Flat fee agency is probably best for all. The day of the agent for working and middle class people has gone. High enders may want one, but a real estate lawyer is just as good.

The claim that the average agent gets a seller 8-15% more is plain old real estate mumbo jumbo. If it was true, a buyer’s agent would only show FSBOs to their clients, because they could be bought for 8-15% less than other homes. Does this happen? Of course not. The value of the home is determined by what a buyer is willing to pay in today’s market, based on comparing the home to others currently on the market, without regard to the name of the listing brokerage.

There are good reasons to work with a listing agent. If a seller wants representation, there are many good agents and companies available to offer that service. However, if the seller does not want representation and wants to take ownership of the homeselling process while saving on closing costs, companies like ours are there to meet that need.

Ken Whitney
MLS4owners.com

I compeltely disagree with this article on all fronts. It is absolutely the reverse. Real estate agents are essential in this market.

First, properties are not selling as it is, so you need an agent to be able to evaluate the value of your property, so that it is priced to sell!

Second, the agent has a system to advertise your property beyond the MLS. They will advertise it to other agents in their office and the ones that they know. Which means getting your property infront of the individuals who can purchase it.

Third, depending on the area where the house is located a number of the houses are short sales. So a agent really needs to be involved, so that they can work with the bank to get the property sold.

Fourth, even if the property is not a short sale the agent will know how to sell the property when competing with the short sale properties.

I hope that individuals do not take this article literally and critically read this article.

Prabhjit Singh
http://www.rempower.com/blog

Do you want to be an agent and thrive? I outlined two years ago in my book Commissions at Risk - the key is flat fee, non-commissioned agents. If you want to work with one of them, I’m all for it. At least there are deliverables without the 6% price tag.

Tamara you hit the nail on the head! By the way Prabhjit, I actually work with agents and consult with them on HOW to compete in this market too. It is possible, but my belief is most won’t be able to compete in 5 years from now. Technology will have removed them from the market. They have a few good years to enjoy.. but any intermediary will eventually be priced out - and rightfully so.

Kudos to technology and the power of the Internet. Some agents will be smart about it, unbundle their services like Tamara suggests, and still thrive in the internet-marketplace. But, NAR is only going to protect the agent so long before the truth starts hitting the fan - their 10 decade old MLS system isn’t going to last much longer. NAR is a lobby organization brain washing a lot of people, starting with their own agents. Very sad indeed.

Dani

I would much rather prepare my own offer or sell my own house than pay those commissions. I do speak from experience. I have sold 2 of my residences on my own. Both of these homes sold for the highest value on the block – my neighbors thanked me.

One of the earlier posts in this thread struck me as a bit odd – isn’t that practice of steering clients unethical and illegal? I believe agents can lose their licenses for this. We all know it happens – yet one more reason to stay away from this unethical bunch of people. A few of you may be good guys/gals, but you’re in the minority. Wake up, technology will soon take over your jobs – I can list my house online, I can determine the right price online, I can get buyers online, and I can put it into your precious MLS system that is so sacred among you agents.

By the way, the very last post with that link to the blog?! HAHAHAHAHA That is PRECISELY why people should NOT consult with individuals like you! You want to charge 6% to tell people to replace dead plants? LOL I could have told you that for 1%. Geez.. next time come to me for advice.

Matthew

Flat fee/FSBO clients, in my view, have raised squandering and or killing deals to a fine art. They simply lack the objectivity, skill or know-how to guide a deal to a close regardless of who sources the buyer. And if they do list with housepad or Home Trek or whatever other flat fee company just to get rubber stamped onto the MLS, they can get their lunch eaten by a savvy buyer agent. Again, I see it happen all the time.

Very obtuse, zero-sum stuff in my opinion.

With regard to your email, I noted:

I actually agree with you in many respects. Some sellers should not be selling on their own. Many will benefit from an agent. But in todays market where sometimes an offer is determined purely or highly due to price, it isn’t always in a sellers best interest to use an agent - that extra 6% could be taken off the price and allow the seller to be competitive.

In fact, before I became an agent, many deals were hindered by extensive pressures the agents placed on sellers to sell to certain buyers - and just recently that same thing occurred with an agent. In fact, one of the respondents to a similarly posted article on Inman (they reposted my blog entry) actually admitted to steering clients away from agents offering “only 2.5% commissions” or for sale by owner sellers, which is not only unethical but illegal. The public isn’t aware of this practice, but they should be. I’m sure you’d agree with that.

Unfortunately while there are many great agents, there are also many that won’t, and shouldn’t, survive in the new Internet era. In some cases, particularly in heated markets (I know, it sounds like an oxymoron, but as you well know they are out there - I live in one and it appears that you do too in NY) it is not best for a seller to sell with an agent in all cases - I’d go so far as to say, even in most. If priced using data rather than emotion, it is possible for the seller to earn even more on the sale of his/her home.

What I don’t want to happen (and what I’m seeing due to massive NAR efforts and their ridiculous, even unethical advertising and lobbying) is for sellers to think it’s their only option. I take great pride in educating the public on the options available to them. If they know all the facts and still choose an agent, I’m all for it. Some are great. But.. If they don’t know the facts because the media kept facts from them and they don’t get information from numerous sources, they may actually be hurting themselves in the process. That is what I don’t want to happen and fight hard to keep out of the marketplace.

I also tend to agree with you regarding buyers agents - but only in certain markets. Having navigated the NY market for a condo recently myself, I ran into numerous issues where an agent was beneficial and lawyers were a nightmare. Suburban Missouri? No way. Since most individuals are in a Missouri-type situation and not midtown New York, I feel I owe it to readers to have another opinion. I also agree (and state in the article) that title companies are essential; in fact I published in Entrepreneur magazine not that long ago about the in’s and out’s of buying and one of my suggestions was to be darn sure you know what is going on with title. I agree completely. But, an attorney could do that, too. So can escrow.. Recommend a title company.

Also you should know, I have no affiliation with housepad. I simply used them in a previous transaction and they were great.

Take care, and best to you and in your business.

Dani

Simply put, many in the lunch pail crowd who might take your advice to shun agents can get hurt.

I’ll cite the following examples:
-The novice investor who bought a fixer upper on a land contract, botched the rehab, and gave the torn up house with a mortgage on it back to the seller. He wouldn’t take my input for the rehab. He’s selling used cars now. It took the seller and myself another year to sell the thing.

-With regard to the lawyers or title companies fixing issues as they come up, in many cases the damage will have been done and ratelocks or entire mortgage commitments will expire while the encroachment, permit or Certificate of Occupancy issue is remdiated. A good agent would have pulled the property card early and handled the issue far earlier than the attorneys in my market will.

- In a short sale, an agent is extremely important. Lender loss mitigation departments either negotiate with an attorney and have the agent do the legwork, or the agent does the whole thing soup to nuts. A client of mine with two liens with Chase did yeomens work on his own short sale, but assumed that the loss mitigator knew of the junior lien. She didn’t, as HELOCS are a different department, and I am cleaning up the mess. Chase is Chase, he thought.

There are many other examples, especially FSBOs gettng their head handed to them by a good buyer agent, but my last point is that agents are far, far more than just a conduit to the MLS database. They guide deals, ask the right questions, troubleshoot, and advocate. 9 out of 10 agent issues in my view are the result of choosing an inexperienced agent because of an outside relationship. As the market declines the herd of agents is thinning, which is good for all because the calibre of professional left over is far higher.

Stop working with your brother in law and vet the agents before you use them is probably the best advice anyone can take. It can mean the difference between Memorial Sloane Kettering for a tumor or just using an herbal supplement.

This isn’t to say that 100% of people need an agent. If I thought that, I wouldn’t have a flat fee, housepad-type of company. However, the percentage of people who truly benefit from FSBO or representing themself without a buyer agent is far lower in my experience.