Real Estate Industry - cougarguard.com — unofficial BYU Cougars / LDS sports, football, basketball forum and message board

jay santos · 01-17-2007, 03:58 PM

Has too much fat in it. I see a couple threads on CB about this. I've had a few experiences lately and have been thinking about it some.

Realtors, Mortgage brokers, and Title Officers all spend over 50% of their time "marketing" or scavenging for clients.

I recently learned that the title insurance you pay at closing goes 80% to the title company who doesn't do anything. They're just a middle man. They then send on about 20% of the title insurance on to a real title insurance company to pay for a title insurance policy. They also charge you a title fee and other small fees which they pocket. Title officers work on commission.

Realtors, mortgage brokers, and title officers add very little value to the process and collect a total of up to 10% on the sale of a home.

I predict widespread reform in these areas. The fat will be stripped out of these industries so that they are paid for their added value no more no less. I predict in 20 years that 10% figure will be cut in half and headed lower.

Of course realtors and other associations use part of this fat on massive PR, advertising, and lobbying government to protect their empire. Recently the Utah realtor lobby group tried to create a bill that no broker could list a home for under certain percent because they were trying to protect the consumer from less-than-full-sevice brokers that would hurt the consumer. HA! But this kind of crap can't last forever in today's marketplace.

cougjunkie · 01-17-2007, 08:57 PM

You obviously dont know much about the real estate industry. If you dont think Mortgage brokers do crap, then you are up in the night. Now i can agree that sometimes real estate agents will make hordes of money for doing very little, but you cant blame them for finding you a house or selling your house quickly, that is part of the job.

Title Officers can charge 60%, 70%, or 80% title insurance. The lower the percentage the cheaper it is to the client. and the less commission that is paid to the escrow officer. So they do have their choice. They also do lots of other things besides just closing the loan and pushing paper.

Maybe you should do a little more research before you say asinine things.

jay santos · 01-17-2007, 09:29 PM

Quote:

Originally Posted by cougjunkie

You obviously dont know much about the real estate industry. If you dont think Mortgage brokers do crap, then you are up in the night. Now i can agree that sometimes real estate agents will make hordes of money for doing very little, but you cant blame them for finding you a house or selling your house quickly, that is part of the job.

Title Officers can charge 60%, 70%, or 80% title insurance. The lower the percentage the cheaper it is to the client. and the less commission that is paid to the escrow officer. So they do have their choice. They also do lots of other things besides just closing the loan and pushing paper.

Maybe you should do a little more research before you say asinine things.

In my past I've been a licensed realtor and also a mortgage loan officer. I didn't understand the ins and outs of the title industry until recently.

I now work in an industry where if you have any fat in your value chain, India and China will kick your ass.

The real estate industry has people making above average salaries with below average education levels spending inordinate amount of time on menial tasks. Commissions will get slashed over time giving the industry a complete makeover.

MikeWaters · 01-17-2007, 09:31 PM

I agree with Jay. The industry is going to face increased competition and lower wages. We are seeing Bush fight the MLS monopoly.

Insensitive PAP · 01-17-2007, 11:15 PM

Clearly there is a lot of fat in the industry, but they do bear a lot of risk as well. It's not uncommon for people to lose their shorts in real estate, and those that make money are a lot less than those who wash out, quickly.

Title companies bear a TON of risk. I know one that recently had to pay out $1 million for screwing the pooch on the title work. So while it's a racket, there is some expertise needed.

jay santos · 01-18-2007, 02:53 PM

Quote:

Originally Posted by Insensitive PAP

Clearly there is a lot of fat in the industry, but they do bear a lot of risk as well. It's not uncommon for people to lose their shorts in real estate, and those that make money are a lot less than those who wash out, quickly.

Title companies bear a TON of risk. I know one that recently had to pay out $1 million for screwing the pooch on the title work. So while it's a racket, there is some expertise needed.

Are you sure about that? My understanding is that title companies are just a middle man to sell you title insurance. That $1M was probably paid by the insurance company the title company sold the title policy to.

Real estate investors carry risk. I don't think any real estate professionals do as far as realtors, mortgage brokers, title officers. A realtor could get sued for negligence, but they carry insurance for that for which the premium represents a very small percent of their revenues.

UteStar · 01-19-2007, 04:36 AM

Realtors overall get a bad rap. Its too bad because a good realtor is worth every penny. Recent case in point. Average realtor selling a home for $435,000 in the market and the house sits for months. A very good realtor came in and realized how much the house was worth but wanted to get the best deal possible. The sellers had sat on two mortgages for several months and they just wanted to sell but didn't want to 'lower' their asking price to the public. The good realtor played hard ball, got them in negotiations and got the house for his client for $375,000.

A good realtor is worth it. A bad or average realtor (and there are many, many) is not worth it. With that said, same could be said for most industries. A lot of bad workers make decent wages...the great workers are the ones that thrive. People need to do their homework on a realtor before they jump into the market. Too bad, many don't and they have a bad experience.

01-17-2007, 03:58 PM	#1
jay santos Senior Member Join Date: Jan 2006 Posts: 6,177	Real Estate Industry Has too much fat in it. I see a couple threads on CB about this. I've had a few experiences lately and have been thinking about it some. Realtors, Mortgage brokers, and Title Officers all spend over 50% of their time "marketing" or scavenging for clients. I recently learned that the title insurance you pay at closing goes 80% to the title company who doesn't do anything. They're just a middle man. They then send on about 20% of the title insurance on to a real title insurance company to pay for a title insurance policy. They also charge you a title fee and other small fees which they pocket. Title officers work on commission. Realtors, mortgage brokers, and title officers add very little value to the process and collect a total of up to 10% on the sale of a home. I predict widespread reform in these areas. The fat will be stripped out of these industries so that they are paid for their added value no more no less. I predict in 20 years that 10% figure will be cut in half and headed lower. Of course realtors and other associations use part of this fat on massive PR, advertising, and lobbying government to protect their empire. Recently the Utah realtor lobby group tried to create a bill that no broker could list a home for under certain percent because they were trying to protect the consumer from less-than-full-sevice brokers that would hurt the consumer. HA! But this kind of crap can't last forever in today's marketplace.

01-17-2007, 08:57 PM	#2
cougjunkie Senior Member Join Date: Jan 2006 Location: Utah Posts: 5,741	You obviously dont know much about the real estate industry. If you dont think Mortgage brokers do crap, then you are up in the night. Now i can agree that sometimes real estate agents will make hordes of money for doing very little, but you cant blame them for finding you a house or selling your house quickly, that is part of the job. Title Officers can charge 60%, 70%, or 80% title insurance. The lower the percentage the cheaper it is to the client. and the less commission that is paid to the escrow officer. So they do have their choice. They also do lots of other things besides just closing the loan and pushing paper. Maybe you should do a little more research before you say asinine things. __________________ LINCECUM!

01-17-2007, 09:31 PM	#4
MikeWaters Demiurge Join Date: Aug 2005 Posts: 36,365	I agree with Jay. The industry is going to face increased competition and lower wages. We are seeing Bush fight the MLS monopoly.

01-17-2007, 11:15 PM	#5
Insensitive PAP Member Join Date: Jan 2006 Posts: 293	Clearly there is a lot of fat in the industry, but they do bear a lot of risk as well. It's not uncommon for people to lose their shorts in real estate, and those that make money are a lot less than those who wash out, quickly. Title companies bear a TON of risk. I know one that recently had to pay out $1 million for screwing the pooch on the title work. So while it's a racket, there is some expertise needed.

01-19-2007, 04:36 AM	#7
UteStar Senior Member Join Date: Aug 2005 Posts: 1,817	Realtors overall get a bad rap. Its too bad because a good realtor is worth every penny. Recent case in point. Average realtor selling a home for $435,000 in the market and the house sits for months. A very good realtor came in and realized how much the house was worth but wanted to get the best deal possible. The sellers had sat on two mortgages for several months and they just wanted to sell but didn't want to 'lower' their asking price to the public. The good realtor played hard ball, got them in negotiations and got the house for his client for $375,000. A good realtor is worth it. A bad or average realtor (and there are many, many) is not worth it. With that said, same could be said for most industries. A lot of bad workers make decent wages...the great workers are the ones that thrive. People need to do their homework on a realtor before they jump into the market. Too bad, many don't and they have a bad experience.