What’s with the wrath against real estate agents?

So they get more for their homes? Wouldn’t you?

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We cover a lot of real estate issues on MoneySense.ca, some of which make us less than popular with real estate agents. Just ask my colleague Romana King, who drew the ire of the industry when she wrote about how to sell your house on your own.

Lately, I’ve seen a number of articles regarding how much real estate agents make when they sell their own homes. According to the authors of the book Freakonomics, U.S. real estate professionals tend to leave their homes on the market 10 days longer and command a higher price (about 3%) than the national (U.S.) average.

Whether or not this particular statistic has contributed to the popular backlash against real estate agents is not known, and probably never will be. Nor does it matter. However, the anger is real. A recent Investopedia article offers a beautiful illustration of this. Just enter “real estate agents are” in a Google search. “Scum”, “liars” and “useless” pretty much round out the repeatable terms. (It seems journalists are only slightly less loathed, if the Google search method is accorded any merit.)

So are people actually angry because real estate agents do a good job of selling their own homes? If so, what could possibly be their reasoning?

Agents are industry insiders. They know how to work the system. Just like police officers no doubt have more success beating speeding tickets and doctors ultimately end up with slightly better than average health care, real estate agents are experts in their field and use this to their own advantage. Instead of letting their emotions get the better of them, they market their homes in accordance with economic conditions and wait for the best offer.
Who wouldn’t?

Personally, I’d rather use an agent who was able to squeeze a few thousand dollars more from the sale of his own house as opposed to an agent who only got the expected price. It’s evidence that he knows what he’s doing.

Just apply this logic to your financial adviser. Would you be happier knowing her personal rate of return is slightly ahead of the market, or simply on par?

Say what you will about the merits of real estate agents, but I don’t see how their ability to generate higher profits for themselves should be held against them.

16 comments on “What’s with the wrath against real estate agents?

  1. Issue I have is that when they're selling our homes, they push for lower list prices for a quicker/easier/cheaper sale. Example: on a $400,000 house, an extra 3% nets the seller an extra $12,000. But the selling agent only gets 2.5% of that incremental increase, or an extra $300. So the extra 10 days it takes to sell at $412,000 instead of $400,000 requires the agent to spend another Sunday afternoon hosting another open house… all for a measly extra $300 in their pocket. So instead they push the vendor to keep the asking price low and take the quick and easy $10,000 instead of the much harder $10,300.

    Now, I don't dispute that agents know exactly how to position a house to get the highest resale, including buying the right house initially, doing the right renovations, decorating to sell, etc etc etc. I'd be shocked if they didn't get more $ when selling their own homes. But the extra 10 days their houses spend on the market tells the real story – they work harder for themselves than when they're working for us.

    I don't dispute for a minute that agents dont add value. But I don't think it is worth the fee.

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  2. Another awful article. The point of that statistic is that real estate agents don't work in your best interests. They recommend that you accept a quick offer (often with pressure, "this is a great offer, you probably won't get anything better…) because financially they don't get much more if you wait for a slightly better offer (which is probably in your best interests).

    The police officer analogy is poor because you don't hire a police officer (for thousands of dollars) to help you beat your speeding ticket, and if you did, you would expect it to work just as often as if it was the policeman's own ticket.

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  3. It self interest. A real estate agent will go the extra mile for themselves but not for there client. On top of that they mislead you. They want to close the deal fast and make a quick buck.

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  4. So many people seem to paint all real estate agents with the same brush.

    "They recommend that you accept a quick offer"
    "They mislead you."
    "They work harder for themselves than when they're working for us"

    I do believe the statistics that, on average, agents will leave their their houses on the market longer and obtain a slightly better return. But I think that if all agents work harder for themselves than for their clients, the statistics would show that they held out longer than 10 days and received an even better return than just 3%. This means that there are some that work just as hard for you and me as they would for themselves.

    We just sold our condo in Vancouver. We received 2 offers before our first open house in December. Our agent could have suggested to accept one of those right away and he would have made an easy $15K, but instead he suggested that we hold off to gauge the level of interest at the open house. He could have made his commission just 3 days after listing, but instead he hung on with us for 2 months, holding open houses almost every weekend, so that he could be sure that he was getting the best price for us. He worked his ass off for us even though he wasn't making the commission he would on a million dollar home, which are a dime a dozen in Vancouver.

    They won't all work that hard, but they won't all try to rip you off either.

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  5. You state that real estate agents are professional in their field.
    Most put a sign on your lawn and list the MLS and put a Lockbox on your door and you never see them again until they want you to lower your price ………The you get an offer they will show up again..

    Total , Total SCAM…………..

    People are so brainwashed to think that an Agent gets you more money ………YOU PAY MORE …
    It is all built into the price when you buy………….someone pays they 5 % commission.

    $20,000 or $30,000 to sell a house …………Give me a break.

    Oh the agent cries , "i don't get it all " Well that is too bad because your broker and their broker and the buyers agent all want a shares.
    Brokers ………………..Biggest Scam …………………MLS …………..Unreal Scam …………

    Agents will NOT! show a house unless it is listed with an agent ………….THEY WILL NOT !
    It could be prefect for you but they will not show it ……………….

    As for Paper Work……………….My Lawyer Laughs at agents and the things they miss in offers……

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