Housing Rumble: Do You Need an Agent? (Day 5)

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Okay, so here is a major problem with agents. Sellers overprice their homes to account for commission. Say a house is priced at $266,000 with 3/3 split of 6%, and both agent and seller know the house would fly at $250,000. As $250,000 adds greater exposure (in other words, it can appear at both the top or bottom end of a search), listing a house for $250k on a solid FSBO site (in a location where FSBO is strong) offers close to the same end price for the seller if no negotiations are made. The seller could come down to $250k with the agent, but why would he or she? Why not wait until the listing expires and list for 250k FSBO?
P.S. I love the idiots who would price the house at $249,900. Why the HECK would you do that when you get increased exposure at $250,000? What are houses...check out aisle snacks?

of IL 2:01AM August 15, 2008

Bad representation is far worse than no representation at all !!!!
If you are going to use an agent than choose the agent wisely!!!----otherwise do it yourself and then you will only have yourself to thank or blame.
Bad teachers, bad lawyers, bad doctors, bad dentists, and bad real estate agents all can do much more harm than had they left well enough alone.

Joe of CT 2:17PM July 20, 2008

Jim - I agree completely that I should have raised the safety issue. It's huge. My wife is an agent and I worry about her every time she shows. We take a lot of steps to prevent problems, particularly with new clients, but you never know...
Why didn't I raise it? I don't know. I just grow so weary of the "6% argument". The safety issue was raised previously on other comments on other posts, so I knew it was at least covered, even if I didn't make the point.
In hindsight, I wish I'd not worried so much about trying to counter my opponents arguments.
I would also have loved to have done a specific math example of why the common argument of how much a FSBO saves is usually false.
And another point I *really* wanted to make was on the Stanford article my opponent mentioned. That article looked at the differences between using an agent or not for homes *on* the campus of Stanford University and available *only* to Standford employees. That is a VERY small and specialized niche. My opponent used the study because it shows that those selling homes on Stanford didn't make any less money than those using an agent. What he failed to mention was anything about the size of the possible buyer pool, or the fact that Stanford University makes those "listings" available to every possible buyer. That doesn't compare apples and oranges. It doesn't even compare fruits and vegetables.
I couldn't get to everything unfortunately. I only had three posts that were a max of 400 words each. That's not a whole lot of space... Your fabulous comment for example, is 445 words.
Thanks Jim *and everyone else!) for contributing!

Jay Thompson of AZ 12:12PM July 19, 2008

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.

Jim Mellen of VA 8:25AM July 19, 2008

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.

Steve Belt of AZ 3:46PM July 18, 2008