FutureSDGuy, you make some very good points. But I think it doesn’t work in practice as we might think. Mainly, sellers who list by owner tend to overprice their home. They have no idea of the correct market value, because they did not receive a “Comparables Analysis” from a realtor. Say their house is really worth $750K, but they think their place is so unique because it is a corner lot, the sink is 1 year newer than the neighbor’s sink, and they just planted a tree in the front yard, zo they list for $820K. This example is to point out how completely irrational sellers are in pricing their home. Where is the discount?
If a seller lowered his price by 3% from a realistic market price, he does have a pricing advantage. As long as he is in the MLS and pays a cooperating broker commission, he should get showings. When I listed FSBO with a 3% broker coop, I had several realtor/client showings.
If you come without an agent, will you save 3%? I very much doubt that. The seller has a minimum price in mind, and he won’t lower it just because you don’t have an agent. Say the seller will go as low as $550K, so that is his lowest price. Out of that price, the realtors take split the 5% commission (5% of $550K is $27,500, or $13,500 per agent). Since you don’t have an agent to pay, will he let you have the house for $13,500 less, so $536,250. I doubt it very much. Sellers have that ego thing going and they do not want to go to their cocktail party admitting they got noly $536K for their house, when their neighbor got $550K. For sellers, it is all about the ego! Their house is worth more because it is special, and all that crazy emotional mumbo jumbo. It’s so stupid, but sellers are completely irrational animals.
However, I would love to be proved wrong. So if anyone has any examples where they think they saved 3% by shopping without an agent, and have some comps to make the point, I will eat my words.
