Spot on with the reasoning.
Last time I sold my condo it cost me my profit in commissions.
When we were searching for a house, we found it through mls. In buying/selling the agent simply took visiting appointments. I am not used to having a personal secretary, as such from my experience I do not see the added value an agent can provide.

Hi!

In fact, the agents’s incentive at #4 is even less than $1250, since usually half of it goes to the buyer’s agent.

Regards,
Vasile

We’re actually in the same boat as you, selling our house to upgrade and we’re doing it with a 10 month old. It has been extremely stressful. We decided to do it with an agent. We’ve sold one other property before, but that was in 2007 and the times were different. These are the things I’ve noticed from our experience so far.

One thing RE agents are able to do is easily get sale data on comparable houses in your area. This way you can price your house really well. Basing your price on what is on mls is not a great way to do it since most of the houses on mls are overpriced (because they haven’t sold yet).

We’ve dealt with sleazy agents and we’ve dealt with good agents. Good agents are definitely worth their commission (with the advertising channels and contacts/buyers they bring). You can also negotiate on the commission. We were able to do that with ours and I’ve known lots of people who have negotiated thousands of dollars off their commissions.

With the example you gave on the price (300 vs 325). You’re making it seem like agents have the final say in the price you get. You’re still the one calling the shots. They’re just there for advice on what it will take to get the deal done. If the price doesn’t satisfy you then you don’t have to take the offer.

You did mention that you had a bad experience, that is definitely understandable. There’s nothing worse than bad RE agents. If you don’t have a good one you can go to. You can call several of the big RE agents in your area and interview them. How will they market your property, is the commission negotiable, why should you choose them over their competitors, etc.

I do find it ironic that a financial planner is calling RE agents useless, because a lot of people say the same thing about financial planners. (Indexing is all the rage these days) I for one do see the value in having a professional person when dealing with tens and hundreds of thousands of dollars. Just like in your business, where, for every good financial planner, there is a sleazy salesman, so too is the RE world filled with good agents and crooks.

Hey, I was thinking of writing a series on the useless professions, with realtors high on the list (but I started with Lawyers including real estate lawyers).

My experience with realtors is the same. They are even worse than you say, because their commission on the first 100K or so is high, like 6%, then on the later amounts it is lower. So although the average is 4-5%, they really don’t give a poop about getting you that extra $1K. I have bought and sold 8 properties over the last 4 years and in almost all cases, I was the one who negotiated harder than my realtor and got more money for myself than the realtor would have got. The only one time was Etienne Mellor in Montreal who actually got me more money than I would have got myself. To be honest, there was also another one in Newfoundland named Stephen Winters who, although we got more money than he would have, provided us with a lot of good services in selling property a long distance away.

However, even these good realtors were probably not worth the money. Mr. Mellor probably made about as much in commission as he got me in price reductions. His work was only a few hours, so the hourly rate would have been very high, with his main tangible benefit being a negotiated purchase price reduction of $5K.

All the other realtors I found to be very very bad. They don’t know very much and they put in the minimum effort to sell your house, relying mostly on the market to sell it. They will claim they market it, but marketing is just listing it on MLS or showing it to buyers who inquire and maybe fellow realtors at the office.

Did a quick search for the website and couldn’t find it until I realized its actually bytheowner.com. Very useful article, thanks for sharing your experiences.

@ Brian,
thx for the right web address…. completely forgot to double check before posting!

@ Vadim,
I agree with you that some people may think that financial planner are useless as they are many of “us” who are just “taking orders” and not giving advices. However, we are “mostly free” since you don’t have to pay the Planner 5% of your assets to talk to him.

However, the RE agent is charging way too much to list a property on a website (mls) and wait to do visits. Since 85% of the buyers find their own through internet, advertising in the local newspaper is almost useless. Therefore, I really wonder which kind of “profesionnal” advice they can offer.

I had a relatively bad experience but the RE wasn’t THAT bad. It is just that I really wonder why I paid him so much as he just confused the buy/sale dates with the notary as a return of my 10K in commission fee

As to compare your house in order to price it, you still need to use MLS price as you will have to negotiate your price anyway. It is right that you are the only one responsible of agreeing to the offer of purchase in term of price, but the RE agent won’t push you do not accept the offer of 300K since it doesn’t matter to him anyway

In the end, I am more complaining against the cost of them then about their utility. If I had to pay 3-4K to go with a RE, I would do it. But not at 18K!

We bought our house with an agent, and it was useful in this particular situation because the couple was in a horrible divorce, almost throwing plates to each other head… So I preferred not being there.

But it was a first experience, so I also appreciate working with an experienced agent showing me stuff that the inspector might point out before we fell in love with the property and ask for an inspection that will end with a opt-out… we learned and now, we plan to sell our house by ourselves with bytheowner.ca.

We think that we are the best to sell our house because we are not afraid to negociate and we are convinced that we know our property’s assets. We lived in it for a couple years, so it easier for me to talk about my lovely and practical kitchen as an example.

I couldn’t agree more with your 6 reasons…

I’ve been shopping around for a home and couldn’t believe the ridiculous amounts realtors make with the 5% commission (ESPECIALLY here in Vancouver where the average price of a detached home is in the 750K range).

I went to a new condo development and the developer told me they give a “realtor price” and a non realtor price (e.g. the charge $20,000 more). The $20,000 goes directly the the realtor and the realtor doesn’t have to do anything at all! (No researching strata meeting minutes or anything!!)

Good luck with the house selling!

By the Owner is great, too bad there’s not much selection to choose from though- maybe we need to spread the word! =)

[...] The Financial Blogger: 6 Reasons Why I Will Not Use A Real Estate Agent To Sell My House [...]

I think people who use real estate agents can have valid reasons for doing so. Sometimes people aren’t comfortable taking on the risk of going it their own way, negotiating, and putting it all on the line so to speak.

I”m presently living in my 3rd home over the course of the past ten years (likely my last) and each time I sold my principal residence, I did not use a real estate agent. I think agents serve their purpose for a large percentage of the masses and they have their place in the private sector just like every other profession. I just think for those who take the extra initiative and are comfortable doing the transaction themselves, huge savings can be realized.

Great post.

[...] The Financial Blogger about 6 reasons why he will not use a real estate agent to sell his house. [...]

I cannot agree or disagree with selling your own home with the FB since I have not done both.
Some individuals may be cut out to sell their own and maybe the FB is.

However I don’t think MOST PEOPLE are …
However some RE agents are probably not either!

However stats from the U.S. say this …

1) The best realtors are worth more than they cost.
2) The best realtors achieve a 16% higher price for you than you alone.

Now interestingly enough some have brought up “Financial Planners” which I believe is a misnomer. Most FP’s that I have seen are simply glorified salesmen with a CFP after their name for which you get NO EXTRA SERVICE or KNOWLEDGE on average.

However personally I have found Gord Stockman of EfficientWealth.com to be the best I have met or heard about! He doesn’t pay me to say this and I do not make any money from him except for the excellent strategies he employs to help my wife and I to survive the financial crunch of 2008 and recover from the who-cares company whose name starts with ASS….. and maybe with good reason! (:-)

Unless you have a LOT of money to invest, other than Primerica, MOST FP’s don’t want to talk to you since you can not bring them enough money. Even the Credit Unions which were established to help the little guy now want you to invest $150,000 or go talk to a mutual-fund-licensed teller!

[...] Financial Blogger lists six reasons why he will not use a real estate agent to sell his [...]

[...] couple of weeks ago, we decided to put our house up for sale. I’ve already discussed why I will not be taking a realtor to sell it (even though they call me everyday!). But when you sell on your own, you need to put all the [...]

We bought our first house last summer and ended buying a property on bytheowner.com (or duproprio.com here in QC). Out of the 25 houses we visited, 17 were with an agent, and I must say that we far preferred the process of dealing directly with the owners. They know their house and can answer all our questions on the spot. With the agent, we had to search for and select the houses on mls by ourselves and the agent didn’t seem to be very knowledgeable about the properties other than the information already on mls and the comparable prices. Even though we were newbies in buying house, the buying from the owner was a smooth process.

Regarding the selling price, I think as a seller, you can look for how much a property in your neighbourhood was sold for on bytheowner. As a buyer, we looked for that kind of information to assess our negotiation margin.

I`m in Canda but the program is the same here as in theUS .

I have sold many homes in years past on my own just by putting an ad in the local newspaper.

I always include a cluaue that says :”this offer conditional and subject to purchasers and sellers lawyers ”
This puts the onus of responsibility on the lawyers to make sure evreything is correct.And makes them EARN their money for handling the deal.

From my limited point of view, I think that many individuals do not have the requisite marketing, negotiating and work skills necessary and I am talking about both the realtor and the sellor! In any event, everybody gets what they negotiate!

Have a great day in the marketplace!

I agree with comments above that selling without a RE agent is not for everyone. And I fully agree that paying 4%-5% in commission is way too high.

I would rather push for the RE industry to set up standards for selling homes in terms of hours. That is, it takes 1 hour to process seller information in the RE agent’s office; 1 hour a week to update the file; 50 hours to sell a house; all in, say, 60 hours to sell a house. I pay up to $100/hour (the higher the rate, the better the agent; better agents are measured by moving 3- or 5-year averages of properties sold).

Frankly, I’ll pay the lesser of 0.5% of the selling price or $3k to the average agent if s/he takes a couple of months to sell my place.

It’s a free market. You can negotiate ANY RATE you want. Plenty of agents. Everything is negotiable.

@Chakkar,

I agree with you 4-5% is way too high. I was ready to pay about 1% to 1.5% (max 5,000$) for the sale of my house. Since no RE would ever do it, I have spent $800 with http://www.bytheowner.com and I sold in 2 weeks.

If you think that you don’t have the expertise to sell your house on your own, try talking with the sales coach at By The Owner. They have a real strong team to help you out durint the transaction.

Even 1-1.5% is way too much in a sellers market,I wouldnt pay any more than what the banks pay you for your money which I think is quite fair.

1/4of 1% of the selling price would seem fair especially today in a sellers market when you dont even hav eto have any RE skills to sell a property.It sells itself , with many cases of bidding wars on a single property.

However having said that ? I have never paid a RE to sell my homes.

HI I just sold my own home for just over the asking price.
I had 3 open houses and 9 private showings. I figure I spend less than 19 hours of my time – not including keeping my house immaculate as that would have to be done anyways.

I saved over 31K in after tax dollars. I could have taken 4.33 months off of work just to sell my home and would have made out the same finanacially vs using an agent

Please explain to me why my home was worth more if I would have use a r agent? My buyer was only willing to spend so much $$ as well as the banks are not as eager to over borrow now.

I had many agents saying they had buyers for me. I offered 5K if the bought the buyer. None did. I also had many people they would not use an agent as they can find a house on their own.

@ Dean,
this is their best trick (to tell you that you that RE can sell your house at a higher price). So they crank your price, wait for 4 months with no offer and 2 months before their contract expires, they tell you that YOU are asking for too much and tell you to drop your price hehehe!

There are two sides to this topic and before people can truly comment they have to know both sides. Sure if an agent came to me and said they want 5% of the money i make on the sale of my house i would say screw off, unless i truly know why.
First of all agents take all the risk upfront. They pay for all advertising and marketing with out getting a dime from you. If the house doesn’t sell, they don’t get any money. Offer them a flat fee up front to sell your house, they will do it for less than since there is no risk in losing money.
Have you ever tried to publish a photo and article on a website or in the newspaper or magazine? On average if you went to your local newspaper of home magazine, they will charge twice the amount of money from a realtor than they would you average Joe sending in an article.
The whole 5% of a commission doesn’t just go to the one realtor. It is split up in half to the other agent who brings a buyer. then each agent has to give their Broker a certain percentage. Say they sold a $300,000 house for you at 5%. The commission would be $15,000. That will be split into $7,500 for each agent. then their broker can take anywhere between 10-50%. Say on average the broker takes 30%, the realtor is only left with $5250 out of the so called $15,000 you say they make.
Factor in that they can easily spend $1,000-$1,500 marketing your property(yes that much as advertising is not at all cheap). So what is left? The realtor will be left with a net amount of around $3700. If you want to go with what one poster said about paying hourly and that the Realtor will do maybe 60hours of work for each client it will work out to $62 an hour ($3,700/60=$61.6per hour)
I don’t think $62 dollars an hour is asking too much from a person who is always on call works evening and weekends all the time. Gives up family time to help out client in a pinch.
Realtors are not for everyone as there are people that can take the time do the research to learn everything they need to know. But don’t say they charge too much as there is just reason. you wouldn’t become a Realtor and work 24/7 just to make and average or below average income.
Read the facts first then make you opinion. Don’t just assume they charge too much without finding out exactly what it cost’s to do business.

@ Andrew,

Thank you for bringing this other perspective. However, while I can appreciate that your job is not easy, $60/hour is way more than most people. You salary is still pretty high.

On the other side, I am not saying that you are not working and that you don’t deserve your money. But since everybody is taking a cut, it is still very costly for the client (even though you make 3-4K per transaction, the client still pays the full 15K).

On the other, why would you not concentrate on finding buyers than trying to sell property? you would be making the very same 3-4K but you would rarely work more than 10-20 hours to close the transaction…

In the end, selling my home cost me $1,500 in home staging (what the agent would not pay anyway) and another $1,000 in advertising (since 85% of the buyers are looking on the internet, I truly beleive that other medias are absolete to sell your house). So the total cost was $2,500 to sell compared to about $19,000$ (commission plus taxes) and I don’t even count that I would have disburse the first $1,500 in home staging anyway…

I spent about 15-20 hours on the sale of my which a good part of it would have required my presence anyway (cleaning my house before visits, being there for the inspection). The agent could have done the visit for me and negotiate (which took about 10 hours…).

So, then again, I don’t say you are not working hard, I just say that is way too expensive for me to pay $19,000 while I can do it for $1,000. And there is no way an agent could have sold my property 25K higher than my asking price.

thx for your comment though, it helped me understand the other side of the transaction!

Wow, I can’t believe how uneducated you sound. You definately need an agent. You have no idea who this person is calling you to buy your house. Private stranger. There are people making a career out of getting into your home these days and deciding how ease it is to get back in to rob you. When you let someone in – THEY DO NOT WANT TO MEET THE OWNER. They cannot place themselves in your home. You turn them off by existing. They need to see themselves there. 83% of the public (and that is large) do not have vision. They cannot listen to you brag about every nail you changed in the house. You also have no idea what is right or wrong to say to buyers. We do. You are basically a “SECRET SELLER”. Without an agent. We have 18 web sites. 180,000 agents just in your state will see the house list on the MLS. For sale by owner web sites are for people who can’t afford to buy your house in the first place. How do you know how much you could/should or will get for your house. You have a very uneducated guess. That is it.

My professional opinion to you is you better hire or you will sit with your house on the SECRET market for a very long time.

@ T. Amazed,

Uneducated, huh? can’t sell my house on my own, huh?

I guess that if I tell you that I have sold my house within 2 weeks through bytheowner.com…and this is how I have saved $18,000 in commission paid to your “professional agents”.

Secret Seller? during those 2 weeks, I had an average of 75 visits on my website per day and I have received 7 requests to visit my house… that it is quite interesting to see how many people that are living in my “secret” world!

Breaking my house? come one, unless you live in a castle, most properties are pretty easy to break-in and rob the owner. No need to visit.

Uneducated? I guess that paying 18K in commission in a quick sale must be a real proof that I am uneducated! come on!

Face the truth; real estate agents are quite expensive and DIY websites have emerged to offer an alternative.

I am very happy to hear you got lucky and sold your home in 2 weeks!!!!! Congrats. The facts if you did that are that you under priced your home.

Most people have no idea what their home is worth and what an upgrade you did to your home can get you. If you sold and quickly like you wanted, I am happy for you.

75 visits compared to 1,000 hits from all around the Nation on 18 web sites that can get you over proper asking price since someone coming from London can see your house, needs the area, love your home style, town, etc., does not impress me.

Again, if you are happy with your result, I am happy for you.

You could have made 25K over what you got.

When I look at the market in my area for a similar houses (properties listed with agents included) , the time for sale is about 30 days. I guess that most people are selling underpriced then?

Before putting my house for sale I did a complete comparaison with houses currently on the market including:
- square footage of the house and land
- additional equipement (A/C, natural gas, pool, garage, etc)
- material (wood vs floating flooring vs carpet)
- bathrooms and kitchen finition (and number of bathroom)
- number of rooms and size of them
- localisation of the property (area, services nearby, etc)

I also had a profesionnal appraisal dated a year ago comparing real sales as well and used their guidelines to establish the value of my house.

I know that I did most of my comparison based on the asked price and not the real price but if my neighboor is asking 350K, I should be asking the same thing (supposing we have a similar house). So if we are both asking the same price, we will end-up with similar final price as well.

The funny thing is that even if you were right and I was off by 25K, by giving 19K in commission (the 18K I saved included 1K for marketing expenses), I would have potential 6K more and probably would have waited about 60 days to sell my house instead of selling it in 15 days….

This is, again base on the assumption I was 25K off after doing all my due diligence. Assuming I was 20K or 15K off… I would be losing money once I paid the agent… interesting calculations for an uneducated man, isn’t?

What is with all the crap about you have under priced your home if you sell it yourself and it sold fast?

It is not rocket science. If realtors got more, who the heck would use one to buy a house? That would guarantee you would pay more vs buying privately.

@ Dean,

I guess this is just a common argument they use. you sign with them thinking you can sell at a higher price and 6 months later, they tell you that your price is too high and that you should lower your price

If they claim to be able to sell your house for a large price only give them a 3 day listing.Dont wait 4 months to find out they are full of bull-droppings.
And if they tell you they have a buyer for your home and they need to list it ? tell them ok you have a 24 hour listing .

they`ll either comply or go away , becaus eyou called tgheir bluff.

BEEN THERE DONE THAT~!!!!!!

For those who are on the fence without an agent or who want access to the MLS.

http://www.ihatecommision.com for a MLS listing for $109

http://www.propertyshop.ca/ for a bunch of lawyers to help you sell your house

Cheaper options for the savvy.

even worse in Asia!
they r fucking useless shit!
cheat money. expensive. full of hassle
a job that should never exist in first place
for the very fact everyone can be a real estate agent…
i.e. even idiots can be real estate agent and most idiots do become a real estate agent!!!