For Sale by Owner Excluded

The other day I received a flyer at home from a real estate agency. The visual impression was not the usual agent photo with an invitation to call, so I opened it. Inside, I discovered a property update report summarizing listings sold, as well as listings active and pending for my area. The information is based on the TReND MLS.

I kept reading as the properties listed as sold were not only the ones by this specific Realtor. Then I got to the part that made me pause:

Please note that For Sale By Owner properties are excluded because they often do not represent the full value of what they could sell for when properly priced and exposed to a greater number of qualified buyers through a professional real estate agent.

And I stopped reading. I’m a property owner who was so far willing to be part of the conversation with you, real estate agent, because you were apparently offering some information that would educate me about trends in my area. You just told me something obvious –- you have more experience selling homes than I do –- in a way that shows you have little respect for what I think.

If you’ve read Freakonomics, you learned that real estate agents aim to persuade homeowners to sell for less and buyers that your house can be bought for less. It’s a matter of language, as you can see in the excerpt from the book, and it’s a matter of incentive –- the agents’ incentive is to sell quickly, not to sell for more. Why? The agent makes marginally less off their commission when you sell for more.

As in the case of the flyer I received, real estate agents are careful to exercise every advantage of the information asymmetry they enjoy. Using language to frame the context and position yourself at an advantage is not new. What is new is that more and more consumers are trained to see through it.

Is the list in the property update I received a fair representation of reality? It might be. Since it excludes one piece of information that could weigh in the statistical data, I now question the information.

And there is one other message this flyer sends: I don’t respect you enough to be transparent with you. The other “R” in reputation is respect. See some other ideas on gaining respect and why that is important at The Blog Herald.

Comments

[Mike Wagner]

"more and more consumers are trained to see through it"

Right you are!

The folks in the automotive industry have already lamented this new reality.

I remember one car dealership general manager telling me, "in the old days WE use to be the ones lying to the customers, now the customers have so much information they're the ones lying to us."

And so it goes.

Keep creating,
Mike

[gamommy]

I am a real estate agent, and while some things people say are true, some of them are a little off base. There are indeed some agents who price homes low, but in general, they are not that common. I do, however, think that if a person wants to go it alone and sell it themselves, they should. After all, it is their money.

As far as FSBOs go, though, my experience is that these sellers, in general, have a very inflated idea of their home's worth.

That's just my 2 cents.

gamommy
www.superwomanemerging.com
I want to be Superwoman!

[Valeria Maltoni]

Mike -- we are experiencing some role reversal. That's why it's so important to become more transparent and collaborative in our business approach. Interesting quote you share... I think as consumers we've become more alert to BS, that's for sure.

A Mommy -- that's an interesting blog and what an intriguing proposition: superwoman! A friend of mine used to work with people she defined as superachivers. As usual, the truth is never completely one-sided. You may have noticed that my language is temperate. I say "aim to persuade" and if that's where they perceive their ROI to be, well. The point of my message (using the example above) was that respect comes through, as it does lack of consideration. I find that yes, some HO may have an inflated sense of their home's worth... yet many do their homework and end up selling for more than the agent would have gotten for them.

Everyone: any tales and stories to share?

[Roger von Oech]

Interesting discussion. I live in an area (SF Bay Area) where housing prices are high, and three per cent of a selling price is quite significant. I wonder what I'll do in the future: go with the professional in hopes of getting more than 3%, do it myself, or make a deal with a realtor.

[ann michael]

3% - Roger you're in great shape. Here (northeast US) the standard is 6% (often split if the buying and selling agent aren't the same person - but to the homeowner it's still 6% since we pay both).

I bought my house from someone who took some lousy advise from his real estate agent on setting the price. I offered him several thousand over his asking price. He immediately signed my contract only to be offered $20K more than what I gave him the next day!!! But it was a mighty quick sale!

On the other hand, I love my real estate agent - she is honest, helpful, professional, and a total relationship builder. I would go to her when selling my house in a heartbeat - she's worth the 6%.

[Valeria Maltoni]

Roger -- I was really intrigued by the case Levitt made. It explained many of the situations connected with my experience and that of friends and neighbors. As Ann says, the commission here is 6%, I'm not sure most agents work to earn it.

Ann -- it does depend on objectives. If yours is to sell quickly and do the research to figure out a good appraisal for the space -- at that point is not yours anymore -- then you may be in good shape going it alone. Many of my friends and colleagues got a better deal alone than they did if whey had accepted a deal with an agent. As you say, if someone can add value, then it is worth the cost any day.