For the right price, everything is for sale. So when my Realtor friend pitched to put my home on the market given the lack of inventory, low interest rates, pent-up demand, and Google/Facebook/Zynga/Apple/LinkedIn money, I said, “Sure why not!” It’s estimated that Facebook’s IPO could increase the value of Bay Area property by some $1 billion dollars over the next several years.
I have a single family home in San Francisco that could very well be suitable for a young internet executive couple looking to start a family. I told my real estate agent that if I don’t get X amount, I’m not selling, and he agreed. It’s important to manage his expectations, since he’s the one who’s going to be spending all the time staging, marketing, photographing, and showing.
The real estate market is still booming in 2017 and maybe it’s time.
SELLING WHEN YOU DON’T NEED TO SELL FEELS GOOD
It feels empowering not having to sell if you don’t get your aspirational price. In a way, it’s kind of like going to a bar with your buddies and having no fear of talking to the hottest woman there because you already have the most beautiful wife already. In another way, it’s like waiting to see if you get an acceptance letter from Harvard, when you’ve already been accepted by Princeton, Berkeley, Columbia, Stanford, and MIT.
Or maybe, it’s like veteran Jason Kidd playing basketball the year after he’s won the NBA championships. And since this is a personal finance site, in a final way, it’s like going to work, when you don’t need to because you’ve generated enough passive income to quit your job if you want to.
Renting my house literally costs 3x my mortgage interest and property tax payments post refinance, making it silly to move. When rents are this aggressive, it’s only a matter of time before property prices start marching higher. I truly believe that property prices will be higher 3-5 years from now.
DISAPPOINTED IN MY REAL ESTATE AGENT
* Showed up to my house in a sweaty t-shirt, shorts, and sneakers for a private showing. I was shocked when my realtor strolled up to my house 5 minutes before the private showing in post-tennis clothes. It would be one thing if he was clean, but to stroll up looking sticky after a 1.5 hour match is completely inappropriate and disrespectful to the buyers, and to myself. I would never dare go to a meeting that way, and I’m just absolutely baffled he would show my house in his getup. Weekends are when real estate agents are busiest!
I e-mailed him after, insisting he keep a full change of clothes in one of my bedroom closets. His presentation caused my blood pressure to rise. Maybe if my property was a studio in a bad neighborhood, it would be OK for him to come show my place in shorts and a t-shirt. But, at least take a shower beforehand dammit!
* Doesn’t listen to the client. My realtor has been pushing me to do an open house. I told him NO twice, because all open houses do is open yourself up to your nosy neighbors and to potential robbery. I even sent him a report from the National Association of Realtors saying that only 2% of transactions ever come from open houses. I’ve personally been to over 100 open houses and I have never bought a thing!
I told him I cherish my privacy and my safety, and to just use the internet and e-mail marketing since 80% of buyers find their homes on the internet. He continued to push back, saying he wants the house to generate this “frenzy factor”. I told him why can’t he just host a private open house where each prospective buyer and agent is pre-screened to create a similar wow factor? I did that with my rental property and had 30 people come in a one hour window. He shrugged. Open houses are for the real estate agent to find new clients, and they are not good for the seller!
* False assumptions. After saying that I wouldn’t have to pay anything out of pocket, he springs the necessary $440 pest inspection fee I have to pay for the disclosure packet. I’m all for a thorough disclosure packet, however, if you know the amount of commission I will end up paying my realtor, you will shit a brick at his audacity to back pedal and get me to pay the fee. What was originally a “no cost to you” process of listing, suddenly is now riddled with a $440 pest inspection fee, a $1,000 paint job in the living and dining room, and who knows what else.
* Not in my corner. My realtor is on a tennis league team which I was thinking of joining. I use the word “was” because when I asked him whether I had a chance to play singles for his team, he told me that it would be hard because the singles players there have been members for a long time already. In essence, he wasn’t in my corner. He didn’t offer to say he would talk to the captain to try and work me in. He stonewalled me. I don’t want a realtor who isn’t 100% in my corner to earn a 5 figure commission off me. The messed up thing is, I kick his ass in tennis, and would beat his team’s singles players 80% of the time because I know who they are!
WHAT TO LOOK FOR IN A REAL ESTATE AGENT
* How big is his or her network? The longer he’s been in the game, the larger his network. Real estate agents can work from anywhere, so they don’t necessarily have to be a 10 year veteran of one firm. In fact, if they’ve moved every 3-5 years, that could be a good sign they are in high demand. There is a virtuous cycle on one’s reputation, the longer they have been working.
* Does he have a web presence? If your realtor doesn’t have a hisname.com website in this day and age where 80% of properties are found on-line, then you should be a little leery. The website should have basic info such as his bio, his previous transactions, thoughts on the market, some pretty graphs, and so forth.
* Does he do what he says he’s going to do? If he says he will be at your house at 1pm, does he arrive at 12:45pm to prepare the house and gather his thoughts beforehand? When he says he will handle the upfront costs, does he pay for everything or try and get you to pay some of the bill?
* Intelligence. You must ask them questions about their thoughts on the markets and see if they can put together a coherent argument. I’ve come to realize that some people are just dumb, and Realtors get an extremely bad wrap for being dumb by just regurgitating what CNBC, or the National Association of Realtors write. The realtor should have his own opinions, and facts that buttress these opinions. With good intelligence, also comes good salesmanship, because the more you know, the more you are able to sell convincingly.
* Integrity. The one thing I like about my realtor is that he has great integrity. I asked him whether I should disclose a minuscule leak in the ceiling that I fixed and he said, absolutely. I asked him whether I should turn on the portable air-filter in one room to help drown out some outside noise, and he said best to leave it off to be completely upfront. Good integrity goes a long way because it minimizes the risk of negative surprises.
* Does he make people feel comfortable? If you don’t feel comfortable being around your realtor, the buyers probably won’t feel comfortable either. The good thing about my realtor is that he leaves people alone to walk the property and doesn’t pepper them with questions. He lets people take their time and follow-up with him. I generally see this as a positive sales attribute, because I dislike pushy sales people.
* Can you feel his hustle? When you wake up in the morning, has he sent you some new thoughts and a marketing game plan? Has he created a Google Docs spreadsheet to track all the prospective buyers who have come through and shared the file with you? Has he suggested you go with him to make appointments to see the competitive properties on the market? You need to see and hear his hustle. You don’t want him strolling to your house in the nick of time in his shorts and t-shirt because he had a practice match beforehand!
REAL ESTATE COMMISSION RATES NEED TO COME DOWN
The oligopoly priced 5% minimum commission fee is ridiculous for expensive cities such as San Francisco and New York. Why on earth does it cost $150,000 in commissions to sell a $3 million dollar house, for example? I can maybe understand a $10,000 commission on a $200,000 house, but it doesn’t take 15X more work to sell a $3 million dollar house.
Despite the price fixing, don’t underestimate the power of the 2.5% commission for the buyer’s agent. The 2.5% commission for the buyer’s agent is an incredible incentive that makes Realtors hustle to do whatever it takes to make the buyers happy, which hopefully leads to a smooth transaction. Some agents will literally not show their clients a particular house that fits their needs if the commission is too low!
Paying a 5% commission makes me sick, however, I do feel I’m getting better “value” that the fee is split and incentivizing both parties to make something happen. Don’t feel their commissions are fixed, either. Both sides are definitely willing to negotiate down their commissions if the choice is between walking away, and making a transaction happen.
See: How Much Does It Cost To Sell A House?
THE INTERNET SAVES THE DAY
Even if you are stuck with a dud of a real estate agent, know that it is very hard to screw up a sale if you’ve priced your properly correctly and made the house look its best condition. With sites such as Trulia, Zillow, the MLS, and the agent’s own network, the word will get out online and over e-mail that your property is for sale.
Perhaps some Realtors have an amazing amount of charm to convince buyers to buy. However, a home is usually one’s biggest purchase, and I don’t believe people can get convinced too easily. The selling agent’s main responsibility is to get the word out and show the house. So long as the Realtor isn’t rude, or an idiot, the market will set the price.
I’m enjoying this home selling experience because of all the things I’ve learned and shared with you here. The process is still stressful, even though I don’t have to sell. It’s a pain to keep the house clean and the waiting can be quite aggravating. However, I’m taking the process in stride, so that if and when I do really want to sell, or need to sell, I’ll be more prepared than ever.
In the meantime, I’m looking to invest in the heartland of America through real estate crowdfunding site, RealtyShares. RealtyShares is the largest, and most comprehensive platform where investors can take a look at various real estate deals around the country and invest more surgically. The coastal real estate markets are now cooling in 2017. It’s time to invest in Middle America where cap rates are 10%+.
Note: The basic difference between a real estate agent and a REALTOR® is a REALTOR® is a member of the National Association of REALTORS®. Both are licensed to sell real estate.
STRONG RECOMMENDATION
Shop Around For A Mortgage: LendingTree Mortgage offers some of the lowest refinance rates today because they have a huge network of lenders to pull from. If you’re looking to buy a new home, get a HELOC, or refinance your existing mortgage, consider using LendingTree to get multiple offer comparisons in a matter of minutes. Interest rates are back down to ALL-TIME lows in 2015 due to tremendous volatility and uncertainty in the markets. But the Fed is signaling they will be raising rates by 2016. When banks compete, you win.
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The Best Time To Buy Property Is When You Can Afford To
Photo: San Francisco Victorians in Pacific Heights, 2017.
When we moved in 2007, I had the same realtor for selling my condo and helping us on the buying end of our home. I’d used him before so he cut his commission by 1% on the selling transaction. He was good. The market was already softening but he got us a good price on the condo (really good, in retrospect) and did very well on negotiating our house. Even when I was ready to accept the seller’s “final offer”, he advised me to go $5k lower, and they accepted. As he deftly pointed out,. this pretty much made his commission pay for itself. You need to find a realtor that knows the game and is willing to put you first.
I have a feeling that all Realtors improve in their clients eyes if the seller or buyer gets the price they want. Before that, clients are super critical.
Great post Sam! My wife and I are in the process of putting our house up for sale. Hopefully it will be ready in the next week or two!
You know, we have a few close friends that are real estate agents, so we ended up choosing one of them. I’m a little skeptical but we’ll see how it goes (not really because of him, just because I really don’t like to mix business and friends).
Your agent was quite unbelievable though. You have to be a pretty arrogant douche to show up to the house after a tennis match. That’s ridiculous.
It’s definitely not good to mix business with friendship sometimes. The expectations have been clearly spelled out, and yes, what a JV move to make coming up in shorts and a tshirt for a showing.
Best to you on your house! What are you going to do if it sells?
You nailed it on the head when looking for a real estate agent. Make sure they 100% got your back. As for that pest inspection crap, most real estate agents won’t ask for the seller to do that until the buyers have already cleared their contingencies and are locked in 100% to the deal.
I would drop that Realtor and get a new one quick! Best advice – call the top 3 firms in your area and ask for references for the agents that have the highest amount of homes sold. Then, ask them to create a proposal for you, including their commissions and fees. The best agents will always do this for you!
Oops, too late Robert! You can tell I’m not that motivated to sell. We’ll give it a go for 30 days and see if there are any bites. If not, I’ll happily live in the house for the next 2-5 years and relist later if I decide to leave SF.
Hey Sam, Our opinions on this topic line up quite a bit (especially about open houses being a waste….except for the agent who prospects for new clients).
Personally, I always treat finding a real estate agent like interviewing a potential employee. I’m shocked by people that don’t research and just work with whoever “their aunt recommended them too”.
I may be more anal than most, but when I’m looking for an agent, I actually get a list of 5-10 agents (from referrals and online research), and then I conduct a thorough interview with each one. I’ll really put them through the grinder. I’ll ask about their process, their expertise with certain neighborhoods, and even get a list of references (and call each one).
I’ve had a few agents be quite surprised and insulted when they were put in a competitive situation, but most happily went along with it. And when you are talking about the biggest expenditure of your life, you’d be silly not to spend a little extra time doing this. The last agent I selected was outstanding and she said I was the only person that she ever had to interview with, but was really pleased with the outcome and that our expectations were then properly aligned for the deal.
Good plan Geoff. Definitely worth thoroughly interviewing several agents before signing up. I interviewed 5, and the current one I felt was good enough and trustworthy. Guess things change when the action starts.
However, I think he’ll get better. Just the little things I scratch my head about, but I tell him, and he changes.
When I bought my rental property (condo) I went thru 5 agents. I was extremely picky, and because I was making the purchase by myself, didn’t appreciate the way they “handled” my case. I was 24, and the assumption that daddy was paying for the property and thus they might know more than me frustrated me to no end.
I researched every neighbourhood, knew prices, market comps before I go and see any property and yet the feeling that I would get from some agents are almost insulting.
I loved the agent that I ended up with, she was brilliant, had been in the industry since a young age and knew what I was looking for and essentially had my back. She knew my budget, but was also willing to look at prices above that as she was willing to fight to get me the rate that I wanted.
I recommend to everyone who is looking for a property these days.
Like you, I am an independent property hunter. Internet makes things so easy. Hence, I ask the agent whether s/he is willing to split his/her commission w/ me, especially if I find the place on my own.
I love the analogies for selling when you don’t have to. Deals are typically present only when one party is desperate. If there is no desperation, you’re in total control.
I have never sold a home so I can’t add much value BUT we just accepted a counter-offer so we’re set to close in about a month. Very excited.
Did you accept the counter off to sell, or to buy? Congrats either way!
Did you fire him?
My brother hates agents and realtors with a passion. They are never fun to work with according to him and it sounds like that’s true reading about what you’re dealing with! I’ve gone to a fair amount of open houses over the years and not once did I see an agent wearing gym clothes. Even though it sucks yours did that, at least you caught him red handed and set him straight. At least you’re not trying to sell urgently. Hope everything works out for you!
I have used a good friend as our realtor for years. She meets all your criteria and has to face us if she screws up. She helped us buy our current home, sold our last and sold my mother’s condo. I bought low and sold high, but that was timing and luck. In most cases, I prefer a referral for professionals. What will you do, if it sells? Move to Hawaii?
That real estate agent of yours would be close to fired in my book if he pulled that stunt. You could have lost a buyer over it especially if you have a pricier house!
I had to laugh because I’m actually starting the process of becoming a real estate agent and I love when I get great tips unexpectedly.
The reason your friend wants to host an open house at your property is to obtain more clients. The chances of a person coming to an open house and discovering it’s the house for them is exceedingly slim. But they are all looking at or interested at looking at real estate. It’s like shooting fish in a barrel for agents who do that. Based on your description I would guess that your friend thinks A) you may not be serious about selling your house and B) that he doesn’t even need to sell your house to make a profit off of listing your home. However, you’ve messed with his plan by killing his open house theory. Also, doesn’t really sound like he’s your friend. I would check your listing contract to see how soon you can get out of that mess and kick his ass in tennis as often as possible.
Good luck with becoming a agent! A lot of hustle is involved, and although I love real estate, being a real estate agent is not for me.
I consider my agent an acquaintance. I’ve already kicked his ass in an official match this year :)
Thank you! If I do this I’ll be 4th generation real estate/land development, so if I don’t hustle I have to wear a scarlet R at the next family reunion. :)
There is a company here in Canada called Comfree where you can sell your property without a realtor. The company does all of the marketing/advertising and lists your home for a flat fee. No comissions are involved. They have several different pacakages that you can choose from for all under $1000. I’ve seen several homes up for sale with Comfree. I wonder how many realtors are loosing business to this company.
Sounds like a great company to me! The fear from the seller is that the marketing isn’t as good. Sellers like the hand holding and concierge service, especially for higher priced homes.
Realtors does not suffer a lot, as they paid on fixed rate or commission as percentage of the property.
Lets say it is cost $450 and he will receive 3% of the final sale. Difference in $10K is only $300 out of $13,5K total.
Does not really matter. Quick sale is better and money is easy.
It should be pro-rated, rather than anything else.
My brother is in the real estate business. I have worked with several of them on photo shoots. It’s a tough, cut throat, ugly, dirty business. However, a few of the people I have dealt with are as honest as can be (don’t make as much)… The balance is to tell the most truthful lies without getting to out there in lie-ville.
Most truthful lies….. hmmmmm, INTERESTING!
Do you think highly attractive real estate agents do better than others?
I purchased through my realtor about 3yrs ago. We developed a common friendship over time, and over the last 3yrs I have recommended her services to many. For example, she’s dealing with a family friend who also happens to a Doctor. She sold her condo in the downtown core ($425k selling price), now selling her live-in home ($590k selling price), and is also working with them to buy a lot (roughly $600k+) in a very specific area of the city to demolish the home, use the lot and build a 2,500 sq home w/pool…probably worth $1-2 million. Talk about cashing in. Due to the relationship we had over this short time….I managed to negotiate the commission rate…rather than a typical 2.5%…..she’ll sell my place in hopefully a years time for 1%.
As much as I love Real Estate…I don’t think I’d ever become an agent…the industry is over saturated with Realtors and I’m not sure I can be a good enough hustler…..because you live and die by the hustle in Real Estate.
Good stuff Eddie! I’m writing a post exactly about this topic. Long term relationships are the most rewarding!
We’ve only bought one house (our current home) and our agent was great. He was always in our corner, which was great. I love people who go out of their way to give exceptional customer service, because they will always get more business and have happier clients.
It’s a different case once you try and sell. Much more stressful selling than buying, especially if you need to sell.
Your real estate agent has found a perfect way to become a loser. He has mingled his hobby with his profession. His hobby has become his profession(without pay) and his profession has become his hobby(showing up stinky in a short).
I was just so shocked about the lack of professionalism when he showed up sweaty in his tennis outfit to show my house. Unbelievable, and totally clueless. Luckily, this was pre-marketing, but still.
Great article. I’ve never sold a home, but from my experience buying I got a very negative impression of a lot of selling agents. I’m not sure if the particular sellers were aware, but integrity was something I found very lacking from many agents. I’d almost overlook the other stuff you mentioned if my agent was willing to be open an honest.
I’ve sold my previous house by my own and kept the 16K commission I would have paid to a Real Estate Agent in my pocket. After trying both (horrible experience + commission fee with a real estate agent and a nice commission free experience without an agent) I don’t understand why someone would take an agent after all. They don’t sell higher if you do a good job with comparison in your markets.
I have often wondered whether I can sell my home myself. The irony is, the more expensive your house, the LESS you want to trust yourself over a professional to market for you. It could be the difference between hundreds of thousands of dollars.
I would still have to pay the buying agent a commission too.
Sam, I feel your frustration. As my husband and I have bought and sold many homes and a few investment properties, I echo your thoughts about commissions and professionalism. Actually, our last realtor on our recent home sale really annoyed us with his attitude as well. We sold the house fast and he was very tech savvy so it worked out okay, but the guy turned out to be a jerk.
It’s good you sold your house. Selling a house is quite stressful compared to buying. Buying is like a walk in the park b/c you haven’t committed a thing!
We’ll see how this progress goes.