Housing Rumble: Do You Need an Agent? (Day 6)

A real estate agent and a 'for sale by owner' executive square off.


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.