Sunday, August 1, 2010

What Am I Missing Here?

I think many of the agents consider me to be anti-agent because of my blog containing information on doing a FSBO. Nothing could be further from the truth. I have posted on Trulia repeatedly that of the three of my home owning children only one might be a good FSBO candidate. I have previously posted good reasons for using an agent which are below.

1. Chances are your house will be sold quicker.

2. Convenience.

3. Let them take the risk of dealing with strangers while in your home.

4. Better suited to handle unexpected problems.

5. Better chance of a properly prepared house for showings.

I have recommended to posters on RE sites probably no more than five or ten times to try a FSBO. These instances were of a last resort variety, or issues of sellers wanting to withdraw from the market temporarily. I generally only send posters to my blog when they have already expressed interest in doing a FSBO, or for them to obtain marketing ideas from it to be proactive with their agent.

In reality open minded agents should appreciate the blog. There is information in it that could make for a smoother transaction between buyer agent, buyer, and a FSBO.
To go on further, you will not find one post from me on Trulia or Zillow where I have trashed agents in general. I have never used the words overpaid, worthless, or dishonest in characterizing them. I have never attacked their educational requirements either. However, I do routinely attack those posts from agents that are based on their own twisting of facts that already, in my opinion, have been manipulated or worded in such a manner by the NAR to be misleading to the general public.

The following quotes are from two real estate professionals:

“The information I gave you stating that Realtors tend to get more money is backed by a report done by NAR. Just because someone doesn't agree with the numbers does not make them wrong. And, yes, the report does not give "net" statistics. However, with an average of 32% higher selling price, even deducting the average 6% commission would still net you 26% more money."

"The median FSBO selling price in 2006 was $187,200, compared with $247,000 for agent-assisted transactions. That’s $59,800 dollars more in the seller’s pocket using a real estate professional (according to realtor.org). Given the numbers, if a Realtor can sell a home for 32 percent more than a For Sale By Owner that in itself is a huge reason to use a Realtor?”

What am I missing here? Do they actually expect me to believe that if a FSBO sold his house for 150K, a Realtor could have gotten almost 200K? If a FSBO sold for 225K a Realtor could have gotten almost 300K? If a FSBO sold for 300K should a Realtor been able to get almost 400K?
The obvious answer is they have twisted further a study that indicates that represented sales are, on the average, higher than FSBOs.

I think all of us would agree higher priced houses are, in the vast majority, sold agent represented. This would certainly reflect a higher median selling price for agent represented houses. This finding should not be interpreted or distorted to mean that the differential is the difference a FSBO might get versus what an agent could have gotten for that same house. You might even argue that flat-fee FSBOs are not even included as FSBOs in NAR studies. The new line of thinking is that since they have had help from an agent getting on the MLS, they are not truly FSBOs. I am not even going to bother to post a link to the study that most agents have already seen more than they care to. I could quote from the Sept. 08 Consumer Reports, but I could be considered to be as reliable with my quote as some agents are in their interpretation of some studies. If you want the real thing, you can do as I did. I ordered a back issue through Amazon.

As far as the agents' reference material from what I can ascertain, it's from the following excerpt from realtor.org:

"As for profit — after all is said and done, FSBOs don’t always come out with fatter wallets. Again, the numbers tell the truth. Homes sold with the help of a real estate professional in 2006 sold on average for 32 percent more than FSBO sales. The median FSBO selling price in 2006 was $187,200, compared with $247,000 for agent-assisted transactions."

Where does it actually state in those few sentences that a FSBO can expect to get 32% more if they had chosen an agent? The article states that FSBOs don't ALWAYS come out with fatter wallets. That's a pretty safe bet just like agents don't ALWAYS net you more money which is probably even safer. The article also gives findings on median home sales stating that numbers tell the truth. I won't argue that part, but nowhere do I see a specific sentence stating "with an average of 32% higher selling price, even deducting the average 6% commission would still net you 26% more money,” or "That's $59,800 dollars more in the seller's pocket using a real estate professional."

The article has implied something of that nature with carefully worded sentences, but never truly states it. Some agents have simply chosen to take the bait and run with it. I will repeat. The disparity between FSBO sale prices and agent represented sale prices mainly comes from the fact that more high priced home sales are handled with agent representation. Somehow I can't picture Angelina and Brad hammering a FSBO sign into their front yard. Another factor could be that a number of FSBO sales are between family and friends skewing the numbers even more. Also, if these numbers were even remotely correct, and agents can get sellers that much more, what does that say about the effectiveness of buyer agents getting their clients the best price? I'm sorry agents, you can't have it both ways.

Another stat I see get bandied about is on FSBOs that give up and go with a Realtor. The last one I saw was 90%. Now please, lets get real for a moment. Lets do the math. Given The 2008 National Association of Realtors® Profile of Home Buyers and Sellers states that 13% of all home sales were FSBOs, and mind you their definition of a FSBO doesn't include any hybrid FSBO on th MLS, that would leave 10% of the original total of "true" FSBOs to account for 13% of the sales. So under that scenario how many original FSBOs would there have been if 90% failed. The NAR reported figure on existing home sales in 2008 was 4,912,000. Given that they also reported 13% were FSBOs ("true") that would make the successful FSBO count 638,560 done by the 10% of non-quitters. To find the total number of FSBOs to have started you would simply divide 638,560 by .10 which means that 6,385,600 would have had to start out as FSBOs. That would be more than the total sales at 130%. So the 90%,or even 80% number some agents like to use simply doesn't stand up. The fact of the matter is no one really knows the correct number.
Agents should quit exaggerating the facts. It only draws into question their honesty.

Agents please take this as constructive criticism. Why don’t you stick to doing what you do best on the various RE sites. Such as answering questions with great answers, helping each other, and digging up clients and leads. I really think you do a disservice to yourselves and your colleagues when you post information that is intentionally meant to mislead. Isn't the five important issues I addressed earlier in this blog that are honest and true sufficient for you? Why don’t you leave the biased propaganda for the NAR hierarchy. That is what you pay your dues for, along with them keeping the MLS for agents and brokers only, and schmoozing politicians. That’s maybe just my opinion and if I am wrong, what am I missing here?

Now please scroll down to the videos (full screen available), but on your way down feel free to make a comment, and vote.

Attention Nearsighted Realtors:

An agent recently made an observation in the way of a snide remark concerning a suggestion I have in my blog "Thinking About Selling as a FSBO." She took issue with my suggestion of obtaining free information from Realtors by getting CMAs to get an idea on a price to list their home. She stated in her post that she refuses to leave pricing information behind unless they sign a listing agreement.

Below is just the way the suggestion reads and has read since the inception of my blog:

"Initially interview 3 or 4 Realtors and get CMA's to at least get an idea on price, and for future reference on an agent in case you do bail out."

Now lets go to the statistics that are thrown around on practically on a daily basis. Those being that 80% of FSBOs end up signing with an agent. Of the remaining 20%, 5% sell to a family member, or someone they know.

The 5% that sell to a family member or someone they know will probably avoid a Realtor anyway, leaving a minor 15% haircut to your chances of being called for your services in comparison to someone not considering doing a FSBO. Of those FSBO sellers that succeed that need to buy a new home and use a Realtor, wouldn't you think the FSBO would call one that was previously interviewed, or one that may have been involved with the sale of their house as a buyer agent? Of the ones interviewed, what do you think the chances are of the uncooperative Realtor being called?

It's said that the 80/20 rule applies in RE sales. That 20% of the Realtors account for 80% of the sales. Below is a copied and pasted post that an agent made on Zillow. I have a feeling this agent is in that 20%, or soon will be, at least in his market. He was giving advice to John and Lisa, who were about to do a FSBO:

"John and Lisa Good Luck to You! Get a CMA done on your home before deciding anything. I don't consider anything I do a waste of time. You may need a Realtor for your next purchase and/or refer other friends and family to your helping parties. A good Realtor is one who will sacrifice today for business in the future."

Enough said.

Now please scroll down to the videos (full screen available), but on your way down feel free to make a comment, and vote.