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.