Irvine Housing Blog

Again, others may have more knowledge on this than I but I believe the model IrvineRenter is putting forth here is much closer to the model that is used in the commercial property market ie greater focus on the listing agent as marketer, agree a marketing plan and budget.  I did work once years ago (was a banker selling a REO commercial property) and the contract with the real estate agent was very detailed on the marketing plan and budget for this property (what brochurs, adverts, etc would be undertaken)...I don’t recall the sales commission but it was less than 6%, but pretty sure we paid more than 1% but the higher fee may have covered the buyer’s broker as well.

Amen.

Blog software will not accept a one word post, so this is the more.

All of this thinking is outdated—like adding features to a current technology.  What is needed is a complete retooling of the process to eliminate ALL potential conflicts of interest.  Marketing?  Seriously?  MLS is really all that is needed.  Sure, plenty of agents can’t spell, write, etc. as seen by the ridiculous listings we’ve all seen.  However, that does not change my interest in any house - though it would make me grumble in signing a sales contract for the house knowing that the GED-level education agent made out with a boatload of MY cash.  Anyone who truly wants to sell their house will keep it clean, etc.  Those that are messy probably aren’t going to negotiate much—and when have you seen a house that is truly priced to sell w/o needing some serious negotiations?  Unmotivated sellers keep messy houses, don’t care if their listings are sharp, etc.  And you aren’t going to be able to negotiate with them.  Bottom line is that the RE agent concept is dead.  Get a RE attorney to do a closing, have someone post the house on all of the free sites AND the MLS for a small fee, and reduce the commission as best you can in your negotiations.  If sellers start just paying for MLS and not “marketing” and huge commissions, the buyers will all respond VERY favorably.

Your pricing model may only work with bubble size prices. $500k is not a reasonable price for a house, hence the discount from $500k is not a good choice for the example.

Redfin’s buyside commision has a minimum of $4000. (which they’ve adjusted upwards at least once) And, at least in DC, they reduced their commision to 2% not to 1%. So, for anything I’d be interested in buying Redfin is either totally a wash, or more expensive.

I like the way your new structure organizes incentives, but I just don’t think it will save money for anything but the top-tier of homes.

I’m not sure IR’s 1.5 *4 is accurate.  The 3% split part is accurate, but usually the broker’s take is not 50% of the 3%.  Depending on the company and the realtors’s relative value to the company, that number is more commonly in a range from 30% (for rookies) to 2% (for multi-million producers).  Some companies (like Remax), charge the agents fixed fees for rent, etc., but give then 100% of the 3%.

Someone actually paid 870K for a fixer upper 40 year old townhouse.  An appraiser and a bank thought it was worth the going rate…I am speechless! 

Hopefully a mania like this will never happen again.  The entire world economy is on the brink from this stupidity.  God help us all.

I see the Real Estate commission structure similar to an attorney who takes cases on a contingency basis. If they win (the homes sells), they make money. If they lose (the home doesn’t sell), they lose the money and time invested.

Is it just me or does University Park have some of the fugliest houses in Irvine?  I cringed when I saw that elevation.

How fitting you would pick another listing in which the Realtwhore(TM) lies about this being a SFR. It is *not*. It is an attached/townhome/condo. Wow, to think that a Realtwhore(TM) would resort to lying in a listing! Unpossible!

IR, here’s a new home-selling model for you: dump all the Realtwhores(TM) in the ocean, and start fresh, without NAR lobbyists. We’ll see what new marketing structure forms. It’ll have something to do with the Internet, and probably little to do with a Monopolized Listing Service.

To the many, many Realtwhores(TM) who frequent this board: Eat me!

I understand this frustration.  If it has a “common wall”, it is not a SFR.

It all boils down to transparancy the more info you have and give out to the buyer the more will sign up for your services. Those RE agents who want the full 6% in this environment are dreaming of the old days.
Taking a listing and setting it high will make the seller happy as it sits for months. A good agent will show the owner what is realistic and not a bubble dream.
I sold my last home even though I had a agent, he did not do any work. I had a list of all my improvements for the property. Warranties for all new applicances (water heater, garage door), information on the landscaping. I staged it myself and a professional thought someone else did (as he showed up on my first open house) I sold that house in twenty days. If you have to move you are motivated to get it sold.

And I do agree many of these listings are trying to see what price they can really get. They really do not want to move but they clog up the system and hurt and waste everyone’s time.

Selling yourself can hurt you as well as the buyer does not want to meet you but for me it worked in my favor as I had information that the buyer wanted. So much of this is missing in selling a home.

I think an educated buyer is what the new RE market will have to deal with. As questions asked first should be before I’ll give you a bid. Hopefully those days are over.

As I look at homes now I have not found one RE agent that has done any kind of homework on the house he or she is trying to sell. They are there to sit and look stupid. If you ask them a question about the home they have to look it up they have no clue as they sit in the home.

It’s really terrible and yet they want to be paid sky high for listing it. 

I am with IR the entire model needs an overhaul and I am totally for it.

funny, I was just thinking of this RE process yesterday.
What needs to be done is a flat fee buyers agent. I want a house. I also want an agent who WANTS to get me a kickass deal - NOT be motivated by a higher buy price.
Its a buyers market, and agents should be helping buyers get a better price. You can avoid alot of the shopping around by having an agent who LISTENS to the prospective buyer.
Agent would do the following before getting onboard:
1. Have a bullet point list of items in houses (fixer upper or move-in ready, fireplace, pool, etc). Buyer marks ‘must have / desired / no preference / do not want’ on each item.
2. Agent verifies what buyer truly can afford and pay for (how much cash do you have for closing? do you really have a pre-approved loan? etc)

Agent then is able to tailor houses to the buyer without showing them 30 diff houses. Agent also has to listen to buyer, figure out their likes/dislikes and further tailor houses to what they’re looking for.

Just wanted to say that the commission is totally negotiable between agent and owner.  I sold a house in 2005 and had an agent who was open to some innovation.  I thought I could sell the house myself at 900k, so for the listing agent I negotiated a commission that looked like $5k + 15%*(sales price-900k).  To avoid confusion, we appended a table to the agreement that listed the sales price in 5k increments and the corresponding commission I would pay.  I thought this would give incentive to the agent for the highest closing price possible. 

I wanted to do something similar for the buying agent, but my listing agent said it was too complex for them to understand.  In his words, “the MLS only has a space for 2 digits and a percent sign”.

“Redfin calls out the FSBO listings, so they are easy to find. From what I have observed, most owners if left on their own do not price the property properly, and they do not market it very well. The listing prices are usually beyond WTF despite the fact they do not have to pay a 6% commission. You would think they would price it lower, but they don’t. Often the realtor is the only party to a listing providing a reasonable estimate of current market value. With nobody to push back on the listing price, FSBOs start with WTF pricing. Greed and ignorance if left unchecked is embarrassing.”

Anecdotally, I can say this is true.  When I bought my house, there was a house on the same street FSBO.  The development is pretty cookie-cutter, so all the houses are basically the same, so we called them to ask them their asking price.  It turned out to be 20% more than the house we ended up buying (which, again, was almost the exact same house).  It ended up selling for marginally more than mine after they got a realtor involved.  It really isn’t possible to underestimate the stupidity/greed of most people.

Speaking of which, I was watching HGTV this weekend and saw a show about some woman from Newport Beach who was a “full-time real estate investor”.  She was planning to buy a second home in Tuscany with the proceeds that she had accumulated buying and selling homes in So. Cal.  I almost threw my shoe at the tv.

iggyshouse.com (part of buyside realty) has a listing option for sellers.  No fee.  Listed on MLS and the seller does all the work.  Good thing is it allows access to MLS.

I am sure that there are lot of people that will spend $631,000 for a slum in Irvine.

I’ve been struck time and again by the ineptness of every FSBO I’ve ever encountered. I remember trying to talk a FSBO into selling for 3% less than the value of the house, essentially splitting the 6% real estate commission with me. They insisted on a value above the market and the house went unsold for over a year, including six months they had it listed by an agent.

My theory is that the people who would do a good job selling by themselves also can do a good job of finding the best listing agent, negotiating a deal on the commission, and working as part of a team to maximize return.

As to the way that real estate agents are compensated, there’s no way that the current structure survives any more than the classified ad has survived in the age of the internet.

IR,
I am beginning to lose a bit of confidence in your analysis. First, you reinforce the 6% model under every weekday post, then you continuously trash it in almost every other comment. Why even use it as a reference in your posts? You probably just use it to enhance the shock value of the potential loss of the property.

I think you can finally put 6% commission appendage to rest in your daily posts. The losses are big enough that you don’t need the added “.99 cents” to exemplify the loss.

It seems that you and a lot of your respondents resent the money an agent makes on a sale. Well I do too, especially when you have a bunch of idiots in the business in an appreciating market. It seemed like the best silver-tongued shyster got most of the sales.

Now in a depreciating market, the agents are having to work for the sale. Let me point out Irvine Realtor here. And with lower prices, the pay-off is much less. What you all have to remember is that Irvine is not the only city that agents do business in. What kind of money are we talking about in an average $350,000 sale?

$350,000 x .06 = $21,000 x .5 = $10,500. Divide that by their split with the broker and Uncle Sam and then factor in the months it took them to secure that sale assuming, like most of you, that they just sat on their butts and invested nothing on the transaction. Which one of you would like to work so little money for months of “work”? And why do you people resent real estate agents making so little?

No wonder the system is full of uneducated agents right now. Most of the smart people have left the real estate business and are actually working a real job that pays a living wage.

Wait….  ok, I’ve got my Nomex suit on now. Fire away

“Owners are sometimes very greedy. They put a WTF asking price on the property to make sure they extract every last penny from the sale.”

I love it…like the owner shouldn’t try to get the most money possible…give me a break.

No, they should just give the house away. Don’t want to appear greedy…heaven forbid! LOL

One thing I’ve been curious about on a lot of your posts. Where do you get the mortgage information from? That is, how did you find out that “This property was purchased on 12/20/2006 for $870,000. The owner used a $696,000 first mortgage, a $130,500 second mortgage, and a $43,500 downpayment. The owner went into default, and the property was purchased by INDYMAC FEDERAL BANK FSB on 12/10/2008 for $552,758. That sale represents a 37% drop from the peak.” Obviously this is from public records, but where/how did you look up this information?

Whomever is writing.  Those housing descriptions.  Really likes.  Short. Sentences.

I can’t imagine why anyone would want to own a property like this unless it was as a cash positive rental. I think IR mentioned this in a previous post, there are two types of properties: those that would only appeal to an investor as a rental and those those that normal(IE not crazy) people would want to own to live in. This property falls in the former category. Thus the 12/2006 price is that much more astounding. It seems to me that any sales numbers that do not differentiate between these two categories of properties are of dubious value.

Oh Look, it is a few houses away from the 405 freeway. How “convenient”.

I know a little about these units and before any purchases, one should really take a hard look at the (cast iron) pipes

http://www.redfin.com/CA/Irvine/4082-escudero-92620/home/4776782

Example of house priced way out of market—

Property History for 4082 escudero
Date   Event   Price   Appreciation   Source
Dec 17, 2008   Price Changed   $1,099,000   —  SoCalMLS #P646208
Dec 13, 2008   Price Changed   $1,149,000   —  SoCalMLS #P646208
Dec 13, 2008   Relisted   —  —  SoCalMLS #P646208
Dec 12, 2008   Off Redfin   —  —  SoCalMLS #P646208
Dec 10, 2008   Price Changed   $1,150,000   —  SoCalMLS #P646208
Nov 28, 2008   Relisted   —  —  SoCalMLS #P646208
Nov 08, 2008   Off Redfin   —  —  SoCalMLS #P646208
Oct 21, 2008   Price Changed   $1,290,000   —  SoCalMLS #P646208
Sep 18, 2008   Price Changed   $1,399,000   —  SoCalMLS #P646208
Sep 18, 2008   Price Changed   $1,599,000   —  SoCalMLS #P646208
Sep 17, 2008   Price Changed   $1,399,000   —  SoCalMLS #P646208
Aug 13, 2008   Price Changed   $1,650,000   —  SoCalMLS #P646208
Jul 10, 2008   Listed   $1,900,000   —  SoCalMLS #P646208
May 21, 2008   Sold   $352,900   -33.3%/yr   Public Records
Nov 02, 2005   Sold   $990,000   107.4%/yr   Public Records
Jun 16, 2005   Sold   $750,000   18.4%/yr   Public Records
Mar 03, 2000   Sold   $307,000   34.9%/yr   Public Records
Sep 10, 1999   Sold   $266,000   —  Public Records

*Per MLS rules, we cannot display prices from inactive listings.
Property Tax
  Taxable Value
Land   $875,439
Additions   $91,769
Total   $967,208
Tax (2008)    $10,107
What’s the Market Like for Houses Near 4082 escudero?
House: $/Sq. Ft. in 92620
92620 House median price per square foot
Median House Values
Select a neighborhood, zip code, or city for more stats.
  List $    $/Sq. Ft.
Northwood (Irvine, CA)    $699,900   $357
92620   $759,900   $357
Irvine   $850,000   $375

Home Value Estimates for 4082 escudero
  Low   Estimate   High
Zillow.comZillow   No data is available for this property.
Eppraisal.comEppraisal   $624,008   $734,128   $844,247
Cyberhomes.comCyberhomes   $902,768   $1,003,076   $1,153,537
Zillow.com
No chart or percentile data is available for this property.

The sooner we flush these realtors the better. We have been getting ripped off by this racket for too long. It wil be refreshing to not have to deal with some of these cheesy sales types (anyone see American Beauty?).

You will all love this one.  A small house near me went on the market in December for 540K (4 Briarglen).  No takers.  The realtard has now upped the price to 575K!  I’d love to hear an explanation from Bill White at Prudential.

Wow….this property just reminds you how utterly irrational real estate got in California.  This house for $870k? $630k…?

I’m not even sure I’d live in this piece of crap for free.

Does anyone know what happened to BMIT ??