Take it from an agent -- sell by owner
By Matt Carter, Friday, May 2, 2008.Bookmarking Sites
Foreclosure/investment guru "Dr. Dani" Babb claims real estate agents' commissions are hindering the recovery of housing markets.
"Their added fees are creating inflated home prices, keeping sellers and buyers from reaching deals," Babb says.
What can you expect if you hire an agent to help you buy or sell a home?
"Wasted energy and time, which could be spent house hunting, financing or moving," the Newport Beach, Calif.-based "technologist, consultant, author and professor" says.
The kicker is that Babb -- who earned her PhD online and teaches a course on finding foreclosed properties at UC Irvine Extension -- also happens to be a licensed real estate agent.
"Bottom line? From an agent?" Babb asks. "Sell by owner. Putting your house on the MLS is as easy as going to housepad.com. Unless you have some overly complicated situation, don’t waste your time or money with agents."
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Submitted by Sierra Bloom on May 2, 2008 - 7:22pm.
Wow. That is definitely an interesting spin on selling a home, especially coming from a licensed agent. You must not currently be practicing real estate!
With that said, selling your home by owner is actually extremely complicated and time consuming. In order to sell by owner, you have to be available for all showings and showing requests, have expert negotiating skills, know how, where and what to advertise, etc. In addition, I don't know about other markets, but in Chicago, many Realtors will not choose to show FSBO properties to their clients unless the client insists. If the home is listed on the MLS through a discount brokerage firm, again, many realtors turn the other cheek to those agents as well.
Selling a home, especially in a buyers market, is a specialization and extremely challenging. The more places your home is listed, the more people will see it, the more likely you will be to sell your home. Do you have the same number of resources to sell your home as my real estate company, Prudential Preferred Properties.. that has nationwide recognition and exposure?
Statistics show that approximately 75%-80% of people who attempt to sell on their own, ultimately list and sell with an agent. If selling your home on your own was so easy, why are those statistics so high?
Submitted by Tom McCarey on May 2, 2008 - 7:34pm.
Will Shakespeare opined that we should start with the attorneys. But his quill was dipped in irony as he urged being rid of lawyers. On the other hand "Psuedo Doctor" Dani has dipped her keyboard in nothing more than self-promotion or possibly avarice as she blames realtors for the current market. Her prescription to be rid of realtors is akin to treating medical maladies without a healthcare professional or going to court without an attorney. None of the above represents sound reasoning. Maybe Dani is a lot smarter than the rest of us. Or, more likely, she's just another self-promoter looking for lightning in a bottle.
Tom McCarey
The Real Estate Lounge Chicago
www.TheRealEstateLoungeChicago.com
Submitted by Prabhjit Singh on May 2, 2008 - 7:58pm.
As a real estate motivational speaker & real estate agent I am shocked by this article. It is very much baseless as it does not take into consideration any of the issues that are currently occuring in the market.
I compeltely disagree with this article on all fronts. It is absolutely the reverse. Real estate agents are essential in this market.
First, properties are not selling as it is, so you need an agent to be able to evaluate the value of your property, so that it is priced to sell!
Second, the agent has a system to advertise your property beyond the MLS. They will advertise it to other agents in their office and the ones that they know. Which means getting your property infront of the individuals who can purchase it.
Third, depending on the area where the house is located a number of the houses are short sales. So a agent really needs to be involved, so that they can work with the bank to get the property sold.
Fourth, even if the property is not a short sale the agent will know how to sell the property when competing with the short sale properties.
I hope that individuals do not take this article literally and critically read this article.
Submitted by Prabhjit Singh on May 2, 2008 - 8:00pm.
To learn more about real estate please visit http://rempower.com/blog
Submitted by Matt Spica on May 2, 2008 - 10:16pm.
I agree with the author. Selling and buying a home is a piece of cake in most markets. If you don’t mind taking the time to hold your own open houses and spending some money on advertising it is well worth the time. The amount of money you are paying an agent to write an offer seems ridiculous – and yes as a buyer you DO pay. The seller prices the 5 to 6 percent commission into the price. THIS is why agents get higher prices for homes (not 8 to 15% but a bit higher) – because sellers have no choice! They have to pay the agent fees!
I would much rather prepare my own offer or sell my own house than pay those commissions. I do speak from experience. I have sold 2 of my residences on my own. Both of these homes sold for the highest value on the block – my neighbors thanked me.
One of the earlier posts in this thread struck me as a bit odd – isn’t that practice of steering clients unethical and illegal? I believe agents can lose their licenses for this. We all know it happens – yet one more reason to stay away from this unethical bunch of people. A few of you may be good guys/gals, but you’re in the minority. Wake up, technology will soon take over your jobs – I can list my house online, I can determine the right price online, I can get buyers online, and I can put it into your precious MLS system that is so sacred among you agents.
By the way, the very last post with that link to the blog?! HAHAHAHAHA That is PRECISELY why people should NOT consult with individuals like you! You want to charge 6% to tell people to replace dead plants? LOL I could have told you that for 1%. Geez.. next time come to me for advice.
Matthew
Submitted by Kristal Kraft on May 3, 2008 - 7:35am.
This is another sad example of a licensed agent who has never learned their true potential in the business. Agents who fail to see their value beyond the cost certainly will have a hard time defending a price in the market for their own home or a client's.
As agents we bring more value to the table than the cost of a commission. If we can't we best find another career.
I'm glad Dr. Dani Babb has her online PhD to fall back on. I just hope it isn't in negotiations!
Kristal Kraft
Selling Denver Real Estate
Submitted by Alex Lazo on May 3, 2008 - 11:01am.
Even though most real estate agent commissions are significant, the actual dollar difference than an agent may receive for a $750,000 sale, for example, compared to a $700,000 sale, is not significant. Therefore, agents tend to steer their clients toward agreeing to a lower selling price in order to close the deal faster. In the example above (which is not atypical), the homeowner would receive approximately $47,000 less for his or her home based on the standard 6% commission, while the selling agent would receive only $1,500 less based on the typical 50-50 commission split between seller's agent and buyer's agent. Most agents would gladly give up the potential of getting an additional $1,500 in return for closing the deal in a more timely manner.
Submitted by J Philip Faranda on May 3, 2008 - 7:34pm.
Horrendous advice, and a shameless plug for housepad. For every anecdotal example of someone who supposedly benefits from going FSBO or Quasi-FSBO (i.e., listing on the MLS for 300 bucks and doing an exclusive agency with no listing commission), there are many more who blow their deal or never get one. Full disclosure: I am a broker with a foot in both the full service end of the idustry and flat flee FSBO/MLS. The flat fee clients excel in killing their own deals.
It isn't just about getting your house on the MLS database, it is about guiding deals to a profitable close. Principals typically lack the objectivity to handle the maelstrom of issues that go into a deal, and if they represent themselves and are pitted against a buyer with a buyer agent they can get their clock cleaned. Frankly, I am tired of sellers complaining about the poor job their listing agent did. If people would stop listing with Cousin Vinnie, Aunt Mabel or the guy from the office who just got his license they'd be far better off. Find a good full-time agent with a VERIFIED track record and you'll be far better off and net more money.
Submitted by Mark Daugherty on May 4, 2008 - 11:16am.
Read between the lines. She's been a licensed agent less than a year. She's probably never actually represented anyone. Her main focus is marketing online education. She's selling a $375 course on how to buy foreclosures. What better way to get traffic to your website than push a few hot buttons? I'm surprised her post made it past Inman's BS filter.
Submitted by Shaun Greer on May 4, 2008 - 4:42pm.
Interesting to see a real estate agent selling to sell FSBO. The main problem with selling a home FSBO is that no everyone has time or the skills to do it.
Submitted by Chuck Marunde on May 4, 2008 - 7:38pm.
Real estate commissions are not and never have been the problem. That's a bit immature I think. I've been a real estate lawyer for 20 years and now a Broker/Realtor for a total of 30 years. I have had many transactions in which I saved my buyer $10,000 to $30,000, far more than my commission. And I've represented sellers in which I got them far more than they would have gotten otherwise, including my commission.
Submitted by Louise Decker on May 4, 2008 - 9:09pm.
I'm surprised that Inamn actually highlighted this article. Seems to me that she is an intelligent woman with a very self serving marketing plan. Prior to obtaining my real estate license in 2007 my husband and I sold several of our own properties but it was a lot of work and we spent quite a bit of money and time doing it. I've never been sued in Real Estate but I used to be concerned that someone could bring a suit for whatever reason and go after our hard earned Assets because we did not have a license and could make a mistake. I like having the peace of mind knowing that I have professional insurance in addition to personal experience. I wonder how many FSBO sales end up in litigation after the sale - anyone know a statistic on this?
Submitted by Michael Taylor on May 5, 2008 - 5:19am.
With these market conditions and the average days on the market being high, marketing a home is getting very expensive. It is hard enough to sell a home in the MLS with a full arsenal of tools, I cannot even imagine going by owner right now.
Michel Taylor
Indianapolis real estate agent
Submitted by John Davison on May 5, 2008 - 5:29am.
Dani's credentials obviously disqualify her from any serious consideration all together if she has in fact been licensed for a only a year. The on line Phd is a joke too, as is her attempt to sell foreclosure material for $375, but I won't harp on that too much. I urge people to sell FSBO if they want to. It's your house and your choice.
Here's one sad story about a FSBO I met and ended up listing. The couple was a working couple and not available to readily show the house during the week. They got to the point of desparation and the wife decided to make herself available on a moments notice if she had to. One day she got a call from a buyer and rushed home to show the house. The couple entered the house and the "wife" robbed her blind while the "husband" raped her. I supposed, if the buyers were represented by a Realtor who needed an electronic key to enter the house, this would not have happened.
I know this sounds harsh, but it is one of the examples of what sick people will do in this world when given a chance. I always urge FSBO prospects to get a copy of any "buyer's" drivers license and to have a man in the house when showing it. Unfortunately, people don't always have that luxury and their desire to sell their home can put them in harms way.
Realtors are no different than any other professionals. If we are adept at our craft, we will exhibit a certain value that consumers will appreciate and for which they will hire us. Personally, I don't worry about FSBO's. As a matter of fact, I embrace them and prospect them constantly. Eventually, they get tired of trying to do it on their own and they list with a Realtor. To date, I have not met a FSBO that had as many buyers calling them as a Realtor with a good web site and strong data base. I encourage FSBO's to keep on spending money to advertise and market their homes. By the time they invest hundreds or thousands of dollars and get no results, they'll at least see the economic value of hiring a Realtor.
Submitted by Don Yosef Marcus on May 5, 2008 - 7:24am.
THIS STATEMENT, " To SELL BY OWNER " shows the LACK of EXPERTISE ,EXPERIENCE, KNOWLEDGE & PROFESSIONALISM for the real estate industry. How can you publish such non-sense without any counterview article ? Statitics prove that using a Realtor will help your selling experience's ON ALL LEVEL'S.
I Guess these type of comments you should expect from someone who got their PHD over the internet. I will match my record, kmownledge, experience & Real Estate professionalism on buying and selling with any FISBO day or night.
It Is So Sad that this PHD doesn't have any real estate designations after her name, they make a big difference with you get from these clases.
DON'T UNDER ESTIMATE THE USE OF A REALTOR
Sincerely yours,
Don Yosef Marcus GRI,ABR,CCREC
CENTURY 21 MB
Northbrook & Chicago
Submitted by Don Yosef Marcus on May 5, 2008 - 7:48am.
Hey Dr. Babb,
Why Did You get a Real Estate License if you recommend selling by owner ? Wasn't that a waste of time !!!
Your comments and disrespect for the very hard working deditcated Realtor's & Brokers shows you need to go to therapy.
Obviously you don't know what goes into being a Realtor or a Real Estate transaction if you can SAY such a crazy statement.
It Only Shows that their ignorance in every profession and that statement puts You on Top.
I love my job & I know I that I make a big diffence in selling for my clients.
Realtor forever,
CENTURY 21 MB
CHICAGO & NORTHBROOK
Submitted by Matthew Dollinger on May 5, 2008 - 1:28pm.
Wow... that's about as far as I can get after reading Dr. Babb's article and a number of the supporting pieces here.
Right... go to Zillow (www.zillow), get a Zestimate (20%+/- in Chicago for accuracy), and then throw your home on the market.
Forget the fact that you're overpriced and that most of the activity will come on your home in the first 30 days... spend your beautiful spring days sitting open houses, following up with Realtors (if the return your calls being a FSBO), and wonder why no one has an offer on your home.
Offer (or don't offer) a buy-side commission and then you're tacking on 2.5 - 3% for the buyers agent... That's right... PAY a skilled negotiator to go into monetary battle against you.
Then learn all about the disclosures and how to write and read a contract in the hopes that you get an offer. (Or forget the disclosures and get sued... whatever floats your boat)
Go to Zillow again, fudge the numbers, find out your overpriced, drop it below where you should be, and then get an offer from an experienced agent (see part about negotiating against someone that does this for a living above... While you're at it... go fight Mike Tyson).
"Decide" on a price, then write up a contract, contact an attorney, schedule the closing, go through the final walk through, negotiate some more, blah... blah... blah..."
This post only once again reaffirms the ignorance that surrounds the job of the Realtor. Unfortunately it comes from someone within the organization that only futhers it. I guess this only gets messier when Dani, in a Today Show interview, states that she quit her corporate America job 2.5 years ago (interview published 2/25/08) to start an online business business. Did you really spend alot of time working with sellers then in a "normal" market or when they were standing in line to buy things? Honestly I did alot of research before posting things as I don't know much about the Doctor, but unfortunately I don't think the general public will.
I rank this information right up with the S&P Case-Shiller report for accuracey and "general" overview of a market based on regions. (The Case Shiller report only takes Single Family residences that have been sold at least 2x into account for their survey)
But that's just my 2 cents
Matthew Dollinger
Performance Coach
www.theyoufactor.com
@properties, Chicago IL
Submitted by iHOUSE Web Solutions on May 5, 2008 - 2:21pm.
FSBO is not as simple as the author makes it out to be, but what I see as a stronger case is the buyer agent fee. If a consumer is doing 90% of the work finding the home they want to buy and being firm on the selling price, then I do not see why the buyer agent will receive 3%. But if the buyer agent is seeing the transaction through from beginning through closing, then the commission is well deserved.
Any way you slice it, discussions about commissions are a great way to navigate through the changes that the Internet age has brought to real estate. Realestateyouropinion.com is a real estate marketing and advice blog, for these kinds of discussions
Submitted by Matt Spica on May 5, 2008 - 4:30pm.
I find this thread enlightening. Yes there will always be those that need a realtor because they don’t have the time or are not comfortable with the process of selling or buying a home. But I find it disingenuous and dishonest to suggest that nobody but a realtor can negotiate a successful real estate transaction. We are not talking rocket science here and anyone with a high school diploma can be a realtor with some online classes. I am not a licensed agent and have success on both sides buying and selling. I ended up saving myself over $30,000 in commissions on my last sale and I sold at the top end in my neighborhood.
As a home owner that $30,000 was well worth the 4 weekends of open houses I held. Who do you think has my best interests in mind when it comes to selling my house? Their will be no information sharing between agents on what my bottom line is. I hold that card and I have experienced in the past seller’s agents letting me know what the seller’s bottom price is to help close the sale faster. That is not in the seller’s best interest but it is sure in the seller’s agent’s best interest to close that sale as quick as possible.
I also found it quite reprehensible when some one referenced the tragedy of a family’s burglary and assault, indicating that if they had an agent it would not have happened. What would have stopped those criminals from setting up a visit with an agent and doing the same thing to the agent? I mean really would a sellers agent refuse to show a home to a buyer that was not represented??
Using such fear tactics is deplorable.
Submitted by Mega Broker on May 6, 2008 - 7:08am.
I've seen too many buyers and sellers get burned by doing it themselves. If an individual has numerous recent transactions under their belt, I can see how they can go alone successfully. Otherwise, get help from a GREAT agent and you will come out ahead financially 98% of the time.
Submitted by Mike Cooper on May 6, 2008 - 11:42am.
Ok...enough is seriously enough. Normally I enjoy watching this pointless banter, but now that people are chiming in, posting complete BS and making very uneducated claims, I must finally step in and voice these concerns, shedding light on the aforementioned BS.
First, to those of you who are knocking on this lady for getting her PhD online: Um...can't you take a vast majority of your RE licensing requirements online. Oh, wait...I know what you're going to say..."But we had to go sit down and take our state test in person". Well, let me tell you something sister, there are MANY tests that have to be take in person as well, when working towards your graduate level degree, whether you do the majority of your course requirements online or on-ground. I would theorize that Dr. Babb was held to this standard as well. So there goes that one...next.
I find it comical that Mr. Carter (the author of this "news" blog) has the audacity to post a copyright infringement notice, when he himself is quoting intellectual material of Dr. Babb, which he obviously pulled off of Entrepreneur’s website. Wait...did Mr. Carter or Inman get permission from Dr. Babb/Entrepreneur Press? I'll have to write Entrepreneur and inquire. By the way...you can disclaim all you want Mr. Carter/Inman...you can't copyright work not of your own.
Thirdly, I personally don't care how little time this chick has had her license. Last time I checked, you all started off at some point yourselves...which means you were all, at some point, in her shoes. I would bet my last dollar on the fact that had I met you at that time, you would have told me that you knew what you were talking about and you were the "best" guy/girl for the job (to sell my house). You know what, you probably were. So how dare any of you to talk down on her for voicing her opinion. I would have to also wager that she probably has drastically more education then the majority of you who are talking trash, if not all of you. I know she's got me beat!
Additionally, to the ignorant person claiming that SHE is charging $375.00 for a course in finding foreclosures; if it is being run through an educational institution, then they (UCI) are charging $375.00 for the course, not the instructor. The educator themselves does not set the price, nor lavish in the money that the course actually brings in. Last time I checked, teachers are paid a salary, which means unless Dr. Babb founded and owns UCI, she is just a professor for them, meaning she gets a paycheck, just like everyone else.
Lastly, I do believe I've seen this lady on a couple TV shows. Actually, I know I have. MSNBC and Fox News both come to mind, although I think CNN was one of the networks I've seen her on too. If she's really so far fetched...she wouldn't be getting such good press. When was the last time any of you spent some time chatting it up with Cavuto?
I suggest you all seriously take a look at yourselves before ranting on about someone else. After all, if you don’t have anything nice to say, don’t say anything at all. So what if one among you is pro-consumer? Are YOU really that hard up for clients that a few hundred or thousand people taking on their own lives will be devastatingly detrimental to your business? If you spent half of the energy that it took to write up your rants and drafted up a new flyer or business idea, maybe you’d care less about what others are saying or doing because you’d be too busy making money and being successful yourself!
Dr. Babb…pay no attention to those who mock or talk trash. Everyone who is successful has to deal with it. The more successful you are, the more of these mindless and foundationless injections of uneducated opinions you’ll have to deal with. Look at it this way…through my life, I’ve come to realize that those who are talking the most BS are those who are most jealous. Keep doing what you’re doing, whether or not any of us agree with you. It’s your life, and quite honestly, if one person reads your article and profits a dollar more than they would have using an agent, then you’re job is done and done well!
P.S. To the guy who referenced the “rape and theft” scenario, if it is true, then my heart goes out to that woman. Realize though that these scenes have played out even with the almighty licensed RE agent there. Hell, there have been RE agents raped themselves by their own clients. If you are going to cite a scenario as some sort of proof of something…make sure it actually proves something!
Fin!
Submitted by Maria V. Kafetzis on May 6, 2008 - 4:55pm.
This article must be one of the most ridiculous and incorrect articles on selling a home I have ever seen. Being a licensed Realtor, with 12 years of legal background, I can honestly say, that anyone I have known of selling their home themselves, has wasted valuable time soliciting their home to the wrong people. Not only are For Sale By owners highly criticised by their neighbors but every buyer that comes in the door is usually not even qualified. As many of the people that wrote back on this article said, facts and statistics show opposite of what is said here. A good Agent that brings results has over 100 memberships with different websites and has major advertising techniques to bring in the write buyers. The Agent that posted this article, is either out of the business for many years, or has absolutely no clue. Selling a home is a very complex task from start to finish. Most homeowners work and do not have th experience or the funds to bring about such a sale, successfully PROVEN FACT. I hope the Agent that posted this is not still licensed, if you are, you should reconsider your career, you obviously don't know what you are doing. www.RightRealtor4u.net
Submitted by J Philip Faranda on May 7, 2008 - 4:57am.
Mike,
I think you are missing the point here. There are people with literally decades of experience responding to someone with very little, who is giving poor advice.
I have had correspondence with Dr. Babb which was quite cordial, and I told her that my objection to her advice was not that she's an advocate of FSBO; there will always be those. My objection is that the vast majority of the readership, presumably people with regular jobs who seek foreclosures as a means of a 2nd income or replacement income, can get hurt by taking that advice.
We are talking BIG numbers here. This isn't a Mary Kay deal, or a seasonal lawn mowing gig. This is hundreds of thousands of dollars changing hands, with collateral which could have a myriad of expensive problems, any of which could ruin a novice (or expert for that matter).
One of the most well-known authors on real estate investment, Robert Kiyosaki, advocates getting a great agent. Napoleon Hill and many other success authors, tells people to create a Mastermind group of experts for your endeavors. It is utterly foolish, when striving for wealth in a field as unfamiliar and risky as real estate, to shun the experts, agents, and expect to enhance your chances for success.
When you are starting from a position that the experts are unecessary and without them you'll be 2 or 3% ahead, you are asking for trouble. Big, expensive, trouble.
Submitted by Rebecca Levinson on May 7, 2008 - 2:40pm.
I can't say it better than those listed above, but my gut reaction after reading this post, was a very simple, expressive "What the ___?"
To any one who has gone FSBO it is almost like when you buy a house from a builder, it is a task that once done, you don't often want to repeat again.
It is painful to sell a house on your own, unless you are in or come from the business, and even then some real estate agents hire another agent to represent them.
Why would someone suggest this, you've gotta know that going it alone costs you money in the long run. Most often times, it is the choice of who represents you, not the representation itself, that hurts the real estate seller.
Submitted by Richard Greenwood on May 7, 2008 - 6:42pm.
You'll find many who agree with her at http://BetterHomeSelling.com
Submitted by Lucie Amundsen on May 8, 2008 - 9:31am.
I think that is why companies like www.webdigs.com that offers a full service way to sell your house for $2K and gives you 2/3rds of the commission back when you use them as a buying agent is about to really take off.
My house is on the market with them and I'm currently writing a seller's diary about it. The good, the bad and the ugly. www.webdigsblog.com
I had sold it FSBO, but the way - but the deal fell apart. This is a nice compromise between on my own and 6%.
Submitted by Kevin Schmidtchen on May 8, 2008 - 10:09am.
Wow...you must simply want to attract a lot of attention...that is my first guess....and it looks like you have suceeded.
www.SantaBarbaraRealEstateVoice.com
Submitted by Richard Dale-Mesaros on May 8, 2008 - 8:45pm.
I can't believe I read all these comments....
Bottom line: If you're going with a Realtor, choose one with a good track record , who closes at least 50 deals/year. If you're going it alone, make the effort to learn the strategies that do work.
I'm an investor with over 50 deals under my belt and I keep meaning to use a Realtor (and would do quite happily), but I've always sold my properties myself first. Realtors work and so can FSBO, as long as you due your due diligence on either first!
Are we done yet?
Richard :)
Chief Deal Weaver
www.BlackWidowNetwork.com - STRIKE FAST!