Do I really need a Realtor?
For the past couple of years, after just missing being annexed by the city of Winston-Salem in North Carolina, my wife and I considered selling our home and moving even further away from the city line. From the moment we entertained this idea I knew that I was going to sell our home WITHOUT a Realtor.
When we were searching for homes after moving to this area, my aunt who lived in Winston-Salem had a co-worker who had a friend who was a Realtor. It almost sounds as bad as trying to find a hit-man, “Yeah, I know a guy.” Fortunately, this Realtor was willing to spend a lot of time, and a lot of miles, helping us find a house in our price range and our price range was definitely in the “I’d rather pull weeds than make a sale” category.
Once we finally found a house that was a good fit for us and our Contract to Purchase had been agreed upon by the Seller, our Realtor’s performance plummeted. She claimed that her real estate office did not allow her to recommend a home inspector, mortgage lender, or an attorney. So here we are, new to the area, getting ready to buy a house and my Realtor can’t even give us a short list of companies or individuals to consider.
Based on that sole experience, I’ve looked upon Realtors as nothing more than commission hungry ex-Mary Kay saleswomen that you have to call if you want to see the inside of a home for sale. I was definitely going to do For Sale By Owner(FSBO) and keep all the sale proceeds.
About the time we were considering selling our home, our neighbor put his on the market and attempted to sell it on his own. After a few months, he conceded that he had a couple of calls but no serious takers. With his new home in the final stages of construction, he called a Realtor and his home sold in a few weeks. Now, our neighbor didn’t sign on with FSBO and get his home in the MLS database. Had he done so, he may have had a better response. I know I wouldn’t even consider stopping at a house with the red and white For Sale sign purchased at Wal-Mart. It screams, “I’m just testing the waters” by the homeowner.
The past month or two, and with pressure from online realty companies, Realtors have been launching a nationwide campaign aimed at convincing the public that trying to sell a house on your own is a real pain in the butt. While there’s some truth in the actors’ comments, it’s not that big a deal if you’ve been through the process before or are willing to do a little research prior to putting up the sign. I took the latter route and signed up for an evening real estate class to get my license to sell real estate. If I didn’t pass the course, at least I had the inside track on the selling process and required documentation.
At this writing, I’m halfway through the course and scored pretty well on my first class test. What I didn’t expect to get from the course was an actual appreciation for what a Realtor should do for the Seller and/or Buyer. Furthermore, I now realize that my Realtor had done a poor job after our Contract to Purchase had been agreed to. Her conduct was a poor reflection on other Realtors.
Yes, you can save part or all of the commission if you sell your own home but consider a few things first:
- Do you know what documentation is required by your State and Federal Government for a legal sale? Lead paint addendum, Property Disclosure Statement, etc.
- Do you have the time to show your home when the prospective Buyer wants to look at it? Forget that weekend at the lake when selling your own home.
- Do you have safeguards in place to protect your family when showing your home to strangers? Never show a home by yourself!
- Have you considered a budget for advertising your home in other sources besides your local paper?
Another option to consider is an open listing agreement where you allow a Realtor to put a sign in the yard and show your home. If you find a Buyer first then you can still sell it on your own and not have to pay the Realtor. You gain a second person actively trying to sell your home while allowing you the opportunity to make the sale first and pocket all of the proceeds.
So, do I really need a Realtor? No, but if don’t get my own real estate license in the coming months I will most likely use one when we finally decide to sell.
on September 14th, 2007 at 8:05 am
I’ve heard, more than once, that when faced with a for-sale-by-owner home, realtors join forces and “railroad” a successful sale by doing everything in their power discourage anyone from viewing the home. The problem is that so long as the realtors control the MLS database, what is known to potential buyers is very controlled. Take away the MLS database control and make access open and central, and realtors will have to reduce their fees and beef up the service they offer.
on September 14th, 2007 at 9:11 am
FSBO Sellers can opt to have their listing included in the MLS if they sign with ForSaleByOwner.com. for an additional fee. While I cannot speak for what other Realtors practice, I can tell you in my class that FSBO Sellers are never painted in a poor light. In fact, a FSBO is seen as an opportunity, and a Realtor is encouraged to ask the FSBO Seller if they would pay them a commission for finding a Buyer for their home. It’s no different than paying a salesperson to bring in sales for your company. No sales…no commission. And if you sell it without the Realtor’s help then you pocket the proceeds.
Commissions are ALWAYS negotiable. The number we often hear is 6% to cover the commission for the Seller and Buyer agents, but as the Seller you set what you’ll pay. The commission doesn’t have to be a percentage of the sale, it can be a fixed price. You might even ask if you can pay the Realtor’s advertising expenses for your home to reduce their sales commission. Hey, if you want to keep more of your net proceeds then take on some of the costs to get your house sold.
What is never considered is the time a Realtor may spend listing a home, holding open houses, agent tours, etc. If the Realtor is working with a Buyer, what about the time spent showing houses and gas to drive around. These Realtors aren’t getting paid by the hour to do them, but if there were no commissions involved what hourly rate would you be willing to pay for these services from a Realtor? Think of the wasted time and money spent on Buyers who never find anything they like or a Seller who won’t make improvements and/or come down on his price to sell his house. Who compensates the Realtor for time and expenses lost in those situations?
As with any sales job, the Realtor is gambling that his or her efforts are going to result in a sale. To reduce his or her risk, the Realtor needs to carefully select the accounts he or she is willing to take on and know when to cut loose of an account that is not producing.
I don’t mean to sound like the cheerleading squad for Realtors, but this class has opened my eyes up to the reality of being a Realtor. Like anything else, if you get in at the right time, work hard and stick with it you can do well for yourself, but it is by no means a get rich quick career as is the stereotype. If you think you’re going to succeed by waiting for a Buyer or Seller to call you first then you’re dreaming and you may as well go back to flipping burgers.
on September 14th, 2007 at 7:19 pm
I agree, you can sell without a realtor but the conditions have to be right for it to make sense. You need to be capable and willing of doing some things yourself. Also the market plays a big part in whether this works well. It is much easier if it is 1) an active market, 2) high priced house (since realtors charge a largely fixed percentage (say 5-6%) of the home price, the work they do for a $200,000 is much easier to justify than that they do for a $800,000 house) and 3) if it is a “sellers market.” Here is a post I did awhile back in response to a study: Study on Real Estate Sales With and Without Realtors
on September 14th, 2007 at 9:45 pm
I concur that the commission on an $800,000 home seems excessive for the work being done by the Realtor. However, the Seller of such a home that calls a Realtor has already done the math and for whatever reason has opted to let someone else court prospective Buyers.
on September 15th, 2007 at 9:40 am
I don’t know. I still classify realtors with lawyers and used car salesmen — bottom dwellers with very little sense of ethical conduct.