The New York Times Magazine of 8/3/03 (delivered on 8/2/03) has an article titled: "The Probability That A Real-Estate Agent Is Cheating You (and Other Riddles of Modern Life)."
The article is about the work of Steven Levitt, a bright young economist out of the University of Chicago. He is currently considered the "hottest" economist in the US and, perhaps, the world. He doesn't know much about unemployment, interest rates, fiscal policy, or any of the other things economists tend to go on about. Frankly, he doesn't care. He only studies things that interest him and has an uncanny ability to see things in data that elude other folks.
Some of his recent work: 1) real estate agents - On average, when selling their own houses they are on the market ten days longer than average and sell for 2% more. Reason - the incremental value of getting a higher price for your house is not worth the time to them of keeping it on the market longer. 2) Much of the crime reduction in the US of late was due to Roe VS Wade. 3) Campaign contributions to a candidate account for no more than a 10% difference in election results.
Don't know about you, but I'm off to the library to get my hands on anything Mr. Levitt ever wrote.
Posts: 343 | Location: New York, New York, USA | Registered: 07-15-03
I realise I'm going off topic a bit (but it does match up with what you are saying XFED have a look at these searches for the word "GAZUMP" and related spelling Surprises me that it is a UK only word but it describes a really nasty practice in the house purchase market the links will tell it more accurately than myself. Perhaps in the States they have an apt term for this? Not found it yet
(from Cambridge Advanced Learner's Dictionary) gazump verb [T] [passive] UK INFORMAL to refuse to sell a house that you own to someone you have agreed to sell it to, and to sell it instead to someone who offers to pay more for it: Sally's offer for the house has been accepted, but she's worried she might be gazumped.
gazumping noun [U] UK INFORMAL During the 1980s, practices like gazumping gave the property business in England a bad name.
If you were to try this in the states you would be in hot water PDQ. The purchaser of a home here tenders to the seller a document called a "Purchase and Sale Agreement" (called an "earnest money" in my day). The terms of the sale are spelled out therein, and it's accompanied by a sum of money in cash, for a $100,000 house probably $2,000 to $5,000. Sometimes the realtor keeps this in a trust account, sometimes the seller does. If for any reason the deal queers through fault of the Buyer, the Seller keeps the money. If the Seller backs off after signing the PSA, he can be sued for damages.
As for real estate commissions, when I was selling the deal was 7%, to be split 60/40 between the person who listed the property and the person who sold it. If you sold your own listings, you made the whole deal. That's after the broker takes his cut of course. Nay, nay, far from being a bank robber, a real estate salesperson by the time they are paid a commission has earned it 1000 times over. I worked for a year, showed up every day, showed numerous houses and parcels of land and made $500. A person can (and often does) put hours and hours into a sale only to see the thing fall through at the last minute. Admittedly I wasn't very good at it, but I couldn't live on nothing and got out after a year, and became a brain surgeon. True, I don't make any money at that, either, but at least I don't have to work.
Catty
Posts: 3826 | Location: Olympia, WA, USA | Registered: 06-04-02
i totally agree. i am fairly close with our realtor (we will only use him, even if it means having to wait for viewings because he is busy.. he is that good), and know that he isnt as rich as people think real estate people are. the ones who are rich usually have a spouse who has a good income, or owns the company.
oh, and dont forget, if you manage to sell a home that wasnt in your companies listing, you have to give a percent to the listing company too!
I can't agree more with Catty- we usually earn every penny. just because your neighbor's house sold the week they put it on the market doesn't mean that happens that often- and we're still out the money for the magazine/newspaper ad that comes out of our own pocket. Then,in my market, there's at least 60 days of guiding the transaction thru escrow and dealing with all the "deal-breakers" that come up. All this for 3% or less, generally, and the broker takes about half of that. We are independent contractors, and pay our own insurance, advertising, direct mailing, phone and fax bilss, and office and board fees ( mine were over $2,000. this year. ) Plus taxes to the state and feds. I love this job, but it's incredible how people think we just go to the beach whenever we want! You can work for months and get nothing in this job.
AnswerPool.com 
the links will tell it more accurately than myself.
