Realty Freak

No Co-op Needed

Fellow agent Cary Chubin, in her comment on What Is A Fiduciary Worth, mentions sellers not paying a co-op commission (the money offered to a buyer’s agent) and real estate agents being paid by the hour.

The Realty Freak thinks Cary is on the right track but misses slightly on her approach to compensation.

It is possible to sell a property that is listed in the MLS and offer very little commission.   In fact I have done just that for a client.  Her property sold for $750,000 and she paid $500 in co-op commission.  That represents a savings of approximately $18,250.

Offering virtually no co-op commission is however not for the faint of heart (agent or client).  Nor is it an appropriate strategy for every seller. 

In my case we were selling a two acre teardown in a very desirable area. I was willing to handle the nasty phone calls and I knew that the most likely buyer would be a developer.  Even though many agents did refuse to bring clients to the property we didn’t alienate our core prospect since many developers don’t use agents or insist that their agent kicks back the commission in exchange for listing the newly developed property. 

I personally don’t favor being paid by the hour; it would be great for agents but not so good for clients.  One reason, the time spent recording every phone call and time in front of a computer would in the end add expense for the client and be very inefficient.

The one advantage to agents charging an hourly rate would be buyers paying directly for the service they use, but the two are not mutually inclusive.

The Big Mooo

If every real estate broker and agent read (I bought one for all of our agents) and understood this book, the real estate industry would be drastically better-off.   And if that wasn't enough, 100% of the books author royalties go to charity.

Sort Of Pregnant

I have written before about real estate agents taking license with the accuracy of their listing remarks.  In fact, it is one of my favorite topics of conversation.  Mark, one of my friends and a client, has picked up on this and durring a viewing of a house pointed out this great contradistinction.

  TOTALLY RENOVATED RANCH.ALMOST NOTHING LEFT UNDONE.ALL YOU HAVE TO DO IS MOVE IN

Did you catch that?  How can a house be "totally renovated" when "almost nothing" is left undone.   I am no scholar, but I think that almost is an opposite of total.

A few of the almost nothings:

This is a fuse box (circa 1950.)  They don't put these in homes anymore.

This is a fire place (circa 1970.)  Really, its a fire place.

This is a space heater (circa ?) next to brown wood paneling (circa 1970).  This will not save you money on your heating bills.

What Is A Fiduciary Worth?

My response to Craig's comments regarding "Where Are The Real Estate Agents":

Craig,

I agree with you 100%.  In fact I wouldn't even pay $699 for a just a MLS listing, a sign in front of my house and a lock box on my door.

 

The Internet has opened up many professions to do it yourselfers.  For instance, you can go to an on-line stock trading company, do all your own research and buy and sell stocks for a fraction of the cost of using a financial adviser.  However, there are many people who still happily pay a financial adviser to take care of their investments.  Tax laws are available for anyone to study and the needed forms are free from the government yet many people use an accountant to file their taxes.  Why?  Not every one has the skill or desire to go it alone when it comes to big transactions with potentially life altering ramifications.

Maybe your friend’s agent sucked or maybe your friends house sucks, I don't know.  However, I do suspect that you, your friend and the agent have a much different idea than what I think a real estate agent is supposed to do.

Real estate agents don't sell homes.  Yep, you heard me.  A house is not like a stereo or even a car.  You can't stand there with the buyers and talk about the features and benefits of your listing over all of the other homes for sale.  Every house is different and buyers buy the one that fits their needs and budget best, end of story. (Just trust me on that)

What a good real estate agent does is this;

• Research market trends, conditions, past sales and current competition and suggests the most likely selling price of the property.
• Suggests the most cost efficient and effective property improvements that will leave a positive emotional impression on the greatest number of potential buyers.
• Honestly and accurately present the properties best features to prospective home buyers.
• Continually monitor market conditions and reactions to the marketing strategy.
• Effectively and ethically negotiate the best possible sale terms and protect the seller’s interest.
• Insure compliance of all local, state and national laws and regulations.
• Act in the best interest of the client.

If an agent does all of those things is that service worth $699?  Is it worth 3% to 6% of the sale price?  To some yes to others no. 

I suspect your friend’s agent didn’t do most if any of those things.  That’s too bad.

Now here is my Realty Freak suggestion for your friend if time is not a big concern.  Find a good real estate agent.  Tell this agent he doesn’t want to pay a co-op commission (that’s the half of the commission most agents give to the other agent as a finder’s fee).  Agents who are willing to act in the best interest of their client (and take a lot of flack from other agents) will do this.  This way, your friend will pay for his representation instead of paying for the buyers.