Investor · Saint Louis, MO · Member since 2016 · 7 posts · 6 votes
I am about a week away from finishing a very larger rehab project and want to ask if its worth it to use a traditional listing agent or to go with a flat fee transactional broker? I understand that no matter what I will be paying a commission to a buyers agent and I am fine with that. The home is going to be listed somewhere around $425k so the listing agents commission will be around $13k. Or I could choose to list the home on the MLS for $300 + the cost of hiring a professional photographer to take photos + the cost to buy my own for sale sign + supra rental from the transactional broker. So roughly $13k vs $500. After pouring my soul into this property and literally renovating every square inch it pains me to think of relinquishing control and losing/spending another $12k so I can close a deal.
Do buyers expect the seller to have an agent for homes that trade around $400k+?
What "marketing" will the agent do that I wouldn't think to do on my own?
Have you used a flat fee transactional broker? What was your experience like?
Why hasn't a company like Uber stepped in to modernize the selling process and reduce selling costs?
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
9y
Just to give you a perspective from an agent....when I sell my own properties that are in states where I am not licensed, I hire an agent to do so, even though Im an expert at selling houses. The hard part isnt so much the actual sale, it is ushering the transaction through the entire closing process and navigating all the hiccups and legalities that come along with it. I can navigate those issues in the states where I consistently do business, but in states where I havnt done them, Im smart enough to have an expert do it so I dont screw it up.
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
9y
Just to give you a perspective from an agent....when I sell my own properties that are in states where I am not licensed, I hire an agent to do so, even though Im an expert at selling houses. The hard part isnt so much the actual sale, it is ushering the transaction through the entire closing process and navigating all the hiccups and legalities that come along with it. I can navigate those issues in the states where I consistently do business, but in states where I havnt done them, Im smart enough to have an expert do it so I dont screw it up.
Laguna Niguel, CA · Member since 2012 · 122 posts · 58 votes
9y
@Brant Hampton Redfin takes 1.5% sales side commission and will help guide you through the transaction. This company is as close to a "Uber for RE" company as it's gets.
Real Estate Agent · Orlando, FL · Member since 2016 · 7 posts · 12 votes
9y
Exactly what Russell said. There's more to selling a house then finding a buyer to buy the house. Theres the process after finding that buyer where road bumps could arise that you aren't equipped for. You want the process to go as smooth as possible for yourself and the buyer.
Also regarding marketing, yes you might be able to come up with a marketing plan just like an agent but you aren't an agent who has built a platform where a constant stream of potential home buyers flow through (website, social media accounts, etc) and this is what a good agent has. Its not all about dropping it on the MLS and hope it sells.
Rental Property Investor · San Marino, CA · Member since 2011 · 398 posts · 144 votes
9y
Hi Brant,
I don't mean any disrespect from to all the agents out there but what type of investor are you and have you bought/sold many properties? Are you good at sales? If you've done it a few times and you are comfortable with the process, then why not list it yourself? There are a lot of value adds that an agent can offer but I would argue that if you put in the time and are resourceful, you can certainly do a lot of the work yourself. The commission you pay will certainly dig into your profit so you just have to be honest with yourself and ask if you can do it yourself.
@Brant Hampton Redfin takes 1.5% sales side commission and will help guide you through the transaction. This company is as close to a "Uber for RE" company as it's gets.
Thats actually a worse choice than a flat fee. There are a number of agents who blackball redfin and wont show their listings. Less potential buyers equates to less demand and possibly a lower price.
Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
9y
Seems you realize you will have to pay a commission to the buyer's agent, but you left that out when you came to your roughly $500 total; add 2.5% or 3% of the sale price to that for the commission paid to the buyer's agent (unless you are somehow able to get a buyer that has no agent representation - unlikely if you are putting it on MLS). Maybe you didn't realize that half of the customary 6% commission goes to the buyer's agent, and that is why you have done the math that way.
@Brant Hampton Redfin takes 1.5% sales side commission and will help guide you through the transaction. This company is as close to a "Uber for RE" company as it's gets.
Thats actually a worse choice than a flat fee. There are a number of agents who blackball redfin and wont show their listings. Less potential buyers equates to less demand and possibly a lower price.
Seems pretty unethical for a buyer's agent to blackball listings from an entire brokerage. I would hope their clients would find out about this and fire them on the spot and find a more ethical agent to work with.
As a buyer, I would want ALL listings that fall within my given parameters presented to me. I don't care if the buyer's agent commission is listed as 1.5% or 3%.
Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
9y
Another thing is that in the replies on this thread, you have a lot of agents answering, and of course they all seem to say you need an agent. I am not so sure.
One says you need a marketing plan; well, you kind of laid out your marketing plan, to list on MLS - that is about the extent of the marketing plan you'd get from most agents unless you have a really high end property that justifies spending a bunch on marketing. My hunch is putting it on MLS is enough of a marketing plan, as long as you can get it priced right.
If you aren't able to price it correctly, it will probably sit - but there are lots of properties sitting on the MLS for a long time, and my guess is many of those sellers hired an agent to list it (not just flat fee) ...
And if you did a quality rehab replacing all outdated systems, and chose the design and style tastefully, you will find that the property almost markets itself; picky buyers are looking for a house that won't be a problem immediately after closing the sale. Just be sure to have a really good write up and good quality photos for it on the MLS so buyers want to see it.
@Brant Hampton Redfin takes 1.5% sales side commission and will help guide you through the transaction. This company is as close to a "Uber for RE" company as it's gets.
Thats actually a worse choice than a flat fee. There are a number of agents who blackball redfin and wont show their listings. Less potential buyers equates to less demand and possibly a lower price.
Seems pretty unethical for a buyer's agent to blackball listings from an entire brokerage. I would hope their clients would find out about this and fire them on the spot and find a more ethical agent to work with.
As a buyer, I would want ALL listings that fall within my given parameters presented to me. I don't care if the buyer's agent commission is listed as 1.5% or 3%.
Im just giving you the facts of the market place. A fact anyone is unlikely to be aware of unless they work in the industry on a daily basis.
I sometimes target redfin listings to purchase because I know there will be less demand so I can get a better deal on them. Combine that with the inexperience of their agents, and I can slip in absurd things into the offer like extremely long inspection periods like 14 to 21 days long, then wait til the last day to negotiate an absurd seller subsidy or reduction in price when they have little choice but to give in because now its a week before closing. Id never get that kind of crap past a good listing agent.
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
9y
@Russell Brazil I agree.....I recently got a buyer a $525k condo about $60k under market because the REO agent was offering just a 2% buyer agent commission, so of course most agents avoided the listing. Of course, my client was paying the additional 1% to me, so it worked out for both of us.
I'm an agent so of course I think you should have one (If I didn't think we had value then I would find something else to do with my time).
Nobody needs an agent when things go well. Those sales are the ones where we make up for the problem sales.
There are plenty of steps in the process where there is dancing (regardless of who sees it). The job of your agent is to keep you at the upper hand during the whole process (even if the other side doesn't understand you are there). Having the buyer nullify the bump notice before it comes allowing them to maintain transfer of title contingency, paying attention to those timelines for inspections. Using mortgage contingencies and certificates of compliance as a method to make sure your buyer can still get their EMD if something happens (they find one they like better).
In the end I want my client to get the property they want, but if something goes wrong I want them to have the upper hand and come out whole. Same for selling, I want to get my seller to "lock in" the EMD as quick as possible and raise it enough that if the other sided decides they don't like it any more... at least my seller gets paid for holding it. Can other people do it? Sure take the time to understand the contracts and the customs of your area and you can.
There are mortgage companies I recommend my seller does not accept as POF. Get left at closing or have them kill 3 deals the day before closing enough and you will not trust their Pre-approval. An agent should inform their seller. In the reverse if a RE brokerage is constantly having title issues on houses, playing games with disclosures, offers houses that are under contract.... or not even for sale, they consistently fail to close. Then I am going to recommend my buyer stays away from them (Not in coordination with any other agents or brokerages).
It has nothing to do with 1.5% or 3.5% it has to do with my clients 6K EMD and how safe it is. How much hassle to get back, odds of wasting their time. I'll let them know it exists, but if they want to go for it they can do it with another agent.
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
9y
I'm about as DIY as one can be and I would list with a quality agent.
I can handle the transaction and negotiation but would need help pricing my house. Too low? Leaves money on the table. Too high? Sit forever and get stale.
Need that goldie locks agent to price properly AND know all the other stuff @Russell Brazil and @Mike Cumbie mention! Don't jump dollars for nickels @Brant Hampton.
Are you sure the commission is 6% period? Here I have seen 6% for the first $100k, then 3% above. (3/1.5) Worth checking into!
Seems you realize you will have to pay a commission to the buyer's agent, but you left that out when you came to your roughly $500 total; add 2.5% or 3% of the sale price to that for the commission paid to the buyer's agent (unless you are somehow able to get a buyer that has no agent representation - unlikely if you are putting it on MLS). Maybe you didn't realize that half of the customary 6% commission goes to the buyer's agent, and that is why you have done the math that way.
Steve - Thanks for your response. I understand that I have to pay the buyers agent a commission and am fine with that. When I said $13k vs $500 I was comparing the costs of a listing agent to the costs of using a flat fee transactional broker. The full 6% commission on this house would be approx $26k.
I'm about as DIY as one can be and I would list with a quality agent.
I can handle the transaction and negotiation but would need help pricing my house. Too low? Leaves money on the table. Too high? Sit forever and get stale.
Need that goldie locks agent to price properly AND know all the other stuff @Russell Brazil and @Mike Cumbie mention! Don't jump dollars for nickels @Brant Hampton.
Are you sure the commission is 6% period? Here I have seen 6% for the first $100k, then 3% above. (3/1.5) Worth checking into!
Steve - Thanks for your response. I agree with your point about having an experienced agent on my side to help price correctly. However, I dont consider $13k vs $500 "dollars for nickels", which is why I posted this question on BP in the first place.
Developer · Hobart, IN · Member since 2014 · 773 posts · 225 votes
9y
A good agent is worth their weight in gold. Key there is finding a good one. They can offer so much insight and professionalism during a transaction. You get what you pay for in my opinion.
Rental Property Investor · Seattle, WA · Member since 2014 · 1k+ posts · 1k+ votes
9y
I sense a lot of bias from the agents on here, though when they use agents themselves in out of state transactions, it kind of negates that at the same time. I have yet to sell my own home, but I just as others who you see discussing the outrage of a 6% fee on an expensive house on reddit, city-data, and various other forums, find the 6% commission to be antiquated and egregiously large.
Largely you are subsidizing all the people who the agents waste time with but never buy, etc. I have for a while planned to sell my own homes with the MLS4Owners when the time comes, to cut 50% of the realtor expense off the top (still have to pay the buyers agent) thought my market is reaaaallly hot right now and competing multiple offers way over asking with waived everything is not uncommon. Depending on how it goes with my first sale I may decide to use a realtor. I think it's worth the 12K savings to try it yourself this time and see how it goes. Just because it doesn't go perfect doesn't mean a realtor would have made a difference.
This is like the 9mm vs. .45 debate. They say the guy failed to stop after being shot 4 times with a 9mm and that .45 is superior. Yet we don't know that he would have stopped if shot 4 times with a .45 in the same spots either. At the end of the day, I think it is some 60% of real estate transactions fall apart anyway, so just because it doesn't go as smooth on the first attempt doesn't mean I'd stop using it. Sometimes it's statistical luck of the draw/circumstances...
@Brant Hampton Redfin takes 1.5% sales side commission and will help guide you through the transaction. This company is as close to a "Uber for RE" company as it's gets.
Eric - Thanks for your response. Unfortunately Redfin does not exist in St. Louis. I believe it only operates on the West and East Coasts? 6% to sell a house is outdated and archaic. If it included staging or something more tangible/concrete I think you could twist my arm.
I don't mean any disrespect from to all the agents out there but what type of investor are you and have you bought/sold many properties? Are you good at sales? If you've done it a few times and you are comfortable with the process, then why not list it yourself? There are a lot of value adds that an agent can offer but I would argue that if you put in the time and are resourceful, you can certainly do a lot of the work yourself. The commission you pay will certainly dig into your profit so you just have to be honest with yourself and ask if you can do it yourself.
Jason - Thanks for your response. The house is located in one of the best neighborhoods/school districts (Kirkwood) in St. Louis County and is a completely rehabbed 3/2/2. There are very few (if any) completely rehabbed homes in Kirkwood on the market other than the new construction homes which are all priced at or above $650k. I feel like pricing it correctly, putting the home on the MLS, getting professional pictures taken, getting a front sign, making flyers, and having an open house for the neighborhood is all the "selling" I will need to do. I own 3 other rentals and have not sold a house myself yet so that really is the only thing holding me back.
This statement highly indicates to me that there is a high probability of there being an appraisal issue. So I do have advice which ever way you go. If you do decide to list on your own....take an agent class on appraisals and how to work with appraisers first. If you decide to go with an agent, do not just pick any agent (That should go without saying right?) but make sure you pick an agent who has the particular skill set of working with appraisers to make sure the appraisal comes in high enough.
Getting the house to appraise is one of the most important tools in an agents repertoire....but its even doubly important if there are no comps for the house. This is something probably only the top 5% of agents even given thought to.
Be especially mindful if you accept an FHA or VA loan as the appraisal will attach to the house for 4 to 6 months.
"I feel like pricing it correctly, putting the home on the MLS, getting professional pictures taken, getting a front sign, making flyers, and having an open house for the neighborhood is all the "selling" I will need to do"
Not saying you are one but, I would say 80% of the owners I have sat down and talked to believe that if they just stick a sign in the front yard (maybe a flyer at church to really seal it) masses of people are going to come running throwing offer after offer, higher and higher until finally a higher than asking cash offer with no contingencies comes in. It does happen, not as much as most believe but it does.
There is nothing wrong with trying it for 4 to 6 weeks on your own and seeing what you get. As long as you are confident with the contracts and process. I have had several clients that I talked to, they went on to try and sell for a month. Some successfully and some not. It isn't an all or nothing deal.
Real Estate Agent · West Des Moines, IA · Member since 2016 · 14 posts · 6 votes
9y
Would you give someone a nickel that could turn it into a quarter? Look at your house sale that way. Same way you don't do your own Insurance online with Geico and don't do your own Taxes. Let a professional do it for you and you will find that 12k you are spending to properly sell your home and get max sales price instead of dealing with low ball tire kickers who will expect a 6 percent agent discount even though there is no agent involved. Most buyers are going to be working with an agent anyway and that is going to be the majority of the calls you will get is from agents asking if you would cooperate with a buyer they bring you.
Residential Real Estate Broker · Mount Vernon, WA · Member since 2015 · 28 posts · 47 votes
9y
How many homes have you sold before? If you have the experience and feel comfortable managing the transaction start to finish, I'd say go for it.
However, some things my team does that would not be cost efficient for an individual seller are SEO marketing and pro subscriptions. We get your home on as many websites as possible, and pay a good amount of money to make sure your home appears at the top of search results. We're part of an international MLS, so we get eyes on your home from all over the world. We put together a kit of flyers, door hangers and business cards and go door to door to advertise your property. We do professional video tours. Not to mention you have a professional that looks at homes everyday to help you price correctly, which is extremely important if you want to sell your home in the shortest amount of time and for the most money.
Don't forget that 6% isn't set in stone either. I know many top producing agents that would be willing to negotiate. I bet you could probably find an agent that would be willing to stage for you as well.
One time I had buyers that were interested in a home that was listed with an MLS flat fee service. I talked to the seller, and the home was already under contract with another buyer, but he was feeling extremely unhappy with the way the sale was going. Unfortunately, he was under contract so there wasn't much we could do but wait and see if it fell through. He would call me about once a week, asking if my buyers were still interested, and then he'd tell me about what was going on with his transaction. He foolishly signed a 30-day extension. And not once, but twice! No agent in their right mind would allow their seller to sign a 30-day extension, let alone two. This is just one example of how this guy got plowed in the transaction, whereas an experience agent would have better protected his interests. It took him 5 months to close that deal! Also, at least in WA, after a certain period of time, sellers can basically force the buyers to waive their financing contingency! So if financing fell through after that period, seller would keep the earnest money as a remedy. This is just one example (I can think of lots more!) of a tool that sellers without a lot of experience might not be aware of.
One of my teammates took an expired listing from a client that had listed with a flat fee service. After 6 months on the market with the flat fee service, my teammate had it under contract in a week, at the same sales price as the flat fee service.
I sold a home that was listed with a flat fee service. Everything went fine, but that home was on the market for 6 months before it sold. I am not opposed to flat fee services, but from my experience, they always seem to sit on the market longer.
I am about a week away from finishing a very larger rehab project and want to ask if its worth it to use a traditional listing agent or to go with a flat fee transactional broker? I understand that no matter what I will be paying a commission to a buyers agent and I am fine with that. The home is going to be listed somewhere around $425k so the listing agents commission will be around $13k. Or I could choose to list the home on the MLS for $300 + the cost of hiring a professional photographer to take photos + the cost to buy my own for sale sign + supra rental from the transactional broker. So roughly $13k vs $500. After pouring my soul into this property and literally renovating every square inch it pains me to think of relinquishing control and losing/spending another $12k so I can close a deal.
Do buyers expect the seller to have an agent for homes that trade around $400k+?
What "marketing" will the agent do that I wouldn't think to do on my own?
Have you used a flat fee transactional broker? What was your experience like?
Why hasn't a company like Uber stepped in to modernize the selling process and reduce selling costs?
Brant,
I've done BOTH (listing with an agent and using a flat fee transactional broker).
My experience (although I've used the flat fee only once) is that LISTING AGENTS have sold my properties faster. The reason why is that the right listing agents will have:
1. BUYERS already lined up in the area where they specialize in. Hence, they can already pre-sell your property even before construction is finished.
2. RELATIONSHIPS with other agents who may have buyers in those areas. He/she will also have RELATIONSHIPS with lenders who in turn may have borrower-buyers interested in buying.
3. MARKET KNOWLEDGE on the RIGHT LIST PRICE for your property to sell. Even though I've been investing since 2003 and know how to get my ARV or Fair Market Value, it's always good to have an expert "second opinion" if you will. It's like a doctor if he becomes sick, can surely try to cure himself but it's good practice for him to get checked up by another doctor. Sometimes, rehabbers fall in love with their project and think it's worth $1M but a good listing agent who is unbiased can tell him to list for $899,900 to sell quickly.
With a good listing agent, I got my rehabs sold in less than 30 days at 99% of list price vs. when I used a discount flat fee listing, my property just sat there with NO BUYERS after 3 months.
