Would be interesting to know how may fsbo’s who did not work with a Realtor who would sell by owner again.

A Realtor is no magician and in my opinion a waste of money for many people. Pricing your home correctly is the single best way to ensure it sells. The internet provides all the tools you need. Sure – curb appeal, staging, and other tips help but I sold my house in a down market in 4 days with no realtor. How? Just be fair in your assessment of its true value. IMHO tools like flat rate MLS and access to the internet has changed the game for buyers and seller. Unfortunately, many Realtors and the industry in general are clinging to an antiquated sales model and their premium commissions.

This survey shows what we see most often. Sellers generally fare better with professional help. The tools available online, at least in my market, are not sufficient to appropriately determine a home’s value. This coupled with the experience a skilled marketer and negotiator brings to the table can really help to protect the seller’s interests and help keep a deal together. Having said that, there are also those sellers who sold their home on their own with success.

There are lots of tools online for me to diagnose my symptoms when I don’t feel well, but nothing replaces the need for a trained professional like my doctor.

Respectfully – Let’s not confuse Realtors with Medical doctors. I have bought and sold homes over the year and even gotten my real estate license years ago. I have never worked however as a broker or salesman.

I also have NEVER had a Realtor tell me to raise my price. The client sets the price based on the comps which anyone can get online. This is not quantum physics, or brain surgery as in keeping with your theme. Setting that price is the single biggest determining factor towards the success of your sale. You don’t need a realtor for that. Getting into MLS however is important and as times have changed, you don’t need a traditional agent for that either.

As for buying? If you have ever been shown a home with a realtor – They are limited in the information they can actually disclose, so listening to them ask “so what do you think” as we walk from room to room is not particularly helpful either. Sure they may make small contributions to the negotiation but lets remember it is the seller and buyer that are driving the process. And realtors ONLY get paid if the home is sold which has to influence the judgment of even the most righteous person. So I have to ask myself, when I go to sell my current home … is it worth it for me to pay 54K in commissions for that?

There certainly is a difference but it is always hard to know where to draw the link. Commissions will be here to stay and is really what drives the industry!

Nice article, and the graphs really speak for themselves. There are a lot of pitfalls in today’s market, and many deals fall apart after initial acceptance. Not only do Realtors help with the marketing, they are also the glue that keeps many deals together.

Great article. I would say that the value of a Realtor has changed in the past 5 years quite a bit. 90% of all transactions have MAJOR issues to negotiate and work out. Most of those are with lenders and a FSBO typically has no idea how to help a buyer with this and get their home sold. Most sellers today don’t have the knowledge and expereience to sell a home without getting themselves in trouble from any angle. This is the most difficult market we have ever seen and from our experience 90% of all sellers would agree that they NEED full professional service to get the job done. 5 Years ago I would tell friends that you don’t need my services. Just put a sign in the front yard and it will sell and there are hardly any lending issues since EVERYONE is getting a loan. TIMES have Changed and we see hands flying up begging for full service please. Some consumers don’t see our value until they have a very nast story. Kind a like insurance- you don’t see the value until your home burns down. Then your willing to pay anything for the problem to go away and get resolved. We are problem solvers above all.
Not long ago I had a major medical issue. I did not want to pay the emergergency, hospital and Dr. Bill as they are outrageous in cost. So I decided to save that $$ by staying at home and performing the surgery myself. I went online and found some great public information. I pulled out a knife to cut myself open and half way through I realized I could die. I ended up dying, going to heaven and God told me to go back and use the professional Doctors and let them do their job. I listed and now I’m all better. Moral of the story= sometimes its best just to let the professionals do their job. You may actually live to tell a great sucessful story.

Again comparing 20-40 hours of training to be a realtor to the YEARS it takes to be a doctor is ludicrous. In my “Not long ago story” I was able to pay my medical bill with the 50K, I saved as a FSBO and still have enough over to go on vacation, donate to a charity, get a 60 inch LDC, by a 2011 Harley, and have 20K left over. But I am sure giving that money to a realtor is equally as satisfying.

Oh, Roadrunner, you personify the arrogance of the ignorant.

You’d have been better served if you had taken the 50k you didn’t pay in “premium commissions” and invested it in actual education in real property sales transactions. Passing a real estate exam doesn’t mean you know the slightest thing about the business. Our education is constant and ongoing and the contracts change and increase yearly. Our files on any one client can have upwards of 80 multipage contracts, disclosures, inspections and advisories and thousands of documented meetings and conversations. You’re living in the Dark Ages if you think we fear or don’t use the Internet. The Internet is a tool we can’t do business without, but it’s only a way to connect with people and do general research if you’re buying or selling. It doesn’t do anything a REALTOR does. Our clients, who are well educated, are shocked at what they don’t know and couldn’t find out on the Internet. Also, any half-wit knows you can’t comp a property accurately online – or even by looking in the MLS for that matter. An accurate comp requires you know the physical differences between similar properties – their lots, interior and exterior conditions, upgrades, amenities, legally permitted or non-permitted alterations, HOA and Mello-Roos fees, easements, planned road, commercial, school and housing development in the area, power line proximity, drainage, taxes and much more.

As to these lavish commissions you think we make, 50%, or more, of the commission paid a listing REALTOR is given to the agent representing the buyer. Contrary to your impression, though we are paid entirely on commission, we strongly counsel our clients about areas of concern that could negatively impact their investment in a home or their ability to sell it in the future. We will forego a commission altogether rather than encourage a client to seriously consider what we believe is a challenged property they may regret buying in the future. Imagine that. Compensation, by the way, comes to about $23.00 per hour on an average million dollar transaction when you document time, materials and expenses. There are usually 2 or more of us servicing one client, so the income is shared. No benefits, no weekends off, no vacation pay, no company-matched 401(k).

So, if you didn’t pay an agent to list your home, and you didn’t compensate an agent to represent the buyer of your home, just who did protect the buyer’s interests? Maybe you, with your vast knowledge of real estate and your unquestionable ethics?

With no credible knowledge of the real estate business, those you are advising about it will be better off if you stick to tooling around on your shiny new Harley and let qualified real estate agents represent people who are smart enough to know that they don’t know everything.

Paula – Who would hire an agent with such little respect for their clients or the public in general? If any post exudes arrogance, it’s yours.

I never said you fear the internet. But certainly it is a tool that has revolutionized the purchasing of homes, the inspection of homes, and the determination of market price. In fact the only thing that has not changed in your industry with the exception of companies like Redfin, or Zip Reality is your antiquated commission schedule.

So you can continue to place dated pictures on your signs of a time when you were younger and think that you’re indispensable to your industry, but I would bet I could through a stone and find 50 more qualified, higher educated, more market savvy negotiators, all thanks again to the internet.

Just because you split the commission with equally valueless individuals does not mean I am getting more worth for my money. Why does an agent have to split with a broker? What benefit did the buyer’s broker really bring to the transaction? For that matter … why are contract 80 pages instead of 5 or 10? What an amazing world we would live in when litigation is replaced by common sense and personal responsibility.

“We will forego a commission altogether rather than encourage a client to seriously consider what we believe is a challenged property they may regret buying in the future.”

Do you want a cookie? It’s called fiduciary responsibility. Which I am sure you share with other members of your profession too like lenders and mortgage brokers … ALL of WHOM had NO CONTRIBUTION to the current situation real estate finds its self today.

The facts however seem to support many realtors DID place clients in homes they could not afford. And they got paid… and the mortgage broker got paid…, and the lenders portfolio were bundled and sold on Wall Street where yet someone else got paid.

However DO NOT MISTAKE my position on personal responsibility!!! I am disgusted in the number of people who expected their home to only appreciate and have walked away from their responsibility and contractual obligations. But this argument is not about them.

“So, if you didn’t pay an agent to list your home, and you didn’t compensate an agent to represent the buyer of your home, just who did protect the buyer’s interests?” Are you disclosing to your sellers that their commission payment is being used to protect the buyers? I would love to see that speech. We all know the reality of it but how crazy would it be if the buyer pays for the service they receive and the seller pays for the service they receive. Or maybe a buyer finds a house on their own and hires an attorney to review the paperwork. Too crazy?

I will certainly concede for many transactions a realtor would be necessary for individuals with neither the time nor inclination to do their homework and sell their own property. Or for Buyers unfamiliar with a new area. But your failure to acknowledge the tools available to a savvy do it yourselfer is simply denial.
No benefits, no weekends off, no vacation pay, no company-matched 401(k). Are you kidding? Your complaining only proves my point. Most established realtors I know make a very good living. You knew the job before you decided to stop being a waitress, nuclear scientist, or crossing guard or whatever you did previously, so you can’t complain. Jobs with all of those benefits you seem to want are available just not CURRENTLY in real estate.
BUT maybe Realtor’s should be paid hourly and get benefits. It’s not a crazy notion to pay for what you GET. If you need a house, hire an agent on an hourly basis to show you properties. If you are selling, pay only for the MLS listing and premiums perhaps for each open house. Maybe a bonus for delivering an able buyer in a certain time interval. The only DARK AGES here is the antiquated codependent system of commissions that have driven the real estate profession for way too long. And the attitude of some scared realtors reluctant to change with the times.

Wow! Those were some pretty serious comment and not so much about the article. The article simply states that a gross majority of people who attempted FSBO would use a Realtor next time and and even larger majority of people who didn’t use a Realtor would use one next time.

Paula is right that a Real Estate license doesn’t make a great Realtor. That is why 20% of the Realtors do 80% of the business.

Surely, a Realtor isn’t the best way to go for every transaction, but more than 4 out of 5 people who sold their homes (FSBO or not) think that it is.

Actually it says “77% of FSBOs who managed to sell their homes on their own said they would try and sell their home on their own again.”
and 88% of those who used a realtor would use a realtor again. While 88% is better than 77% it is not a huge difference.

Additionally 24% FSBO eventually used a realtor I would not classify as a “gross majority”

The article mentions what most people can image. Those who used an agent and did not sell their homes were slightly less likely to use an agent again. Hardly surprising.

It would be nice if the article spoke about asking vs sold price.

As I mentioned earlier, if a home doesn’t sell FSBO or Realtor 99.4% of the time …its priced wrong. Can’t fault anyone but the homeowner for that.

Sorry, I didn’t see 77%. Just read this post again and still didn’t see that. Where did you get this number?

81% of FSBOs would use a Realtor next time.
88% of represented sellers would use a Realtor next time.

More than 4 out of 5 is a gross majority.

Can’t agree more on listing price being very important. Price fixes all issues.

I wrote an article about FSBOs that list in the MLS which shows that FSBOs saved money over the average agent:

http://thechinsells.wordpress.com/2010/09/21/statistics-of-for-sale-by-owner-fsbo/

These surveys are useless. I sold my home in Syracuse for more than asking and much more than the median sale in my neighborhood ON MY OWN within 2 weeks. Unless you are moving to an area that you know nothing about, a realtor adds no value.

Roadrunner doesn’t have a clue. He got his license, why didn’t he ever use it? He just doesn’t have a clue and Paula is right on. This is problem with headstrong people that just don’t have a clue. Who would want a client like that to begin with who holds Realtors in such low esteem and thinks he knows everything?

In all reality. Most people have little awareness of the complications that can occur with selling their home or buying a home. And why should they. A Realtor is not only available to guide Buyers and Sellers, they take risk with every transaction. In a litigious society, what protections are there? If there were a structural concern, how would it be handled? If there was a cloud on title, what may be to proper procedures to protect both side? What’s the difference between a Quit Claim Deed and and Warranty Deed? If the appraisal does not match the sales price, what are the alternatives? How do you address non-permitted physical changes to a property? What is the difference between legal and physical access to a property? What options are there for encroachment? These are tip of the iceberg issues that are relatively easy to resolve for an educated, trained, and experienced Realtor who has a multitude of resources to rely on.

Not every deal is sweet and easy. Nobody knows until they start digging what problems, troubles, or challenges lay ahead. Sellers can sell their home and save a commission. At the same time, they assume full risk. That $54K profit may end up with a $500K liability without even being aware. Then who is to blame? Using a Realtor goes far beyond marketing and negotiating. A Realtors responsibilities don’t stop with a close of escrow. Where money is involved there will be those waiting for the unsuspecting to take advantage. Buying and selling a house is much more than buying a car, boat, or refrigerator. Using a professional minimizes risk, increases satisfaction, and makes sense.

Alisha Wade – I got my license because BUYING a home I thought at the time would be the single biggest purchase of my life and I wanted to know everything about the process. And as for being clueless … that’s all your post says … it adds NOTHING to the conversation. So who is really CLUELESS?

My postings said nothing about my holding realtors in any regard. Simply that the internet and tools afforded to a majority of homeowners diminish the need for a REALTORS and their standard 6%.

Chris F is RIGHT. You can watch HGTV for a day and get a good understanding of what it takes to be a realtor. It’s not quantum physics so its insulting when you make comparisons to doctors.

Doug presents so interesting contributions about legal exposure but I have to ask if using a realtor affords the sellers any less exposure? Sellers disclosures are “questionable” at best and perhaps listing it with a broker affords the buyer an additional deeper pocket but ultimately it is the seller who is responsible for any misrepresentations.

If you know your market, represent the home honestly, and don’t mind a little work, selling your home YOURSELF can be a great savings.

And Alisha … you deal in $179K homes. Not the homes I would be buying, so no worries about me ever hiring you.

Roadrunner – Yes using a Realtor does decrease Sellers liability; at least in the courts view. Having read past litigation, it’s generally the Broker and the Agent who end up paying the higher penalties. Courts seem to differ on who is ultimately responsible; though it should be the Seller. You are right that some Sellers fail to disclose, and I would add lack integrity. This is why I have convinced that type of Seller to release me from listing their home in the past. I don’t care to partake in deceit, manipulation, or taking advantage of an unsuspecting Buyer. The same can be said of some Buyers who prey on unsuspecting FSBO’s.

Personally, I like working on cars from body work to rebuilding an engine. Nothing sounds better than old fashion American muscle car thunder from the toil of your own hands. That doesn’t mean I don’t rely on my mechanic from time to time to get some specialty work done. I’ve built my own computers. Doesn’t mean I won’t buy one at the store. All this does is make me a better protected consumer for computers and cars. I worked in Criminal Justice for 20 years, wouldn’t dream of representing myself in court. Even if I do feel Attorneys are overpaid. As the saying goes, I wouldn’t want a fool representing me in court. Doesn’t stop me from knowing if my Attorney wasn’t performing to my standards though.

In a perfect world, Realtors may not be needed. This isn’t a perfect world. So, Buyer and Seller beware. A Realtor can make a big difference. It’s their decision which one.

I think the numbers would be better if Realtors focused a little more on their communication. Every year a deal with many Realtors who won’t return a simple phone call. I have even been able to pickup clients just because a Realtor would not call someone back about a listing.

http://www.EugeneFineHomes.com

As a realtor, I see it all the time. A homeowner wants to sell, the market is rough and, in trying to minimize their losses, they decide to go the FSBO route. Only to contact me months later when their house doesn’t sell. Although I am a realtor, I actually recommend that some of my clients try FSBO. It can work for the right homeowners (those willing to put in the work) and sometimes they just need a little hand holding. Their are some great resources out there for FSBOs. When clients ask about FSBO, I ask, “how much work do you want to do?” If they don’t mind the work (and can get the home listed on the MLS) they may do just fine. If not, stick with the professionals.

This survey shows what we see most often. Sellers generally fare better with professional help. The tools available online, at least in my market, are not sufficient to appropriately determine a home’s value. This coupled with the experience a skilled marketer and negotiator brings to the table can really help to protect the seller’s interests and help keep a deal together. With no credible knowledge of the real estate business, those you are advising about it will be better off if you stick to tooling around on your shiny new Harley and let qualified real estate agents represent people who are smart enough to know that they don’t know everything.

There are a lot of pitfalls in today’s market, and many deals fall apart after initial acceptance. Not only do Realtors help with the marketing, they are also the glue that keeps many deals together. We will forego a commission altogether rather than encourage a client to seriously consider what we believe is a challenged property they may regret buying in the future. Thanks for sharing…

All are really good points but we need to remember that Realtors are excellent negotiators. If you want an opportunity to learn about real estate and the options you have as well as which Realtors in your area are willing to work with you for a fee you are comfortable with, it might be best to negotiate with them before you ever meet them face-to-face.
real estate fredericksburg

Glad to see this is still going around a year later. Hopefully HomGain will come up with new survey to see if Sellers still feel the same.

Realistic and wonderful information about home sellers utilizing the services of a REALTOR than those who try to sell their homes on their own. Thanks for sharing such a nice blog.

Really interesting and surprising post about the home rate gaining with the use of a Realtor. The variation in the cost of the house sold by us directly and through the Realtor is really amazing. The reviews by the visitors explained about the success.

It’s pretty saddening to see someone devalue someone’s profession (and often time passion)in such an aggressive manner. I have been a Realtor since 2004 and I love what I do, and I love my clients. I’ve made friends for life, and they send their friends and family to me. Yes, it is a huge blessing.

Their happiness and success is as important to me as my pay check. I know so many Realtors who would say the exact same thing.

Roadrunner, you do not need to use an agent to buy/sell properties, but why attack every Realtor’s value in the process of buying and selling real estate? There were some really harsh things you said. I wouldn’t do that to you, no matter what your profession is.

I hope your relentless anger have subsided.

Yes, Monica! I have been a Realtor for 27 years. I find that typically, the sale price is higher with a Realtor involved. I hear comments of offers in 4 days by a FSBO…perhaps they were under pricing their home?? I also have buyers coming to me because they do not trust For Sale By Owners. Roadrunner should know the facts before she steers sellers in the wrong direction and costs them thousands of dollars and/or a trip to court…

The problem with FSBO’s is their inability to accurately understand the value of their home. There is no single site or physical location available whereby they can determine the true value of their home. Only current and actual sales from MLS can provide that answer. Our company performed a study of actual sales against Zillow’s Zestimate and the results are astonishing. Zillow’s average error was 6.14%. For a $200,000 home that means the value is off by over $12,000. The total range in error was from +15% to -30%. In dollars that is an over estimate of $30,000 to an under estimate of $60,000. If a FSBO sells his house quickly he/she most likely lost significant money and just doesn’t realize their mistake. They are lacking all the information to make a wise decision.

Our company also performed a study to determine if a Realtor can save more on new construction homes. The results showed that using a Realtor saves the buyer 1.2% off the list price. In addition 28% of buyers without a Realtor paid above list price. Contrast that to just only 10% paying over list when utilizing a Realtor.

The idea that by going alone allows someone to save money without paying a commission is actually false. Numbers don’t lie and the Realtor associations don’t take proper steps to educate the public. Feel free to visit our website for the actual study and numbers.