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Wednesday, January 8, 2014

Saving on Commission Is Poor Justification for Not Using an Agent

[Published Jan. 9, 2014, in the Jeffco editions of the Denver Post's YourHub section. An abbreviated version also appeared in five Jefferson County weekly newspapers.]

The decision to try to sell your home without an agent is typically rooted in the concept of saving 6% commission. Here’s why that is a faulty premise — and why most people who take that approach end up listing with an agent anyway.

For starters, the average listing commission nowadays is not 6% -- it's closer to 5%.  I can’t remember the last time I listed a home for 6%, but it was probably when I listed a condo for under $100,000.

Second, that listing commission includes the co-op commission -- typically 2.8% -- that is paid to the buyer’s agent.  When I list a home for 5%, that leaves only 2.2% for me as listing agent -- and I do most of the work!  Smart buyers hire a buyer’s agent, because they want to have an agent who is negotiating in their best interest — costing the buyer nothing, since the buyer’s agent is almost always compensated by the listing agent. When you sell without a listing agent, more often than not, you’ll still end up compensating the buyer’s agent 2.8%.  All you accomplished in that situation is to make yourself the only party in the transaction without professional representation, putting yourself at a severe disadvantage.

But let’s get beyond the financial implications of your decision to go without a listing agent.

The first thing you give up is widespread online exposure, unless you find some agent who will put your home on the MLS for a flat fee -- say, $500 -- and do little else. (This is called “limited service.”) Note that you pay that agent’s fee up-front, regardless of whether the home sells.  If you list with a full-service agent, you typically pay nothing  unless and until you sell the home.

How are showings going to be scheduled?  Without an agent, you’ll have to be home for all showings or purchase a lockbox ($35) and trust that you’re giving the lockbox code to a licensed agent instead of a burglar.  By listing with a licensed agent, you will, hopefully, have the services of Centralized Showing (our showing service) which follows a specific protocol for granting showings, providing lockbox codes, and then obtaining feedback from the agent after the showing.  Your listing agent pays for the lockbox as well as the showing service, of course.

How about pictures? True, you can take good pictures with a smartphone, but an agent will either hire a professional photographer or use high-end equipment to generate high quality photos.  If the agent is with Golden Real Estate, he or she will also make a professional-grade narrated video tour, which will be uploaded to YouTube and linked on the MLS and consumer websites.

Surely you’ll want to create a flyer to put in a brochure box (which you’ll purchase) on the for sale sign (which you’ll purchase) in front of your house. On your PC or Mac you’ll be able to create a high quality flyer if you know your software.  You’ll pay to have it printed and reprinted, of course, while you wait for the right buyer to come along.  A listing agent would take care of this for you, and at no cost to you.

Are you a good negotiator?  It’s safe to say that a listing agent has more experience negotiating not only the purchase contract but the inspection issues and appraisal problems as well as those unexpected issues which arise during the transaction. 

Okay, you made it to closing without a listing agent. Have you factored in the cost of moving?  A very few companies — including Golden Real Estate — not only provide free moving trucks with blankets, dollies, and even moving boxes. We can also provide free or low-cost labor for the move itself, saving you thousands of dollars.  We make the truck available to the buyer, too, which helps to sell your home over its competitors.

So, you might save 2.5% commission if you succeed in selling your home without an agent, but what will it cost you -- and not just financially?

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