Tuesday, January 03, 2006

Commission Advoidance Schemes?

The New York Times had an article today talking about how more people are selling their houses directly, as opposed to using a realtor. Obviously, realtors aren't happy about potentially losing their gravy train. One realtor griped that "For Sale By Owner" is a "commission-avoidance scheme". That quote struck me as very funny. I propose that realtors all give me money, and if they don't, then I will call it a "charity-advoidance scheme".

I was thinking about the numbers a little. The typical real-estate transaction charges the seller six percent. Assuming a house sells for $200,000 (which would be considered cheap in Ann Arbor), the real estate commission is $12,000. A typical mid-level white-collar professional can bill $100 per hour, which would mean that $12,000 would cover 120 hours of work. Does anyone really believe that the typical realty transaction comes anywhere close to that amount of work?

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