Are Real Estate Agents Worth the Additional Cost?
By DAVID LLOYD JONES
The following are three views of the profession of real estate associate that were expressed to me recently (and slightly edited for brevity):
A. It’s going to cost me $10,000 in commissions just to sell my house? What do you DO for all that money?
B. I was going to sell my house myself and save the commission, but after I got a look at the new contract I decided I didn’t want to get into all the potential legal hassles.
C. A satisfied customer writes: “He was tireless in his effort and it was no small task. He helped us with every detail and since we don’t live in Tulsa, there were many. There were repairs to the property, countless hours of showings and open houses, meeting the furniture movers, not to mention the long hours of the last weekend to actually close the transaction.”
These are three rather common reactions to the process of selling a house.
The first, a lady on a fixed income whose entire nest egg is tied up in her house was aghast at the thought of paying so much in commissions. She probably thought the sales associate would make a quick sale, pocket the $10,000 and rush down to the dealership to make a down payment on his new BMW.
As a real estate associate all I can say is a rueful, “if only.”
For those of you who like to know the inner-workings of somebody else’s business, here is how the game is played.
There are two sides to the playing field: the listing associate (the selling side) and the buying side (the associate who gets the actual buyer together with the listing associate and contracts for the property). Occasionally the listing and selling associate are the same, but not often.
The homeowner and the listing associate agree on a percentage of the sales price that will be charged as the commission. Then the listing associate decides how much the buy-side associate will get (usually an even split.)
If they work for a real estate brokerage firm each associate divides his share of the commission with the broker. Just how the portion is split usually depends on the individual associate’s productivity and experience.
Thus that portion of the commission the seller assumed would finance a BMW might not be enough to finance a decade-old Ford.
Now lets go to comment B. There’s a lot more to selling a house than putting up a sign and waiting for the crowds to form.
There’s putting the property on the multiple listing service in which each house offered by a licensed sales associate member finds itself on the internet. With a majority of millions of home buyers looking to this as the primary source of market information a good internet presentation, under the company banner, makes a powerful impact. People trying to sell their own homes can put an ad on the Internet, but how can a buyer find it?
Now comes the serious marketing! The first thing any homeowner wants to know is “how much can I get for it.” Homeowners, being human, often have an inflated image of what their house is worth. A good associate will study the immediate market area, what is selling and has been sold in the neighborhood and give that information to the homeowner. It is ALWAYS the homeowner’s choice as to what to ask for his property, but many a house has languished unsold for months because of a homeowner’s unrealistic expectations that could and should have been tempered by a knowledgeable associate.
Helping the house reach the finest condition possible, making sure it is attractive to the buying public, helping arrange for cosmetic repairs and correct more serious problems, are costs that must be borne by the selling homeowner, but the associate usually has some helpful numbers at his disposal.
Then there is the matter of holding the house open, getting other realtors to see it, advertising it, all of which costs are borne by the associate. If the house, for any reason, does not sell the associate is out the monies expended, and has worked for free.
Then there is the not inconsiderable duty of making sure all legal t’s are crossed and i’s dotted. The associate is not an expert in real estate law, but he knows where to find such expertise.
The associate bringing the would-be buyer has his own arduous tasks. When told his clients want a five-bedroom house with no fewer than two wood-burning fireplaces, a swimming pool in the back and stone gargoyle statuary in the front he has to scour the MLS to see if any such properties exist. He then has to take his clients around to the properties they might enjoy. They might like the first property or they might like the 100th two years from now.
Houses have been sold within an hour of being put on the market. Houses have languished unsold and unloved for years. Associates deal with them all.
There are undoubtedly some inadequate real estate associates, but the vast majority I’ve met are helpful, courteous and conscientious. They really want to do the best for the people they serve.
And if you get one of those associates that can occasion the rapturous comments of the person in example C, you can be sure they thought he was worth every penny.