Realtor Commissions

[Razorback01]

My wife works with both sellers and buyers, she has a lot of investment in each seller, almost to the point of losing $. Buyers can be easy, or just as difficult/ expensive considering fuel costs. It's not cheap to be a realtor, everyone stacks on fees, and realtors are basically self employed, if they aren't working and generating sales they aren't paid. She has considered joining a team in the past and they have some form of pay for team members.

[Birddog66]

nobody knows why? They're working for the buyer, why is the seller paying their fee?

That's a very fair question and not an easy one to answer. First off, it's the system that has been in place in Texas since the 80's or 90's or so. It's the same system that's used in most other States that I know about. My thoughts have been that the buyer typically has lender closing cost, and to put more cost on them would make it tough on buyers. I know it doesn't sound fair, but it's a system that has worked for a long time.

Typically, buyers agent does more work and has more time in the deal than the listing agent. But, it's for the buyer, not the seller.

[ecallarman]

Man this is a real head scratcher. You call the market value (what someone is willing to pay) $200k. Then you throw fees on it and somehow add value? Now what someone is willing to pay is $212k. Let me break this to you but if someone is willing to pay $212k, then $212k is the market value of your house even when you were selling it for $200k. You just proved my point

Say you have two identical homes sitting next to each other. One is selling with a realtor and one is not. Using your crazy way of thinking these two homes have different market values. They do not. You are getting appraised value and market value confused.

To summarize, the market value of a home does not change based on whether or not you have a realtor. Agree and never said that. If you are selling a home and you add fees to the "market value" I believe you mean appraised value and the home transacts at the "market value"Appraised Value price + fees then your "market value" was never the market value appraised value.

To me, my argument has nothing to do with using a realtor or paying realtor fees. My argument is that market value is determined by what someone is willing to pay. I do agree with you in one respect. If I sell my house for $212k, then that is market value.

[ecallarman]

Taking supply and demand into account, if your homes market value is 200k, you would be asking a buyer top pay above market value at 212k. This certainly can happen, but when the appraisal comes in at 200k or 202k, some modifications to the transaction will need to be made.

I agree with you, especially since you have a clear understanding that appraised value and market value are two different things. As an example, after Hurricane Harvey SETX was in a sellers market. My $280k home (appraised value) had a market value of $350k based upon buyers paying well above appraised values for homes that did not flood. Actually had a few unsolicited offers in the high $300's- This is market value.

[Throwin Darts]

To me, my argument has nothing to do with using a realtor or paying realtor fees. My argument is that market value is determined by what someone is willing to pay. I do agree with you in one respect. If I sell my house for $212k, then that is market value.

Outside of getting out a box of crayons and a Big Chief pad I don't think I can explain this anymore to you.

[JHT]

Man this is a real head scratcher. You call the market value (what someone is willing to pay) $200k. Then you throw fees on it and somehow add value? Now what someone is willing to pay is $212k. Let me break this to you but if someone is willing to pay $212k, then $212k is the market value of your house even when you were selling it for $200k.

Say you have two identical homes sitting next to each other. One is selling with a realtor and one is not. Using your crazy way of thinking these two homes have different market values. They do not.

To summarize, the market value of a home does not change based on whether or not you have a realtor. If you are selling a home and you add fees to the "market value" and the home transacts at the "market value" price + fees then your "market value" was never the market value.

At the end of the day your home is worth what someone is willing to pay for it regardless of selling it yourself or using a agent.

"Market Value" is just a baseline.

[ecallarman]

Outside of getting out a box of crayons and a Big Chief pad I don't think I can explain this anymore to you.

[Throwin Darts]

at the end of the day your home is worth what someone is willing to pay for it regardless of selling it yourself or using a agent.

"market value" is just a baseline.

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[John Paul]

Market Value = Appraised Value

Appraised Value = 3 to 4 like properties sold in same area in the past 12 months

I might really want to buy a ranch for $400K but if sold comps only appraise said property at $250k unless I have cash no bank will lend me the money. However, if I have the cash to over pay for a property that its market value(appraised value) and plop down $400K then good on me. And what I just did was raise the neighbors "Market Value" because I gave them a legit sales comp and that will alter future appraised values and the "Market Value"

[JHT]

Outside of getting out a box of crayons and a Big Chief pad I don't think I can explain this anymore to you.

I think you mentioned before you were into real estate and finance. Maybe it was someone else?

Since most people finance their homes the banks tell you what your house is worth. The city does too for taxes but that number is usually way off as far a selling/buying guideline.

I think what were saying is the real value of real estate has to do with what someone is willing to pay for it/sell it for.

Can we get back to bagging on realtors?

[JHT]

Market Value = Appraised Value

Appraised Value = 3 to 4 like properties sold in same area in the past 12 months

I might really want to buy a ranch for $400K but if sold comps only appraise said property at $250k unless I have cash no bank will lend me the money. However, if I have the cash to over pay for a property that its market value(appraised value) and plop down $400K then good on me. And what I just did was raise the neighbors "Market Value" because I gave them a legit sales comp and that will alter future appraised values and the "Market Value"

You gave them one non arms length comp (paying way over market) that will only be used if 3 of your rich buddies do the same in the next 12 months in the general area.

Then all your neighbors will hate y'alls guts come tax appraisal time.

[BertramBass]

Looking at it from a business perspective, why wouldn't you add the 6% cost to the price? You don't think that all businesses don't have the cost of sales and marketing factored into their product's price? They do. No different in this situation.

Ding Ding Ding. We have a winner.

[RiverRat1]

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Well then I would just add on 20-30% so I could make more money!

[John Paul]

Very true only gave the appraiser one but many times in the past 15 years I have gone toe to toe with an appraiser to take into account a good portion of that one comp because I am trying to sell a ranch down the road and I am trying to get as much money to my seller even if I know that other one sold way high. lol. Thats why people should get represented.. lol

[BertramBass]

Outside of getting out a box of crayons and a Big Chief pad I don't think I can explain this anymore to you.

I could explain running a profitable business to you, but you would end up chewing on the crayons while scratching your head...