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I am wondering about the need for seller's agent in a hot market such as the SoCaL/ Los angeles area.
If people are really getting into bidding wars to buy property , where is the need for a seller's agent?
Sure most buyers will want to use a buyer's agent because it doesn't cost them anything, but 3% in a market like L.A where average homes are over $400,000 seems kind of crazy.
How much time does a listing/seller's agent actually put into marketing a property.
3% of $400,000 is $12,000! Takes most people a lot of money to save up that kind of money from income..so why should it be paid out of the proceeds.
Yes I know agents take pictures and list the property on the MLS..but how much could it cost to hire a photographer to do the pictures and their are sites that let you list the property on the MLS. In this market with buyers "desperate for dealings" perhaps the MLS isn't even necessary.
Even if you had an attorney review the contract that's still not going to add up to $12,000.
I can see the need or want in a slow/down market like 2009-2012 , but things are different now.
Dealing with a FSBO is always a pain. It means you're usually dealing with some nut job who thinks that the real estate industry is out to get him/her. They won't be typically aware of any gotchas with their property and the process. They'll also likely price the property wrong, usually too high.
I really would not want to deal with the individual sellers in a multiple offer type situation. Dealing with people who are sometimes douchebags even through an agent and be painful. To boot, will that individual seller understand all of the contingencies, etc? In a multiple offer situation, a realtor would be MORE needed not less.
That $12k is a pittance. Quite likely, a realtor can do things that make up for that money pretty easily. Your argument would be better suited for the buying agent. That's where something like Redfin comes in.
I don't have a license, but I have bought and sold property before in CA and other states for several years.
Speaking of redfin , that's a great way to get an idea of what a property might be worth.
I have been following the market in L.A very closely for years..so I think I have a pretty good idea of market prices. It's not some kind of magic formula, the listing and sold prices are available via redfin or other data such as the assessor's office for all L.A neighborhoods.
Looks like you can save 1% via that route too ... listing with a redfin agent.
I'm just trying to see really how an agent justifies their commission in a hot/'tight' market..
I'd say that the work is the same in a hot market but it is stretched out over a greater period in a slower market. Also, in a down market, there may be more advertising involved but that is difficult to quantify. The point is that real estate agents perform a service just like other service providers. Do you need a painter? A mechanic? A plumber? A barber? A doctor? Some might say yes but others would differ. Do what you want to do.
Its impossible for an agent to really justify 3% in a listing agreement in a hot market. The time does not pay hour/hour commiserate with the work & effort. What it really comes down to is 2 things. 1) Do you have the time to do it? 2) Are you capable of doing it? In a very hot market the MLS will drive the sales price higher through exposure, so I would never recommend going to market without the MLS.
The sellers agent will do 2 things for you that you may not be able to time wise: 1) show the property at the request of individuals on their schedules (you have a job I assume?) 2) Attend inspections, appraisals, surveys, etc that would otherwise require someone to let people in your house. Those things are not difficult, but they DO take time. If I was doing all that for myself, I would have likely used up 50% or more of my vacation for the whole year.
The Sellers agent also is familiar with the contracts, common pitfalls, industry standards & norms, uses the MLS to do commissions, and plays better with other agents. Agents tend to be protective of their profession, and many agents will not like, and in some brokerages are forbidden, from working with unrepresented buyers/sellers.
I just sold my own house (though I got my license to do it) in a very hot market, and it was very easy. I had the advantage of being an agent (though only for a months) so the common hostility was not there, but it did take more time than you would think...I saved over $22,000 doing it myself but I had a great agent on the other side of the transaction who was willing to attend all of the things I did not want to attend.
Its impossible for an agent to really justify 3% in a listing agreement in a hot market. The time does not pay hour/hour commiserate with the work & effort. What it really comes down to is 2 things. 1) Do you have the time to do it? 2) Are you capable of doing it? In a very hot market the MLS will drive the sales price higher through exposure, so I would never recommend going to market without the MLS.
I just sold my own house (though I got my license to do it) in a very hot market, and it was very easy. I had the advantage of being an agent (though only for a months) so the common hostility was not there, but it did take more time than you would think...I saved over $22,000 doing it myself but I had a great agent on the other side of the transaction who was willing to attend all of the things I did not want to attend.
It would behoove you to point out in this scenario you have a law license.
Most real estate licensees do not sell $700,000 homes every day, month or even every year.
You will not be set up for the automated showing service, for one. That means I am not coming to see your house as I have an agent and we didn't waste time with fools. I am also suspicious about how you priced, thinking you are a cheapskate looking to save money at my expense.
I can see the need or want in a slow/down market like 2009-2012 , but things are different now.
In a market like LA, the house sells itself. You probably don't need an agent to market the house. But I do think a real estate agent who does this stuff everyday is actually better at handling the negotiation, following up on things, making disclosure, etc, than a lawyer.
If I were you, I'd look into hiring one of those armchair real estate agent, this is usually a one-person broker/agent shop who does all the negotiation, paperwork, listing, following up for you but does not show your house or take pictures for you (you'll have to do it yourself); basically they do everything that doesn't require them to leave their desks. In return, they usually rebate 1% to 1.5% of the commission back to you after close.
With that said, if there is a market where FSBO doesn't deter buyers, it's the California metro market of LA and SF. If you want to give it a shot, by all means.
In other threads I have read that buyers want to get a discount because the seller is not paying a realtor to sell the house. A co-workers son wanted to buy a home on my street because he wanted to work a lower priced deal because the seller was not using an agent. In these cases the buyer wants and expects you to pass part of that savings on to them.
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