Sammy

"Sammy,
I find it curious that you perceive the idea that transactions conclude quicker in a dual agency deal to be a good thing for buyers and sellers."

Susan: Clearly you did not read the paper. My argument was that "conflict of interest" is a non-issue when all things are considered. I was merely pointing out the fact that the study found that the only measurable effect of dual agency on real estate transactions is that they come together faster than inter-agency deals. Read the paper and then tell me why Krissy should avoid working directly with the seller's agent.

Now, if Krissy doesn't consider herself a confident negotiator and does not know how to use the research tools available to her, then maybe she should consider hiring an agent, but my interpretation of her question was that she was asking for an opinion on whether to make an offer now or wait and see what happens if she waits to see if there is any other interest in the house.

Krissy, what the agents here won't tell you is that if you go out and hire an agent to represent you in your transaction, you are automatically costing yourself or the seller 2.7% of the cost of the home. 2.7% of the price of the home you are looking at is nearly $6500. If you like the house and your are confident that the price is reasonable, then why would you want to pay $6500 dollars more for the house? And I put it in those terms because your seller knows about the commission issue, so if you come without representation, the seller may be willing to accept a lower offer knowing that he/she won't have to pay that 6K to your agent. The fee that your agent earns is supposed to be for the work they did to help you find a house AND negotiate the deal. If you found the house on your own, then what exactly did this agent do to earn 6K? If you are willing to pay someone 6K to negotiate an offer, then send me a private message; I'll gladly do it for you. Easy money! No wonder you have some gomer from Alabama offering to help you...easy money!!

Even if the process took a whole week of 8-hour workdays (which it will not) you would be paying your agent $150/hour. Nice work if you can get it -- I think I should become an exclusive buyer's agent. Sounds like a cake walk job to me. Let the seller's agents lay out all the cash for marketing and just bring a buyer -- what a scam. Better yet, watch the trulia and zillow message boards for people like Krissy, who have already found the house they want, then you swoop in with your "resources and years of experience" and earn a quick buck for closing the deal. Hah!

Good luck Krissy! You will need it while trying to navigate the REALTOR® infested waters of the home buying market. - Fri Sep 12 2008, 00:20

Is this house lender owned or something? The house just down the street with the same attributes just sold for over 270K. Must be a very motivated seller...I wouldn't sit on it very long in light of the latest interest rate drop.

The county's estimated market value on that property is $234,700. Most houses in that neighborhood are still selling for well over their estimated values. Assuming you have already been approved for financing, you should head to the nearest office supply store and buy the pre-fab purchase offer papers. Write up an offer contigent on inspection. You will have to find out what kind of earnest money will be required with your offer, but you don't need an agent. I have bought two homes using the method I just described.

Having said that, I am curious to know why you don't want to work with the listing agent. I just read a study about dual agency (conducted by students at Cornell University) that tested the conflict of interest issue, and found that dual agency does not really affect average sales prices of homes. In fact, the study found that dual agency deals conclude about 7% faster than cross-agency deals.

I will try to find a link to that paper, it's a good read if you are into that kind of thing.

PS -- I am not an agent and should probably be trying to send you over to my neighborhood to check out my home for sale in SLP instead of suggesting you snap this one up. Best of luck to you!

Sammy - Wed Sep 10 2008, 22:40

Oops, forgot to attach a link to the abstract... - Wed Sep 10 2008, 23:14

You might be interested in this dual agency study conducted by students at Cornell University. - Wed Sep 10 2008, 23:13

Thank you all for your thoughtful responses. I recognize that I may have ruffled some feathers by being critical of your industry. Please don’t take it personally, it’s not meant as such. I should probably clarify a couple of things from my original post, though.

I am not disputing that pricing is key. In fact, I think it is more important than ever to get a good market analysis. The useless charts and graphs I referenced are the 30+ pages of redundant information that are extrapolated from the weekly market activity report. I would prefer to just be provided with a copy of that report and a good list of comps – electronically, if possible. I now recognize that it’s a matter of personal preference, but I thought I had made that clear to these folks.

I’ll concede that picking the comps is the tricky part, but I was quite surprised to get such varied reports from these five different agents. In the end, I felt that two of them seemed to have a better understanding of the small nuances specific to St. Louis Park than the others. Incidentally, those two agents gave estimates that were lower than I had hoped but higher than I expected.

It should also be made clear that I am not in a financial situation that is forcing me to sell; I am not being transferred; this is not a short-sale; I have a good mortgage rate and hold only a first. I simply want to sell because I am getting married and we are moving into my fiancée’s house. We would rather not wait 12-36 months for the market to right itself before starting our new lives together. That also negates the argument that I’ll get it back when I purchase my next home because I will be buying low. Again, a great sales pitch when you can use it, but to me it perpetuates the cycle.

The one thing that all of the agents seemed to agree upon, is that the house is staged beautifully (my cousin is an interior designer). In fact, one agent suggested a 5.5% fee (instead of 6%) since staging is part of her marketing package. I will give her full credit for recognizing that you shouldn’t charge for a service you aren’t providing.

With that said, some have you have made some very relatable comments.

Cameron: thank you for acknowledging that things may not be as hopeless as the media have led us to believe. You, and the others who addressed my “average buyer” comment, are right. I failed to recognize that it’s much harder to hit the mark when the bull’s-eye is so small, and I need to look at how to make my house more appealing to a greater cross-section of the population.

Elv!s & Wheels: I see that my statement was poorly written, making it seem like I am looking for an above average buyer. I should have stated that I think my house will appeal to a buyer with a specific set of life circumstances (i.e. – a single young person or couple; someone who values a fenced yard; an individual who appreciates the architectural features specific to the period in which the home was built). Jennifer & Susan both picked up on my point there. Wheels: you completely missed the mark on that one. By no means, did I try to suggest that the “specific” buyer I am looking for is a millionaire.

Rockinblu: Good point on the FSBO comment. I don’t see it as a very practical option for me, since I don’t have the time nor the tools to sell a home myself, but I might consider Webdigs. Interestingly, I haven’t looked at the stats, but I think fewer people are choosing the FSBO option these days.

Jackie: I think, overall, you have the best response to my “rant”. You seem to have a thorough understanding of challenges specific to St. Louis Park. Even though there are foreclosures all over the place, they are much fewer and farther between in SLP. I think what compounds the problem is that BUYERS don’t see SLP any differently than any other city – they are looking for bargains all over, and they are finding them. That’s the crux of my rant. I have this voice deep inside that says “I don’t have to give my house away” and some people are proving it. I spoke with a recent seller who turned down two lowball offers, held on for another 22 days and got the asking price (no seller contribution). Total DOM: 120. That tells me that SLP is still a demand market, so I shouldn’t have to take 8% off the estimated market value to figure out my selling price.

Best,
Sammy - Thu Jul 31 2008, 21:20