The real estate system in the US is like a battered old ship with crusty barnacles clinging to its hull. These barnacles are called Realtors. –Kidding! Realtor joke.
Over the next several weeks and months, I plan to share with you my real estate story. I can’t say how it ends yet because we’re still in the middle of it. I can tell you that it starts with me saving $20,430 in realtor fees by retaining my rights to sell by owner. It also includes a hair-raising, red-light-running, stop-the-presses, utterly-last-second showing that brought in the winning offer which I guarantee you, no realtor other than Me-“realtor” would ever have facilitated.
I don’t want to give away too many of the details while the contract is still pending, but when the ink is dry, I will be telling all.
Let me start by saying, I don’t hate realtors. I think they can be incredibly useful. My story involves multiple wonderful realtors, at least one of whom truly earned what I paid him. It also involves one complete tool of an agent who screamed and swore at me on the phone, and then called back to leave a message apologizing and saying how “easy going, very easy going” he is. Har-har.
An excellent realtor is worth her weight in gold. In sepia-toned olden times, realtors were indispensible. How was one ever to know what was for sale without a realtor? How was one ever to navigate the convoluted waterways of real estate negotiations without a crusty barnacle clinging to one’s hull?
In the internet age, however, the real estate industry is in the process of disruption. Buyers and sellers are capable of doing their own research. Sites like zillow.com, trulia.com, realtor.com and redfin.com are posting more information about properties directly to the public than is even available to realtors through their local MLS (multiple listing service). Because clients are doing so much on their own these days, a number of alternative real estate agencies and individual brokers are offering innovative services at discount prices far below the traditional 6% commission realtors have been gorging themselves on for decades.
The public is also realizing that through no fault of their own, realtors in the antiquated system are susceptible to incentives that do not line up with those of their clients. Much of the credit for this awakening goes to Freakonomics for widely reporting that realtors keep their own properties on the market an average of 10 days longer than their clients’ properties, and then sell their own properties at prices an average of 3% higher than those of their clients’ properties. Looking at the numbers you have to ask, are realtors really representing my interests as well as I would myself?
Kent and I have always prided ourselves on being first-adopters, so we had to get in on the new wave of non-traditional real estate relationships.
If you’re tech savvy, if you’re willing to put in serious sweat equity, and especially if you have some prior knowledge of real estate (Both Kent and I had bought property before, and we both took property law in law school. Insert endless litany of lawyer jokes here.), you might want to look into it. Mark my words, in 20 years, selling a home will be like selling a rug or a car on Craigslist today.
For today’s introduction, I will list just a couple of the conditions under which I think it’s wise to use a traditional realtor.
1. You’re new to the area you’re buying in and don’t have a lot of contacts there.
Sure you can get a lot of insights from the internet, but somehow, locals are often better at distilling the flavor of neighborhoods. If you don’t know a lot of locals, you might want to hire one. Now that so many areas have at least a few outfits doing non-traditional buyer arrangements, you can probably find someone who is both local and non-traditional.
2. You’re flush with cash and barren of time.
If you simply don’t have time to do it yourself, you aren’t reading this blog. If you are reading this blog and you want to get this economy moving by pumping as much of your own money into it as possible, by all means, be a job creator. Hire a traditional realtor.
3. You’ve never done this before, and don’t know anything about real estate.
You don’t want to end up doing something illegal or getting taken to the cleaners by people who see your ignorance as their good fortune.
4. You hate technology.
If you eschew cell phones and use your landline to call your son to ask how to “turn on the internet”, you need a realtor. You probably also pronounce it “real-a-tor”.
5. You’re squeamish about confrontation.
If your friends have ever referred to you as a doormat or a pushover, or if you must be liked by everyone you know, or if you have significant trouble asking for what you want, well, you might be just as well off with a traditional realtor.
Stay tuned for the next installment of Adventures in Real Estate: Preparing to Put the House on the Market. I’m filing these under Science, because I plan to pack them with useful information.