Home Selling in West Linn>Question Details

Aj Rogers, Home Seller in 97068

We have noticed a growing number of homes listed by low cost brokers whose primary service is to place a home

Asked by Aj Rogers, 97068 Thu Apr 30, 2009

on RMLS and give advice, but do not do any active marketing of the home. We have a friend who was successful selling his home this way, and therby cutting commission expenses considerably. (He still paid 3% to the buyer's agent). Is there any objective data about the cost/benefit tradeoffs of this approach? It seems to us that nearly every potential buyer is already on the internet and already using it to find candidate houses.

Help the community by answering this question:

Answers

11
Here's my two cents - an objective opinion since I'm not a realtor. We've been investors and involved in many transactions - buying and selling over 20 years - many transactions within the last 5 years. We've been successful at FSBO, but feel it was more luck in a hot market than skill. Even then we used a real estate attorney that saved us headaches on contracts etc. Unless you are extremely knowledgeable in real estate, I think it's a risk I'd resist taking - I want an expert representing me and my interests. I wouldn't trust a bank teller to invest my 401(k) - it deserves a professional viewpoint -- just like the sale of my home.
Also, if people know you are listed with a discount broker the expect you to shave $$ off the price. Buyers are more savvy than ever -- and if you aren't having to pay a full fee they expect to benefit from it! Just the mentality we've see in our personal experience!
1 vote Thank Flag Link Fri May 1, 2009
Hello Rock and thanks for your post.

Although I have not read the Stanford or Northwestern University studies, I can say, from my own personal experience, that when my clients were the "drivers" of the real estate transaction, and I was there only as the "map reader" to ensure that we did not fall off a cliff, I could really see that my clients were far more satisfied and prepared at the conclusion of the transaction than in a "traditional" real estate relationship where my clients are "informed" but not as "involved."

I certainly understand Joe's point of view that a Realtor is there as negotiator, but, perhaps, the assumption that the seller or buyer is ill-prepared to negotiate a deal of this size needs to be rethought. I've found that most of my sellers and most of my buyers are informed, have definite goals and buying or selling parameters, and need only the help of the real estate as "navigator" to get them to their destination of owning a home. The only thing that most buyers and sellers lack is the familiarity with the "arena" of real estate, and that's where a facilitator gets involved to fill the knowledge and experiential gaps.

The field of real estate is morphing due to access on the internet, and, more and more, in my opinion, sellers and buyers will want to be in control of the buying and selling experience. As such, Realtors and their job duties will have to morph. I just see this as a "coming of age" progression in this field.

Just my two cents...

Sincerely,
Grace Morioka, SRES, e-Pro
Area Pro Realty
San Jose, CA
1 vote Thank Flag Link Thu Apr 30, 2009
Hi Aj and thanks for your question and post.

I blogged here on Trulia last evening about using a Real Estate Facilitator and my experience working as one for my clients. In using a facilitator, the seller or the buyer undertakes a lot of the "leg work" involved in selling the home--showing it, paying for advertising, etc--and the buyer undertakes the job of finding the home through the MLS or at open houses. Once a buyer has been found, the facilitator creates the paper work, helps coordinate the reports needed and, basically, handles the portions of the transaction for which a regular home buyer or seller is not equipped to manage.

The cost is moderate, but both buyers and sellers will need to sign agreements limiting the liability of the agent to that of a facilitator. Frankly, I see this as the most productive way for sellers to sell and buyers to buy, while reaping the benefits of a lower overall cost from a professional committed to helping providing the important services that cannot be done without a license in most states.

Check out my blog here at Trulia, or if you have difficulty finding it, go to my website below and read the information about Real Estate Facilitators.

Thanks!

Sincerely,
Grace Morioka, SRES, e-Pro
Area Pro Realty
San Jose, CA
Tel (408) 426-1616
1 vote Thank Flag Link Thu Apr 30, 2009
The entire market is changing and so Agents must follow. I have been very successful marketing to 65+ different websites and MLS. They say 89% of people looking for homes search online. My listings get hundreds and often thousands of views and the buyers come ready. When the buyer arrives I provide all of the negotiations, paperwork and service.

I can't see the downside to positive transactions coupled with low cost service.
1 vote Thank Flag Link Thu Apr 30, 2009
Personally, I provide Full Service at Reduced Commission.

Why? Because my brokerage charges me WAY less than my previous mainstream brokerage. Big name companies can and do take 50% or MORE of the common real estate agent's commission. Imagine if you were used to paying out 50% - 60% to your boss and then you switched to a company that charged you pennies on the dollar.

Why not charge less AND make the same amount of money AND provide the same quality of service?

It seemed the best choice for me and my satisfied clients.
0 votes Thank Flag Link Fri Nov 27, 2009
I am an Oregon Broker of 34 years. Throughout this time I have watched many business models in the industry come and go. Currently with the market we are seeing that discount or limited service agents are
disappearing. That is because most of them are not modelled for long term listing times and expensive marketing. With the difficulty of this market, the new government regulations, bank requirements fluctuating regularly, and negotiating with other agents, the homeowner needs updated information, accurate pricing & market trending, and constant communication to get the job done. If a seller is interviewing an agent then be sure to hire a full time agent. So many times I run into agents whom I can not contact because their new job won't allow them to converse or negotiate. The agent does not attend enough educational sessions to be up on the latest HUD, Her, HVCC, and foreclosure information to provide adequate consul to their client and I get
to either educate them or do their work. If the skill level of the agent you are hiring is to type and photograph...it is not enough. Yes you can reduce your fees by hiring an agent that can put you into the RMLS but if you are you paying a fee for that service alone, you are basically paying them to go away!! If the difference in the fees paid is 2-3% , ask yourself if an expert negotiator can make that same difference in your negotiations? Or if the length of time on the market and the cost to hold the home will equal or exceed the dollar amount? Or if the lost sale will put you back to square one? We are losing 1% of our home's value in Portlland each month. Next year will be a 10-15% decrease again. That being said...it doesn't take over 2-3 months of lost equity to pay for good knowledgeable service & a smoother sale.
The other difficult part about discount brokers are the industry respond to them. Full time full servcie agents
understand what they will have to work with when they show and sell one of those listings. They may not choose to show the home unless the client requests to see it or it is one of the last in the list. It may be that
this will increase the market time which effectively will affect the sales price of the home. If it takes longer to sell , customers will more than likely write lower offers and sellers may believe the price of their home could be a factor in the market time. The traffic for showings could be diminished. All this needs to be concerned
in deciding whom a seller should list with. Different models work with different people. But our market today
is so complex and so stressful it is nice to have an advocate from start to finish who will be there every step of the way. It pays big dividends!
0 votes Thank Flag Link Thu Nov 26, 2009
I bought my first house without a buyer's agent. I dealt direclty with the listing agent and the transaction went just fine. I used the same agent to sell the house (after I had moved out of state) and could not show or sell the house myself, and to represent me at closing - the house sold in a down market in a less than a week, because I priced it right. I bought my second home a while back (at the bottom of the market). I bought direct from the owner. She had an attorney that handled escrow of the deposit. I am a fairly capable person, so I negotiated the contract direct with the seller, arranged for my own inspections, and I paid for a title agent who cleared the property and ensured that all was legit. I was a very satisfied new home owner, and the seller was a very satisfied seller and we did it all without a real estate agent. When it can time for me to sell (just as the market peaked), I paid $200 for an MLS listing, and another $100 for necessary legal paperwork and access to limited advice (which I used once). I wrote the listing copy, filled out the necessary forms, took all the digital photos, and handled all the showings of the house. In the first week, I had 5 or 6 showings and one of them, (a buyer using a buyer's agent), ultimately resulted in a sale. The transaction was completed quickly and smoothly. The buyer's agent wanted her 2% commission, so she facilitated the transaction between me and the buyer. I was a very satisfied seller. Bottom line... if you are sufficiently comfortable handling your own transactions, you area available and have time to handle all the necessary details, and you have measures in place to ensure the legitimacy of the transaction, then paying for the services of a real estate agent is basically unnecessary. If you are buying your first house or if you are totally unfamiliar with an area, then it probably wouldn't hurt having a real estate agent walk you through the process, but after that, it is easy to handle these things yourself, if you have the time and inclination. I am presently searching for a house and I am happily NOT using a buyers agent. I find all the info I need on the Internet, and frankly, I provide better service to myself (as a buyer) than I have ever received from a real estate agent (since I am a rather picky buyer). Don't let a real estate agent talk you into signing with them unless you are certain the you need/want an agent, and that you will recieve the services that are promised at the level of quality that you want. Use of a real estate agent is not legally required to buy or sell a house, although agents tend to suggest that buying or selling without their involvement is a difficult and complicated thing - it doesn't have to be. Yes, I know I there will be some agents out there who have a "difference of opinion" with me on my position on this.... so have at it :-)
0 votes Thank Flag Link Sat Aug 29, 2009
I don't know about any objective data to prove what you're seeking, but I can give you some information based on my own experiences.

There are a variety of low-cost models used in the Portland metro area (including West Linn). The vast majority rely on cutting some amount of services, in exchange for a reduced fee.

The cheapest model is often referred to by other brokers as the "minimum service model." With it, brokers usually charge a very low fee in exchange for putting a property in the local MLS, but provide no other services, aside from ordering a sign and taking pictures for the MLS listing. These brokers don't help the seller negotiate, or assist with escrow. They don't assist with completing the home purchase contract, or represent the seller for the appraisal or professional inspections. The seller is left to carry out all duties on his own or through the buyer's agent.

The risks with the previous model are borne mostly by the seller and the buyer's agent. The seller essentially has no one to represent his interests with the buyer; no firewall to prevent compromising information from reaching the buyer. The seller has no one to help ensure that he (the seller) provides all the proper disclosures required by Oregon law.

Similarly, the buyer's agent, having no counterpart on the other side of the transaction, is basically required to do more work than he would on any other transaction, but for no higher compensation. The buyer's agent runs other legal risks related to possible dual agency and, thus, greater errors and omissions liability. For this reason, some buyer's agents try as much as possible to avoid minimum service listings.

Another low-cost model, which is often advertised on radio or in print, is basically little more than a classic "bait-and-switch." The broker or company advertises a very specific commission, which is always remarkably low. When the seller finally meets with an agent from the company, he finds out that the low fee is only for assisting sellers who are willing to do all the work on their own. If the seller wants access to the MLS, he has to pay another higher fee. If he wants help with marketing, negotiations, etc., still another--higher--fee.

Another low-cost model that is probably not as common in other states involves a relatively small but growing number of independent brokers. After considerable lobbying from the Oregon Association of REALTORS®, the Oregon legislature passed a bill that took effect in 2003 that made it possible for real estate agents to strike out on their own. Unlike most other states, where agents are required to take additional courses and pass a test to go into business for themselves, the new Oregon law allowed any agent to become a broker and open his own office with almost no additional training or instruction and without having to pass any test.

The new law resulted in a substantial number of successful brokers deciding to extricate themselves from under the wings of their brokers, who often take a large chunk of the commission from a sale. These new sole proprietors usually operate from small office spaces, often located in their homes. Their overhead is very low, so they can afford to charge lower fees. Their services run the gamut from minimal to extravagant, depending on the business philosophy and the skill of the individual agent.

There are different benefits and risks associated with each of these models. I would be happy to discuss them further if you have additional questions. Just call me at your convenience.

Best Wishes,

Craig Loughridge
Bryson Realty
Web Reference: http://www.bybryson.com
0 votes Thank Flag Link Thu Apr 30, 2009
In response to Joe's post, there is some objective information available from a few sources. In separate studies by Northwestern University and Stanford University, “by owner” sellers were found to be as effective as agents in maximizing the sales price of their homes. After commissions are factored into the equation, the studies reported, sellers who sell “by owner” actually save more money, and retain more equity, than sellers who sell through agents. The September 08 issue of Consumer Reports magazine also reported that FSBO sellers are more likely to get their asking price while agents deliver, on average, a sales price that is $5,000 less than the original asking price. BTW in Joe's defense, he didn't make any reference about net. While the Consumer Reports magazine didn't either, one would only have to assume in a by owner scenario if the sales price is higher, the net also would be higher than in a full 5% or 6% represented transaction.
0 votes Thank Flag Link Thu Apr 30, 2009
The trouble with taking this approach is that the seller is not being represented. Top brokers are skilled and trained negotiator with a huge network of cooperating agents and proven marketing techniques to promote the sale and yield a higher selling price for you the seller.
0 votes Thank Flag Link Thu Apr 30, 2009
Aj,

Getting objective data on the subject of flat-fee listing aka MLS entry only services on this site will be a good trick. However, if you are considering a FSBO, you might want to check out the blog attached to the link below.

http://www.trulia.com/blog/rockinblu/2008/08/thinking_about_…
0 votes Thank Flag Link Thu Apr 30, 2009
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2014 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer