Real estate agents are one of the most egregious examples of misaligned incentives:
“It’s just 2.5%”
If I came to you and said “hi I’d like $25,000 for unlocking a few doors over a few weeks” you’d tell me to pound sand.
But a few % sounds like nothing so people go for it...
“It’s just 2.5%”
If I came to you and said “hi I’d like $25,000 for unlocking a few doors over a few weeks” you’d tell me to pound sand.
But a few % sounds like nothing so people go for it...
“It comes out of the sellers pocket”...
Not true. If you don’t use an agent then you should be able to lower the price by the equivalent amount...
Not true. If you don’t use an agent then you should be able to lower the price by the equivalent amount...
“They help you negotiate a better price”
Rarely. As a buyer, $100k savings to you REDUCES your realtor’s fee, so they have an incentive to convince you to pay MORE...
Rarely. As a buyer, $100k savings to you REDUCES your realtor’s fee, so they have an incentive to convince you to pay MORE...
On the flip side, if repping a seller $100k in price increase is only worth ~$2,500 to them.
They’d rather close a quick deal and move on...
They’d rather close a quick deal and move on...
There are exceptions to the rule, but it’s shocking how few people do the math or take the time to understand the incentives on what is often one of the largest transactions they will ever do.
