Real Estate: In Need of Massive Reform

LadyThinker and I have been in the market for a house for about 8 months now. While we started looking in San Jose, LadyThinker came back from a trip to Europe and let me know she really wants to live in a more urban environment--namely, San Francisco.

So 6 months ago we shifted the search north to the 2nd most expensive city in the US. Lovely. We've gone back and forth, had some heated discussions over what we will make an offer on, what we won't and what classifies as a legitimate reason either way. After seemingly ages, we agreed on a house, not you on the market, that we had an inside angle on. Supposedly, an offer that they considered strong would win the house before it hit the market.

On the assigned night, we made our way to the "City" to see the place and agreed it was just about right. No house is perfect, but this was a strong 8 of 10 in a city full of 6s. In the kitchen that night, with BOTH agents present, we discussed the plusses and minuses. OUR agent proceded to wax poetic about the hot market, how no house goes for asking in this area, and brings up comps of houses in recent months that went for $60k above asking. Needless to say, I was a little peeved at the agent.

We made the offer--at the "asking price." Only contingnecy was a home inspection--rather common in this flat market. Well--they came back with a counter offer $46k above the asking price. We were the only bidder. Very frustrating time. Very.

As to why the market should be reformed...

1. Buyers agents have an inherent conflict of interest in the current framework. 3% commission doesn't encourage them to get the best price--a $50k cut costs them $1500.
2. Buyers agents cannot possibly be worth 3%. OK--in some cases, where the buyer is lazy or requires a TON of work, yes--3% is fine. In cases where the house costs $200k, yes 3% ($6k) is fine. But in san Francisco, where the median price is $755k--the median commission therefore $22.5k, something's wrong. I find possible places before my agent does.
3. Kickbacks. Our inspection was to cost $700 on a small condo. Most inspections cost $300-400 tops. I smell a kickback.
4. Lack of transparency. For example, there is no way to track seller contributions or other under the table elements of transactions. The numbers say real estate is up a trickle in the Bay area. Most think otherwise, but we'll never know. We shouldn't rid ourselves of such tools, but this should be transparent.

As for me, the search goes on. With a few changes: I'm firing our agent and using Redfin.com, which does the same thing that a realtor does, but only takes 1%. The adventure continues...