Ethical Homes

A recent item in the WSJ attempts to summarize the main options available to people looking to sell their home, but in the process reveals some fundamental misunderstandings about how home sales work.

For one thing, it claims that flat-fee/discount brokerages are no longer flat-fee if they list and sell your property on an MLS, as such sales require the seller to pay a co-op commission to the agent who represents the buyer in the transaction. This is true, but misses the fact that the flat-fee is for the listing itself; rather than paying a 6-7% total commission, then, a seller using a discount brokerage ends up only paying 2-4%.

The more fundamental misunderstanding reflected in the article, however, is that it perpetuates the myth that the primary advantage of listing a property with an agent is the exposure that the property gets from an MLS. MLS exposure is a huge bonus, but the hundreds of other things that a good agent does beyond putting the property in the MLS will still get a house sold for a higher price than a comparable house sold through a discount broker.

In just the last month, for example, I worked with a young couple who had been talking to a few discount brokerages about selling their home; by working with me instead, they ended up selling their home for nearly $30k more than the discount brokers had told them they could expect to sell for, which more than covered the higher costs of working with me.

Similarly, also in the last month, I represented a buyer purchasing a home being sold through a discount brokerage; a good listing agent would have been able to help the sellers get their original asking price, but with no assistance from their discount broker, these sellers instead ended up selling the property to my buyer for $32k less than they had originally wanted.

Of course, it could be that the article in the Journal was written by someone whose only exposure to “full-service” agents were agents who did just put the property in the MLS and wait for it to sell itself; in the current DC market, agents can get away with things like that, and many do—but that doesn’t mean that they are actually providing full service to their clients.