Housing Rumble: Do You Need an Agent? (Day 5)
Welcome to Day 5 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, in case you're just tuning in:
Thompson, you're up:
From Jay Thompson:
Final rebuttal
Those that are pro-FSBO [for sale by owner] invariably bring up two points, and my opponent has proven no different. It's always the mystical—and incorrect—6% commission, and the fact that an attorney can draft contracts and closing documents.
My previous point wasn't that commissions are 5.12%. The point was they are NOT 6%. They aren't ANY fixed percentage. Commissions are negotiable. If you can't negotiate a commission agreement with an agent, how do you expect to negotiate the price of a home and contractual terms with a buyer?
Yes, an attorney can draft documents. But is that same attorney going to negotiate terms and conditions with buyers and other parties? Is your attorney going to market your home, or help educate you in the nuances of selling a home in markets like we face today? Ask your attorney how much they charge to prequalify your buyers. Ask your attorney for access to their database of hundreds to thousands of potential buyers.
Yes, someone can sell (or buy) a home without an agent. I can also rebuild my own transmission, cut my own hair, and even represent myself in a court of law. Personally, I'd rather leave all those to an experienced professional who does it every day, and does it far better than I'll ever hope to.
Greg asks me to explain "why agents don't allow their clients to sell through an agent and simultaneously sell 'for sale by owner.' "
I can't explain that because I do allow for exactly that. Not to beat a dead horse, but commissions are negotiable. It's quite simple to write a variable commission schedule into a listing agreement. We do it all the time. Thousands of agents do it every day.
Greg himself said: "(unrepresented) buyers can get a better deal on homes, as they can negotiate the commission savings into a lower offer and sales price."
He's right. Buyers are smart. Sell FSBO, and they will want some of your savings. So how exactly is all this commission being saved by FSBOs?
I'll close this debate with a couple of quotes. From Laura on my blog:
"I'm an attorney with transactional real estate experience and I won't buy or sell a house without an experienced agent. Nobody ever wants to hire a lawyer, either, but think they can do it themselves until the damage is already done."
And this one; "He who represents himself has a fool for a client."
Healy, back to you tomorrow.
Tags: real estate | housing market
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Reader Comments
Game - Set - Match
Well said Jay - and thanks for the new business ideas
Coming soon...
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trannyrepairbydriver.com
Excellent Argument
Jay, this was well written...particularly the point about a FSBO buyer expecting to save money as well. Whatever the prevailing commission rate is for a specific area in the US, a FSBO buyer that is negotiating the purchase price expects to see some of that savings too, thus significantly dwindling the 4-6% "savings" the seller wants to achieve.
Food for thought
Many points brought forth on both sides of the argument are valid. Yes, getting a real estate license is far too easy. There should be an apprentice period before a new agent goes it alone. And if getting the license is so easy, I would recommend to any FSBO seller or buyer to spend the two weeks ( if you can do it every day full time for two weeks) and get your license. At least you'll have an idea of the liabilities you may face and the local laws which you are still required to follow. You still won't learn a thing about buying or selling a home. That's not what the license process is for.
There are agents out there who who may deserve less than the commission they are charging. There are also agents who deserve far more than they are charging. Commissions are 100 percent negotiable, but the companies for which we work may have set guidelines and standards. Like any business there are costs, and profit is needed to grow.
I am amazed that the issue safety was not mentioned as a counterpoint to going the unrepresented seller route. I would never let my wife be home alone or even with my kids to show my home to a total stranger either day or night. Think about the people who come to your door delivery things, soliciting for donations etc. Do you let them in, close the door behind you or do you keep them on the porch and prevent them from coming inside? Go ahead escort someone around your home, and lead them right into a bedroom or bathroom in the middle of the house where no one will hear you scream for help.
Convenience is the biggest reason we hire people to do things for us. How many of them do it for free with just a hope of getting paid at some point in the future? Call a lawyer and have them draw you up a contract, negotiate with the seller or buyer, but if the deal falls through you still get a bill. An agent will do that and more several times and may never get paid-or even ask to be paid. Or how about the seller that gets 6 months of pretty expensive advertising, countless hours of advice,service and availablity, and for many possible reasons the house doesn't sell. Again, no money may change hands.
Yes, an experienced professional and successful Realtor will cost money, but if you found the right agent, the value will outway the cost everytime-just like the right doctor or lawyer the right car mechanic, plumber,or electrician to name a few.
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