Originally posted by @Account Closed:
@Russell Brazil, @Steve Vaughan
Good contributions, thanks.
It sounds like your argument boils down to market knowledge. Makes sense, I certainly wouldn't advocate for anyone offering to buy real estate if they don't understand the value of what they're paying for.
My rebuttal would be that with the resources we have currently (Redfin, Zillow, etc. etc. etc.), that market knowledge is extremely transparent and easy to ascertain. It may may sense to have another set of eyes on your value, but $15,000 is a steep price to pay for what I can do in 3 minutes on Redfin.
The other area of value Steve notes is the hand-holding function of realtors and pushing to get a transaction through. Undeniable that there is some degree of value there. More value the less versed you are in real estate.
But the process is actually quite simple, the boilerplate contract is not rife with pitfalls, and you'll have a lawyer there to help facilitate all of that as well.
Ultimately, in an era where I can buy and sell stock for zero commission, and information is incredible easy to access, 5% of the value of the house seems like an absurdly mispriced service.
Please don't throw a brick through my window.
The numerous ways I take advantage of both unrepresented buyers/seller.....and in addition to people who just use bad agents, and lets be honest, 75% of the agents out there are just bad....and that has added up to millions of dollars of difference over the years. The thing is, the other side usually has no clue about the mistake......and usually feels good about the whole thing without ever realizing how much money they missed out on.
This is one recent example. I had a previous client that I helped by a 3 unit property a few years ago. When the time came to sell it, they decided to hire a bad agent instead of using me again to save a few bucks. This property in the tax records was listed as a 2 unit property. But there was a variance granted to it to make it a legal 3 unit, and that variance was recorded in the land records. The agent that listed it, in the description described it as a 2 unit property, and insinuated in the description the 3rd unit was not legal. They also listed it in the single family section of the MLS instead of the multifamily section of the MLS......so none of the numerous people who had autoemails set up for multifamilies received an email about this property. They listed it at an even $1,000,000. Another mistake as listing at $999k would have captured more searches, but less of an issue since it wasnt set up to be found in a multifamily search.
This property should have been listed for $999k, and should have been bid up and sold $1,100,000. Instead it languished on the market, and I ended up writing an offer and closing on it for $925k. $175k swing. But hey, they did save 1% on the listing fee, so they got that for them. At the soonest chance to refinance at the 6 month mark, the appraisal came in at $1,150,000.
Those sellers though never once had any idea the property was listed in the wrong MLS section. They had no idea that the description of the property indicating the 3rd unit was illegal was wrong. They did not know that listing at $999k vs $1m could make a difference. They never knew they left $175k or so on the table, and they walked away from the transaction feeling great about it, because the opposite side of the deal from me often feels great about the experience....thats how I get deals done.
Now, theres maybe 50 agents, maybe 100 in my metro area, out of 20-25,000 agents who would have listed this property properly. Multifamily is incredibly rare in my metro area, and theres only about a dozen of us agents who do all the multifamily deals. Most of the agents have zero clue about how to check the units legalities, variances, understand the multifamily MLS system, etc.
This is just one story out of hundreds I have. I buy properties in other states as well....and when I do, I hire local agents even though I am a top 1% agent nationally, because I know how many little quirks there are in things that can cost big dollars. I will say though, I have a much better gage to judge the quality of an agent when Im hiring one than a lay person does.
