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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]The only thing that will happen if you untie the two fees is that buyers will lose free representation, and sellers will keep 2-3 percent more profit. [/quote]

Sellers could take a lower price because their net would be higher. A lot of deals fall apart because the buyer and seller can't agree to price. Changing the realtor fees to 2% would get them 2-3% closer than the current 4-5% commissions.[/quote]

I don't know why this is not discussed more.  What is more likely to sell a home quickly?  A top notch realtor or a price that is 5% under the market of the realtor-represented ones?

Also that for some reason realtors commission is on the gross and not the net.  That makes no sense, nothing else I can think of is comped that way.[/quote]

This. The lower price is much more likely to sell the home quickly. No seller's realtor can squeeze more money from a buyer. The most they can do is avoid hampering the deal, which unfortunately seems to happen a lot. [/quote]

It is because the seller and buyer agent make more when the price is higher, and of course, the industry as a whole (where commissions are based on percentage of sales price) benefits more with higher overall prices. [/quote]

It has been shown statistically that the opposite is true, and realtors overall make MUCH more with faster sales:

[i]When she sells her own house, an agent holds out for the best offer; when she sells yours, she encourages you to take the first decent offer that comes along. Like a stockbroker churning commissions, she wants to make deals and make them fast. Why not? Her share of a better offer—$150—is too puny an incentive to encourage her to do otherwise.[/i]

https://forum.nachi.org/t/exerpt-from-freakonomics-book-regarding-real-estate-agents/56492

https://freakonomics.com/2008/02/real-estate-agents-revisited/[/quote]

Indeed.

The commission scheme incentivizes frequent sales.

In addition to  Levitt & Syverson, an example :

[quote] For example, if an agent expected that spending 30 extra hours would increase the selling price of a home by about $10,000, the 3 percent listing agent’s commission on that increase ($300), translating to $300/30 = $10/hour, or more likely $7/hour,[13] would hardly seem likely to motivate the agent to invest the time .

[13] Actually, both buyer and seller agents usually share their commissions with their brokers, with the agents typically retaining 70% of the commission. So here, the agent would receive 70% of the $300 = $210 for 30 hours

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3571088
[/quote]

There is zero real monetary incentive ($7/hour) for a seller agent to maximize returns for the seller, nor any incentive for the buyer agent to minimize price for the buyer. 
[/quote]

Not sure where you are listing houses, but I do most of my work in Arlington and there is a large monetary incentive for me to maximize returns to the seller. The sellers happily trumpet around the neighborhood that I got more money for them and that gets more listings and more money for me.  What am I missing about marketing 101?[/quote]

Economics 101 says there is a higher monetary incentive to sell volume.

250K extra on 1M will earn you ~6K. Selling fast and pursuing another similar listing earns you 25K. 25K > 6K. Incentive is clearly volume, according to economists.

But economists examine evidence and incentives from a macroeconomic level. The Arlington "trumpet" effect is a localized and specific to particular market conditions.

[/quote]

Meh, I had an argument with Stephen Dubner at the Cosmos Club that his economist co-author of "Freakonomics" was wrong about his assertion that real estate agents got more money for their own houses because they kept them on the market longer.  This was based on economist Steven Levitt's experience in selling his own home.  The reality is that agents get more money for their home because -- unlike Levitt -- they know how to prepare their homes for the market and price them correctly.   I also shot down to great applause Dubner and Levitt's argument that real estate agents are like the Klu Klux Klan.

Diddle around with your economics.    I know what I am doing and know how to make money.  [/quote]

Wasn't the theory not that agents got more money, but that they kept them on the market longer as well? The conclusion being that an agent would rather hold out for more money when they were not only going on commission?

I am dying laughing at you saying there was "great applause."[/quote]

LOL. Who knew the Cosmos Club consisted mostly of realtors who overheard pp?[/quote]

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