Last year I had the unfortunate experience of having to put my house up for sale. I listed the house with the largest real estate firm in the country and the listing agent was one of the top producers in the state. A Comparative Market Analysis(CMA) was completed to determine the fair market value of the house, and a listing price was established without any resistance on my behalf. In addition to the CMA, my agent explained the marketing strategy he and his firm would undertake through the duration of the listing.
I was keenly aware of the traditional 6% listing commission that I would bare; 3% of the sale price would go to the listing agent and 3% to the buyer's agent. Frugal as I am, before signing on the dotted line, I tried to negotiate a slightly lower listing agent commission, but was unsuccessful. After this failed attempt, the agent had the audacity to tell me that the industry was trying to move towards 7% commissions. This must have been his attempt, I presume, to make me feel better about signing at 6%. The only portion of the 6% listing fee that should be contested is that of the listing agent. The reason being, when your house is listed in your area's Multiple listing Service(MLS) the buyer's agent commission is blatantly displayed and anything less than the standard 3% will deter agents from even showing your house. Unethical, probably, but generally a well know practice.
To make a long story short, 4 months on the market, 3 price reductions, 2 showings, 1 low-ball offer, and the house was sold. After a sobering reflection of my experience, I began researching alternatives to the traditional real estate firms. I soon realized that a burgeoning but mostly underutilized segment of the industry was operating seemingly underground. This industry segment, known as discount real estate services, offers all the trappings of a traditional real estate firm but at reduced commissions. No, I am not referring to those for sale by owner firms, MLS listing services, or even the a la carte firms where your fees are commensurate with the level of service provided. The real estate firms I am speaking of are those that offer you exactly what the traditional firms offer; a complete full service listing from start through closing. No need to negotiate the listing agent commission because their fee is set not at 3% but closer to 1%.
The large established firms have so far dismissed these "rogue" firms and have even tried to introduce legislation against their use of the MLS. Fearful of missing out on what could be the wave of the future, Century 21 has quietly rolled out Century 21 Clickit, an a la carte discount real estate agency. Another threat to the traditional 6% firms is taking place at hungryagents.com. The site matches you with agents in your area who provide full service and are ready to reduce their commissions and compete for your business.
With Spring almost here, I urge all those homeowners who are thinking about selling their house to do some homework, rethink the traditional approach and find a firm who will offer full service, for less money. If you decide in the end to list your house with your neighborhood agent, be strong and insist on paying no more than 2% to the listing agent and 3% to the buyer's agent. About the Author
Stephen Geyer is a former senior NASDAQ market maker and equity trader with
over 15 years of professional experience in the financial services industry.
Contact Stephen Geyer at http://wallstreetandmain.blogspot.com/ |
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