Housing Rumble: Do You Need an Agent? (Day 2)
Welcome to Day 2 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 subject: "Do you need a real estate agent to sell your home?"
Yesterday, Jay Thompson, a blogger and real estate broker in Phoenix, made the case for using an agent when selling a home. Today, Greg Healy, vice president of operations at ForSaleByOwner.com—a Web-based company that markets the homes of independent sellers, argues against it.
Healy, the floor is yours:
Debate Topic: Do You Need an Agent to Sell a Home?
What we're here discussing is whether an agent is needed to sell a home, and the answer to this question is "no." To put this more clearly, an agent is not required—legally or otherwise—to be part of any real estate transaction. Of course agents are part of the marketplace and people can choose to use their services, but they should be mindful that an agent charges an expensive commission equal to 6 percent of a home's purchase price. That's $18,000 on a $300,000 home.
To figure out if hiring an agent is worth losing that 6 percent of home value, let's ask ourselves some questions:
Is an agent needed to put a home on the MLS? No. Websites like ForSaleByOwner.com have access to put listings on the MLS.
What about to market a home? Again, the answer is an emphatic "no." Even the agent's own trade group—the National Association of Realtors—says that more than 84 percent of buyers go online to search for homes, up from 2 percent in 1997. This tells us that sellers don't need agents to market their homes but rather a quality Internet site to do the marketing work. Listings on our website, for example, get in front of 2 million people.
How about to price a home? Nope. There are plenty of online pricing reports and professional appraisers that can price a home better than an agent can.
But who gets the most money for a home, an agent or a FSBO? According to studies from Northwestern and Stanford universities, FSBO sellers are as effective at maximizing their home price as agents. Further, once commissions are factored into the equation, the FSBO seller came out ahead financially.
My debate counterpart, Jay Thompson, used part of his remarks to talk about the complexity of a real estate sale. There's no denying that there's some paperwork to handle, but Jay didn't point out that a real estate attorney and/or title company can handle most, if not all, of the paperwork for the seller. An attorney can be hired for less than $1,000, which is just a fraction of the cost of an agent's 6 percent commission.
In today's market, it's important that people know the benefits of going FSBO. Home prices have dropped by more than 15 percent nationwide. Since commissions cost another 6 percent, having an agent is a luxury that too many people simply cannot afford.
Tomorrow, it's back to you, Thompson.
Tags: real estate | housing market | housing
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Reader Comments
Duh?
The over-marketing of homes by a million (yes, a million) real estate agents together with too much mortgage money available too cheaply are things that caused the bubble in housing prices.
As values go down, an agent today will tell you that the best thing you can do to sell your home is price it competitively. The best way to do that is to reduce the price by the 6% you were going to give to the darn agency and give that 6% to the buyer. YOU DO NOT NEED TO PAY SOME DUDE 6% TO COME OVER AND TELL YOU TO DROP YOUR PRICE, AND THAT IS EXACTLY WHAT MOST REALTORS ARE NOW "COUNSELING" THEIR SELLERS TO DO. THAT "ADVICE" NEED NOT COST YOU AND THE BUYER TENS OF THOUSANDS OF DOLLARS.
6% for what?
Agents were nessesary 20 years ago. But today? What the difference between forsalebyowner.com and MLS? Agents try to keep public out of thier MLS databases to charge 6% for access. It's too much for just searching in a srtuctured database.
FSBO
I am not a broker or an agent, but I have a family member who was an agent several years ago, and I have friends and play golf with people in the business.
Agents pre-qualify buyer before showing them the house. Does FSBO offer that benefit? A random person calls and you just let them into the house to look around? Maybe they call to schedule a showing and see what time you are available, but what they really want to know is what time you will NOT be available.... What hours is the house empty? And can you post some more pictures of the entertainment center? Does the home have a security system?
People need to be careful with the information they put out on the web and realize that people that are viewing it might not be who you intend. Predators love all the free information and anonymity. Hire an agent to meet with people, qualify people, and negotiate with people while your personal information and family stay secure……. Someone put a value on that?
My family member got out of the real estate business after two ladies from her office were attacked by “prospective buyers” within 8 months of each other.
How much liability is involved? How much protection do you receive from FSBO, and how much do you receive when you use an agent? The agents I know search the FSBO website weekly looking for potential listings, so they think it is a great source of leads. How much traffic on the FSBO website is home buyers and how much is real estate agents farming it for leads? The website tells me how many people have viewed my house, but not who they are or what their intent is. 80% of my traffic could be real estate agents and not buyers. If I use a FSBO type site am I really paying to market to buyers or to agents? I am in sales and I would love a site like FSBO where my potential clients paid $500-$1,000.00 to provide me with their contact information. WOW! What a deal!
I am told that commissions are negotiable in my state, and that may or may not be true everywhere. If you cannot negotiate a deal with an agent what makes you think you can negotiate a good deal with a buyer, who might a professional investor? I agree that some of the commissions I hear about are excessive, but I think it makes more sense to work out a deal with an agent than to take on all of the risk and potential cost of selling my house myself. I am told some of the big national agencies are “listing mills” (which is exactly what FSBO sites are) and drive agents to get as many listings a possible. They don’t put a lot of effort in selling because they figure having lots of listing will bring lots of buyers looking, and that might be true. I would still prefer to work with a small local agency.
just my $.02
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