Why would anybody ever list with a 6% Realtor?
Any seller who understands the process of listing and selling a home would never list with a typical 6% Realtor. (We refer to the typical Realtor who charges 6% as a "6% Realtor". They prefer to call themselves "Full Service Realtors" to make it sound like they are providing more than they are.)
There is nothing of value that a 6% Realtor can provide that a seller can't get from us for a fraction of the cost. In fact, the odds of selling your home quicker or for a better price are actually reduced by listing with a 6% Realtor. The 2 main reasons this is true are:
- The biggest single factor that generates showings and offers is the price. If you are stuck paying a 6% commission, you have to price the property high enough to cover that. By listing with us, not only can the listing price be lower, but when a buyer contacts us about your home, we refer that buyer directly to you. This allows you to avoid the buyer's agent commission too, which allows you to make another 3% price concession that you wouldn't be able to with a 6% Realtor.
- When a buyer calls a typical 6% real estate office after seeing a real estate sign in a yard, or a property listing in Realtor.com or some other website, what normally happens? Typically, whoever the agent happens to be on "phone duty" at the office answers the phone. The call is treated as a lead, not as a buyer to direct to your home. The agent answering the phone makes the same commission if he sells an in-house listing or any other listing, so the focus is on turning the caller into a buyer-client. The agent may answer a few basic questions about your property, and then move on to questions such as, "What is your price range?"; "How soon are you needing to find something?"; "Do you also have a home to sell?"; etc.
This explains why some people have their home listed with a 6% Realtor without any activity, and when they list with us they get showings and offers right away. Very few sellers ever try calling the phone number on their agent's real estate sign pretending to be a buyer as a test to see how the call is handled. We recommend you do.
The dilemma of 6% Realtors - Sellers are more educated today
The problem that 6% Realtors currently face is that sellers are getting more educated and savvy when listing their homes. Since the 6% Realtors can't really provide much more than we do, they get creative with their sales pitches to convince sellers to list with them. Here are the most common sales pitches that 6% Realtors make to convince a seller they should list with them instead of someone like us:
Sales pitch: Our company has a well-respected name in the business, so buyers feel more comfortable with us.
Truth: Buyers don't care about the company who has the listing; they care about the property.
Sales pitch: If I have your listing, I'll "market" your home.
Truth: The more vague and non-committal the sales pitch, the better they seem to like it. If you ever hear this, ask, "What specifically would you do?" Don't let them off the hook when they give you more vague answers – probe further and insist on quantifiable specifics! (There won't be any.)
Sales pitch: If you list with one of those discount outfits, you are going to get "blackballed" and no agent is going to show your house.
Truth: First of all, if you follow our advice and use a real estate company sign and follow the standard showing procedure for your area (instead of "call owner for appointment"), no Realtor would ever know that your listing is different from any other listing. Second, assuming they could somehow tell the difference, it really wouldn't matter anyway. All that buyers' agents care about is getting their commission, and they WILL show your house regardless of what kind of listing it is. If they don't show it, they risk that the buyer will find it themselves, and the agent would end up with nothing. The only agents complaining and making up "blackballing" stories are the ones who can't get 6% listings so easily any more, and they don't normally work with buyers anyway.
Sales pitch: We have lots of buyers referred to us from our relocation business. (As though the odds of finding a buyer are better if they list your house.)
Truth: Any buyer's agent who works for a brokerage company gets the same commission no matter where the buyers come from, including relocation referrals. Assuming their office lists your house, there is still no incentive to sell the buyer your house over any other house on MLS. A good question to ask an agent who gives you this pitch is, "You've known about my house, if you have so many buyers, how come you have never brought any over?"
Sales pitch: I network with other agents, so I'll get the word out there about your house.
Truth: Absolutely ridiculous. Agents who are busy working with buyers don't have time for tea parties or bowling tournaments or other functions to rub elbows with other agents. Agents who have time for tea parties are typically new and inexperienced and don't have anything better to do than "networking" with other agents like themselves. Agents working with live buyers use the MLS to search for homes, not some neophyte agent at a bowling alley.
Sales pitch: We'll enter your listing in our book which is distributed to hundreds of supermarkets all over the area.
Truth: This is a favorite sales pitch of Keller-Williams. If you've ever seen one of their books, you'd know it contains no useful information and is designed to promote their agents. There are no property addresses or details. Typically there's a tiny bad property photo, and a brief description like "Big yard – bring the kids & pets". Even if it had better information, the time lag between printing and distribution (minimum 6 weeks) makes it useless. Since they come out quarterly, the information may already be 4 1/2 months old when it's picked up. (Of course, each page always has a big photo of the agent, even if they have a face that scares people away!)
Sales pitch: I'll send an email to every agent in the MLS so they are aware of your house.
Truth: All this does is annoy agents, and make them dislike the spamming agent. No legitimate agent reads this spam. If agents have buyers looking for a particular type of property, they search MLS, not their spam emails.
Sales pitch: We'll hold an open house and send mailers out to the whole neighborhood.
Truth: Any buyer who buys after seeing an open house would have scheduled a showing based on the sign anyway, so an open house makes no difference for the seller. Realtors love to hold open houses because they have a chance to meet prospective buyers who may be in the market to buy at some point in the future, and prospective sellers from the neighborhood who are planning to put their house on the market. Holding an open house is also a great way for Realtors to give their clients the impression that they are actively marketing the home when they are actually just promoting their own business. (We occasionally do open houses, but we are honest with our clients and let them know they are doing us a favor by letting us do it instead of the other way around.) If you still believe holding an open house is important, it's very easy to do it yourself!
Have you heard any interesting sales pitches lately? If so, please email them to us so we can add them here!
Unreasonably One-Sided Listing Agreements
In case you don't already know, the standard listing agreement that all 6% Realtors use states that if the house sells while they have it listed, you pay 6%. If they do nothing more than put their sign in the yard and enter the listing in MLS, it's still 6%. Even if you sell the house to your neighbor and the Realtor had absolutely nothing to do with making that happen, you pay 6%. We personally can't believe anyone would ever sign the standard 6% Realtor listing agreement, and wonder if anyone ever reads it. It's completely one-sided in favor of the Realtor. Click here for a sample blank copy, in case you are interested (This form is for Texas, but listing agreements in all states are very similar).
Don't fall prey to this extortion!
A really dirty trick many 6% agents play is to get your listing, and then "hold it hostage". It works like this: First they say whatever is necessary to get your listing, even if they have to tell you your house is worth more than it really is. If the listing is a long enough term, they assume they can convince you to lower your price later on. Perhaps you don't want to reduce your price, or maybe you think the agent doesn't know what he's doing and you want to list with somebody else. If you want to cancel your listing for any reason, they demand a "fee" to compensate them for all their "hard work" and expenses before they cancel your listing. This is often thousands of dollars. The reason this often works is that no other agent can enter your property in MLS when there is another listing active in the system. If you want to get rid of the agent, you need to "pay them off".
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