It Costs Too Much to Buy and Sell a Home in Los Angeles

Buying or selling a home is one of the biggest decisions most people make. The country’s total residential property market is worth $34 trillion, which is as much as the value of all its publicly listed firms. The Economist says that buying and selling a property in America is cumbersome and extraordinarily expensive compared with other industries and other countries. | Blog Video

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The Economist is missing the mark just a bit when it discusses commissions. Broker fees commonly run at 5% to 6% of the value of a property, which The Economist says is three times the average level in other developed countries. This is misleading. California commissions are always up for negotiation, individual agents usually receive closer to 2.5% (which is sometimes split among more than one agent), and the agents must pay a very large chunk of this for expenses of living and doing business in California, vehicle, gas, parking, advertising, marketing, photography, assistance, transaction coordinator, broker, MLS, Association of Realtors, legal fees and taxes, plus they must pay for their own expensive housing if they live in a price place like Los Angeles. #sellloft #sellcondo #sellhouse

The Economist fails to recognize that other states do many things differently, and other countries do things dramatically differently, so that the commission comparison is completely disconnected. Apples and oranges have different prices. Real estate professionals in other countries follow entirely different rules, engage in totally different advertising, marketing and administration practices, have different training, different laws, different professional practices and much different results. In some of the countries that the Economist has studied, they failed to note that individual brokers were receiving the same amount as California agents, but the condos in Switzerland actually sold much slower, often taking months or years to sell versus weeks to sell in California.

The Economist correctly points out that Americans are moving less frequently today. In the 1950s, 20% of households moved each year; today only 9% do. The frequency of Downtown Los Angeles residents moving has dropped significantly. 2019 saw only about 25% as many transactions as 2017. That caused a substantial drop in total average commission for L.A. loft specialist real estate professionals. Local pros are actually making about 70% less than they made a couple years ago. Try living on a 70% pay cut. We’ve seen several cases of overdose, suicide and homelessness by local real estate professionals in the last two years.

Maisy Wong of the Wharton School of the University of Pennsylvania says that brokers steer buyers away from properties that offer less than 3% commission, keeping fees high. Steering is a provocative word that generally refers to agents suggesting neighborhoods based on racial make-up. In California, real estate professionals have the right to show properties based on commission because that is how they get paid. Like other commissioned sales people, most real estate agents must get paid or their work. A satisfactory commission is the primary motivation for a real estate salesperson. If a home seller or buyer wants the assistance of the best, most motivated salesperson, the buyer or seller will pay some attention to make sure the salesperson is paid well. If the client prefers the professional to be paid salary or a set dollar amount, they may negotiate that instead of the commission percentage. In California, the commission percentage is usually set by the seller and their broker. The commission may be anywhere from $1 to 10% or more, with 5% to 6% being the most common total, which is split up among all participating brokers and agents.

Home buyers and sellers are paying more, and the main reasons include: the increase in home prices, increases in the cost of living, increases in the cost of doing business, and increases in the bureaucracy and administration of real estate transactions. The state of California has steadily increased the legal and administrative burdens on buyers, sellers and real estate professionals. New required paperwork keeps being added: Disclosure form that states the property has a pool or hot tub that may be dangerous, disclosure that there are earthquakes in California that may be dangerous and many other forms and other legal requirements, many designed to protect and educate home buyers. These legal requirements make it difficult or impossible for home sellers to sell their own homes.

Broker commission is the biggest expense for home sellers, which buyers must ultimately pay for. For buyers, lending fees, taxes, insurance and other miscellaneous costs add up.

How to Sell your Downtown Condo Without an Agent and Save the Commission. Fill out my online form:

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Copyright © This free information provided courtesy L.A. Loft Blog and LAcondoInfo.com with information provided by Corey Chambers, Realty Source Inc, BRE 01889449 We are not associated with the homeowner’s association or developer. For more information, contact 213-880-9910 or visit LAcondoInfo.com Licensed in California. All information provided is deemed reliable but is not guaranteed and should be independently verified. Properties subject to prior sale or rental. This is not a solicitation if buyer or seller is already under contract with another broker.

Introducing Entar Real Estate

Feeling Pain of Cooling Market, Good Real Estate Agents Create New Company  #Entar

The Problem: Slowing property market combines with new services that eliminate real estate agents. Good for home buyers, bad for agents.
The Problem: Slowing property market combines with new services that eliminate buyer’s agents. Good for home buyers, bad for agents.

Downtown Los Angeles  —  Readers of the L.A. Loft Blog are privy to the behind-the-scenes creation of a new kind of real estate company coming to the area.  As the Los Angeles real estate market cools, homeowners are snug and holding tight to their current residences. While few would ever shed tears for struggling real estate agents, the reality is that there are only about 1/3 as many transactions in Downtown L.A. compared to a few years ago. This results in nearly all real estate agents seeing a serious reduction in their overall finances, with many finding that they need to change their careers.

Real estate professionals also face a longer term issue of increasing technology and less need to use a real estate agent to purchase a property, thanks to iBuyer services that provide innovative ways for home buyers to see properties without the help of a buyer’s agent. Also, services that offer to buy the seller’s home quickly for cash, without the need to take months to market it on the agents’ MLS and elsewhere.

From 1960 to around 1990, the average commission was about 7%. Today, it’s falling toward 5%. Buyer’s agent commissions are about 2.5%, and appear to be headed to 2% or less, while listing agents often get a bit larger percentage of the commission pie at around 3%.

More and more listing agents are keeping all of the commission, offering to share nothing with the buyer’s agent.

This is all ok news for home sellers, but deadly for the careers of traditional real estate agents.   |   VIDEO

Entar Real Estate

The solution for the industry calls for real estate agents to provide more value using the latest technologies along with improved customer service to guarantee home sellers that their home will be sold at a price acceptable to them or the agent will buy it.  This proposal has proven to be the most cost-effective for Downtown Los Angeles condo sellers, getting the urban home sellers more money ($16,760 more on average), a faster sale (44% faster), and a successful sale. The listing agent has a proven system that accomplishes these objectives, reason being that the broker has more than 4,365 buyers in their database looking for a home.

EntarAbout 100 of the best local real estate agents are coming together, combining their best resources to create a new company, called Entar Real Estate. Downtown LA home sellers can take advantage of the newer, more powerful real estate company that guarantees home sellers better results while also guaranteeing to help the real estate agent earn $100,000 more than they made last year.

The new Entar Real Estate official launch date of October 2020 is a while off, but the good news is that the pre-launch is October 2019, and home buyers, sellers, landlords and agents can already get access to many of Entar’s features today from the Corey Chambers Team.  Get free help by getting on the Entar radar — the new Entar Real Estate company interest list. Click the selection that best describes you or your goal:

BUYER   |   SELLER   |   RENTER   |   LANDLORD   |   AGENT


Moving to a bigger space?  Get a free list of lofts over 1,500 Sq Ft.  Fill out the online form:

LOFT & CONDO LISTINGS DOWNTOWN LA [MAP]

  Lofts For Sale     Map Homes For Sale Los Angeles

SEARCH LOFTS FOR SALE Affordable | PopularLuxury
Browse by   Building   |   Neighborhood   |   Size   |   Bedrooms   |   Pets   |   Parking

Some good real estate agents are going broke.
Good real estate agents going broke in the cooling L.A. real estate market.

Copyright © This free information provided courtesy L.A. Loft Blog and Entar.com with information provided by Corey Chambers, Realty Source Inc, BRE#01889449 We are not associated with the homeowner’s association or developer. For more information, contact (213) 880-9910 or visit LAcondoInfo.com  Licensed in California. All information provided is deemed reliable but is not guaranteed and should be independently verified. Properties subject to prior sale or rental. This is not a solicitation if buyer or seller is already under contract with another broker.