2 Things Your Real Estate Agent Won’t Tell You

Photo: TaxFix

"I don't mind leaving thousands of dollars on the table."

Your real estate agent won't ever utter the words above -- at least not around you -- but they're true. A real estate agent doesn't always have your best interests in heart.

The book Freakonomics uncovered agent-listed homes typically sell faster than homes listed for sale by owner, but they sell at lower prices. The reason, the book suggests, is selling a home cheap has little impact on the brokers.

At a 6% commission rate, selling a home for $10,000 less than market value only costs brokers $600. It costs the sellers much more.

A study from the National Bureau of Economic Research backed up the Freakonomics claim.

"Our central finding is that a seller's use of a broker reduces the selling price of the typical home by 5.9 to 7.7 percent."

You can do the heavy lifting
Where a real estate agent can add value is in the pricing of your home. As professionals, they should have a better feel for pricing in your area.

But real estate is largely valued on a case-by-case basis. And even then, you have access to the same data that a professional does.

Zillow (NASDAQ: Z  ) has done a lot to make home sales more transparent. Zillow's Recent Home Sales feature allows you to see recently sold homes in your neighborhood, complete with specifications, sales prices, and addresses.

This allows you to compare your home to similar bedroom and bathroom configurations to determine a reasonable price per square foot. From there, it's easy to compute a reasonable price range for your home. In addition, the site keeps pictures in its database, allowing you to adjust for things like renovations or remodeling.

So the next time a broker suggests they can help you price your home, keep this article in mind. Brokers have an incentive to sell your home at a below-market price. And, thanks to free online tools, they have little informational power over those who choose the for-sale-by-owner route. 

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  • Report this Comment On March 16, 2014, at 10:06 PM, sissylappin wrote:

    Three more things your real estate agent won't tell you.

    1.) In the past five years there are 27% less real estate agents. No other industry has ever lost jobs this fast. Not even Travel Agents died at this pace.

    2.)According to the National Association of Realtors- Americans do not have 5-8% equity until they have owned the home for 6-8 years.

    3.) According to the NAR Survey, only 1 in 5 homes is now sold with a full commission. All others, discounted or FSBO.

    For every 100K of home equity, you would pay a real estate agent $6,000. It is not 6% of your home value; it is a huge percentage of your equity.

    Oxford study said 97% chance real estate brokers-obsolete. YIKES

  • Report this Comment On March 16, 2014, at 11:03 PM, Triggins wrote:

    There are a couple of myths to be busted in this article. First any agent or broker who tells you what price to set on your home should be shown the door. I don't set the price you as the homeowner do that. I will give you an open book view of recent sales and in a non-disclosure state like Texas not even Zillow can do that. My job is to be your marketing expert and I will spend a good portion of my own money to get you the fullest exposure. Essentially my half of the 6% assuming I don't bring the buyer is 3%. 1% goes to my broker, 1% goes to marketing and I get to feed my kids on the 1% I keep. I work for referrals. If I do a great job you'll get the word out and the number of listings I have keeps me in business. As for Zillow, Trulia and the like don't be fooled. They rarely scrub their database and have no problem admitting that. The number of times I've been asked to show a house that Zillow says is for sale when it's been sold for 6 months is more often than you think. The home sale aggregators want clicks on their website so they can call me every month and try to sell your information to me. They call like clockwork. I think it's disingenuous to lump the industry as a whole into an article like this. I'm not denying that what's been said happens, but my clients would disagree wholeheartedly if you said this article describes me.

  • Report this Comment On March 17, 2014, at 8:37 AM, Driven3000 wrote:

    The number one reason agent-listed homes sell faster than FSBOs is because FSBOs often price their home too high for the market. That's why so many FSBOs fail to sell their home.

  • Report this Comment On March 17, 2014, at 11:15 AM, SCRealtor wrote:

    Our Realtor team is in South Carolina. We would agree with a portion of your comments but, we believe that the increase in value of a property and a neighborhood is up to the Realtor listing a home. We have many recommendations from our clients thanking us for getting then that extra $20,000 to $50,000 by not being afraid to go up higher with an asking price.

    Zillow bases their pricing on the Tax records and does not take that sold square footage prices into consideration which provide comparable sales on properties that have updated and upgraded their homes. "For Sale By Owners" do not have the privilege of knowing what these prices are without talking with a Realtor.

    We have closed properties where we have personally increased the value of homes in a in neighborhood and we are being thanked for doing so. Realtors who were interviewed for the listings on some of these homes provided a list price under our list prices for a fast sale. It is up to the Realtor to provide the Seller with the correct information for the Seller to decide on their listing price not the Realtor! It is up to the Realtor to provide excellent service and marketing to sell that home at a price higher than average to help the values in the neighborhood increase. We agree not all Realtors do that.

    We disagree with the blanket statement made that all Realtors are the same. They are not! There are some excellent Realtors out there. We have a very long list of satisfied customers, many of which have used our services multiple times and referred us to other very satisfied clients.

  • Report this Comment On March 17, 2014, at 3:38 PM, dianaclary wrote:

    I am Realtor in the Dallas, TX area and feel that this article doesn't give an accurate portrayal of what services realtors provide. Of course, home sellers can sell their homes on their own without an agent but most potential homebuyers will immediately expect the seller to reduce sales price by 6% because an agent isn't involved. In addition, serious, qualified buyers who are ready to move now will contact an agent because they do not have the time to drive around looking for sale-by-owner signs. For Sale by Owner sellers will need to be available to show their property whenever a potential homebuyer calls. A lot of these "looky loos" who are in the market without an agent are unrepresented by an agent because they are not serious, not qualified to get a mortgage or want to get a "deal" by not paying the realtor's commission.

    I encourage all of my potential sellers and buyers to explore all of their options and decide what makes the most sense for their particular situation.

    Zillow is not accurate! Due to privacy laws in Texas, home prices are not disclosed to the general public. Zillow is only guessing what a value is based on what the general public has said it is.

  • Report this Comment On March 17, 2014, at 6:41 PM, OregonBacon wrote:

    Where do you think Zillow gets a majority of it's money to be in business as well as it's data? Realtors... plain and simple. The only time someone likes Zillow's valuation is when it's in their favor and Zillow has not been inside their home... does Zillow know about the New Furnace and Roof or that one house has a usable level backyard while the ones around it do not or the trend of larger open rooms rather than boxy formal living spaces most people no longer care about? Zillow cannot keep up with buyer trends and how that can affect a homes value. How do you value the views or landscaping between homes? As for realtors, the good ones know a lot of important information about specific locations and neighborhoods that is really important to a buyer and having their own representation with a local expert goes a long way towards securing the purchase of a home. Just my two cents..

  • Report this Comment On March 18, 2014, at 3:24 AM, crash3085 wrote:

    This writer is full of crap.

  • Report this Comment On March 18, 2014, at 8:22 AM, taxi69 wrote:

    Triggins nailed it on the head.

    I can not tell you the number of times Zillow has listed a house as sold for x number of dollars, but public records tell otherwise.

    The real estate association in this area stopped reporting data to Zillow a few years ago because Zillow did not update their website accurately and in a timely manner.

    Sometimes 6 months would pass before a house would finally be listed as "sold" on Zillow.

    This article sounds more like it was written by a Zillow employee.

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