March 30, 2010, 4:50 am

6 Reasons Why I Will Not Use A Real Estate Agent To Sell My House

by: The Financial Blogger    Category: Properties
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***Welcome to the Globe and Mail readers! As a scoop, I can tell you that I have sold my house within 2 weeks at 330K. So I saved $18,810 in commission (5% commission rate + taxes). If you like this article, please subscribe to our RSS feed***

Last week, I announced that we were selling our house to move to a better place (hopefully!). We spent the previous week painting, buying frames and other decorative goodies and moved our furniture around to make our house look its best. I will write more about staging our own home later on (you probably guessed that I will be writing a few “selling your own property” articles in the upcoming weeks!). But today’s article is about all the reasons in the world I have to NOT use a real estate agent to sell my house.

#1 Avoiding a real estate agent: I have 18,000 reasons to avoid it!

I actually have no doubt that some real estate agents are pretty good at  presenting and selling your property. The problem is how much they charge to do it! If I calculate a 5% commission fee (that is taxable!), I will end-up paying  an agent around $18,000 to sell my property.

Since I will probably have to buy a second car once I move to my next property, the real estate agent commission represents more than what I will actually pay to buy my car! In the end, I really wonder what they can do that I can’t for this sum of money!

#2 Avoiding a real estate agent: Independent websites are just doing fine

When I look at properties myself, I always have 2 websites that come to mind: mls.ca (which houses all the properties listed by real estate agents) and bytheowner.com (which is the most popular site for individual sellers). I don’t know if you have taken a look at the site but it is probably one of the most efficient and appealing real estate sites.

Searches are convenient and there are enough properties for sale that most people consider taking a look before visiting properties. Then, it comes down to the fees; $800 (tax included) to put a full time ad with 12 pictures (10 + 2 in extras). There is a guy that come to your place, take professional pictures and put the “for sale” sign in front of your property. $800 vs $18,000… any questions?

#3 Avoiding a real estate agent: I love negotiating!

Another thing I don’t like about real estate agents is that you never negotiate directly with the buyer/seller. Therefore, when you have a quick question or you want to negotiate something, you always have to go through a third party. It’s even worst if you are buying with an agent and you are looking to buy a property that is being sold by another agent! The 2 agents are negotiating together (i.e. talking about how much commission they will both make) while the seller and the buyer don’t discuss anything.

I really like talking to people and getting their feelings about my property. Therefore, I find it easier to offer them a nice cup of coffee and negotiate at my kitchen table.  As opposed to telling my agent that will tell the other agent that will tell his client that I would like to move earlier!

#4 Avoiding a real estate agent: What do they do that is so special?

The key idea behind this article is simple; what does a real estate agent do that I can’t and justifies the huge commission I’ll give them? Do they provide legal advice? Very few and they are not responsible for what they say so you are better off checking with a lawyer/notary for real advice. Do they ensure a legal transaction? Hey! A 3 page contract that you can print from the internet… I don’t call it a legal transaction! Even the notary is not responsible if he makes a mistake so what is the real estate agent is responsible for? Do they negotiate for you? Well, for them, if you sell your house 300K vs 325K, it only makes a difference of $1,250 in their pocket (while they will still make 15,000$ at 300K). Do you really think they will encourage you to wait to get your price if they can do a quick sale? You are losing 25K, they are losing 1.25K… who’s the winner, who’s the loser?

#5 Avoiding a real estate agent: Previous bad experiences

I dealt with a real estate agent to sell my previous property and I was quite disappointed. It took 6 months and all my agent did was create confusion between the buyer and us as regarding the possession and moving dates… In the end, he cost me all the profit I was going to make on the house and I didn’t feel he did much more than take a picture and put it on a website (oh wait… I am doing that for $800!).

#6 Avoiding a real estate agent: I’ve seen the difference with bytheowner.com

A few years ago, I helped my parents sell their house through bytheowner.ca. Back then, the system was less effective than today (less options, no professional pictures, no online tools, etc.). but even then, they were able to sell it within 2 months (and they had 2 buyers fighting for it!). The transaction went pretty smooth and my parents just kept a good $15,000 in their pocket instead of giving it to a third party!

What about you?

I would be curious to hear about your stories or even better, if a few real estate agents can tell me why I should pay them 18K to sell my house?

Image source: Kiz

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Comments

by: Finance Doc | September 4th, 2012 (8:26 am)

Again, another tool shows us how much of a tool they really are. “seller pays the commission” but who is purchasing the house at that set price with the commissions built into it? Thats not free to me. When you sell privately, the price is set without the over inflated commissions. The corrupt commissions is the issue. The tools have corrupted the whole industry with their greed, as shown in your comments, ” if you worked for a commission, wouldn’t you naturely want to make the most money you could on a transaction?” This attitude is why you are ranked high on a “not trusted and very useless” scale. You should be saying ” I will try my very hardest to focus on your needs and price while using common skills called communication, networking and honesty to negotiate a lower price to make you, my client, happy with purchasing your new home”. As for being a seller, you wouldn’t have to worry about your house selling, if you have taken care of it, invested money into it for upkeep and are asking a fair price, without inflated commissions built into it.. It is way too easy showing how the tools really have tried to cover up their dishonest and inmoral practices. Please stop trying to justify your policies and put more effort in adjusting to the changes and help fix something that has been broken for too long. Your are a tool aren’t you?

I love this blog! My home is worth over $1Mil, I’m in no rush to sell and there is NO WAY I will pay a realtor over $60,000 + taxes to a realtor. No one can sell my home the way I can sell it. What does a realtor do that adds any additional value? I can do my own open houses and marketing. It isn’t rocket science. I am going to use Comfree as they have a great package and provide MLS.ca listings.

I have purchased several homes throughout the years and I have ALWAYS found the home I wanted to purchase on my own. Never has a realtor actually found a home for me that I purchased. The realtors I have dealt with are basically order takers.

If you have the time you can sell your house yourself.

Sandie it is not a FREE service. A home has to be listed for more to cover the commision.

On the subject – too many realtors have on 1 or 2 pics of a house and have it listed wrong. Here almost all the mobile homes are listed as a house so when I get a print out from an agent on homes, it has moebile which I am not currently looking for ( I own several mobile BTW that I rent out so I am not predudiced in the least ). Here they list the sq footage which is usually way off. You can buy an electronic distance meter for under $200 so you just point at the far wall and it tells you the distance. I own one and is very accurate. It only differed from measuring the tyape measure was by 4 sq ft in a 1090 sq ft home.

A realtor contacted us about a house we had listed previously saying she has a buyer that might be interested, could she look at the house. We said sure, I assumed she was a buyers agent. One email she wrote struck me funny so I wanted clarification, I wanted to know if she was the buyers agent and she said oh no, I am representing you for a one time showing. HUH!, okay so if you were to represent for this one time showing what would the fee be? She said 4% …. and we know nothing about this … she just phoned and asked to show the house? I thought I could live with giving her 3% so countered at 2% – only because I know my husband wants to sell, I would have said stick it …. thinking she would come back at 3% but she says I will have to pass, good luck. So I said thanks. WTF

by: Finance Doc | September 29th, 2012 (7:35 am)

@ Milly, unfortunately you have witnessed first hand of a useless tool for real estate. If you could imagine this tool is being used still by other hard working individuals to complete the task of selling their home. Using a stone hammer to frame a home could get the job done, but would cost the user a lot of wasted time, money, grief and misery when he/she looks around and realizes they could have used a nail gun that would have been more efficient, less time and would have saved him/her lots of money. Anyways, lets step away from the analogies, I think you understand what this blog is about, so lets look at some ideas that could help you. Have you ever considered going to open houses in your area and handing out flyers or information about your home? I believe by tapping into a market that is already out shopping for what you have could only help with promoting your home. Now you need to be approachable and not to forward. It could be just putting the flyer on their vehichle when they go into the open house or standing on the sidewalk out front, but what ever approach you take, if I was looking to buy, the more options I had while I was out looking, the better! You do not need a useless tool that is obsolete when you have yourself and all your tools at hand.

Thanks for the confidence your blog is giving me. My first step is seeking out information and that was how I got to your blog. I know I have the intelligence to become a real estate agent if I chose to … so I should have enough intelligence to be able to learn the ins and outs enough for this one transaction? And I do now have the time. Last time the property was listed she posted on MLS the wrong house dimensions and it was full of spelling errors. It took 2 weeks for her to make the corrections. I know I can do better than that … so once again thanks.

Sorry one more thing …. does this make sense … the realtor tells my husband to list for $399,000 six years ago …. they say market conditions, no sell (I thought they increased your opportunity to sell?) anyhow now this realtor (different one but from same company) says my husband would be lucky to get $150,000. Then in another sentence she says finished out (new house, needs kitchen, bath, floor) the house would easily fetch $350,000 plus ….. the estimate was $50,000 to finish it out. The appraisel for taxes is $250,000. Do projects really increase the value that much or is this buyer she is no longer bringing by looking for something under $150,000. How does one trust the figures they throw out? It is hard to find comparables because of the acreage and unfinished condition but geez. Does this sound like she has our interest at heart? She should she was planning on collecting 4% without our knowledge! No more venting. 🙂 thanks again … very informative

@ Milly
It seems to me that you have found a broken tool. This broken tool looks like it would do the job, but when you try and use it, it screws everything up and you have to start over. Do you have anyone that you can trust? You should find someone that has done what you are trying to do and ask them for their opinion. My experience with investing into your house has always added value if done by code and by a professional. Whether the value is in how much your house can list for or in putting your house above the next in terms of comparing whats in the market and making it easier to sell. Is it in the budget? If you can’t afford to finish then you can’t expect to ask a price that isn’t warranted. Common sense always prevails. These, ” By the owner” companies that are out there can offer support in this area as well. Research is key to any successful venture, so the more you educate yourself, the better. Keep digging and don’t give up! You could be three feet from gold!
P.S. Throw that tool away and don’t be shy to express your feelings like you have, let people know what company and who you have had dealings with, as long as you don’t slander their names, your only expressing your opinions.

@ everyone
There is a tool for every job and sometimes its better to have an experienced person use the tool to get the job done, because you can get hurt if you do not know how to use it properly. Also, I personally know of some awesome tools that do a great job, so remember not every tool is obsolete, they might cost you a pretty penny, but dome will do a great job!

by: The Financial Blogger | September 29th, 2012 (1:54 pm)

@Finance Doc,

I agree with you in regards to experienced people. The problem has evolved overtime thought:
– would you pay $2,000 for an oil change? if my mechanic would charge me a ridiculous price for relatively simple task on my car such as an oil change, I would probably search for another option. If this option exist where there is someone that is willing to show me exactly how to change my oil for a one time fee of $100, I’ll certainly do it.

So as long as my mechanic is charging me less than $50 to change my oil, I won’t try to do it by my own.

It’s the same thing with selling a house. When the commission was 5% and houses were selling $75K, it wasn’t that bad to pay $3,750 to sell your house. Now the same house worth over 300K and you will have to pay over $15,000 in commission for the exact same job. This is when it becomes ridiculous.

@T Amazed,
Just thought of this; if your amazing websites gets over 1,000 visits per day per house, how come you are not able to sell them faster??? I mean, your conversion rate is just pathetic if the house takes 60 days to sell. This equals to 60,000 visits for 1 conversion! I was able to get the same sale with less than 1,000 visitors. If you would get to my rate of conversion, you would sell 365 houses a day per agents… lol! you are far away from that. So is your 1,000 visitors worth something?

The Truth!

I can understand the analysis in this article BUT the truth is different, this is my assessment:

– Buyers are rarely buying directly from Owners, when was the last time you bought a piece of jewelry from someone or through ebay. I can tell you never because you need to be sure that what you are buying is free of problem. No one pay 300K$ without secure his transaction.

– Selling a house at maximum value required a special marketing and tools that owners don’t have access.

– What public sites offer you is to list your house on limited traffic websites. This is easy, you pay between 1000$ and 1200$ and they give you access to post your photos.

– Selling your house is the biggest challenge, finding a buyer is you biggest challenge. Brokers have potential buyers and they direct them to houses that lead to profit to them.

– When the market is good, anyone can sell everything but when the market is tough as it is right now, you need enormous efforts to lock a buyer and get your house sold.

– Most of homes are sold through a broker that means you still need to pay 2.5% for the buyer’s broker, that leaves you with 2.5%.

– When selling by yourself, you published that the sale is without commission and buyers are expecting to buy at 5% less than the prices of houses around you. To say that you are saving the 5% is not true. The buyer is the one that is saving the 5% because this is what you are offering to them.

-By the time you sell your house, you will be paying 1000$ + 2.5% + 5% less than market value. Make your calculation and you will see that you are losing money.

– Broker provides you with a safe transaction. Selling your house is one thing but protecting your transaction from future legal pursuit is another things. Having a broker with special insurance will cover you from future surprises.

-Believe me I was a FSBO and found out that on the long term it is worth it.

Enjoy it.

by: The Financial Blogger | November 5th, 2012 (6:09 pm)

Hey Marwan,

I have a few observations upon what you just wrote:

#1 do Real Estate agents takes any sort of legal responsibility in case there is a problem with the transaction? nope, you can’t sue your Real Estate agent if you have problem with your house.

#2 which kind of super powered marketing tool a guy that took a 6 month course to become a Realtor has and I don’t?

#3 limited traffic website? do you have an idea of how many visitors bytheowner.ca gets per month? their traffic is astounding|

#4 honestly, how many “potential buyers” do a Realtor has that can possibly buy your house? it’s not like they have a bank of 100 people looking for your type of house in your budget range all the time.

#5 What the Realtor does when the market is rough that he doesn’t do when the market is easy?

#6 That’s not true, I’ve sold 2 of my properties without paying any commissions.

#7 That’s not true either. A buyer had used this argument once and I just told him that I was sticking to my price since I was doing the Realtor’s job and I’m the one who’s putting the 5% in my pocket. He ended-up buying my house at my price!

#8 Where are you getting your 5% less than market value? Do you think I’m too dumb to look at how much similar houses to mine are selling for?

#9 Safe transaction? Honestly, I’ve dealt with brokers before and when I ran into troubles, I had to handle them myself as he claimed he wasn’t responsible. Btw, most sites where you can sell your site on your own offer legal protections now so this is not a valid point anymore. And if you are not dumb, you will just hire a quality inspector to go around your house.

If you like paying 5% commission, good for you but that’s not worth it if you are willing to put a few hours of work to market your property.

by: Finance Doc | November 5th, 2012 (11:25 pm)

Marwin, I’m sorry but you sound ridculous. Have you read anything on this blog? I can’t understand where you get your facts from. They are just not adding up to someone who has done their research. Point blank, if you want to blow your money on something that is not worth it, go ahead.

After I read comments from agent in this blog, I feel that these are why I don’t trust realtor agent.

See Marwan’s comment: “-By the time you sell your house, you will be paying 1000$ + 2.5% + 5% less than market value. Make your calculation and you will see that you are losing money.” If you are a buyer, would you want to hire an agent when you can buy a house 2.5%+5% = 7.5% less than market value from private sell?

See Charles’s comment: “2) The best realtors achieve a 16% higher price for you than you alone.” If you are a buyer, would you want to hire an agent when you have to pay 16% more than to buy from private owner.

The answer is very obvious. The agents actually point out that to buy property through agent is a BIG loss to buyers if the above agent’s comments are true.

According to agent, if the sale goes with realtor agent, the seller is winner, the buyer is winner, the agent is winner. There is no loser. In other words, buyers don’t need to pay commission, sellers save commission(compare to 16% higher than sell by owner). I’m just wondering where does the commission come from?

Buyers, do you still believe Buyer doesn’t “PAY” commission? That’s a trap. It’s like someone said this is a well designed corrupt system.

by: Sebastien Cloutier | March 5th, 2013 (10:55 pm)

I am starting in the Real Estate business and I actually loved this article! It helps me see why some people would not want to sell with a RE agent.

However, one thing in your article that seems contradictory, is that you said that when you are looking to buy a property, you go to 2 websites and one of them is mls.ca. This is the website of properties sold by an agent. So you kind of have to admit that having an agent can be useful! Right?

Also, not everyone is comfortable with negotiating. We can help with that.

Finally, I do have to admit that many RE agents are morons and worthless. But this is the case in all professions (lawyers, cops, salesmen, teachers, dentists…and so on). There are crooks and unqualified people everywhere. Unfortunately, many times it will make the better ones look bad.

Cheers!

I use one gauge to separate all realtors. If they have a BAD domain name or use their name.com. It tells me. They have invested nothing in their business and chances are their services are going to be a reflection of that.

I am in Quebec, I want to sell my my house my self, what is best duproprio.com $800. But they do not list on the mls but do have some traffic on there web site or list in Ontario with Isellmyhome.com they will list on mls. $300 (I find them very cheesy and cheap looking). I plan to use only my mktg tools ie web site, photos, video, sell sheet etc. I have the time, I am in sales and mktg so that part should not be hard for me.
By the way I fully agree with Jim about DNS ( domaine name) I gauge lots of companies that way.

@Sebastian

MLS also lists FSBO houses that have paid to list.

Thanks Nick!

I didn’t know that.

Cheers!

Having been in the building and design business for 40 years, I am quite familiar with the labor that goes into building a house. Think about the mason that works many hours out in the heat and cold and maybe makes $15K as his contribution to a $300k home. Along comes the realtor and charges the seller $18k for a minimal contribution. What a joke!

The biggest problem with not using a realtor is you may have to wait to find a buyer who wants to “save” you money by overpaying, and risk their own financial well being by not using a realtor. Owners frequently try to sell homes for “what I have in it” and as a buyer, I don’t give a hoot. If comparable houses sell for a certain amount and you want $15000 more, I hope you wait a long, long time. I tried to buy a for sale by owner and if my friends had not insisted I get a realtor, I would have been totally ripped off. First it was overpriced, second the seller said it was “fine” and didn’t need inspecting (which turned out to be a lie–it wasn’t) and I’d have been stuck if I had not used a realtor. The house appraised for $50,000 less than the asking price. I applaud your desire to sell on your own, have at it! But I will never, ever, try buy directly from an owner again.

I had a great experience with my agent Tania Menicucci. She acted very professional, diligent, and was very knowledgeable. She did refer her inspector as well as a couple others which I did call but did decide to go with hers. I did not have any problems. She was actually very patient and did not make us feel rushed as I know other friends have complained of things like this with their agents. We also got a very good deal on our home and this was our second purchase with her. I was surprised to read your bad experience Mary.

by: ClosingInDays | January 5th, 2014 (8:37 am)

I’m days away on closing on a house…
I didn’t have an agent and the seller didn’t have an agent.

– I was told upfront by the seller they could go at least $10k lower with me without an agent
– in today’s internet world, finding the house was EASY
– having a real estate lawyer look at contract was easy
– finding and talking to an inspector was easy
– working with bank and title company has been easy
– researching and understanding the for sale by owner approach was easy
– getting opinions from various people on a variety of subjects was easy
– I’ve absolutely loved talking with the seller and they’ve even given me things I didn’t ask for because they are nice people
– negotiation was easy; I researched what the house was worth, aimed low, and won the house for less than expected; people can’t believe the deal I got

– agents aren’t appraisers or lawyers or online marketing sites. They are just middle men that offered negative value to me. I think they are a pre internet need.
– agents always use the free for buyers bullshit. No it’s not free, it’s an indirect cost

I had a realtor last year, didn’t sign a contract, and all I was signed up on an automated email list, called a few times, and shown a few houses. Agent was looking for any sale and not trying to get me into the best house for me. Didn’t understand me at all. Even if he/she did they offered me nothing I couldn’t easily do on my own.

I highly recommend not using middlemen!

By the way I worked buyers down 35k and 150k down from the price if house 4 months ago. It’s big and relatively new in a great area.

I totally agree with you.
I have sold 2 of my houses and bought 2 all by myself.
As soon as I put up a house for sale, the agents swarm in like vultures.
You are the seller and you make the rules – hey, after all, it’s your property!
So I just tell them very clearly up front: I don;t care how much commision you want ot make – you can evan make $80000 if you are good. The bottom line is, that in the end, I NEED to end up with $325,000 in my pocket (that was the price I was asking for). If you as the agent can sell it for more – all the power to you – YOU will have the “extra”. And remmember – if they post the house for $350,000 and then they try to get the seller to drop the price – stand firm – tell them that the drop in price goes directly from their commision first.

On another note, think of if this way….if you have to pay your agent $20,000 in commision – sell it yourself, drop the price by $10,000 – you will sell easy as pie – and still be in a better profit then with the agent.
Cheers,
-jinn

by: Finance doc | January 12th, 2014 (12:13 pm)

@ any real estate salesperson

Any real estate salesperson that would have any moral values should look in the mirror and ask themselves, when it comes to my work and effort, does it truly justify my commission and the commissions my brokerage takes from the hard working people who buy and sell?

……….then again, if you are doing this for a living and not trying to change the industry and the structure of the fees, then you do not have any moral values.

Also, any real estate salesperson defending their commissions are probably just scrapping by and should really think about changing careers. Maybe a FSBO advisor would make a great and rewarding career, because you would know all the crooked and illegal tricks a real estate salesperson would know.

See an agent’s comment – Mara July 8th, 2013. You will find that some agent always lie. He said “First it was overpriced, second the seller said it was “fine” and didn’t need inspecting “. Actually seller never say “my house doesn’t need inspecting”. I sold my house privately last year and I encouraged the buyer to do the inspection. I sold my property at a market value – 2.5% which benefits both sides. Sell by owner is the same process(like ask for inspection, find a lawyer to issue a contract and mortgage broker etc.). The only thing different is that both buyer and seller saving money.

I just wanted to say that there are many dedicated, hard working, ethical realtors out there making a living – not a windfall, but a living. If I make $100,000 in commissions in a year that’s before taxes which is 48% (33% fed, 7% state, 8% social security). Now I’m down to $52k. But wait, I haven’t paid any of my overhead – advertising, licensing fees, dues to MLS, state assoc and NAR, required education classes, MEDICAL INSURANCE, office rental, E&O insurance, gas for my car. (Only some of these fees are tax deductible and not at 100%) So my bottom line is about $40k a year. And I work 24/7. I am available evenings, weekends and holidays to show property and present offers. For just as many “easy” transactions where I sell a home in a day and only put 20 hours in total and make $10k (before taxes and expenses), there’s at least 9 more where I will spend over 100 hrs and received no payment whatsoever.
I went to college and to grad school and I have an MBA. I chose real estate because I love helping people find the home of their dreams. There are so many times I have walked into a home and knew it was right for my client. It’s a great feeling to know they will raise their family in a home I found for them.
Yes, there are many people very able to sell their home by themselves. But there are many that are not comfortable with a 17 page legal contract, plus 4 legal disclosures plus all the showings and negotiations and planning and paperwork. I may not be an attorney but I can tell you I am legally responsible. If my client gets sued, I get sued. And my client can sue me if I didn’t fulfill my contractual obligations to them.
Sell your home by yourself if you want, but don’t degrade my profession. Yes, there are some bad real estate agents out there just like any profession. I love what I do – and not because of money. I get to meet new people, many becoming lifelong friends, and I get to help them find the home of their dreams. Could they have found it themselves? Again, yes. But many people have a 40 hr a week job and really don’t want to spend the rest of their time showing, negotiating, writing contracts, etc. That’s why they hire me.

As a Tough-Love proponent (who happens to be a “rebel-agent”), I could not stop reading until I finished every post. Very useful exchange.

Finance Doc, that was a wise idea about agents providing a sort of coaching function to include revelation of all the tricks of the trade and the counter to them.

I call my service Principal to Principal Direct sub titled “Use A Broker To Choose, A Broker”. Thanks for the hint that such a service will fill a needed gap.

My two cents worth on this thread is as follows: anyone can sell anything for any price but not anytime. My Guru, Tom Hopkins,(a Real Estate Champion) emphasizes the difference between perception of value and price.

If a FSBO has a bargain(or perceived bargain), he certainly needs no outside help to sell it, all he would need to do is whisper the bargain-price to his neighbor, and it would be gone in one day.

There are two reasons for this hypothetical quick sale. One reason is the perception of value because of the aggregation effect. The second reason is that a neighbor knows, the value of his own property, so he has no fear that he is overpaying.

Remember, it not price as much as it is perception of value. To demonstrate this fact, I usually bet a seller that if we were to walk to the corner of a street and tried to give away $10 bills, we would not succeed in getting the first person to take one. until perception of value is ascertained. i.e., until the takers perceive that the bills are not worthless play money, or the giver is not baiting them into some kind of scam. Now tell me if you could top that bargain.

Just to rivet this concept into your mind, try this site http://www.markDice.com/gold coin, here is a guy trying to sell an $1100.00 gold coin for just a fraction of its true value, but because of perceived value, he gets no takers.

As a “Real Estate Rebel”(I am borrowing this label), I do understand and acknowledge many of the flaws, follies and falsehoods of my fellow agents, but in this stanza I am exploring with you some of the benefits that a conscientious agent might be able to bring to the table.

If you have already viewed the Mark dice video demonstration, then you will be ready to join me in gleaning a more useful conclusion Mark Dice. Mark’s take on the demonstration is that people are so unsophisticated that they can’t tell a bargain hen they encounter one.

My take is as follows: one, had Mark been among a crowd of close friends, he would have sold that gold in two minutes. Hence, it’s not that the strangers are unschooled, instead they were schooled that “if a thing seems too good to be true it is”. Hence there are three lessons here: a bargain has to be perceived as such or ascertained as such or the exposure sample must be enough to attract the eyeballs of demographics that has their guards down or don’t know that(if it’s too good, it’s no good)rule.

Here is where a even a no good agent can’t help but benefiting the seller(unless the agent induce you into that ungodly OFFICE EXCLUSIVE”), if an MLS has say 200 brokerages and each has 10 agents, and intern each agent has 10 customers then that is 20,000 eyeballs without including Realtor.com. and the rest of the internet.

Another way Mark Dice would have gotten someone to take his claimed bargain, was if he had stayed long enough to stumble upon one of the folk who don’t know that famous saying.

To drive home the point, even if you were offering a bargain like Mark you would not achieve lift-off until enough eyeballs see it to sift out the one that does not know the rule.

However since you are not selling your home at a bargain, we may move on to the more relevant discussion. The reason I spent so much time explaining why it may require as many eyeballs to “give your property away as it would to get above market, is to introduce you to Tom Hopkins(my guru)next admonishment.

Many supposedly smart agents have induced sellers and buyers into believing that a price-reduction is a good sign. My Guru thinks not, for the following reasons: buyers don’t think that you are doing any favors by reducing your price, instead they know that you had an over-priced turkey and you are just coming to your senses, they smell blood in the water and come in for the kill. The buyers still expect to start haggling down from (the reduced price). I acknowledge this is one of the “tricks” that some agents employ to win the right to list the property. I also note that many sellers seduce this action by gravitating to the broker who agrees with their price wish.

Another Real Estate Guru of mine, Barbara Corcoran, recommends listing lower than market, then stand back and watch offers go up rather than listing high and watch the haggling go down. Human nature is not to buy on the way down because they think they can time the bottom, while they don’t mind if the prices increase while they are still in contract.

Guru, Tom Hopkins says: if you choose the path of listing too high, instead of reducing your price, you ought to increase the value instead(remember it isn’t price as much as perception of value), instead of reducing by 10K, offer to pick up the closing cost or throw in a smart car, or pay the pay the first year of mortgage payments, just don’t spill blood in the water by reducing your price… TO BE CONTINUED…

by: Unikanic | June 1st, 2014 (2:19 am)

I think the realestate model is flawed, you want to buy a house then you pay an agent to find a house for you. (Very useful if you are moving to a new town) This way the commission would not be so high when you list a house, At least half of commission .
If you know what you want With MLS really you can find a house on your own.

You want to sell your house, then you pay flat fee for expenses upfront it show your commitment, and the agent is more likely to do some MKTG, commission after.
It’s just flawed how that works no fair for them.
There is Lots of part time realestate agents out there, the market is saturate, so agents do what ever to get the listing or sell you a house. By the way NEVER take the house inspector offered by the agent, I learned it the hard way with my first house.

That said, I sold my house my self without MLS I would have liked MLS but it is forbidden in Quebec. Oh it’s not rocket science, the actual “real estate” work was 30hr. It’s not for everyone for sure,there still a need for agents (elderly, person with no social skills, traveling people etc.) but it defenetly worked for me and it was a very rewarding experience.

by: ughh realtors | June 1st, 2014 (3:02 pm)

the first time I sold my home was with a realtor….never, ever, ever again. what. a . rip off. This was about 8 years ago and I am still mad about how much this asshole ripped me off.

The second home I sold I listed and showed the home myself. The buyers had an agent and it was hilarious to hear the agent lie about my house to the buyers. The agent was totally clues about the water issues the house had and other aspects that needed repair. It was totally obvious to me the sellers agent wanted to make a quick buck. Not only did the sellers agent fail to negotiate a better price, I refused to budge on my price since they had an agent, and the people still bought it.

by: Finance doc | June 1st, 2014 (4:38 pm)

@ Donna

Read my Jan 12th post. When you are done, read it again. By the way, you should really think about moving to Canada, it is even more corrupt up here.

Why Use a REALTOR®?
All real estate licensees are not the same. Only real estate licensees who are members of the NATIONAL ASSOCIATION OF REALTORS® are properly called REALTORS®. They proudly display the REALTOR “®” logo on the business card or other marketing and sales literature. REALTORS® are committed to treat all parties to a transaction honestly. REALTORS® subscribe to a strict code of ethics and are expected to maintain a higher level of knowledge of the process of buying and selling real estate. An independent survey reports that 84% of home buyers would use the same REALTOR® again.

Real estate transactions involve one of the biggest financial investments most people experience in their lifetime. Transactions today usually exceed $100,000. If you had a $100,000 income tax problem, would you attempt to deal with it without the help of a CPA? If you had a $100,000 legal question, would you deal with it without the help of an attorney? Considering the small upside cost and the large downside risk, it would be foolish to consider a deal in real estate without the professional assistance of a REALTOR®.

But if you’re still not convinced of the value of a REALTOR®, here are a dozen more reasons to use one:

1. Your REALTOR® can help you determine your buying power — that is, your financial reserves plus your borrowing capacity. If you give a REALTOR® some basic information about your available savings, income and current debt, he or she can refer you to lenders best qualified to help you. Most lenders — banks and mortgage companies — offer limited choices.

2. Your REALTOR® has many resources to assist you in your home search. Sometimes the property you are seeking is available but not actively advertised in the market, and it will take some investigation by your agent to find all available properties.

3. Your REALTOR® can assist you in the selection process by providing objective information about each property. Agents who are REALTORS® have access to a variety of informational resources. REALTORS® can provide local community information on utilities, zoning. schools, etc. There are two things you’ll want to know. First, will the property provide the environment I want for a home or investment? Second, will the property have resale value when I am ready to sell?

4. Your REALTOR® can help you negotiate. There are myriad negotiating factors, including but not limited to price, financing, terms, date of possession and often the inclusion or exclusion of repairs and furnishings or equipment. The purchase agreement should provide a period of time for you to complete appropriate inspections and investigations of the property before you are bound to complete the purchase. Your agent can advise you as to which investigations and inspections are recommended or required.

5. Your REALTOR® provides due diligence during the evaluation of the property. Depending on the area and property, this could include inspections for termites, dry rot, asbestos, faulty structure, roof condition, septic tank and well tests, just to name a few. Your REALTOR® can assist you in finding qualified responsible professionals to do most of these investigations and provide you with written reports. You will also want to see a preliminary report on the title of the property. Title indicates ownership of property and can be mired in confusing status of past owners or rights of access. The title to most properties will have some limitations; for example, easements (access rights) for utilities. Your REALTOR®, title company or attorney can help you resolve issues that might cause problems at a later date.

6. Your REALTOR® can help you in understanding different financing options and in identifying qualified lenders.

7. Your REALTOR® can guide you through the closing process and make sure everything flows together smoothly.

8. When selling your home, your REALTOR® can give you up-to-date information on what is happening in the marketplace and the price, financing, terms and condition of competing properties. These are key factors in getting your property sold at the best price, quickly and with minimum hassle.

9. Your REALTOR® markets your property to other real estate agents and the public. Often, your REALTOR® can recommend repairs or cosmetic work that will significantly enhance the salability of your property. Your REALTOR® markets your property to other real estate agents and the public. In many markets across the country, over 50% of real estate sales are cooperative sales; that is, a real estate agent other than yours brings in the buyer. Your REALTOR® acts as the marketing coordinator, disbursing information about your property to other real estate agents through a Multiple Listing Service or other cooperative marketing networks, open houses for agents, etc. The REALTOR® Code of Ethics requires REALTORS® to utilize these cooperative relationships when they benefit their clients.

10. Your REALTOR® will know when, where and how to advertise your property. There is a misconception that advertising sells real estate. The NATIONAL ASSOCIATION OF REALTORS® studies show that 82% of real estate sales are the result of agent contacts through previous clients, referrals, friends, family and personal contacts. When a property is marketed with the help of your REALTOR®, you do not have to allow strangers into your home. Your REALTOR® will generally prescreen and accompany qualified prospects through your property.

11. Your REALTOR® can help you objectively evaluate every buyer’s proposal without compromising your marketing position. This initial agreement is only the beginning of a process of appraisals, inspections and financing — a lot of possible pitfalls. Your REALTOR® can help you write a legally binding, win-win agreement that will be more likely to make it through the process.

12. Your REALTOR® can help close the sale of your home. Between the initial sales agreement and closing (or settlement), questions may arise. For example, unexpected repairs are required to obtain financing or a cloud in the title is discovered. The required paperwork alone is overwhelming for most sellers. Your REALTOR® is the best person to objectively help you resolve these issues and move the transaction to closing (or settlement).

This was a great read. I read through all of the posts while snacking on some Orville Redenbacher. We are currently selling our home ourselves and we just received our 1st offer. It was far more than my wife had planned to receive, and they came without an agent. Boom! Signing the contract tomorrow. I have to say, after reading these posts, Financial Doc is my hero. There are plenty of morons in this world, so realtors will, unfortunately, continue to fill a need in our society. Sad…

by: Finance doc | September 5th, 2014 (7:08 pm)

@ peter
That’s awesome, good for you in taking control of your assets. I commend you on a job soon to be well done!

I want to share with you an experiment that I have just finished. I recently have sold and bought using real estate salespeople. I decided to do some real research and back up all my previous blogs. We used an agent to sell, which took 4 days. Then we used an agent to buy, which took another 2 days. The selling agent was a friend, who was not a very confident negotiator nor detail oriented as I deliberately left out some things on the contract (due to not wanting them and looking to buy new for the new house, and it was not appliances, those we agreed to leave ) that should obviously be included. Not to go into to much detail, but the buyers wanted the house because of the set up and they could move in and run a business right away as we did. My salesperson missed that key negotiating piece and hence lost. I have to admit, because of loyalty to friends, you sometimes can get into trouble and get burnt. My experience was not too bad overall, but was it worth 20k, absolutely not!
As for the rest of the story, please tune in later, I will give you the end result and my final word which might surprise you!

I agree that if you are committed to do it on your own, it is worth it because real estate commission fees are way out of line and I agree that at the end of the day the agent has THEIR best interest in mind, which to them is to sell fast and they justify this as reasonable based on the calculations of their mind.

i also generally appreciate talking and meeting the actual home owners and dealing directly with them. However … As a current buyer looking … This can totally work against someone! There are so many GROSS people out there trying to sell on their own, with disgusting lifestyles that don’t know any better to clean their houses and make it look presentable. Then there are those that don’t speak English very well (but they think they do). Houses that smell of dogs, curry or smoke. Kids running around. As someone that doesn’t really see the value in real estate agents for myself, I do now see that some people do need them and as such there is a place for agents in the process for sure. It’s true that sometimes you really just don’t need to see the people that currently live there as it can really turn you off.

by: Tom Struckhoff | October 23rd, 2014 (6:00 pm)

Dear “Financial Blogger”,

It’s bunny that people are outraged that a Realtor lists a house for 5-6%. Especially when they have no idea how much work goes into selling your home and how MOST OF THE TIME WE DO IT FOR FREE. Think about it, IF YOUR HOME DOESN’T SELL, WE GET NOTHING. Therefore, MORE RISK = BIGGER PAYOUT. If agents only got 0.5% (1/2%) THERE WOULD BE NO AGENTS. So, good luck my friend, because we don’t need you. There are plenty of people out there who don’t want to spend weeks trying to sell there home with no guarantee of a sale.

by: Tom Struckhoff | October 23rd, 2014 (6:02 pm)

Ok so one typo. Insert “funny” for “bunny”. Nipping that one in the bud before I get a slew of idiots whose only rebuttal is that I don’t care enough to re-read my post.

by: Finance doc | October 31st, 2014 (2:15 pm)

@Tom Strokeoff

Please explain how much work goes into selling a house? Which part of the job dictates why you need to rip people off? Hammering the sign into the ground or walking prospects through and pointing out the obvious? How about placing adds in the local paper or filling out generic on-line forms to list on MLS. Maybe you take pictures and the camera is really heavy or perhaps your drive to meet the buyers is an hour out of your hectic day? A lot of work compared to what? Your work is key to selling/buying and is a part of a process that allows the process to be completed, but you should not be paid Tens of thousands of dollars to do it. You deserve to be paid and it should only be 1- 2% at most. This would eliminate the over saturated real estate salesperson market and bring the real estate industry back to reality. You are a slug like the rest of the real estate salespeople who try to justify their thievery and are overpaid for your minimal work effort. You pray on lazy, stupid and elderly people. You should be proud of your career. Most of the time you don’t work so it should be free! As for my final experience on selling/buying using a real estate salesperson, I have yet to compile all my findings, but one thing is for certain. I am convinced that I had a part in a new vehicle that they purchased after the sale of my property. Stay tuned!

by: Finance doc | October 31st, 2014 (2:26 pm)

@ pookie

Those type of people do not deserve to sell their home then. Scratch them off your list and move on. One problem is that some stupid pig like person will come along and actually not mind the stink or the mess and pay the asking price. Great, good for them! You on the other hand move on and buy a place that fits your values and priorities. There is a buyer for every house. We do not need a real estate salesperson to tell us what we want. Another problem is that disgusting people who should not have the right to be that way are allowed to sell their house because a no value or no morals real estate salesperson sticks a sign on their front lawn. It all comes back to the industry and the people who work it.

I was just curious as a home owner and private seller, and why the need to bash these hard working folks, the insults and the threats, when we probably know some people in our circle, like family, friends, relatives. I mean, would you tell your church group member, who is a realtor that he/she is a moron? Would you tell your neighbors, who happens to be a realtor a moron. Hey, neighbor, your an *&*&^&% MOrRON !! I mean if you were face to face, I know nobody here would have the courage to say it to someone in person. Why do we need lawyers like me, doctors, like my mother and father if everyone can stand trial in court and represent themselves, and fix their own wounds from a car accident. Why do we need courts and hospitals? Aren’t doctors and lawyers making a killing ? I don’t know, I mean I asked around and here is the answer I got. You list a $500k home, you pay 6% commission ($30,000), realtors DO NOT WORK by themselves, so their broker, the Company gets half. The other half is split with the other Broker/Company, then that realtor gets there half. Ok, for non-math wizards like me. Split 6%, between selling broker and the buyers broker. 3% ($15,000) ? Ok split that between the individual broker and their respective agents 1.5% ($7500). That is the real money the individual realtor is walking away with, less taxes when they file, and the cost of travel, fuel, marketing. Plus the 3 months time it may have taken to sell that home. $7500 divide by 3 months is $2500 per month. Most realtors I know make about $40k-$65k, yes the small percentage, like any doctor or lawyer makes the $100k plus salary a year. So, while most sale by owners are making more money selling their own home, on their own, which I did too, and then some, why are we bashing these folks who make $2500-$4500 per month ? The IT I know makes $7500, he is from overseas, and he sits in his office most of the time surfing the net. Why aren’t we bashing those guys from overseas, who are putting American IT job candidates out of business? Yes, our taxpaying dollars from the proceeds of our home sales are hiring overseas IT staff in the US Government and paying them $120k-$180k+++ per year, to sit around and watch a computer screen, go out to lunch for 2-3 hours and then go home, with a full government paycheck and full benefits, while American College Grads are still jobless, with IT degree’s. Can someone answer me that riddle?

by: Finance Doc | November 14th, 2014 (8:45 am)

@ just curious
First of all, I think you should create a blog about the corruption that you mentioned. Change starts with action. Secondly, this blog is more than just bashing and calling a spade a spade. It discusses the need for change to an industry that is corrupt. If I wanted to though, I could discuss my thoughts on my drug pusher of a Dr. I have and the lawyer that was barred from practicing because they stole money from an estate of their deceased client.

Most people under-estimate their ability to sell their own homes. Other than putting the property on the MLS, the agent does little to sell the property, and you may end up selling the house yourself anyway. That being the case, at least try to sell it yourself and save the real estate commission. Price the property right, and you can do amazing things. A property that’s well priced will sell, no matter if an agents involved or not. And if you aren’t paying thousands to an agent, you can afford to be more aggressive in the price.

I have worked intensively with over 300 realtors. Finally, I decided to get the license. Now I do my own investments, and save the entire 6%. No gatekeepers, no dog and pony shows, no agency contracts.
And more importantly, eliminated the overhead component. Once you get a hold of the proper forms, hire a good escrow company or settlement attorney, photographer, pay for MLS insertion and sign installation, your done. In fact, word of mouth sales don\’t even require the photos or signs, just a few phone calls. The Internet is empowering buyers and sellers. That is good. if you think a 60 hour training course qualifies someone who is usually starting a new career after failing in another one to negotiate one of the biggest investments you will ever make, then you should probably hire a realtor.

by: amonaghan2013 | April 15th, 2015 (6:00 pm)

We are being sued by our lovely Realtor. When he presented us with the listing agreement to sign, we found out that it was for a 6 month period. We told him we could not sign that listing for that length of time and we thought that listing agreements were only for 3 months. He assured us that the norm nowadays was to have 6 month listings. We again reiterated that we then could not sign it. He then told us that he wanted to keep his clients happy, that we could terminate the listing at any time and that he had no problem with that at all. We then signed with him, believing he was honest. More than 3 1/2 months went by and there were no offers, we decided to take the house of the market. He came by with a piece of paper for us to sign to terminate the listing. We signed, he took the paper with him. He never did provide us with copies of the agreement nor of the termination of the contract. We thought we were done. Three weeks later we sold the house ourselves to a person who had never seen the house before. We are now being sued as there was a conditional termination of the agreement stating we could not sell our house ourselves until the original 6 month listing had run out. Since we did not have copies of any paperwork, we thought we were totally legal in what we did. We were stupid in trusting this man. We are old age pensioners and feel that we were totally taken and betrayed. After the fact we also found out that we did not have to sign for 6 months at all. We should have had a lawyer then. Now we had to find one which was hard to do as all lawyers in our town are dealing with REMAX.
Also, it was very easy to sell our home ourselves. You always still need to get a notary or a lawyer to deal with the paperwork. It was easier to deal with the purchasers of our house ourselves. No middle person to deal with. We have learned a lot in our old age. We knew too little too late. I hope never have to deal with any Realtors again.

I find it pitiful that some of you throw shame on a profession just based on your bad experience with PEOPLE who happen to be real state agents, but are not the standard of the profession which is among the most regulated ones in Canada, particularly in Quebec, the OACIQ regulates the activity of realtors and its main mission is the protection of the public. It is, in fact, very strict with the real state agents. Diminishing a profession won’t do away with your personal experiences. There’s a long list of professions which we could live without, put aside doctors, farmers, breeders, constructors, teachers, nurses and taylors and we could probably eliminate the rest of the professions, still society works because thereare lots of “useless professions” that produce income for families and taxes for the country to function. Ignoring the importance of a professional involved in one of your most important financial decisions is like denying the importance of seeing a doctor when you are sick. Sometimes they won’t find the cause of your illness, but they will do their best. And so do the realtors. On the other hand, when I first met a financial adviser, the first thing I asked her was what kind of investments she had for herself. She said none and then I knew that I had to walk away. You cannot give advice on what you don’t know or if you don’t have anything at stake. And that has been the rule with 5 other financial advisers since then. If I were to chose between the two professions, according to my experience, I would do away with the financial advisers. My experience with realtors has been good so far and I appreciate their expertise though honestly their commission is somehow high, but as I have found through a friend of mine who was tricked by the buyer, that is more an investment than an expense. Think of it.

These days a lot has changed. Its not hard to get your property exposure with the advent of this little thing we call the world wide web. Selling a house is really not that hard given all the available tools. A realtor hopefully will know the market in your area, or have a pool of buyers in their network that can make the deal close more quickly.

Choose a realtor based on the amount of deals they are doing. A realtor that list a lot of properties will also be getting a lot of exposure to buyers. This brings an advantage, knowing the motivated buyer. Ive sold two houses in the past year. One house a paid no realtor fees and the other a realtor brought the buyer, so I paid that realtor his commission. Turned out he was a really nice guy and was great to work with.

Now back to the regular scheduled programming! 🙂

Completely agree, Realtors are a useless lot, making money for nothing. Sales in general is a lowly proffession, for the most part, ethics are little to none in my experience. Why would anyone want to do this job? Why that’s easy, virtually zero effort for easy money. The jury is out, there’s no denying, anything a realtor says they do is not commensurate to the money they are making off of us. We as a whole should just take it upon ourselves to make this industry obsolete by doing it without them. Just do a little research, it’s not that hard.