Housing Rumble: Do You Need an Agent? (Day 6)
Welcome to the sixth and final day of the Home Front's new Housing Rumble feature, a regular series that will match up opposing sides of an issue in an online debate format and let readers decide the winner.
The current Rumble features Jay Thompson, a blogger and real estate broker in Phoenix, and Greg Healy, vice president of operations at ForSaleByOwner.com—a Web-based company that markets the homes of independent sellers.
The subject: "Do you need a real estate agent to sell your home?"
Here's a recap of the action so far, if you're just tuning in:
Day 1 (Thompson)
Day 2 (Healy)
Day 3 (Thompson)
Day 4 (Healy)
Day 5 (Thompson)
Healy, you get the last word.
From Greg Healy:
Commissions might be negotiable, but agents don't proactively tell this to unsuspecting sellers. After all, agents are salespeople and want sellers to sign listing agreements at the highest possible commission rate.
I would argue that the rise of the Internet has provided sellers and buyers with more real estate tools, resources and pricing data to successfully complete a real estate deal without the help of an agent. More than 84 percent of buyers, for example, use the Internet to search for a home.
As I noted previously, the average commission has gone from just over $9,000 in 2000 to nearly $14,000 in 2007—an increase that has easily outpaced the inflation rate. Sellers should not have to pay so much to sell a home, especially since the Internet is doing so much of the agent's work.
In his last post, Jay tries to infer that agents make deals successful. But where's the data or statistics to back up his claim? I've pointed out that studies from Northwestern and Stanford universities have each found that "for sale by owner" sellers are more successful than agent-represented sellers.
Not only were these sellers able to negotiate everything from the home's price to contractual terms, as well as find qualified buyers, they made more money going FSBO than if they went with an agent.
I also don't quite understand Jay's comparison of real estate agents to attorneys, as the latter is required to obtain an undergraduate degree and a degree from law school. That's seven years of school, compared to the couple weeks it takes to get a real estate license.
Agents like to drive fear into people in the hopes of getting people to use their services. The reality is that their services aren't needed. Selling real estate essentially involves three steps: pricing the home, marketing the home, and transferring title to the new owner.
Sites like ForSaleByOwner.com can handle the first two tasks. Agents can as well, but for 5 to 6 percent of a home's value. The third step—transferring title—is handled by an attorney or title company no matter if a seller uses a Realtor or goes uses a FSBO route.
The goal of any home selling experience is to maximize the money a seller puts in his/her pocket from selling the home. There's statistical evidence that FSBOs do indeed get more money.
Tomorrow, I will post a voting poll, and the readers will decide the winner.
Tags: real estate | housing market
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Reader Comments
Housing Rumble: Do you need an agent.
Lot of pontification went on there! Both parties certainly taking their hardlines. Could the truth possibly be yes and no?
For one answer to the question, why not poll those who tried the FSBO route to see if they would do it again?
Without doubt, a small percentage of people, for various reasons, are able to do anything they set their minds to do, and would be able to sell their homes without using a Realtor. Their responses to: would they do it again, and how well the results turn out to be, will always questionable though, given human nature and people's egos.
I think several of the comments submitted that reasoned most people don't have the objectivity, knowledge, experience, skills, time, energy, or emotional stomach to navigate the painfully tortuous trail that the vast majority of real estate transactions turn out to be, were 100% valid. They shouldn't be ignored, or taken lightly; the penalties being financial and/or emotional for you and your family.
Also, I loved the adage, comment(paraphrased here)reminding readers that: "anyone that is not a lawyer and represents himself, has a fool for a client."
In sum, you better have a strong sense of self, family, and all your abilities before messing with, what will most likely turn out to be, the largest overall investment you will have in your life.
Good luck with your decision when your time comes.
The great thing about the US of A
It's easy to see that this is a very heated and emotional topic for both sides. But the great thing is... you the consumer have the decision to choose! No one puts a gun to your head to make a decision. If you don't want a REALTOR don't use one. Simple as that. Great. We live in a wonderful country, don't ya think? The thing that people forget is that every home, piece of land, buyer, and seller, on this great earth is different. Every sale transaction is different. That my friend, will always prevent the real estate industry from becoming obsolete. Make your own decision and let's focus on something more important like who is going to win this presidential election!
They are both missing the point.
Both of these individuals are forgetting a very important item when it comes to paying commission: What is the VALUE that the homeowner receives?
If the agent is doing nothing, has little experience, is lazy, and does not INVEST his/her own money into the sale of the home, then paying 6% or anything near it is ridiculous. However, if the agent provides service that goes above and beyond, and EARNS the commission, then I would pay 7% or even more. Agents are not a commodity...each agent does things differentyly. Match the amount you pay to the level of VALUE that you are receiving.
Mr. FSBO: You over simplify it by only looking at the amount of commission paid. If all agents did exactly the same things then that would be valid.
Mr. Traditional: You fail to realize that MOST agents out there are brutal and have no business being in the business and they by no means deserve the pay they receive.
Take it from someone who is a Broker who gets it: You get what you pay for but you should not just pay not knowing what you are getting. Make sure you ask A LOT of questions prior to signing an listing agreement. If you feel the value is there, then pay...if not, then do it yourself. I can assure you that the way my company operates and puts its money where its mouth is makes paying us what we are worth an easy question to answer.
Bottom line: A good agent will be WELL worth the fee if they do things the way they should and they are worth nothing if they don't.
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