That is the number of licensed real estate agents in the United States today. They make up one and a half percent of the entire adult population.
None of them are doing anything useful.
Okay, maybe that’s an exaggeration. I will moderate: 99% of real estate agents in America serve zero purpose. They contribute nothing meaningful to the buying and selling of real property, but do manage to suck down billions of dollars a year from naive homebuyers who don’t know any better.
The real estate agent is the tapeworm of transactions, the parasite of property, the blood-sucking vampire of brand new homes.
That may sound harsh. After all, real estate agents are everywhere. They’re nice people who drive nice cars and smile a lot! Some of you are, certainly, real estate agents yourselves. On what grounds can I so fiercely damn such a prominent and popular industry?
Simple. I’ve sold property without a real estate agent. It was remarkably simple and, more importantly, significantly cheaper. I’m not the only one, either. I know a number of friends have sold and bought property without real estate agents. They’ve had the same experience. Buying and selling a home is not nearly as complicated as it is made out to be. The vast majority of home owners simply do not need another middle man in the process. They certainly do not need one as expensive as the typical Realtor.
The real estate agents’ commission on the average home sale in America is 6%, evenly split between the buyer and seller’s representative. The median home price is $392,000. Do the math. The typical home transaction in America will pay out a whopping $23,000 to the two parties’ real estate agents.
That’s a lot of dough. What exactly does it buy?
Dave Ramsey says there are 8 reasons to get a real estate agent. Ideally, this person is supposed to:
Meet with you in person to understand your needs and answer any questions you have
Educate you on current market conditions
Give you access to an MLS (Multiple Listing Service)—which offers more options to buyers and visibility to sellers
Refer other needed pros (mortgage lenders, photographers, inspectors, attorneys)
Schedule home showings
Negotiate the best price for you
Represent you throughout the sale and act in your best interest
Help you through the mountain of paperwork
Let me address this point by point.
you already know what your needs are. You also have Google. Most questions in regards to home buying are just a click away.
you can educate yourself on current market conditions. It’s called Zillow. You can also call your local county clerk. Depending on the jurisdiction, the price of real estate transactions is public record. Also, you can simply ask people in the area how much they paid for their home.
MLS. That’s gatekeeping mumbo jumbo. Most people buy a house by going on, you guessed it, Zillow. They also drive around and look at for sale signs or talk to people.
You can find the “pros” yourself and you also won’t get fleeced in a local good ole’ boys kickback racket in the process. Always a plus. Need help finding a home inspector, bank, or electrician? Have your heard of a phonebook? Google? Talking to people? It is that easy.
You can clean up your home and show people around yourself. In fact, that’s actually way more convenient for both you and the buyer because unlike the real estate agent you actually know stuff about the property and can answer relevant questions.
“negotiate the best price.” LMAO. No. that’s not how real estate agents work. They BOTH get paid on a commission based off of the final sale price, remember. “Your” real estate agent has no interest in lowering the price any further than at all possible. They aren’t there to play hardball, they’re there to MAKE MONEY off of *you*. Buyers tend to think that real estate agents are free. “The seller pays the closing cost.” Bruh, who do you think is PAYING the seller??? The bank? Out of the goodness of their heart?
“Represent you throughout the sale.” What exactly does this mean? Why can’t an ordinary person represent themselves? Think about buying a used car in a private sale, or even at a dealership. Cars are expensive. Do you bring an agent with you to do all the negotiating on your behalf and then pay them thousands of dollars afterwards for their time? Of course not. Why? You don’t need to!
Ah the infamous “mountain of paperwork.” The most important myth of all. And worth addressing at length.
Put simply, real estate agents are NOT the ones who do the paperwork for buying and selling the home. Let me repeat that. The actual transfer of title and the filing of the deed with the relevant local authority is almost always done by a title company or other third party. These are the people who hold the money in escrow. Real estate agents, by definition, cannot and should not be doing this since they are interested parties. Generally, the price for the title transfer service is only a couple of hundred dollars.
What about the all-important purchase agreement? Isn’t that where real estate agents shine and protect their clients from FRAUD? Again, no. The local title place here in Hillsdale, where I live, had a fill-in-the-blank template contract. It was easy to fill out a purchase price, target date for completing the purchase, and an earnest money deposit.
This is what the first page looks like. Again, this isn’t rocket science.
The contract also had an addendum sheet if either the buyer or I had wanted to add in additional contingencies (we didn’t as I had a fully completed third party home inspection done before we signed the agreement). A home inspection contingency could be useful and there are plenty of ways to make that work that a buyer and seller could easily negotiate.
If you really wanted to, you could hire a lawyer to look over the contract. Though that is absolutely no garauntee you won’t get ripped off. Lawyers love a legal controversy. That’s how they make money. At the very least, though, it is certainly a lot cheaper to hire a lawyer to look at a few pages of documents than to hire a real estate agent at 6% of the home price. Remember, real estate agents have virtually zero legal training.
Buying a family home is a big purchase, yes. But it isn’t necessarily a complex one. Real estate agents just aren’t necessary in the vast majority of cases. The entire real estate industry would collapse overnight, for instance, if the buyer paid the closing costs. Because the seller essentially hires both real estate agents, first time homebuyers assume these individuals are a necessary part of the process. Because most people don’t buy homes very often, they don’t question the established framework. If buyers had to pay tens of thousands of dollars before buying a home, you can be certain they would rethink the overall utility of the exercise!
They should do it anyway.
Real estate agents are a relatively modern invention. They didn’t really come into being on a nationwide scale until after WWII. It was at that moment, of course, that America transformed from a manufacturing economy into a service economy. Instead of building and making real goods, Americans moved toward an economy rooted in financial products, spreadsheets, and powerpoints. That sea change corroded our national spirit. Post-war America became a nation of grifters and middlemen. Not good.
Today 20% of the American economy is FIRE—Financial products, Insurance, and Real Estate. The consequences of that change surround me. In Hillsdale, abandoned factories line the streets. The empty flour mill sits like a sprawling concrete sepulcher in the downtown. The “21st century global economy” literally ripped the city’s heart out.
But billboards for real estate agents line the highways leading into the city. Telling.
In a truly free market, real estate agents would have disappeared a long time ago. Zillow should have destroyed the industry. A website with all the homes for sale in one place and an easily accesible record of recent sales should have been a deathknell for the Realtors among us. But, in a story that has been repeated many times in the “tech” era, Zillow didn’t upend the old establishment—it entrenched it!
Zillow’s “main page” in a given market is made up of “agent listings.” That is intentional. Properties for sale by owner are in a less immediately prominent tab. Zillow discovered it could make money selling leads to agents. It is a couple dozen bucks a pop but in a nation of millions of real estate transactions a year, that money adds up. Zillow essentially makes money by getting kickbacks from real estate agents, among other things.
Just as Facebook and Twitter ended up censoring dissident and grass roots writers in order to favor major media companies and newspapers, Zillow sidelines private sellers to promote the entrenched real estate establishment. MANY such cases.
America, in 2023, is a giant sheep-shearing operation. The goal of the modern American economy is to rip off ordinary middle class people at every possible opportunity. There is no better time to do this than when they buy a home.
In a just country, homes would be 6% cheaper nationwide. Americans would buy homes like they buy cars—negotiating on their own and trusting in their own judgment. But we don’t have that economy. And getting to that point is hard. Selling a home without an agent can feel risky. It does come with work. But most of the hardship for a private sale is imposed by people who have a major financial stake in gatekeeping sellers and buyers.
For my part, I think there should be a major push by buyers and sellers alike to hold the real estate agent industry’s feet to the fire. The entire system should be blown up. We need truly disruptive technologies and sales platforms willing to skirt around the Zillow kickback model. More importantly, ordinary Americans should be far more familiar with their real power in the housing marketplace. They need to demand better treatment from the people supposedly “helping” them but who are, in reality, helping themselves to a piece of the mortgage pie.
It is high time for the grifting to stop. Americans deserve better.
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Good advice and I fully-agree with the author.
Back in the day, the realtor was the one who shuffled contracts/paperwork (the fill-in the blank kind) to and fro. Everything's electronic now so no errand boys needed. Last time I made a sell, I saw my realtor once, the day I signed the listing contract. It sold itself within a week and I felt ripped-off by the "commission" transaction. Not everyone has a brain for it, but if you do, take the author's advice!
I'm a licensed Realtor/Associate Broker. I will give you a real life example of the difference between using a qualified agent and doing it yourself. I had helped this couple buy their first home. The time came to get a larger home and I was called to help with that. Long story short, after some time and many explanations to every question I was ghosted. Well the lender I had suggested for them didn't know that so one day I walked into the office and the lender said "Sorry, (so and so's) house didn't appraise. This peaked my curiosity so I asked how much was it off? She said $37,000! Mind you, this was long before the market went crazy . With so many stories about way over asking sale prices this probably seems, well, to be expected. No, this was during a more balanced market. Guess who came calling? Guess who didn't answer? Zillow for the record is notorious for misinformation. With the exception of the past @3 years of crazy offers, their "zestimate" was always a joke. In fact THEY thought pretty much the same thing as you suggest and decided they were going to take the whole market, buying and then selling houses. Look up how many people they laid off after throwing in the towel. Apparently it wasn't as simple as they thought. I've had situations recently where sellers told me what offer they had on their property and with no regard for my own bank account, I explained why (with the house in the condition it was in) it would be in their best interest to take it. I had time and effort into that and got $0.00 for it. It's hardly the only time I've done that.