Outfoxing Realtors

The 6 Percent Solution: Skip Real Estate Agents

Your Money
The 6 Percent Solution: Skip Real Estate Agents
By DAMON DARLIN
Published: September 17, 2005
Homeowners across the United States are figuring out that they do not need to pay what agents demand and they may not need an agent at all.

Excerpt:

Anyone who wants to know how to outfox them first has to understand where they derive their power: information. They know the market - or presume to know it - and help set the price of your house. They serve as the go-between and, again presumably, know how far you can push the other side.

(Note, however, that agents don't always push for the best price. Steven D. Levitt, co-author of "Freakonomics," and Chad Syverson, both University of Chicago economists, found that real estate agents have an incentive to persuade their clients to sell their houses too cheaply and too quickly because a few thousand dollars more in price won't yield them a significantly higher commission.)

But more than anything else, agents control access to the Multiple Listing Service, where all the houses for sale in a community are listed. The M.L.S. is the most powerful tool in real estate because it informs the widest pool of buyers that a home is for sale. Not open houses, not fliers, not big ads in the newspaper. "The M.L.S. is king," says Brett Weinstein, an Oakland, Calif., discount broker who prefers to be called "a full-service reduced-fee agent."

Comments: In our area it might be more like the 7% solution! Note mention of Freakonomics: A Rogue Economist Explores the Hidden Side of Everything - a must read about practical economics! Freakonomics devotes an entire chapter to the real estate marker!