Recently “Alberta Venture” magazine published an article onthe state of Real Estate and examined the differences between selling on yourown and using a REALTOR who markets their property through the Multiple ListingService.
Since I was interviewed for the article I have a couple ofthoughts that I’d like to share. Myinitial reaction is that this article was written with the perspective that realestate transacted through a Realtor is passé. As far as the article is concerned it does tryto peer into many aspects of the industry and asks some tough questions.
The great thing about free enterprise is it finds itsequilibrium. If the Real Estate industrydidn’t have value it wouldn’t exist. Thereality is that it has significant value for many people and for some itdoesn’t matter they just don’t want to pay the fee. Fair enough. Not everyone shops at Sears, Wal-Mart or Holt Renfrew and all of thesebusinesses offer different levels of service at different price points as doesthe real estate industry. The problem I have is that people tend to lump everyoneinto one pot, saying that we all do the same thing for the same price and getthe same results.
Regarding Fees
For some the main issue is real estate commissions. This week alone I went on several listingpresentations and was confronted by sellers who had received a range of offerson commissions from different brokerages.
There seems to be a perception that Realtors are overpaidand the money is easy. The failure rateof people entering the industry lured by dollar signs and easy commissions isincredibly high. I’ve heard as many as 50% of new associates are out of theindustry within a year of being licensed due in part to intense competition andexorbitant costs to maintain mandated thresholds.
If it was such an easy business then the free enterprisemodel would tell us that the fees would have come down by now. The fact is in many cases they have and inother cases they have risen as true professionals who know their value chargeaccordingly. However, the marketingcompanies who pitch to people that they will sell your home don’t care in theend if it sells or not since they get their fee up front.
A Changing Industry
One of the conversations I had with Scott (the author) was abouthow the Internet had changed the travel industry and would it could do the sameto real estate. This is an argument I love. Yes, the Internet has changed real estate and will continue to do so. Idon’t know how often people make travel plans in the hundreds of thousands ofdollars, but I’m certain those who do still use a travel agent.
The internet has augmented my business. This blog is a perfect example, as is theonline marketing we do for our listings. Not everyone in this industry hasembraced the Internet but it will not be long before these people are relegatedare completely marginalized by consumers’ demands for better marketing. When you look at the amount of viewings,impressions and my bet is showings I think hands down our marketing blows themout of the water. We’re the best of bothworlds. Fantastic, innovative onlinemarketing with the strength of the MLS.
Business Models
One thing I have to admit is that these marketing companies havea great business model for the business owner. You get people to pay you – up front – to advertise your business. It’s likepaying your electrician in advance. Here’s the money now do the work.
The reality is that these companies talk about offeringgreat support but this is support is extremely limited (by law) and so is theadvice they are able to give (none).
I’ve stated before that I believe the actual transactioncosts are increasing due people trying these companies out and realizing thatthey are not for everyone. Thesecompanies in a sense pray on the “save a buck mentality” and if it doesn’t workthen you have to go out and get a REALTOR which just increases the overalltransaction cost. Not to mention theseller has probably put themselves in a more motivated position by wastingmarketing time.
Service Levels
One common misconception the article does not address isthat there are different tiers in the industry in terms of fees, abilities andservices provided; the article actually brushes the whole industry with a broadstroke feeding the perception that all Realtors are the same. Many people incorrectly assume – as does the author- that everybody provides the same level of service, advertising, and resultsat the same fee. To be fair, I’m sure the article had to be limited somewhat inlength (lucky for you I can go on as long as I want).
Myfavorite quote in the article was from one of the DIY owners who said “I don’twant to work after 5, if a Realtor does that’s up to them.” Of course he doesn’t want to work after 5,who really does? The majority ofproperties sell after 5 so most Realtors spend a lot of time working after 5.
Competition
The author tried very hard to get me to look at Comfree asmy competition; unfortunately that is just not the case. The have actually helped my businesses. By the time people have exhausted themselvestrying to do it on their own and contact us they are much more appreciative ofthe work that our little company does.
The points I made to the writer about marketing companieswere this:
- Their stats don’t add up. At least I can’t get them to add up. I’m required to be factual and support myclaims. He alluded to this in hisarticle as well.
- Their claims about commissions saved areFALSE. If I said there was a standardcommission in the industry I would be investigated by the competition bureauand fined. (The last fine they handed out in Calgary that I am aware of was $100,000).
- There is room for numerous types of companiesand business models in real estate. That’swhat makes free enterprise fantastic. Weall have to keep evolving. I amconstantly told by potential clients that so and so will do it for this and someoneelse will do it for that – all of which are different from what I charge. Sowhen Comfree states there is a set fee this is BS and actually probably helpslower tier industry members get higher commission. (Just a belief)
- I did say that I believe some of these companieshave forced some people in the real estate industry to improve their level ofmarketing. I could also say we’ve beenlifting the bar as well. People in industrycontact us regularly about some of the things were doing.
Reality
Theother thing that the DIY’s said which shows a complete disconnect from realityis that – “the buyer and seller will sit down and work out the best price, it’sthat easy.” Some people clearly havebetter negotiating skills than others . Thenthere’s always those who find out the hard way that things should have beendiscussed earlier and weren’t only to have it come up and bite them in the assbig time. Be it a lawsuit or some obligationthat causes the deal to crater costing the seller time, money and lostopportunity.
Oneseller who contacted us had six deals come apart in the heat of the market. Sayingit’s that simple is not being even close to realistic. In this case we sold her property and nettedher $12,000 more after paying us then her highest offer would have netted her.
Ireceived an email from someone who was really upset with the person and companythey had used in the sale of their home. They actually took them to court and won a substantial settlement. So he told me my argument of the value of aRealtor was mute. My comment back tohim was, based on their situation that they would more than likely have madethe same mistake on their own, possibly even compounding it causing the buyerto be entitled to even more damages then they were. More importantly though he recognized thatbecause the Realtor had errors and omission insurance (mandatory in Alberta) hereceived compensation, whereas if he had done it himself it would have been avery costly mistake to sell on his own.
Results
Inthe end it’s results that matter. After all the fees paid up front, the lack ofexpertise in such an important area, the lack of a support network to getthings resolved and the potential loss in value while sitting on the market, Ibelieve that it’s easy to justify the industry’s existence. But lets face it,no one wants to pay anymore than they have to. At the same time there’s areason the saying “you get what you pay for” exists.
Onething I think article proves is that people should be aware of the choices. The most important thing they can do with oneof their most important assets is to do their research thoroughly and make thedecision that’s best for their family.
Asthe world changes the relative value of the real estate industry may fluctuate,but more likely the consumer will get what they have paid for. Professionals who have extensive knowledgethat can benefit their clients in real time have value for such importantinvestments.
I would like to share my own observation.
When Comfree just popped up, it’s a very good alternative to the MLS. Lot’s of good choices there. Common sense that the average Joe wants to save the $10k commission.
However, as the market is booming, Comfree has become a paradise for flippers. They see Comfree as a way to cut down their flipping cost, since houses would sell themselves in such a boom.
But the buyer are not stupid. They stopped paying too much attention to the over-priced Comfree listings, and the listings won’t sell. Those who really want to sell got to keep their distances from these flippers. The result? Both buyers and seller are back at square one, and Comfree will simply diminish in a declining market.
The author of this website is biased because he is a realtor and he feels threatened by Com-Free.
Sure, Com-Free isnt for everybody. Especially people who aren’t educated or self educated on realty.
My experiences with realtors is that they drive up the price, and pump up prices for their own benefit.
Sure they want your house to sell fast and are with you every step of the way during the home selling or buying process, as opposed to Com-Free. But it is because they have a vested interest in getting paid at the end of the day.
Realtors from the buyer and seller side often work for the same agencies and get together in many cases to concoct a price that both the seller and buyer will make the purchase. However, they deceive the buyer usually stating there are 10 other offers on the home and that if they dont offer a mininum of XXX amount of dollars then they will lose the purchase of the home because another perspective buyer will purchase it with the same offer.
I had this happen to me when I was trying to buy a home in saskatoon last February when the market was just starting to get hot. My realtor worked for the same agency as the seller, yet she assured me there was no conflict of interest.
There had to be.
I have become skeptical of realtors ever since and have taken steps to self educate myself. I will never use a realtor to buy or sell.
An interesting article, but relatively silent on what I should expect out of an agent as a buyer. I’ve got my eye on something, I’m trying to figure out how low to pitch the offer, and I’ve managed to figure out a great deal about the listing history and the seller already. What information should my Agent be able to get that Google and persistance can’t get me?
Actually as I’ve stated comfree has helped us (our company). It squeezes the fringes of the industry’s business. Am I biased? What a statment. Of course I am. The article was fairly balanced as the author points out some of these DYI’s are what they seem to be.
John, I see a lot of problems with your story including what may be your take on things. I can’t speak for Saskatchewan but if there weren’t multiple offers and they said there were there are significant consequences, including the possibility of losing your license to trade in real estate. We are highly regulated and if your agent wasn’t acting in your best interest you have substantial remedies available. Stop whinning and take action.
However my recount is that there were probably far more sellers selling on their own fudging facts than agents since they have no accountability. My clients know I care about what happens to them and their families and their investments. Maybe you should have looked around a little more. Are you guilty of assuming we’re all the same? There are scores of REALTORS I’d give my business to, knowing what I know, and there are others that I wouldn’t deal with. I think the same goes for lawyers.
Don, go for it I’m sure it will turn out alright and if it doesn’t you only have yourself to blame. I’ve done over 1000 transactions and there’s always something that I have to be aware of or lean on my past experience. Every property is unique and unless I was involved I couldn’t begin to give you advice. I don’t have the time to explain the disclosures and information you should be looking for. Go for it and when something goes wrong be honest and let us know.
Actually, Sheldon, you misunderstand me – I’m already attached to an agent for this search and potential purchase. I’m more looking for a guide, such as you’ve offered here for sellers, on what that agent should be able to do for me, so I can find out if I’m getting my money’s worth out of her.
I’ll be happy to continue to report on how it goes, for good or ill.
Sheldon, the problem is that it’s really easy to be a Realtor. Many of them simply jump in when the market is booming and don’t intend to stay and be good at it like you did.
Even if John files a lawsuit and wins it, what difference does that make? It didn’t take them 7 years of post-secondary education to obtain the license. So essentially, it’s just a part time job for them.
I agree with the general premise of your post – some people aren’t as good at making deals as others. Realtors provide expertise and should be compensated for it, no problem.
That said, it is easy to understand the rise of Comfree during a boom, when houses are supposedly sold in 48 hours with no conditions attached.
On a different note, what’s with the all caps spelling of “REALTOR”? (also on the EREB site) Every time I read it, I feel that I’m getting shouted at, which doesn’t help dispel the stereotype of the agressive and pushy home salesman.
Using ‘All-Caps’ is an advertising strategy used to emphasize the word(s) being capped. Because we all need to be reminded (especially on a real estate blog) that realtors are REALTORS, like GOD!
Surely EREB members must possess a 4-year degree from an accredited college or university to have learned these cleverly crafted marketing strategies. After all, they are helping people make one of the most important decisions of their lives!
wait… Realtors don’t require a post-secondary education? So I can become an expert in real estate myself and learn about these breakthrough advertising strategies by taking a few courses? Something just doesn’t seem right here.
Sorry, but IMO, if I complete a few assignments and attend a few seminars, it doesn’t make me a qualified financial planner (ex. Primerica). Sorry if some of you don’t agree with my analogy.
The problem with filing a lawsuit is that I lived in Calgary and attempted to buy the property as an investment. It was my own fault for being greedy and pretending I was Donald Trump.
Perhaps I would have gotten recourse, but the onus would be on me to prove my realtor acted unfaithfully. That would be pretty hard to do as I’m sure both agents for the real estate firm would deny the allegations till the cow’s came home.
I guess I am just disenchanted with the real estate industry because of some wayward realtors. Sheldon, you seem like you have alot of integrity. I’m sure you operate with the highest ethics. However, even if you are the greatest, most honest realtor, if I owned I house I would sell it myself and keep the $20,000 commission fee for myself thank you very much. I dont care how much work realtors do for their client, NO ONE deserves that high of a commission. That is equivalent to 1/3 the average salary of an Albertan for 2 or 3 weeks work.
That is why COM FREE has grown the way it is.
What you forgot to mention in your blog post Sheldon, is that COM FREE still has growth potential and is an ever evolving business model that still has to work out it’s tweaks. While at the same time, the Realtor’s and their programs are a mature industry and have had years to work out their kinks and ‘commission’ controversy.
30 years ago, Realtor commissions were appropriate because the average house sold for less than $100,000. I could see how people didnt mind paying the commission because it would about to maybe a few thousands of dollars.
But fast forward 30 years and today you have realtors making Tens of Thousands of dollars on a house for doing the equiavlent amount of work. Even when you factor in inflation, you still can’t justify the commisions realtors make today.
The commission percentage needs to be dramatically reduced.
I agree with Don that it would be nice to know what to expect after hiring a realtor. Should they contact you weekly to tell where their advertising your property?? How much advertising should we as a seller expect??
We have had an acreage listed since June 19. We had one realtor we dismissed after 10 weeks. We discovered she was not advertising because “she had bills to pay” and “things have been tough lately”. We would speak with her and get a promise but she would break it. Each time another week or two would have passed.
We are with another well known realtor but all we see for advertising is MLS and the Real Estate Weekly. Is this normal??
We think we are reasonably priced (334,900) for 2 acres, highly landscaped with a new in 1999 1260 sq ft modular home. We are 30 min north of Edmonton in Bon Accord area. We have not seen as nice an acreage in our area and we have lived there 16 years. We were originally asking 349,900 and dropped the price 45 days ago. We have not had a showing since early August.
This is our first home sale and are getting more depressed as each day passes.
LAM, in recent years, land appreciated much faster than construction. I am not surprised that land value drops faster in a declining market. Very few people would choose to live 30 min away from the city. If there is value in your property, it’s about future development potential. Maybe you should list it at the business section as well.
John,
The onus is on an agent to prove they acted in their clients best interests in a dual agency situation. You may think you’ll do it on your own and save 20,000 but the reality is very very different. Even comfree is advertising you should use this money to reduce your price because that’s all you can do. Its more likely in my experience that you’ll net less and have greater exposure to serious problems.
So I disagree. I think our fees need to come up. The costs for marketing and maintining a licenses as well as having to up front all costs for buyers and sellers.
Should you wish to pay the marketing costs and some expenses upfront I would be happy to take an agreeable hourly wage.. The problem there is you will get billed when I go to show your home and the buyer doesn’t show up. Most sellers don’t want to pay for no shows or phone calls.
Once a buyers agent is paid (let’s say half)
The amount left to the listing agent has to cover all costs, taxes and has to have enough room for prfoit to make it an incentive for people to do the work that’s necessary.
The reality is that there are numerous commission structures but if you want someone to work for free then its best you go on your own.
I’m in a fortunate position where I’m choosy with who I’ll work with. I believe in adding value to my clients and I would say most agree we do. That’s the great thing about a free market. You get to chose what works for you.
Bitter renter…some of the best innovators and intellects never graduated. Eienstein and numerous other driven people who have started companies that employ phd’s because they need in the box thinkers to do the routine stuff. Just kidding I have immense respect for people who educate themselves at whatever they do.
As a consumer you can chose from someone who has no education to numerous people in this industry who are higly educated, with numerous degrees. One of the main reasons we started this blog was to communicate my thoughts on standards and what not to accept.
As I’ve indicated in the article there are tiers in every industry regarding competency. You have the choice. Choose a committed professional or not, or go on your own.
Valid Points Sheldon,
But I think fees need to come down.
Case in point, the commission structure hasn’t changed and lets say it has remained the same since the 70′s.
I think the internet, advancements in telecommunications and technology have made it easy to ‘show’ and ‘market’ and ‘advertise’ a house. Imagine 30 years ago or even before that when fax machine’s didnt even exist and realtors only had the use of a landline and a beatup Winnibego (sp?) for transportation.
I think they earned their 5% commission. Especially on a paltry average listing price of $50,000 grand.
Realtors jobs are easier. Much easier. I would welcome any debate on this issue.
If the market is so efficient Sheldon, why has COM FREE and WE LIST become so popular and taking business away from realtors? Thats just it, the market for realtors ISNT efficient.
I’m confident enough to state that the only marketing realtors do to generate interest on a house is posting it on MLS. So how is it any different than a home owner posting their property on COM FREE and saving themselves the Commission?
The majority of marketing realtors do is ‘self serving’. Its printing up stamps or pens with their business’ name on it. Not your house. Duh.
The COM FREE business model will only get better. It is in it’s infancy stages. Why wouldn’t someone educate themselves on selling a house by buying a few books or taking a small course for a fee of $500 and in the end save themselves tens of thousands of dollars? (Less the fee to list on COM FREE).
It just doesnt make good practicle sense not to.
I am university educated (Recently graduated) and I was thinking of becoming a realtor. In the end, I just couldnt justify in good conscious the tactics I would have to employ to sell houses at unfair commission rates. But thats just me. Plus I thought long term, and after consulting various sources, found out more or less that realtors are slowly becoming less relevant.
Sheldon, I do respect your opinion and I think you and Sara are definitely an exception to the case that I mentioned above. Great job with the blog by the way. I really like how you and Sara let things fly whichever way. Definitely more resourceful/useful for the future first-time buyer like myself.
Bunny…thanks for the advice!! I will ask our realtor to list there and see what the response is.
It strikes me that depending on where you live and work in Edmonton many, many people drive 30 min and more.
I would have thought that in todays city with the crime etc. what it is alot of people with kids would be looking for a nice acreage 20 min. from a small town (Bon Accord & Legal, 25 to Gibbons). I also thought some buyers that paid 500 – 600,000 might need/want to downsize their mortgage.
Question/advice: if you had a highly landscaped acreage (2000 lilies and many flowers in numerous raised beds)would you post pics of the acreage during the summer months or would you post pics showing it as it is now??
LAM – the answer is both! You want to show the lifestyle the buyer will enjoy, let them imagine living there. Show shots of lilies in the summer, frost covered trees in winter, fall colours and a spring sunset. Show it all!
John – regarding marketing. We don’t spend any money on personal advertising. In fact our marketing budget is spent advertising our listings not on personal promotion. Take a look at the real estate weekly and compare our ads to others and you’ll see what I mean. And definitely don’t expect a free Sheldon Johnston pen when you come into our office
By the way we advertise our listings in a lot more places than MLS and Real estate weekly, but I’m not about to give away our marketing strategy here.
What I don’t understand is why consumers will hire someone because they have their face plastered on bus benches and bill boards. It makes no sense to me whatsoever but it happens over and over again. Until the public stops hiring based on billboards that is where a lot of marketing dollars will go. Consumers need to do their research and expect more.
Sara…thanks for answering my question. My realtor had said we should post pics based on how it looks now…I didn’t agree but was willing to go with his advice…as he is the professional. I will insist now.
“I don’t understand is why consumers will hire someone because they have their face plastered on bus benches and bill boards.” “Consumers need to do their research and expect more.”
I can answer that. We hire the face/name we are familiar with. Before hiring a realtor we asked many people who was good…but how many people have used numerous realtors??? We were advised to hire someone local who would know our area. So we did and wasted 10 weeks. How many people have ever sold more than one home?? What percentage do you think?? As well there is the thought that if I have seen this face for many years they must be good cause they are still in the business.
Maybe we need a Rate Your Realtor website.
I have had to contact the Competition Bureau regarding a fraudulent calculator on MLS as the Canadian Real Estate Association did not return my e-mails. The fraudulent MLS calculator that does not include the carrying cost of capital can be found at: http://www.mls.ca/Calculators/en-CA/calculator.aspx This calculator says that “You should buy!” even if rental costs per month are as low as $5. I would regard MLS as the most important website people use to do research in purchasing a home. The Canadian Real Estate Association is regarded to be professionals and therefore this information is trusted. Every Canadian homebuyer can be affected by the misleading results that this calculator yields and buying a home is the biggest investment most people will make in a lifetime. Considering the average house costs about $300,000 and the carrying cost (at 6%) is roughly $18,000/year. Multiplied by roughly two million Canadians that may be affected by the calculator in a year yields a financial miscalculation of $36 billion/year. This calculator is purposefully misleading. It is not an accident that the MLS calculator says “You should buy!” even if rental costs are as low as $5/month. I work as a professional engineer. If I provided this information publicly, you can bet I would lose my license and possibly be sued, and for good reason too. If CREA is acting in good faith, why isn’t this being fixed immediately?
That said, I appreciate the hard work and commitment that Sara and Sheldon demonstrate. Not only that but you have demonstrated a lot of courage in putting up your blog. You are doing great work in building trust with buyers and sellers. (Something that is entirely missing from a FSBO transaction) You’ve overwhelmingly earned mine. This is something that will be invaluable to your careers, I wish you all the best.
Hi,
We recently had an unpleasant experience with an experienced realtor. She was telling us it was smart to buy a certain property, before selling the one we live in, in this dropping market, and got quite offended when I asked for more of a rationale than “her experience” for that strategy. I still have an open mind though, because as Robert Kiyosaki points out in Rich Dad, Poor Dad, poor people think nothing of tipping a waitress 15% for mediocre service, but balk at pay a commission to a realtor 15%, whereas (in his opinion) rich people know that very often you do get what you pay for.
Having said that, the Internet did change the real estate industry and alternative models will emerge, as some readers have already pointed out. For example, maybe there will be more independents, since Joe Realtor has to split quite a lot with the brokerage, I think. Next time I buy or sell (after this doldrum period), I’m going to really negotiate on commission, and check out some independents and what they are offering.
Sheldon, there *is* a de facto standard, which we all know if 7% on the first 100k. If it werern’t pretty much “a standard,” it wouldn’t be written into the contracts. In Freakanomics, the author points out how this structure really doesn’t motivate the realtor to care as much about e.g. every 10 thousand in the second 100 thousand, as he/she does about every 10 thousand in the first 100 thousand (because they’re making less than half the commission on that part). For Joe Buyer, 10 grand means actually $18,000 over the 25-year mortgage (at 5.79%), so that 8 months of mortgage payments, the biggest payments most people have. For the realtor, it’s less than $300 extra (3% of 10 thousand). So, human nature being what it is, how much is Joe Selling Realtor going to care if you got $300k or $310k on your townhouse? He has already made the bulk of his commission. So I hope and believe the Internet will bring evolution/revolution to the industry.
One more thing, I think one main difference negatively affecting the DIY is information on the cost of properties actually sold in a given area (as opposed to asking prices). These number (especially cost per sq. foot) are really where the rubber meets the road – and I think (please correct me anyone if I’m wrong) those are only on the MLS – to Joe Comfree won’t have access to those, which makes it pretty hard to do meaningful analysis for pricing purposes.
Thanks Sheldon, enjoying the blog and I find you guys pretty brave to hanging out with so much potentially hostile company.
: )
Well Sara,
From a buyers perspective, when I was willing to buy a house off a realtor, the only place I looked was on MLS.ca
Looking at real estate publications just didnt make alot of sense, considering you could find ALL listings on MLS. Therefore I cannot fathom why advertising money on a home would be spent on publications or newspapers.
So I think we might be a ways away on agreeing on that issue.
I know realtor’s work hard. And at nights. They should be compensated for that work. I still think that $20,000 commission per house is still astronomical.
How much tax do you pay on that commission?
I would still like a pen Sara.
This housing boom has made it so I’m devoting a large portion of my income to rent, and I need all the freebies I can get
:p
John, are you being sarcastic about devoting a large portion of your income to rent? I’m paying less than 15% of my after-tax on rent and utilities combined (inner city apartment), with the additional funds going straight to the RRSP, life is pretty good right now. No fees, taxes, maintenance to worry about….
Maybe with the prices coming down, I’ll be able to afford my own place in about 4 years.
I’m being half serious.
I pay $895 for a 1 bdrm apt.
which is over 1/4 my takehome salary for a month
John, I guess your degree is not in marketing. If you were seriously interested you could come in and Sara could show you the differences in our marketing plan. You’d be blown away at what we do, but its pretty hard to have a discussion on that here and I’ll just say we agree to disagree. Since I’ve been in real estate about 10% of the market has been fsbo’s. The DYI’s have consolidated that.
Technology was supposed to make life easier. What it has done is diluted information and made it more difficult for people to ascertain the real value of a property. It is much harder for the average person to ascertain what information is valid, what they should be looking at. Marketing is a big part of the equation but just a factor. Feel free to follow us around for a week. If you can keep up
As for the statement that 7 and 3 is what everyone charges I’ll debate that till the cows come home because I’m often told that others will do what we do for a much lower fee (although no one actually does what we do).
There is no doubt though that the MLS is still the most powerful, efficient way to market a property. The number of REALTORS (that’s in caps because it’s a trademark) who are working with other buyers far exceeds a single home owner who never deals with buyers or their needs, hoping that a buyer will please, please buy there home.
If I’m selling I’m going MLS. No apologies, that’s just my opinion.
I am on my way to San Francisco and had to peak at the blog. Hence why I am posting at 3AM.
Have to share my thoughts.
Alberta Venture couldn’t have said it any better. I guess you were not able to sense the writers slant b4 it hit print.
The writer understands the way of the future with FSBO, the use of the best tool, the net and the real estate industries refusal to admit the the changing times.
I have watched this blog for a very long time and would like to point out that almost always Sheldon’s negative comments regarding Comfree, back fire.
Like the traditional travel agent industry, the traditional real estate agent industry is fossilizing.( Did I create that word?)
I am helping a buddy sell via Comfree and have had calls and Emails from realtors hoping we are ready to give up. We are smart enough to know that really not much is moving now, realtor or not, so we will wait. Interesting, one thought we were selling a little low, the other thought a little high.
I laugh when I hear that certain realtors think people should drop their prices but haven’t considered dropping their fees.
I swear if prices drop drastically we are creating a second boom for these realtors through sales and the investing and flipping they are doing.
As I mentioned in a previous blog….The realtors that visited my showhome were very upset that the fee for them was “only” $500. Because they simply knew we existed and they pointed their client to us they thought it should be so much more. Of course this is when they didn’t want to buy and flip themselves.
The monopoly on what the house down the block sold for, is the realtors last secret. The ONLY advantage they have on FSBO. Don’t expect this to change.
I took a 3 month course learning tax preparation. I think 3 months is about how long it takes to get your realtors licence. I was damn good at it and made good $. I could have made more but couldn’t bring myself to charge $50 for 1/2 hour of work.(The 90′s) With the do it yourself tax software, my business with the average Joe was toast. Lets face it, most of us our average Joes. Same idea with travel agents and soon realtors. PREHISTORIC
To clarify, realtors will always be needed as there will always be people frightened to sell their home. There are times one would need a realtor. But most will be able to do their own taxes, make their own travel arrangements and sell their own homes.
I have specifically looked for your ads in MLS. I see 6000 ads and one or two from you. So where exactly do you advertise? What is the secret in that? Tell us what you do different then other agents. I see nothing unique with your ads. How will you sell my home faster, for more then Terry you know?
PS I’ll have some SOURdough for you. TEEHEE
I think comfree should make recent comps searchable on their website with actual sales prices. This would be more of a threat to REALTORS than their current strategy. Right now they are focused short term on aquiring as many listings as possible and keeping their clients pacified with arbitrary stats. They will need to learn that for their business to work long term they have to attract buyers as well.
Comfree has 17 months of inventory at current rate of sales. That is a much more telling stat than “sales success” which has been arbitrarily chosen to be 50%. Hahaha what a bunch of clowns!
Sheldon my degree IS IN MARKETING, as well as in Political Science. With that being said, I know enough about politics to know when someone is dancing around an issue.
You still haven’t elaborated on what you do to market someone’s home. If you dont want to give away your marketing strategy, thats understandable, but that shouldnt keep you from giving examples of what other REALTORS do to market a property for sellers. You are just dodging the question, and rather than responding to it with a factual answer (Which doesnt exist because realtors spend the bulk of their money on marketing, marketing themselves) you are giving me a challenge that you know will be unfeasible for me to meet – following you around for a week.
I can understand the position you are in. The market is tightening up, theres growth in “sell your own home” businesses, and the irrelevance of REALTORS would make me feel threatened too if I was a realtor.
All argument aside. I have not once seen a break down of the expenses vs income of a real estate. Sheldon is right. The 7% and the 3% is negotiable, everyone here negotiated,6% or 5% on their home when it was beign sold – and the real estaete agents alwasy start at 7% and then go down to 6% and 5% (because you are such a good friend
))
Still – at least once!!! Tell me what do you do to make 5%(100K), 2.5% (over) – dont give me an explonation of the hard work in the evenings…..break it down for me – one by one – where is the money – what is teh overhead, what money do you spend on a normal marketting campaign – break it down. Dont avoid the question. Break down the costs to you to sell MY property!!!!
Anyone – someone do that please – and do it properly just once!!!
Its the nature of the beast
))) Captialism – GOD – I miss communism 
))
Over the last year we have bought and sold with both “REALTORS” and COMFREE, and from our experiences selling your home is not rocket science. I believe REALTORs often give the impression selling a home requires magic tools and “a mysterious marketing strategy”. Does it take time, research, work effort…of course, but nothing the average person can’t do. This spring after attempting to sell with a REALTOR, we chose to sell through COMFREE. We were warned the decision would be regretted and could be mugged, burglarized, and vandalized in the process. We sold in less than two weeks. Selling without a realtor didn’t net us an extra 15K, but it did give us a competitive edge with respect to other properties in the area. Would we go FSBO again, maybe, but it was a viable selling alternative, which isn’t going away.
It’s also funny how realtors are quick to destroy the merits of FSBO services, without realizing they are actually insulting the people using them. So rather than insult someone for selling on their own, provide them with initial pointers knowing it may be theirs, their family, or friends business in the future you may be getting.
As for fees. The excuse about working evening/weekends, we all do this. I don’t remember the last time I received 15K for working late for a couple weeks. The fees do have to come down, and yes I too would like to see a breakdown of expenses.
A number of people have congratulated us on putting this blog together and putting ourselves out there for everyone. Thanks very much for your comments. There are some things we just can’t publish on this blog though.
Greg, Jason, if you hire us to sell your home we’ll provide the breakdown to you, but this is not the kind of information that you publish on a public forum. KFC doesn’t give their recipes to their competition and neither do we.
Have a great weekend everyone!
Jason,
I’ve got numerous examples of people coming to me from Comfree where we’ve exceeded their expectations. Its not an insult to educate people on the differences. I’m certain that if it can’t be discussed and if people who are potentially going to be offended by things I’ve said its already to late. I’m not asking you to like my opinion. If you have a home to sell you can call someone else. I’m not pandering for business.
But why am I getting so many calls from people who have acted on their own and now want a last minute bail out, some expert advice? Why do I have educated clients such as lawyers, doctors, dentists, judges and so on come back to me time and again? Because we bring value to them.
You even said you really didn’t save what you thought you would save when you did it on your own.
There are transactional costs and the costs of staying in business. The expenses issues is certainly something I can do on a post on in the future.
John,
You are most welcome to come in and we’ll spend some time with you on what we do for marketing. Granted Sara used to be the director of interactive marketing for coldwell banker canada for 5 years so we definitely do more than the average. I think even someone as discerning as yourself will be impressed.
I’d love to answer everybody’s questions and concerns but at the end of the day I’m limited by time. I have clients that are my priority. One does have to ask oneself am I really saving money by doing it on my own or is it just that I want to save money so, even comfree suggests in their advertising you should use the money you are “Potentially saving” to lower your price.
Sheldon and Sara,
You have my email address, lets set up a time and go over the amount of money you spend marketing a seller’s home.
If we could, I would like to discuss the profit margins you make on your commission rates on a home worth $600,000 and over.
I would like all costs broken down with proper documentation (ie: Receipts).
Using money you are ‘potentially’ saving to ‘lower your price’ will make your house sell faster, in a declining market.
So in the end, you will be saving money by having a competitive price, and not succombing to further losses in a decling marketplace.
ie: House A is Priced at $220,000 with Realtor
Similar House (House B)is Priced at $205,000 using Com-Free.
Assumption: Both houses are mortgage free.
Buyer chooses to buy house for $205,000 because it is the most competitive on the market.
2 weeks go by, House A still has no sold. Realtor suggest reducing price to $205,000. House sells, Seller is left paying $15,000 in commission. Profit is $190,000 as opposed to seller of House B who sold house for $205,000 and gets to keep that amount.
What do you have to say to that?
John,
I would like to see every penny you made, including your income tax claim. I want to ensure that anything you have ever sold on ebay, or at your garage sale is claimed and i want to know EXACTLY how much money you make. I also wnat a schedule of what you do at work. Every 5 minutes. You obviously have time to come on this blog lots. You also have lots of time to bitch and complain. Maybe you should become a realtor and give it a try if it is so easy. I would also like to break down how much money you make every minute at your job, and then follow you around for a week and watch every minute you waste not doing work.
Get real. Go find something fun to do – like get your realtors license. It is super easy money.
I dont have to disclose anything, because I am not the one publishing a blog and making claims about my profession that are unsubstantiated.
Perhaps my time will be better served writing my own blog, indicating reasons why:
1) You shouldnt buy a home in Alberta now
2) You shouldnt be buying property anywhere unless you have a sizable downpayment of 15% of the purchase price
3) your amortization period shouldnt exceed 25 years
4) you shouldnt be using the services of a realtor to sell your home unless you can negotiate an overall commision rate of 3% or lower
I would also like to dispell myths and scare tactics that the real estate industry and realtors especially employ to deceive people in making bad decisions.
So with that, I bid you adeiu.
I sincerely wish all home sellers the best of luck in their endeavours regardless of how they sell their home.
Good luck and god speed.
Truly the industry and its players have had to change tactics recently to get buyers inside homes and those that don’t have found their listings turning into dead albatrosses.
I have recently had to admonish my realtor for not making paying attention to details (newspaper ads placed in wrong categories or just plain missing, spelling errors in listings, listing price not getting lowered for a week in MLS and realtor’s own website) and for generally treating my business as secondary to her “other” careers (that must be paying the bills). I seem to be running the show now as she has apparently lost interest (maybe I would feel the same way if my chosen profession didn’t seem to be paying any longer). I’m having to find my own advertising opportunities for specific niche markets as she has run out of ideas (MLS listing and Real Estate paper).
Last night she had the nerve to suggest that maybe I wanted to use the services of a different realtor if I wasn’t happy with her service. Not “gee, I’m sorry I screwed up yet again”, or “I’ll take your suggestions and will try to do better” – what I want is for her to put her butt into high gear and get my place sold. I wanted to hear “lower the price” instead of “I just don’t undestand why nobody wants to see your lovely home – I guess nobody is buying right now”. After 40 days of no showings, she was starting to have that “deer in the headlights” look.
Where is this industry headed when realtors would prefer an unsold listing to dealing with a seller’s issues surrounding the marketing of his house? (How dare you question my abilities? I’m the expert!)
Will I fire her? With only a couple of weeks left in the mandate, I think I’ll just take that time to find another realtor who is on the ball, if such a person really exists – or maybe I’ll (horrors!) list it on ComFree as I have learned pretty much ALL I need to know about how NOT to sell my place from my realtor. If she somehow manages to sell in the meantime – BONUS! Will I ever use her again or recommend her to anyone else? NOT A CHANCE!
Hey Sara,
As for my previous comments…hey you got a deal….I have rented my second property for 6 months with possiblity to extend to a year. And then you are getting hired on. Just remember your promise
))
Okey will give you credit – you are running a successfull business, and a blog where people can express themselves. This blog is probably the best marketing tool that you currently poses in your arsenal. As for a marketing campaign – get real – marketing using existing and proven methods cannot be considered a campaign. That requires a professional strategy, tactics, and doctrine.
Hmm…as for the breakdown. Well here is one from my last transaction:
Arrived in Ottawa to buy a condo. Realestate agent meet me in my hotel, gave me the speel about his expirence, family values, etc etc….dont blame him I used the same standard bull in my sales pitch – as long as he delivers who cares right
))) ….No clue about Ottawa…so had to hire the guy…..
He worked out an itenirary for 5 days to see properties. Gave some advice (which to a newbie is really immportant but anyone else who lives here already knows), dont buy here, dont buy there, this is good this isnt. Standard stuff…..he was really not happy when i started considering already build brand new developments (could not figure why until I found out he does not make the price commision but rather a standard fee)…finally in negotiations for my condo we started out at the 90% level and ended up at the 98% level – and here is the kicker – usually you should be able to get 95% price – in other words condo is 200,000K you should be able to get it for 190,000k…imagine my surprise when the seller didnt want to budge…..(i pushed hard he pushed back) to make a long story short – seller was using the i have to pay my agent 10K on sale …..which is not exactly true- THE SELLER DOES NOT PAY REAL ESTATE FEES BOTH OF US DO.
So here are the figures for a buyer real estate agent
Property 200,000$
sold for 197,000$ (round it up to 200K fo simple
seller (who I know well now since we deal with his mail
6% on the sale price 100K, 2.5 on rest.
on 200K the selling agent gets 8500$ on bringing in the buyer the buyers agent takes some of that
My guy took 2.0% of sale price (4,000$) in fees – although my guy says it does not quite work like that (he said it was closer to 2500$ (lets meet in the middle lets say it was 3,250$ to the buyers agent
this is what I got for 3,250$
)….he did work 2 late evenings till 10 pm still sending me postings.
I got approximetly in a period of 5 days – 30 hours of labour, included in that was the usage of his vehicle and advice on real estate issues, and a cup of coffee
In his defence, he said he only takes approximetly 30% of the 3250$ since he is a member of a association and has to pay overhead to his boss (usage of office, space, other fees. So for a week of work he got 1100$ from me (and while we were riding his blackberry was going) …. he is a professional and he massages the system – that what they do…..did he earn his commison with me
)) ….he did earn it but not 40$ an hour I paid him (that is if his 30% of the take is his theory is taken at value)
Okey so the seller what did he get for his 5,250$$.
He got posted on MLS
)
)), he got 3 open houses in 2 months the property was on the market and he calcualted he had approximetly 20 showings by various agents…..buyers agents that is not his.
He got posted on Homes weekly, which costs approximetly 120$ for a 3 month color pic of your place in the sections (and yes if you buy a large bulk print the cost per posting comes down
so 5250$ – 120$ for news paper = lets say 5000$ after markeeting is done – 70$ for the sellers agents clearing house (MLS fees, admin costs, association fees…etc etc etc) …..the guy takes approx 1500$ in the end to cover his expenses. Total working hours of labour over the 3 month period (remeber most of the showings on sellers property are form buyers agents) lets assume 30 hours, he made 50$ an hour. Not too shabby, if this was his only porperty for the 3 months he is screwed, so I hope the guy has more properties on the market.
My guy showed me listing on the MLS on his screen, since the system is actually designed to be a collection tool for real estate agents rather then a markeeting tool for common folks. The houses shown to potential buyers usually have an associated percentage with them, usually ranging from 1.5% to 2.5%. The lower the percentage the less buyers agents will be interested. This is a warning to sellers, dont fight your guy to hard on his commision – the lower his associated commision the lower the percentage for buyers agents, and agent will not be happy to bring a buyer to a 1% or 1.5% house (** this all depends on other factors – price of property and so on and on).
I am not a real estate agent, but I sell my properties, and I am not a flipper but I move every two years (working for the Gov they move you ALOT)and most of this is pieced from what other real estaete whom i worked with tell me
…..
If there are real estaete agents plese explain some of this stuff to me – in avg – i dont need to know how much you make exactly but how much goes to for example REMAX, how much goes into operating costs (office, sexy secreateary in a mini skirt
))) )
GREG