Don't get me wrong. I've nothing against real estate brokers. Some of my best friends are real estate brokers. They helped me buy and sell many homes.
Twenty-eight years ago, my wife and I bought a five-bedroom stone house in Philadelphia for $9,100. Our broker found the house, check it out, showed us what was wrong with it, helped us negotiate the price and arranged for us to pick up the existing 4% mortgage.
Our real estate broker was a family friend. We didn't really find him; he found us. We weren't even thinking of buying a home when he suggested we consider this one. He was enormously competent, had been in the business for 15 years and was a principal in his firm. He worked hard for his money and made our dealings with him a total success.
The brokerage fee on our first house was 6%, or $546. The seller paid the fee. It was a great deal. Times have changed. The last home we sold was a five-bedroom colonial in Stamford, Connecticut, which we planned to offer for only $289,000 in a "desperation sale." When we realized that at 6% the brokerage fee would be $17,340, we started looking for another way to sell.
Now, we understand that the cost of living has escalated for real estate brokers as well as else, and that a fee of $546 might be a little on the low side today. However, allowing for the same cost-of-living increase that everyone else got, $546 would be worth about $1,960 today, which sounds about right. A fee of $ 17,340 seems a bit steep for conducting a desperation sale.
Along with many other people, we harbor serious doubts that real estate brokers today are worth what they are paid.
