Mock this! Do real estate agents disparage DIY & alternative fees?

Stupid Tax

Wow, @GJEL, the half-dozen points you make in your series of comments on’s real estate blog post, Expired and cancelled listing and the winter market, are so revealing:

This article could not be more timely for me as a seller as [1] my listing expired and have begun to explore alternatives to the traditional realtor relationship. My property is located in a different state and I just had a discussion on Trulia in which I asked listing brokers some of the [2] questions posted about contingency compensation and the flaws of the model. I [3] advocated for a flat fee service arrangement and was universally MOCKED. [4] I suggested that homes wouldn’t be so overpriced if sellers could reduce their selling cost and improved their net. This should benefit all if the reduced asking price moves inventory.

As mentioned I think the most important aspect is seller motivation. In my case I am not a motivated seller and in fact listed with a broker to get buyer feedback. I set my home price at the high end of the range because it is in the sweet spot of the market. I have no mortgage and other expenses are modest. I had two offers both from a realtor who wished to buy for his primary residence. Although I declined his offers, this was good feedback for me. [5] I now thinking of a flat fee arrangement with MLS listing and offering only a buyers broker commission. I will reduce the asking price by the amount of commission saved.

Someone asked why someone would list a home that they don’t need to sell. The reason is that we want to [6] buy another property if we can get our price or I should say NET.

Contrary to what real estate agents may say, from the seller’s perspective, the bottomline is the NET PROFIT after they deduct real estate commissions.  As you point out, if there are no full-service, full-fee brokers involved, any seller can reduce their price and sell, netting the profit.  That’s why we liken this win-win opportunity to a tax-free holiday, get the photo above 😉  In your case, that translates to “reducing the asking price by the amount of commission saved,” based on whether one agent (a buyer agent) or two is involved so you can buy another home.

DIY homebuyers are you paying attention?  Do the math — if DIY sellers are willing to reduce their sales price by the amount of the real estate commission, why use a full-fee buyer agent, either? And read buyer agency contracts carefully before signing!  Even well-known real estate rebate provider Redfin doesn’t represent buyers in for sale by owner transactions and their minimum fees is $6,000 (or $2,500 with a partner agent).  If you request a limited amount of help from fee-for-service real estate consultant like The Real Estate Cafe, you can pay for the services you need “a la carte,” thereby minimizing the price the seller is willing to accept and maximize your savings!

So you’re right, GJEL!  The contingency compensation model — the traditional, two-sided real estate commission — is not only flawed, it’s one of the long overdue reforms that could create BILLIONS in savings annually for real estate consumers!  Real estate agents know it, and that’s why they MOCKED you on Trulia. But in this year of “Customer Activism,” shaming can’t hide barriers to competition (see our previous blog posts and Google search results) when alternative solutions are a click away.

DIY home buyers:  Want to learn how you can save money by approaching DIY sellers and for sale by owner properties (FSBOs) directly?  Click on the button below and to download our FREE, no obligation “Insider’s Guide to Approaching Owners of Expired & Canceled Listings.”

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