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.
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.