I am assuming that most agents will consider this post slander and horrific. I am by no means an anti-real estate agent, yet many agents may differ in opinion after reading this blog post. I am making the effort to present what I feel are issues important to the ever changing real estate profession.
Recently my husband an I have been debating the typical 6% commission. Commissions (in most states, if not all) are a negotiable factor in any real estate transaction. Most people do not know this and are told by the agent they interview that the commission charged is 6%. Certain brokerages do have a mandatory charge within their firm but as I stated commission are NOT SET.
I just want to share with you our feeling on this matter. I would love to hear any feedback.
I feel that the days of 6% (an up for some people in various markets) are OVER. I do respect any agent and their commission charge is their business. Many agents cannot charge a lower rate due to the fact that they have to split the commission with not only the buyers agent (who typically gets 3%- if they don't many will not show the home, which is just sad) but their brokerage. That split can be anywhere from 50% to 80%. Most brokers will not allow an agent to work for them without maintaining as high a split as possible. These brokerages (I am not using names) charge the individual agents so much due to the prospects and leads they provide (this is what they claim). This being said, not all agents will be able to offer a low rate like we plan to market in the coming months.
The reason times are changing is because of the exact tool you are currently using. The world wide web. The internet is making the business of home selling much more affordable. I do not think some of the sites that are set up to do this will guarantee any owner a successful sale. If an owner is in a hot market then these sites may work, depending on how much time and research they put into the process. Over 80% of home buyers use the internet to start researching their purchases 6 months before they buy (the statistic may even be higher). I do think more goes into the marketing of your home. In order for you to be successful you have to present the home in it's best light. Do you think a stinky or untidy home will sell? Do you think a home that is not photographed in it's best light will be viewed? You must get buyers in the door. In addition to these issues your home should be listed with your local multi listing service. Only an agent can do this. You need to make sure your home is priced according to the comps in your area. Many owners may undervalue their home while some may over value the property. You need an agent who can successfully negotiate with a fellow buyers agent. You also need an agent that will navigate your states laws. If you do not disclose certain issues with your home you can and (depending on the issue) will be sued. The time your home is on the market does make a difference. A buyer will look at how long your home has been available and their offer will take this factor into account. All of the above mentioned factor will effect your time line.
I think 4.5% is a fair listing price. I must have 4.5% because I must be able to offer 3% to the buyers agent. I don't see commission dropping this low, across the board that is, for some time. Now we get into the argument over a discount versus full service broker. Since I keep almost 100% of my commission I am able to offer full service real estate at this price. Some items would be extra, such as newspaper ads in the New York times (by the way newspaper ads don't really help sell your home, they help promote the Realtor). An ad of such magnitude would be extra. I think the words "discount broker" were formed by agents who choose not to be competitive with their commission rates. Yes some agents may offer less service in association with a discount. Sometimes you get what you pay for. In many cases an agent can cut their commission and offer excellent service. I have many times.
I would like to make a few points brief that every seller should consider before placing their property on the market.
1) Property should present itself to the buyer as clean and welcoming. Clean your carpets and give it that fresh, uncluttered look. Put all the thing away that you are not using (even if you use them day to day consider storing them out of sight). Keep your counters free of clutter. The most important aspect of the home presentation is the fact that it must be CLEAN AT ALL TIMES. You never know when you will have a buyers agent that has a client who MUST see your home within the hour. Yes you can decline them the right but they could be that buyer you have been looking for. To find out more about presenting your home in it's best light see my article on staging at www.galveston4sale.com .
2) Price it right. Yes we will suggest you price it a bit more then what we think it should go for because we want to give the buyers agent a chance to negotiate with us. If you have no desire to sell your home within a time frame and really want to try to go for that extra equity then go ahead and reasonably price it a bit over what the comps suggest. Remember that I will be discussing with you a point in which you need to lower the home if we are not getting the activity we need. I don't want your home sitting ideal on the market and making buyers wonder what is wrong with it. Just want till your market appreciates if you want a higher sale price.
3) If it is ugly, they will not come. I plan on expanding this topic in an additional blog later this week. In addition to the fact that your home needs to be the cleanest home in the world (don't worry you can become a slob again after I have it in a contract) you need to remove anything that is not neutral. Repaint walls that looks terrible. Just make the place buyer friendly. An agent should and can help you figure out the most cost effective way to revamp your home. I am not stating that you need to pay $20K to have the home repainted b/c it really is not going to bring you any additional profit. It will only put you at the top of your comps. Many thing you can do yourself. If aunt so and so painted a beautiful picture that only you and her mother can love please take it down until you are in contract with a buyer (even then we may still be showing the home for back up offers). If you have a blood red dining room that was painted to match your motif then please consider maybe sacrificing the look until you move into your new home. The buyer must be able to imagine their own aunts art work in what may become their new home.
These are just a few things that need to be addressed at every home. Please don't hate the agent if they suggest a few issues that need to be visited. Many agents could be nicer about it but the reason they have become blunt with this subject is due to the fact that the buyers freaks out. Most agents are just trying to help. I will say that some should learn to explain what their intentions are before coming in and yelling to remove this and that. You are their customer after all. By the way don't be afraid to tell and agent how you feel. You will have a better relationship because of it. I also always keep my listing contracts open to termination in case of personality clash. Some parties just don't work well together.
To sum up I just want to say that markets around the country are experiencing a bit of a stall. Hopefully times will change. I am fortunate to be in 2 great Texas market (see www.SanAntonio4sale.net for information on my San Antonio real estate practice). I am also an agent in Las Vegas, NV (see www.LasVegas4sale.net) where the market has crashed. Don't hire the first agent you meet. Interview at least 3. I don't care how good they claim to be. You need to find the person you are most compatible with. Don''t believe that your market is GREAT because your agent told you so. Do your OWN independent research. I was recently on a real estate forum where an agent suggested that we tell our clients, via our websites, that the market is great for both buyers and sellers. This positive attitude will make you money, right? I am sorry but I have to sleep at night and making a statement like this in a market like Las Vegas would be just wrong. Vegas may be great for buyers but they better want to hold on to their homes for more then 5 years. None of this flipping stuff. Great market for foreclosures at the current time.
I would love to hear from anyone regarding this topic. All comments, as long as they are clean, will be posted. Feel free to reference this blog in an effort to get some discussion started.
Thanks for your time. Have a happy and safe 4th of July.
Christina Stevens