I remember a few years ago – back say between 2005 and 2007 – there was much wailing and gnashing of teeth regarding high home prices. What was causing it? There were many in the media pointing fingers every which way. There was a lot of talk about how greedy home sellers, mortgage lenders, and yes, many would blame Realtors for high home prices. Greed, greed, greed, pure and simple.
Of course, the market crashed in 2008 and the spotlight went off Realtors and stayed on the banks for many years, blaming them for predatory lending and liar loans and and all the rest. While of course there was plenty of predatory lending and liar loans, there’s quite a bit more to that story, although it isn’t very pertinent to what’s going on in today’s real estate market.
So let’s take the greedy banks, easy-money policies, and rapacious mortgage brokers out of the equation for the moment. In case you haven’t noticed, housing prices are again skyrocketing, and the mortgage market is markedly different today than it was 7-9 years ago. So let’s turn the focus back on Realtors, and ask: are Realtors to blame for high housing prices?
I’m going to come right out and say it: damn straight we are. Actually, I’ll go so far as to say:
if Realtors aren’t to blame for higher home prices, why do we even exist?
Indeed, the whole raison d’être for real estate agents and brokers is to push up home prices. After all, if you could sell your house all on your own, without hiring a real estate agent, and get the same money – why would you hire an agent in the first place?
Of course, there are a few things agents do in addition to netting you more on the sale of your home. We handle a lot of paperwork, marketing, vetting buyers, coordinating inspections, making sure the buyer’s lender is moving the loan along, and generally keeping the transaction on track toward a smooth closing.
And while all those things are very important, what it comes down to for most people in the end is, they want a real estate agent to get their home sold and net them more money than they could otherwise do by themselves, or for more than another agent could.
So yes, Realtors are to blame for higher house prices. The best agents work to aggressively lift up prices for each individual home they sell. As a matter of fact, agents have a legal, fiduciary responsibility to do just that. As part of an agent’s fiduciary duty to the client, they must keep their client’s best interests ahead of those of any other party. In my book, working for my client’s best interests means getting them the most money for their most valuable asset that I possibly can.
The other day, I was out door knocking, and I popped by a For Sale By Owner. I kind of had to track ‘em down – they hadn’t published the address, and didn’t respond to my email when I contacted them through Craigslist. But I’m a resourceful guy, so I sussed out which home was theirs and went and knocked on the door.
The lady who answered was surprised to see me, couldn’t figure out how I’d tracked them down. She told me that they already had two offers on the table and were negotiating with the buyers – and that they weren’t cooperating with agents. I offered my heartfelt congratulations and went on my merry way.
It’s wonderful that these folks were able to sell their home all on their own, and I’m sure they’ve figured out that they’ve been able to keep $20K or whatever in their pocket. But what’s the sound of one hand clapping?
The other hand is holding the money they will never know they could have made. If it were that easy to find a couple of buyers by running a few Craigslist ads, imagine how much they would have been able to net if they’d actually bitten the bullet and hired a true professional to market their home?
Two offers? How about ten? How about having someone who’s done this a hundred times work those buyers and play them off each other to where you’re walking away with $20K more than you would have by selling it yourself?
If they had hired an agent, I am sure they would have netted more on the sale of their home – and with less hassle, and less liability on their part. And yes, the sale price of their home would likely have been quite a bit higher, and you can blame that on the Realtors. It’s called adding value, and if we’re not doing it, we’re not doing our job.