Today I signed away our property to some people I don't know for less money than I thought it was worth through an agent who apparently felt more loyalty to them than to us, making more on the deal than we did. In fact, we took a loss on this house to the tune of about 5,000. I hate that.
My advice to all you out there thinking about selling your home is not to sell it yourself. Rather, avoid going through the big name real estate agents and find a discount broker. I wish I had. The discount broker works for the seller. He/she gets a set fee no matter how much the house sells for, and that fee is usually substantially lower than the regular broker. For example, there is a discount broker in my town whose set fee is $2500; for comparison purposes, my agent made over $8,000 on this deal. That $5500 difference would have made up for the loss I took on the price, and I would have broken even.
Hindsight is always sharper than foresight. Sigh.
2 comments:
Yeah, I agree. I really despise it when someone I signed a contract with does what they agreed to do in the time they agreed to do it and makes the amount I agreed to pay them for their service and expertise. What a raw deal.
I agree that because a brokerage has the ’biggest’ name in town it doesn’t make them the best broker to sell a house. I would say that the best agent is the best broker to sell the house.
I would hesitate to be so quick in suggesting the hiring of a discount or flat fee brokerage to anyone. As one in the industry I see and understand the bait and switch of these ”full service brokerages”. Do I as a Seller truly expect someone that says they will sell my house for a cut rate give first rate service? No. What do you suppose that they are doing for this flat fee ($2,500 in your example - by the way when a buyer does come along – their agent will want to get paid so tag on that to your flat fee and you’re starting to get closer)? Doing everything to try and sell your house? Good question… I would expect that they are on to their next prospective Seller client, because that is what they have to do to make enough money to work in the industry. Find Sellers – not the Buyers you need.
But you may say to yourself - Really if I sold two houses a month as a flat fee broker why I would be making $5,000 a month and that surely isn’t all too shabby. But wait, I’m an independent contractor, I’m self-employed, and I run my own business. Wow - what better job? But then again I run my own business – and have to pay to run that business – office, association dues, MLS dues to allow the public to view property, advertising, etc. And I guess because I am self –employed that means I have to somehow figure out how I am going to take care of all those benefits that you normally get when you’re an employee. So I guess I’ll need to figure out how I am going to cover for retirement, health insurance, etc.
Hmm… that not so shabby $5,000 has turned into about fifteen hundred - well shoot we have those pesky taxes that as all well-informed folks know is at a greater rate for me the self-employed than I would pay as an employee - now how about the cost of living you know like food, and a mortgage, and…So you see the discount broker has to do high volume and in my and many of my clients experience that equals discount service.
There are a few different basic models for doing business – one is the Wal-mart approach and another is a top of the line service/product approach (which by nature costs more)
If I had a 125,000 tax issue I surely would not hire a cut rate accountant and I surely wouldn’t try to find a discount surgeon when in need of a procedure. Why would I go for a cut rate sales approach on one of the largest investments most folks make - a house? I’ll take the best, thank you and I’ll gladly pay them top dollar.
Please understand; my intentions are not to offend but to inform and save frustration from those considering cut rate service. You get what you pay for…
Understand, however, that in our case, our full-service broker made more money (by about 5000) than we did on the transaction. In addition, once she had a buyer, she essentially became their agent, not ours. We went down on the priority scale in her work. Since she was both the listing agent and the agent who found the buyer. After the contract was signed, all of her work went to please the buyer and keep them happy. Frankly some of what they asked for was unreasonable. There was very little (if any) concern for our needs or effort to make us happy. Because we were in a bind--we had to sell in order to move--we just went along with it.
I realize that not every discount broker will do a good job. My former neighbor (owner of Thomas Transfer--a moving company) has a brother who is a discount broker. In that small town, he moves more houses than any other broker--including the full-service broker. He must be doing something right.
I think the bottom line is that the seller needs to consider ALL the options and investigate the broker, whether discount or not, before he/she sign with any of them. I think the seller also needs to negotiate a bit, and the broker needs to take care of more than his/her bottom line.
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