Potential and existing For Sale by Owners should take National Association of Realtors (NAR) ongoing rhetoric with a grain of salt. The NAR has a significant stake in how you choose to sell your property – did you know that there is approximately $60 BILLION in real estate commissions paid out annually (up 19 billion form 2000)? In a well planned and funded effort to justify their services and the astronomical commissions that they collect the NAR spends millions of dollars every year inundating the average homeowner with propaganda.
Realtors would have you believe that it is totally impossible to successfully market and sell your own home. The reason they propagate this fallacy is painfully obvious but it is shocking how convincing they can be and how frequently homeowners fall prey to their ploys.
Let’s put some of the most common NAR rhetoric to sleep:
FSBOs do not sell for less
FSBOs do not take longer to sell
FSBOs do not unwittingly expose themselves to potential thieves, rapists or murderers
FSBOs can effectively market their own property
FSBOs can effectively sell their own property
FSBOs can save thousands of dollars in commissions
Truth be known, the National Association of Realtors does some things very well. First of all, they gather, compile and distribute very accurate data related to real estate that can prove very helpful when creating a For Sale by Owner marketing plan. This data is gleaned from hundreds of thousands of home sales so the data is very accurate. Most, if not all, of the data is readily available on the internet. This data includes, but is not limited to, average number of days on market (DOM), average and medium sale prices (compiled monthly and seasonally adjusted), unit sales by region and unit sales by “Metropolitan Areas”.
The NAR also compiles statistics related to “Buyer” and “Seller” tendencies, these statistics are generated through surveys of both buyers and sellers. Some of the data speaks volumes, for instance over 70% of home buyers in 2006 used the internet to find the home they ultimately purchased, before they hired a real estate agent. Secondly 18% of home purchasers claimed that the first introduction to the home they purchased was a FOR SALE lawn sign. Do the math – that means over 88% of “BUYERS” found the property they ultimately purchased without the assistance of a real estate agent – yet 85% used an agent to facilitate the purchase – who says marketing doesn’t work.
The second thing they do very well is market real estate; this is done through their proprietary data service – the Multiple Listing Service better known as the MLS. This real estate listing data, while proprietary, is not restricted to real estate agents, it is available to virtually anyone that has access to the internet. Realtor.com, the consumer facing website is a by-product of the MLS, this primary marketing tool for Realtors is also available to virtually anyone. For Sale by Owners can invest in Flat Fee MLS. The concept is simple – instead of the “Listing Agent” charging a commission based on the sale of your home, the homeowner agrees to pay a Flat Fee to a registered Realtor – this fee is typically in the $399 – $699 range depending on your geographical area and level of service. The agent simply agrees to list your property on the MLS. This exposes your property to all Real Estate agents through the MLS database and most potential buyers through Realtor.com (remember over 70% of buyers found the property on the internet BEFORE they hired an agent) which enjoys over 7 million monthly visitors that generate over 350 page views. BEWARE – not all Flat Fee MLS is created equal – make sure you know what you are buying and that there is some level of support.
One of the biggest problems that I have always had with Real Estate agents (outside of their high commission fees) is that they have a different mandate then the typical homeowner. A real estate agents mandate is to sell “a” home and get paid their commission. The homeowners mandate is to sell their home. How often do you think a prospective buyer calls in to set up a showing for a specific property (your property) and the agent says – “sure, we’ll set up an appointment – but while were out looking at that property let’s look at these “others” that I think you may be interested in.” Personally, I don’t blame them, that is how they earn a living – I would do the same thing, it’s called “hedging your bets”. The inherent problem is that a real estate agent can be successful without the homeowner being successful. A great example of this is “Open Houses” in my opinion they are simply a lead generation platform for the listing agent. The “visitors” come to see your home, the agent takes their name and contacts them to sell them any house – they have simply used your property and time as a hook.
I always have to defend myself, and I want to be clear, I do not hate real estate agents. They definitely perform a service that some individuals are incapable of performing. I do however have a problem with the fees that they charge and their relentless attack on FSBO’s. I have always felt that if someone has to take a run at the competition in an effort to justify themselves that it was a sign of weakness.
Bottom line, you can sell your own home and save thousands of dollars; do not be swayed by the NAR and its unsubstantiated claims. Do not believe something just because you saw it on television – it is a shameless effort to protect themselves, their association and a livelihood that is under significant pressure to justify it’s fees. It’s not a coincidence that the U.S. Department of Justice is currently investigating the industry for anti trust violations. Change is coming – and it will shake the very foundation that this association was founded. The internet has changed the way people buy and sell real estate – it’s time for Realtors to accept that fact and adjust accordingly or go the way of the Dodo bird.