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Big tech advertising companies have been getting into the real estate business for nearly 20 years now and in the last few years, they have begun to actually broker the purchase and sale of homes. The early model for these companies was this: Provide a nice website using information from local Realtor Associations and then sell “referral” spots to local Realtors for a fee. When an interested buyer clicks for more information about a home, the highest-paying agent gets the call. (Saturday Night Live recently poked fun of this process and the desperate agents attempting to make their investment to Zillow worth it) I am guilty of giving my money to Zillow early on in my real estate career but have since reformed.
The way Realtors get paid is weird. When you sell your home you pay for your agent (Listing Agent) to sell your home and you pay for the buyer’s agent to help the buyer buy the home. Buyers generally don’t have to pay agents when buying a home but clearly, this is baked into the sales price. There are good reasons this system works and should continue. There are also reasonable arguments for a newer system.
As a Realtor, I know what value I bring to both home buyers and sellers. The compensation is reasonable given that I take on a great deal of risk and liability in the process of assisting people in what can be a complex process. Often Realtors take on expenses such as professional photographers and stagging services not to mention driving, signs, ads, social marketing etc. People go to doctors when sick, or barbers to get a haircut. People can and probably should go to professional Realtors when buying and selling a home.
Right now, if you want to sell your home fast, use one of these big tech companies. Just know that it will cost you, not only in commission, and required fees but in the selling price of your home as well. Here is a chart taken directly from the Zillow website.
Note the 2.5% “on average” Zillow service charge. Doing the math makes selling with Zillow between 8-10% of the value of the home. This is not negotiable by the sellers. You will sell your home quickly but will be paying at least 2.5% more than you would with a Realtor.
Here is Redfin:
Both of these companies sell their services by saying their commission is less than your local Realtor (a Realtor with training and experience in your actual market). And then go on to state that there are also additional fees and that the fees are “at least.” This is where homeowners and buyers lose. Calculate the at least fees and commissions assume a robot computer in another state is buying and selling your home and make a choice.
Local realtors are human-contracted professionals who should be living in the area they work in. When buying or selling a home you should interview several local, full-time, professional Realtors. Realtors are accustomed to competing for business. Agent commission (professional fees for service) can and should be discussed upfront and early. I start all of my listing appointment interviews by answering the two most frequently asked questions:
1. How much do you think my home is worth? (most homeowners think they know already because of the inaccurate Zestimate).
2. How much are your professional services?
(Zillow and others have already told the seller that Realtors charge too much or at least more than they do, which as you have seen is not true).
I am not afraid of having this discussion because I am good at what I do and my fees for service are pretty average within our local market and I know the value that I provide to my clients. I also know the likely value of your home because I have completed a thorough market analysis prior to meeting with you and I have experience buying and selling homes in your area. I know the local market better than the robot computer that has provided the Guestimate.
Finally, consider this: How does Zillow or Redfin, or Open Door make their money? What we know for sure is that they don’t do it by buying your home at the highest prices and selling it for less, how would they make money? Sell it for more than the market? Who would buy it? Nobody buys high and sells low if they have a choice, right? That is not how successful businesses work. Chances are you will be paying for Big Tech profits by getting a lower-than-market-value for your home and, most likely, by paying additional fees outlined in the buyers/seller contract. The Big Tech company will sell your home at market value and add in the commission fee you thought you were saving and charge it to the buyers. Buyers are also probably not getting the best deal here either.
If you need to sell your home today go Big Tech. Let a Marketing Bot and an Investment Bot sell your home. It will be quicker than I could do it for you in many situations. It will likely cost you more than a Realtor, you will have less support in the process and you will get less for your home than you would on the open market.
If you don’t have to sell your home today, find a local, full-time, professional Realtor to assist you in the sale of your home and assist you in the purchase of your next home. Interview several, there are good ones and bad ones out there. We all have the ability to judge character and get a feel for who we want to work with. You will have much more control of your expenses, your outcomes, and your experience and you will have a trusted partner during the process because you interviewed and selected a professional human to assist in the sale or purchase of your home.
