There are more than a few surveys that say 90 percent of all real estate transactions involve at least one agent. You can also find more figures suggesting that 90 percent of all real estate transactions involve at least two agents, one for the buyer and one for the seller.
Now I want to set this up by pointing out that Zillow carries just 10% of all of the real estate portal traffic (again, depending on which of the many statistics you choose to believe.) And keep in mind that there are a lot of people coming through that site that aren’t really looking to use it as a tool to buy a house, such as researchers, ‘looky-loos,’ serial shoppers, and renters. Zillow will keep touting its traffic, but it’s simply not quality traffic. But, we digress.
Zillow’s ‘Coming Soon’
It an attempt to drive traffic, Zillow created a place on their site where sellers can announce they intend to sell their home. In theory, buyers get to take a look at these homes and make an offer before they hit the market.
Wait, what? I mean, aren’t they putting their house on some sort of market when it’s on a website, advertised as for sale, in front of the entire nation? So it’s a nonmarket market. And sellers hope they can avoid a commission by carving out the agent.
But is this really a good idea? Or, are the real buyers seeing this property? Is the seller really getting the full attention of the entire market? And are they likely to get the market value of the property when few people know about it?
Soft opens may work for restaurants and bars, but a soft sell? You’re eliminating one of the best resources you have: competition. This is especially true in high demand areas. Competition helps maximize the number of potential buyers by ensuring the widest exposure. It is, without a doubt, the best way to get your strongest offer.
(“Coming soon” could be a better tool for Realtors, who can scout for underpriced properties and make their pitch. But again, another post for another day…)
Getting Your Best Offer
I once heard an auctioneer say that any time two people are in the same room at the same time trying to buy the same thing, the seller gets market value. Put a third into the mix, and the seller is likely to get above market.
If these things are true, why on earth would anyone willingly reduce competition when selling their home?
Here’s the problem: Most people think only in terms of price. But offers include both price and terms. You cannot forget terms. Price is absolutely crucial, but the terms play a lot into overall satisfaction for a transaction.
So when you have maximum competition, you’re going to get better price and you’ll also be able to choose better terms. The ‘Coming Soon’ section of Zillow truly undermines a seller’s leverage by absolutely ensuring that the seller won’t be talking with the total population for that property. What are the chances that everyone who is interested in your property will find it if it is listed on only one message board? We call those chances slim…
But What About the Commissions?
There are a ton of intangible benefits that come with the commission paid. People tend to view commissions as expenses, but when you hire a good Realtor, you’re investing in a good outcome from your sale. If you feel your agent is an expense rather than an investment, find a new one.
Good agents:
- create competition and consequently drive prices up
- know how to negotiate effectively and put more money in your pocket
- evaluate the market and help your decision making
- bring expertise to lending, title work, appraisals, inspections and closing issues
- recommend other experts for the help you need to smooth the transaction
The most motivated buyers are riding around in a car with their skilled buyer’s agent, looking for their new home. Shouldn’t you want someone to represent you when they show up?
One other thing: the commission paid to an effective agent buys you time, and that always has value. The time required to successfully pull off a transaction is too often underestimated and, in many cases, the time savings alone can make the commission worth it.
Summary
Now, I’m not telling you you can’t sell your house without an agent. Nor am I saying that “Coming Soon” doesn’t have some intrinsic value. This article simply suggests that a good agent combined with the most powerful real estate network (MLS) will typically lead to more value from the transaction than the commission you pay. “Coming Soon” may carve out a commission, but I bet it’s going to cost you somewhere else.
There are exceptions, such as if you are selling to a friend (or friend of a friend) or are not necessarily worried about getting every penny out of your property. But if you want to sell and take home maximum value and with the most favorable terms, exposing it to the most qualified buyers in a finite time period with guidance from an experienced agent will always yield the best results.
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