**Benjamin´s last blog post..Flak Presents: Coachella 2009 Part 3

Ryan we are not assuming that our commissions are justified, we know what our expenses are and what we need to charge to make a living.

If you want a rip off go sign up for a FSBO program. They get paid without any results, they have no risk of investing thousands of dollars marketing and countless hours invested just to have a home not sell. FSBO programs are paid upfront, Realtors are paid only for results.

I have listed and sold countless homes for more then they attempted to sell with ByOwner(dot)com. These homeowners spent upwards of $3500 of upfront nonrefundable “marketing” dollars for zero results. Then turned around and still had to hire a professional to get the job done. Funny thing is each time I actually listed the home for more then they had it by owner for and netted them the same or more then they would have netted with ByOwner (the big player in the Chicagoland market).

It should be a flat fee. You cannot tell me it is harder to sell a $750,000 house than a $325,000 house, yet the commission is TWICE as much. Come on! Stop ripping us off please!

A good amount of “FSBO’s”, for sale by owners, and other sellers seem to try to “compare what we do for our commissions, rather than focus on the results. I can certainly understand that line of reasoning, and probably would’ve thought along those lines if I was not in real estate, however, I am in real estate, and have been active in real estate since 1985. Selling real estate cannot be compared to “manual labor”…

When it comes down to the nitty gritty, you’re not paying an agent to do the most open houses, the most mass mailings, print the most flyers.

You can commonly get all the above, AT NO CHARGE, with an agent that will fail to sell your house. I actually heard a seller tell me once, “Matilda” (not her real name) didn’t sell the house, yes I know.. Will YOU be able to make the “just listed” cards as nice as hers?”..

Whether or not the cards will come out looking just as nice is NOT the issue; whether or not you want the same results is the issue..

If you’re serious about selling, you should prefer an agent that will get you the results that you should get. “Get” the results… and the ONLY way to “Get” the results, is to actually “Sell” your property. Preferably, you would like to get the absolute best price possible, at the best terms & conditions possible, & as speedy as possible.

THAT’S what you’re paying an agent for, not how many tasks they can perform.

Since 1986, I’ve done my share of open houses. I personally have never sold THE HOUSE BEING FEATURED using an open house. If the house is very competitively priced, I usually would get bombarded by calls from other agents the minute it hits the MLS system… I’m sure someone out there has, but the statistics are lousy…

Have I sold any houses ever by using an open house? Yes, of course….however, it was NOT the house I was doing the open house for..

I tell my clients this stuff. A number of them probably think I’m just being negative. I am not. National statistics have been saying the same things for years. Yet real estate agents continue to do open houses. Probably they think they have to prove to the seller they are doing something. Probably because this is their way of “drawing blood” for the seller.. I’ve sat a couple of times at open houses watching a “Star Trek” movie on VHS.. Point? House priced too high. No demand. Tell seller to reduce or dump the listing. Note to self: Try to avoid “overpriced” listings..

If you want flyers and mailouts, after a day on the internet looking at other examples, practically anyone can come up with a standard flyer. Spending money for color printouts does not need a real estate license.

Real estate is a commodity. Your house is a commodity. However, a good real estate agent who is a good negotiator can learn to take advantage of the opposing parties weaknesses (if any are exposed, even soooo slightly)… and TAKE ADVANTAGE OF THE SITUATION, particularly if the opposing agent is not as experienced in negotiating.

If I am a buyer agent, that means I am working for the buyer. If I see the listing agent is “flubbing” negotiations, I try to take advantage. If I am a listing agent, and the buyer’s agent says something to me that I may be able to use, either to get a little better of a price, or perhaps a more favorable term or condition, you bet I’ll try to take advantage!

That “advantage” could be as high of an average of a 10-% difference…!

That’s where the value of a good real estate agent comes in, who knows HOW to negotiate…

FSBO’s, you don’t know WHAT you could have had good if you never had it better to begin with.. Think about it..

My husband is an attorney, and he laughs at the idea of purchasing or selling real estate without an agent.

I think I’ll come back to this blog and try to wrap my arms around the whole deal…

Lynn – I did say this at the end of Day 4 post, “And get ready to deal with buyers who also mistakenly think you’re saving 6 percent—they’ll want a piece of that, too.” that was my sole attempt to point out buyers will expect a price reduction. But as Ken pointed out in the comments here (and on USN&WR) my opponent even brought that up!

Also, the effectiveness of many FSBO sellers as marketers and sales people is miserable. When we bought our first home in Florida, we just stopped going to see FSBOs after a few. Part of the reason is that calls are not returned in a timely manner. You can’t see the property until they are available. As a Realtor, I can’t count how many times I’ve been called to see a property in the morning and I’m showing the home within a few hours. My experience is that it doesn’t work that way with a lot of FSBO sellers. You will see the property when it is convenient for them, not for you.

My opinion is that in a seller’s market, FSBOs can be effective. In buyer’s markets like we are seeing today in many cities, they are very effective. There’s just too much competition.

Lynn

Sorry I missed finding this nice nugget until now, so first, let me say, what a cool thing to debate over.

I suspect the vast majority of successful FSBO sales had a 2.5-3% co-broke to an agent that brought a buyer. That’s the only way that FSBO got into MLS and MLS is quite simply head and shoulders the winner in getting a home sold.

Average listing commission is 5%, so the savings potential is 2-2.5%. Next, subtract off the $1k Greg suggests a lawyer is going to cost, and the additional profit to a seller just dwindled more. To account for the “double speak argument”, split the profit potential (2%) equally between the buyer and seller, giving the buyer a 1% discount to fair market value, and thus the seller will potentially yield an additional 1% in profit, via the FSBO approach.

For this sample $300k home (which is far above the median home price, even in Phoenix), the seller will potentially profit an additional $3k. Was all of the hassle, risk, frustration, confusion, and time worth the added $3k? For those without a real job, and experienced in selling many, many homes, it will be. For most people, they realize it isn’t and thus hire a REALTOR, wisely spending that additional $3k to have a trusted adviser at their side protecting their interests.