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.


  1. Like your blog. Keep in mind that many RE agents are of the “hard core sales breed” and will tell you whatever they think will get them the sale. That all will change with time and new blood coming into the business that actually cares if the client is making the right move. Most agents today come from a business background and have a BA Degree; therefore we are “lobbying” for higher entrance requirements into the business. A lot of money is at stake here and I personally would not want a high school graduate to “sell” me my biggest purchase ever and lock me into a 30 yr. commitment.
    Also soon with everything being more open and online, consumers will get the chance to educate themselves about anything they want. Sure there will be and are misleading sources of information; however the “crooks” can get caught faster because if it is posted on the net it will be there forever.

  2. I'm an agent; have been for 13 years. I absolutely think that anyone can sell their home themselves if they are patient, willing to put in the time, and educate themselves about the process (not necessarily in that order). At the very least I always recommend a FSBO get their home into the MLS (flat fee). At that point they would be required to offer compensation to a selling (buyer's) agent (flat fee or percentage). Properties not in the MLS will drastically reduce their pool of potential buyers and this is not good marketing. Money will still be saved on the listing side of the commission. And I feel time will also be saved - and many feel time is money. I think that many FSBOs fail because sellers come to realize that it IS WORK to sell your property. It takes TIME and many people don't have that kind of time - especially if you have a 40 hour a week job. I think there are big changes coming in how real estate is bought and sold.