the RMLS data is not transparent to eligible/willing buyers.
 

I'm so lucky. I had heard such bad things about Real Estate agents, but mine called me to talk about how I was feeling when I lost bids on houses. She gave suggestions on how to make my house better, and had a clear list of the top 5 things to do to increase my house value. She mails me quarterly lists of all houses sold in my neigbourhood and what they sold for. She sends me Starbucks gift certificates for my birthday and wine for Christmas. Oh, and she found me a kind lawyer, a bright mortgage guy, and a funny insurance agent.

I don't understand why people put up with less than that.
 

Under the "Why didn't she..." section, you need to ask of these things when you interview potential agents and not just pick an agent because someone recommended him/her or he/she seems to be a big shot in your area.

Buyer beware applied here too, it is you who signed the listing contract with her so it is you who should make sure your agent does a good job and not her.
 

Ben, have you read Freakonomics? There's a very interesing part about real estate brokers and their propensity to sell their own houses for more than what they would sell their clients' houses for. It's really a matter of relative worth - that $10K extra in house value is worth a lot more to us than it is to the broker. That's the dynamic at work here. Nevertheless we used a broker to sell our house because I just didn't have the time to do it ourselves. And congrats on your sale. All the best.
 

Tim E -- thanks for your comments. I wanted to make sure I didn't over-generalize, I've had plenty of good and bad experiences in many different industries. Still, I think real estate is one where there may be more bad than good, so finding the good ones is harder. I agree with everything you're saying in terms of what a GOOD agent SHOULD do though. Thanks for stopping by!

Patrick -- I would tend to agree as well. Fast turnover is best for real estate agents. Anyone that sells anything typically wants to sell quickly, whether it's a service or inventory, so I don't think that's unique to real estate agents. I think the GREAT ones though, DO want to build relationships. Some people have said -- "Most people only buy/sell once or twice in their lifetime." I'd say with the latest housing boom we've had for a good number of years that's changed considerably. I've already bought and sold once, and will probably do so another 4-5 times in my lifetime if not more. People are moving cities more, people want to upgrade faster...so to me it behooves agents to really build solid relationships.

Nursegirl - Sounds like you have a gem! People shouldn't put up with less; finding the right person is the tricky thing.

Starbucker - I haven't read Freakonomics, but I probably should. And thanks for the congrats. Complaining aside on my part, I'm glad the house is sold.
 

As a mortgage originator, everytime a customer wanting to sell their home comes to me that hasn't spoken with a realtor yet I tell them straight off to put a sign up in the front yard, "For Sale By Owner". Last year during the height of the housing boom around here, several of my customers saved themselves $50,000 or more by NOT enlisting the services of a realtor armed with little more than a lockbox key and access to the NAR's stranglehold on the MLS. It's safe to say these customers will be coming back to me with their repeat business. Using a realtor is only a COST of selling your home. 5-6% of your home's equity is nothing to sneeze at. Neither the mortgage business nor home selling are rocket science.
 

Ryan - thanks for commenting and participating here. It's clearly a hot debate, made even hotter I guess by the booming housing market (even if some would say it's cooling, it's still quite hot.)

I think it probably comes down to some personal choice - and if you can, finding a great real estate agent, which may help. A mediocre or crappy one is just going to steal your hard-earned money.
 

You think your REALTOR was unethical or didn't seek for your interests, such as you didn't think they got the best price for your house, or they didn't market it because they didn't want to do a lot of work etc, then complain! Call or write your local Board of REALTORs and your state board to file a formal complaint.

You did get shafted. Good agents do the things you suggested, and more. Yet many clients just think that because they pay a REALTOR a whopping 6% commission that they are overpaid and making a great living. The FACTS are that the majority of REALTORS make below poverty level...that's a fact not an opinion. So therefore there is high turnover. Which gets you the kind of workers that float from high turnover job to high turnover job. YET, those that have been around for a while, obviously are doing something to be able to stay around...provide service to their clients. Contrary to one of the previous posts, REALTORS do have incentive to please their customers because the good ones stay in business because of referrals, just as much as new marketing. How many homes to agents sell a year? The avg is below 10. Some, less than 3 a year! What is the agent doing with their time then you ask? Trying to find buyers to buy the homes they list or sellers. Agents spend lots of money to find clients. So in all honesty and understanding, agents may not do a whole lot of work for the 3-6% they made to sell your home, but that 3-6% is paying for their time to find you and other "clients". It is used to operate their business. It's a strange way of explaining it but you aren't paying them to sell your home, you're paying them to maintain their business. Yet keep in mind the gas they spend, the advertisements they spend, website costs, Signs, Flyers, networking events costs, and such are all resources they spend their money on that directly or indirectly will get your home sold.

Also, let's not be naive...as a REALTOR myself, I laugh when I hear of market where homes are selling within days or even minutes after being on the market, and finding out that they used an agents... In that kind of market, unless you don't want to handle the paperwork and such, there is no reason to not just stick a sign in the lawn and maybe a cheap online ad to sell the home just as quickly and save a ton of money. At the very least, negotiate with the Agent a reasonable commission understanding the fact that they will not have to put money into marketing the property, yet should provide value by handling paperwork, explaining processes, ensuring everything is legal and such.

Additionally, speaking of the areas where the avg home is WAAAY over $200K, where most homes are selling closer to 1 million admittingly 6% seems a little much, YET that depends on the standard of living in these areas too. $60,000 a year in earnings goes a long way in Mississippi, but doesn't do a whole lot in Honolulu or San Francisco. So the wages of agents in high priced areas will be higher than agents in other parts of the country. If you aren't living in an area where homes are selling for over those amounts but you happen to own a million dollar home...Come On! Unless your agent is advertising in elitist magazines and networks and flying people in (which they should do, by the way) then you definitely should negotiate a better commission.

Finally, I have talked to numerous people who were soooo glad that they sold their home FSBO because they saved 6% commission, but once again, year after year studies (from NAR) show that FSBOs sell for 13% LESS than homes listed by agents. OUCH! 13-6 = 7% money left on the table. So much for the comment that agent's don't get the highest price for your home.

So unless you are in one of the SUPER HOT areas discussed earlier, then do some research and talk to previous clients of agents you are selecting, and hire a REALTOR.

www.robertreesrealty.com ...in case your wondering
 

I have used agents, realtors, brokers or whatever 12 times over the years. I can honestly say that every encounter was a nightmare and I ended up doing most of the work myself anyway. It is very easy to sell or buy yourself. You only have to do a weekend reading a book from the bookstore to realize that there's a good reason why real estate licenses are a dime a dozen and agents require very little education.
 

Don't believe anything NAR studies tell you. If a seller gets more for using a "Professional" it's because they have an appraiser in their hip pocket who will give them any number they want.
 

In 2004 I know of an agent who made roughly $300,000 in commission in MA.

In 2006 he tells me it doesn't matter what gets sold now. He is already way ahead financially. That $300,000 allowed him to reinvest in newer bonds, funds. He claims to be raking in $1000+ in monthly interests alone nowadays for doing absolutely nothing. I am sickened by it.