I’ve noticed something lately. Even though sellers are getting less for their homes than years past, commissions are not down. I see more bonuses offered. I see strong cooperative commission offered in the MLS. Brokerage as an industry has not been decimated by the market downturn or the advance of technology the way other industries have. In spite of the naysayers and blabbermouths at the keyboard, the market is efficient, and it is proving the worth of brokerage.
Every company that was going to “change the industry” hasn’t.
Every trend predicted to supplant brokers with technology has not manifested itself. And it won’t.
The reasons is simple: Real estate doesn’t sell itself. It takes people to sell it, and it is a rare skill to make huge amounts of money change hands. Moreover, those that possess the skill to make vast money change hands deserve to be well compensated. Don’t bore me with the anecdote of the inept slob who stepped into a million dollar listing and made tens of thousands he didn’t earn. He can’t do it long term. As a matter of fact, the agents who work that niche successfully are, by and large, warriors. They have a skill the critics do not possess.
Full disclosure: Ann and I ran a side business for years where we assisted for sale by owners (FSBO) to sell themselves. Most were train wrecks. Even the sharpest civilians do better with a broker because they eventually have a weakness brokerage doesn’t possess. Even if getting lots of showings were easy (and it isn’t), FSBO sellers have one or more of the following weak links in their chain:
- Overpriced Ogre. The picture of bias, this is the sort of seller who believes that it is still 2005, and that a new roof raises value by $10,000. They base price on selective perception, and they have the best house in the zip code-just ask them.
- Showing saboteur. This is why we even advise listed sellers to not be present. Most people either can’t sell their way out of a paper bag, trip themselves up, badger or pelt with information overload, or ask a dumb question. I can name a half dozen times when I have seen a seller ask a buyer of a different nationality where they were from in an effort to show off where the Visigoths and Plutonians lived in the neighborhood. Bad move to offend your potential buyer, there, pal.
- Negotiation knucklehead. I have seen owners lucky enough to get an offer fall on their spear plenty of times as well. Negotiation is not something most people do daily; it is best left to the professionals. Most people don’t know what questions to ask, how to ask them, or when. They get emotional. They let their ego affect their judgement. And they fail.
- Attorney Assisted Asshat. “I don’t need an agent- an attorney will represent me.” These people never heard of billable hours, and I never saw an attorney present at a home inspection. This mentality kills deals over a dishwasher.
- Agent Alienator. “No brokers!” In our area, most FSBOs are smart enough to know that cooperation with agents is wise; 85% of the buyers are working with one, and they are often the best qualified. They are just trying to save on half the commission. But others are hardcore, and to their detriment.
For Sale by Owners have not gained market share. Alternative models have not gained market share. The same 10-20% of the market has been beating itself up for decades. And it will continue. You can’t beat a good broker. And you wouldn’t want to, unless you are the type that thinks that a guy who removes his own appendix should be congratulated for saving money.
The best in the business are paid the most because they are worth the most. Any business. That is why good brokers will never go the way of travel agents.