Is Freakonomics Right for the Wrong Reasons?

[photopress:fr.jpg,thumb,alignright]In my travels, many people quote the Freakonomics finding that agents get more for their homes when they sell, than the average house on market.  My brain said “duh, of course…what’s new about that.”

But then when the Freakonomics boys tried to ascertain why that is, they went into some sideways mode of properties for sale, time on market, etc…  Take the article I wrote yesterday as an example.  Do you think an agent would fall for the tactics of the builder, and buy his worst lot because it was “the only one” for sale today?  Hell no. 

If agents sell their houses for more money in the end, it is more likely because they bought better in the first place.

The most common error in a buyer’s thinking, is that they think their choice equals what is for sale.  Agents don’t do that.  Of course by agents, I’m not talking about every license carrying member of the mls.  Agents don’t buy “the T house”. Agents don’t buy the house that backs up to a busy road.  Agents don’t buy the house on the wrong side of the street without strong compensating positives, like view considerations.  Agents don’t buy the best “interior look”, while overlooking the exterior negatives.  Agents don’t buy the house where the pavement is higher than the front door.  Agents don’t buy “the bargain” with the most negatives, and brag that they got “a great deal”.  Agents don’t buy “a house” without looking across the street, and determining if there are future tear downs in this home’s view corridor.

Also, agents generally buy based on relative value, and not based on negotiating an asking price down.  Relative value is the only true pricing method.  “Negotiating a good price” is the biggest trap in real estate.  Agents don’t even go there, by and large, when they buy their homes.  Again, I’m not talking about every person with a real estate license, as some of those are simply consumers with a license these days.  I’m going back to a time when the only people with a license were those who actually sold real estate.  And if Freakonomics is tracking the sale of agent owned homes, then the purchase of those same homes would in fact be back when only agents and real estate licenses.

When someone goes in and out of hundreds of homes for a living, and sells homes for a living, they know the weaknesses of property better, and they never get dazzled in the new construction office by the cabinets and counter finishes.  They never look at that room of great “stuff”, until they first ascertain if there is a lot they are remotely interested in, and a floor plan that will hold up in value on resale.  The average buyer starts picking out cabinets and floorings like they are in Lowe’s or Home Depot shopping for interior finishes, and they don’t spend nearly enough time determining lot and floor plan first.  Everything’s nice when it’s new and shiney.  Agents think about resale before they buy, not when it is time to sell.

When I am looking at resale issues, when showing property to a buyer, they do often say “Ardell, I don’t even own it yet and you are looking at what will happen when I sell it!”  Yes, I do.  Because now is the time to look for the resale weaknesses…not when it’s too late and you can’t sell it for top dollar later.

Every house has weaknesses.  Many buyers don’t want to talk about weaknesses.  Agents know that a house with weaknesses that are easy to correct, equals bargain.  Agents know that weaknesses that can’t be corrected, should be avoided.  Someone’s buying everything eventually, but maybe agents make more money when they sell, because they never buy a house in the first place, without first determining all of the weaknesses, and making sure none of them are difficult to correct.

Whenever I go to list someone’s home who wants to sell it at the same price as the neighbor, and I point out they paid a lot less than the neighbors when they purchased, and likewise will need to discount accordingly now.  They always have the same line:  “But I got a real bargain when I bought it!”.  Yeah, right, that’s because you bought the T house and the T house is always a bargain.  It will be a bargain when you buy it and it will be a bargain when you sell it too.

There is never going to be a time when the average agent won’t get more for their house when they sell, than the average homeowner.  But that is not because they know a lot more about selling…it’s because they know a lot more about buying the right house in the first place.  Someone has to buy the houses with the uncontrollable negatives, and it rarely is going to be an agent.

Always, always,always ask this question before the agent writes an offer.  Would you buy this house if you were me right now, and if not, why not?  Would you let your son or daughter buy this house right now, and if not, why not?  Because an agent doesn’t have to tell you everything, but they are not allowed to lie.  Watch for hesitation.  Listen intently to what they are saying and what they are stuttering over.   And then ask this final question.  If I decided to buy a different house in 3 months, could you come back and sell it for at least what I paid?  If you don’t see them thinkng really, really hard when they answer that one, or if they start hemming and hawing…take that as a sign.  Every agent knows which houses they sell they will be happy to come back and sell for you, and which ones they are praying you stay in for a very, very long time.

So Stephen and Steven, you are correct.  But only because agents are better at buying the houses, that will later sell for more than the average sale price, of like property.

This entry was posted in General by ARDELL. Bookmark the permalink.


ARDELL is a Managing Broker with Better Properties METRO King County. ARDELL was named one of the Most Influential Real Estate Bloggers in the U.S. by Inman News and has 33+ years experience in Real Estate up and down both Coasts, representing both buyers and sellers of homes in Seattle and on The Eastside. email: cell: 206-910-1000

44 thoughts on “Is Freakonomics Right for the Wrong Reasons?

  1. Nice work, Ardell. Been thinking about this ever since I read the book, but never put it into words.

    Here in San Francisco, when agents end up selling their houses for more money, but in less time, it’s because we know what buyers want (in addition to having made smart purchases).

    I don’t blame sellers for wanting to question many (or all) of my suggestions when listing their home, but here in SF, it’s the seller who does everything possible to sell their home that gets the best price possible for that property/location/size/etc.

    Even in the hottest of SF markets, you could always get more money by playing into the buyer’s wants-du-jour, whether that be staging, granite, stainless, free plasma TVs, or double-dishwashers.

    The winners are those (either an agent or a client who listens to their good agent) who know what buyers want in a given market, then following through on those items.

    And, of course, don’t forget about pricing the property right the first time…

  2. It is those little things that make the difference.

    When I ask an agent if they got a discount from a builder on their personal home – they usually reply “I didn’t try.”

    Agents understand the ingredients for value – and they insist on it in their personal homes.

    It’s not what you pay – it’s what you get.

  3. Pingback: A bargain when you buy it, a bargain when you sell it » blueCurrent real estate blog

  4. “Ardell’s observations ring true, and this theory goes a long way towards explaning why real estate agents get 3-4% more for their own homes. However, it falls short of explaining why agents’ own residences remain on the market for 10% longer than those of their clients. (Shouldn’t homes selected for their marketability sell quicker?)”

    Well that’s airing dirty laundry stuff. We all know the answer to that one, but not sure it is of consumer benefit to reveal that dirty little secret. Maybe I’ll write that article later in the week 🙂

  5. I imagine this could be part of the equation, but if so, why do agent’s houses also take longer to sell? It wasn’t that agent’s houses sell for more that was bizarre, it was that they actually sit on the market longer.

  6. Okay,

    Here’s the deal. Agents don’t always put their houses on the market to sell them quickly. They do it to get their phone to ring, and get buyer calls from the ad and the sign. They can sell the buyer a different house, if they can get a buyer to call direct.

    If the price is too high (longer on market) they will get more calls from buyers direct, and fewer agent showings.

    Then when they get a buyer for their own home, let’s say it’s priced at 10% more than it should be, hence the 10% longer time on market, they can offer a price of 94% of asking price, still make 4% more, not have to pay a buyer’s agent at all…works.

    Selling it fast equals having to pay a buyer’s agent 3%…selling it slow means keeping that 3% AND getting buyer calls and maybe selling the callers a house or two also.

    The only time I ever had a problem with an office manager, is when I was selling people’s homes too quickly.  She complained she had nothing to advertise in the monthly homes magazine, and agents in the office weren’t getting enough buyer calls off of my listings.  The agent’s goal is not always what you think it is or should be.

  7. Hey Dan,

    Here’s the biggest hole in the Freakonomics reasoning,and why I think my explanation is more on target.

    If a property sells quickly around here, it sells with multiple offers and at highest price. If it takes long to sell, it will almost never sell at highest price with multiple offers as stale on market.

    Makes more sense that the agent is pricing it 10% over market value and then selling it at 94% of asking price to a buyer of his own, and not from an agent showing. So not only does the agent make 4% “on the books”, he also does it more like a FSBO with no commission at all. So the extra time gains him at least 7%. Agents hate to pay agents to sell their house, unless they really need a buyer fast.

  8. Ardell,
    Your thoughts point out a basic problem I have with the analyses of Mr. Levitt. He presents an issue, and selects a few facts, perhaps based on some new research, regarding that issue. Then he draws an entertaining conclusion based on the facts.
    Fair enough.

    My disagreement is that his conclusion is presented as the sole possible correct interpretation of the original issue and its resolution.

    As experts in research methodology Cook and Campbell wrote in 1979 about conditions that must be met before we can infer that such a cause-effect relation exists, “No Plausible Alternative Explanations. The presumed cause must be the only reasonable explanation for changes in the outcome measures. If there are other factors which could be responsible for changes in the outcome measures we cannot be confident that the presumed cause-effect relationship is correct.” They continue, “In most social research (this) condition is the most difficult to meet.”

    This scientific rigor seems totally lacking in Mr. Levitt’s popular writings. He presents a scenario that seems possible, and pronounces it not only probable, and even likely, but as the sole answer to the stated issue.

    Not to mention, I find Mr. Levitt’s conclusions have less to do with economics and more in common with plain old statistical analysis. But they don’t award a Nobel prize for number-crunching, and “Freakastitics” just doesn’t have the same ring.


  9. Well look at it this way Bert. I’ve revealed some basic insider stuff here that explains better why agents get more money for their homes, and are on market longer.

    Would I be revealing these things if Steven and Stephen didn’t bring the stats to light in the first place?

    I think they should have used Mafia instead of KKK, but they brought a lot of interesting stuff out into the open. They touched on many areas outside of their expertise, but now those with the expertise can sort and the data differently.

    It was still a book that got everyone thinking about a lot of things no one talked about before the book.

    I mostly like that they are Steven and Stephen, one with a v and one with a ph 🙂 For some reason they remind me of Woodward and Bernstein. Didn’t know they were going to reveal Watergate in all its infamousy when they started digging…it just revealed and revealed as they continued forward. I think that is what will happen with Freakonomics.

    It causes people to want to peek behind the curtain. And that’s a good thing.

  10. Ardell:

    When you finally “come clean” in comment #7, you actually substantiate the Freakonomics hypothesis. If I understand you, an agent selling her own house has three objectives (in rough order of importance): 1) “overpricing” the home and tolerating it on the market for a longer period will lead to less-than-asking but still above “true” value price; 2) given the extra time on the market, offers will be received directly from buyers, thus eliminating the 3% commission; and 3) agent may be able to sell potential buyers a different house entirely (seems like a stretch, but you’re the expert here).

    Freakonomics posits that you’re more willing to tolerate the additional time on the market because you see a substantial benefit to you in doing so. In your hypothetical, if the agent used the same strategy for a client with a $500k home, the “94%” offer would net the agent an extra $600 (assuming an outrageous 3% commission to the listing — er, selling agent). Not much of a benefit to the agent for all the additional time before the agent is paid. However, as illustrated particularly by your reasons 1 and 2, the agent receives a much greater benefit if it is the agent’s own home. Hence, the system of compensation creates a disincentive to get the absolute best price for a client vs. for the agent herself.

    As for your reason No. 2, that seems a little shady to me. When it’s the client’s money, an agent has no problem spreading the wealth to other agents. But when it’s the agent’s money, suddenly the agent wants to “get over” on the system and keep a greater share for herself. Shouldn’t the system work as well for clients as for agents who are selling their own home? Again, Freakonomics points out — and as you corroborate — that the current system does not work in that fashion.

    As Bert notes, an observed phenomenon may have several contributing explanations. The observations in your original post undoubtedly contribute to the disparity between agent yields and client yields. However, the fact that there is a “secret” explanation for that disparity, which is consistent with the Freakonomics hypothesis, seems like good evidence that Freakonomics has identified the primary cause of the disparity.

  11. Pingback: Busting A Freakonomics Hypothesis About Real Estate Agents | Real Estate, Loans and Mortgage Rates

  12. Let’s assume that my #7 Theory is more in line with why an agent might receive 3% to 4% more for a property. Now let’s test why an agent can do that on a property they own, and not as easily for a property that you own. It’s the seller’s “fault” and not the agent’s “fault”.

    If you price houses 10% over to get 4% more, the average seller will view that as getting 6% less and not 4% more. They fall in love with the asking price, and view a 94% offer as a 6% loss, regardless of the initial strategy discussions.

    An agent might know full well that the 94% offer is 4% more. And Freakonomics proves that out. But the average seller would see that as “6% less than what they ‘wanted’, or 6% less than the asking price. So they would gain 4%, but feel like they lost 6%. Sellers would have to buy into the “4% more” theory. Most can’t.

    There is a danger in Freakonomics suggesting that longer equals more. As memory serves me, they said 10 days longer, which is good. But the principal of “longer equals more” fails when longer equals “too much longer”.

    Two real live examples:

    1) Listed a townhome. Value by three very recent comps equals $329,600. Goal is to get 3% or 4% more for seller. Can’t go 10% up to do that, as that throws it into the wrong “price tier” of $350,000 to $375,000, which would backfire. So in this scenario, price it at $350,000. Create an “out the gate” synergy.

    Got $355,000 on day one. Backfires. Seller didn’t disclose something to me, and that something caused the sale to fall apart. So try again, rework, get $350,000. Accomplished objective. Seller feels like they lost $5,000 when in fact they gained 6.2%.

    So OK. Gained 6.2% for seller and all OK. even though seller not “happy”. Happy to seller equals more than asking price. Strategy worked because I was still able to sell it the second time within the “short timeframe more” as noted in Freakonomics. “SHORT” being the keyword, and not emphasized enough in the Freakonomics explanation. Longer on market equals the danger zone, as noted in second example.

    2) Listed a house. Many deferred maintenance items seller is not willing to fix. Cost to fix is $30,000 or more. Value is $575,000 given repair issues.. Price at $650,000 noting to seller that best hope is $618,000 on the high side, with some money off for inspection items, but not $30,000 off, as difference between asking and sale price will theoretically catch some of the repair costs.

    Get offer out the gate of $640,000 with $10,000 toward repair costs in offer before inspection. Seller drags their feet and not happy with “$10,000 under asking price”. All the talk about the $618,000 best hope is forgotten. $650,000 has become what they want. They fell in love with the asking price. First offer never comes together. Seller takes too long to think about “10,000 less than asking price.”

    Weeks later after much work, managed to get $620,000 “as is”. that is 7.8% over “value”. Seller not happy and sees it as $30,000 less than asking price.

    Final sale price months later…$585,000. Only $10,000 more than value and $35,000 less than really good “as is” offer of months before. The data crunchers see this as “the market going down”, when in fact it is still sold higher than value. The lower price is caused by the seller and not the agent.

    Perhaps a better result would have come from listing it at $599,950 from the get go, which would have been my preference, to get multiple bids with no inspection clause out the gate. But seller not willing to put “a 5 on front vs a 6 on front”.

    So the danger in the Freakonomics explanation is when people hear “longer equals better price” only. If they don’t “get” the short time longer part, and that stretches past the 10 days Freakonomics notes as longer (I think they say 10 days…someone confirm that. I’m going from memory.)

    The seller’s inability to NOT fall in love with the asking price is the problem. When 4% more feels like 6% less, they lose the short term opportunity to get 4% more and end up worse off.

    That is why those who didn’t second guess me, understood the principal of the strategy. Didn’t forget the best hope price and never said “I don’t want to give it away”, are the ones who “won” the most.

    Big tip for sellers. As soon as you find yourself saying “Well, I don’t want to GIVE it away!” just take out a gun and shoot yourself in the foot.

  13. That comment was so long I had to go fish it out of the spam filter.

    Didn’t have a chance to get to the “save 3% buyer agent fee” part that can turn a 3% to 4% gain into a 6% to 7% gain.

    That’s more complicated to explain and much more difficult to “pull off”.

    Question is, would buyers and sellers really be better off with no MLS system? Because the answer to that equals no MLS system. Now I’m not talking data here, I’m talking about the “big machine”. The “in mls equals many agents showing your home”. If you can be in a data system, but no agents show your home…and you don’t have to pay 3%…who is better off? Where are sellers better off?

    If everyone agrees to kill the big machine and sellers don’t want “many agents showing home”, I can tell you how to get there. But I don’t think that is better for sellers. The buyer getting the advantage of that 3% is sometimes playing out, but usually to the seller’s advantage right now. Dismantling the mls system will not come without pain to sellers and buyers. It’s one of those “Be careful what you wish for” issues.

    So run through how that “might benefit MOST vs. A FEW” before it comes to fruition.

  14. I’m not in the real estate business. Instead, I do studies and researh for a living, so I don’t really have “a dog in the hunt.”

    But rather than some “shadowy consipiracy” of real estate agents which is robbing home sellers from their just proceeds, I’d like to believe that the agent is just giving the seller what they are asking for – an efficient transaction that sells their home quickly at a reasonable price. As consumers, we often say “good enough”, and want to get on with our lives.
    I dare say professionals in the stock market are more sucessful than typical amateur investor, which doesn’t mean the pros are crooks.

    I just have a problem with the authors’ dramatic conclusions, such as comparing real estate agents with the KKK. This seems rather nasty, and it has its problems, accuracy being among them. As the Mssr. Levitt and Dubner themselve noted, “We weren’t very happy, of course, to learn that a story we included in ”Freakonomics” was built on such shaky foundations.”

  15. Craig,

    Leave your agenda at home when you get into this next phase. No consumers with agents equals more money for Craig. So watch your personal interest agenda before proceeding. Make sure your logic equals better for consumers…majority of consumers…and not just “woo-hoo” better for Craig. I am not convinced you are capable of that type of thought process. But I will be very happy to be proven wrong in that regard.

    Sellers by-and-large greatly benefit from the “many agents will show my home, machine”. So take it from that standpoint and not “more FSBO activity equals more business for Craig”. Watch your credibility factor.

  16. Bert,

    There are some areas of the real estate world that do match the KKK or as I prefer Mafia mode.

    When agents want to beat me over the head for being “consumer-centric” and call me “a Redfin Lover”…very KKKish.

    When agents won’t show a certain business model’s listings because they don’t want to support that turn of events in the marketplace, i.e. Zip Realty, Redfin or MLS only lmited service listings, then it is more Mafiaish. Wrong family stuff.

    The MLS System is not a data source. It is a “show and sell mine and I’ll show and sell yours” system. That is where the public gets confused when they want to call it “a data source”. It is much, much more than a data source. It is the system that gets many agents to show your home. Many agents working in an agreement with one another that supercedes consumer benefit to some extent.

    When you look ONLY at consumer benefit, the system looks corrupt, same as when you pay protection fees. If you want the protection though…then fee is appropriate. When you are forced to “get protection” you don’t really want…then the system is corrupt.

    So sellers in the system who want many agents to show their house, can’t then look to the system to cut out the system’s members. You can’t get the benefits and hope the people providing the benefits would just disappear. No cost equals no benefit. Reduced cost equals limited benefit, as in some agents will show and some won’t.

  17. Down, Ardell, down! Those teeth are pretty scary when you bare them like that — and what a ferocious bark!

    First of all, you deftly avoided my comment that, by your own admission, agents play by rules that differ from the rules applied to their clients. While agents are happy to pay the 3% when working on behalf of a seller, they apparently try to avoid it when selling their own home. I still think that’s shady and would like a response. Moreover, you never really dispute that your own comment undercuts the very premise of your post. I’ll take that as a concession on that issue.

    Now, as for your comment: what if sellers got to determine how much, if any, they want to pay a buyer’s agent who brought a willing buyer? What if we disconnected the buying commission from the listing? That way, each seller could determine how many buyer’s agents they want to attract to their home. It would seem to be a much more efficient solution.

    Besides, with listing data available to the public, what’s the need to “attract” buyer’s agents? And isn’t that dynamic going to continue to grow? Isn’t that one of the bases for the all the talk of change in the industry? While it may still be the case today, in the not too distant future sellers won’t benefit by attracting a lot of buyer’s agents — it will just be about attracting buyers. The agent will simply be an advisor of sorts to the buyer, and I don’t think sellers should have to pay for that service.

    And finally — FSBO kicks A**!

  18. Craig,

    I am very calm. Where’s the bark? You seem to want to turn this into a fight. Can’t you just have a discussion?

    The mls system has member requirements. When an agent sells their own home they are not simply an agent. They are a FSBO really. A FSBO with a license, same as many in the mls who do not help others buy and sell property for a living. It’s a different scenario. What can owners do that agents cannot? Many things. Including discriminate. You know that. You are a lawyer after all. An owner and an agent are not held to the same standard.

  19. Craig,

    There is no “mandatory” offer of compensation now. Nothing needs to change at all if what you say would work now.

    Sellers try that. They try offering 1% instead of 3% for example. They try lots of things. What works is the question. There is no mandatory fee now. Try a dollar. See what happens. The system can exist right now that way. It doesn’t need to change at all.

    Offer a dollar and get no agents showing it. If that works, then the time has come for it to happen. Who wants to be the guinea pig”? Some are trying it now. Not one thing has to change except for the seller to not care if agents bring buyers or not. The system can contain that now, and in fact does.

    No reason someone can’t hire me as a FSBO for a convenience fee and offer $1.00 fee set by seller” in the mls. What’s stopping them? I’ve done “step in at contract phase only” for a flat fee last year. $3,000 on a property that sold for $1.1 mil. No buyer or seller representation. Transaction Brokerage.

    All options exist now Craig. The world does not have to change. Still doesn’t mean every buyer and seller can work from the least common denominator available and achieve their goals. Some can, some can’t. Some houses lend themselves to that scenario, some don’t.

    Why everyone thinks the mls has to be changed to accomplish these things has me scratching my head. There is no mandatory fee to list and no mandatory mls offering. What works to accomplish the objective is the question.

    We have XA listings…offers to be presented directly to seller, in the mls now. If a seller wants to be XA with a $1.00 offering, they can do that, as far as I know. Will the house get sold? Maybe…maybe not. It’s in the seller’s hands and their decision now.

    If what you say will work, then get a bunch of people to try it and test the results. So far it hasn’t worked real well, but maybe the success will increase. How many sellers can afford to fail at their efforts to test the theory? That’s up to them.

  20. Craig,

    If you are truly a believer of “FSBO kicks A**!” then why did you get angry when Martin sold his home FSBO? I was happy for him. You were angry because he didn’t use an attorney, even after I wholeheartedly recommended you.

    Why aren’t you happy that Mr. Martin FSBO accomplished his objective with no agent AND no attorney. I gave him some moral support for free. You were not a happy camper.

    So do you really mean “FSBO kicks A**! when it equals no agent but yes Craig”? Seems when it was no agent AND no attorney, you were not quite happy with that.

  21. Ardell, what are you talking about? Where did I express anger that Martin did not use an attorney? I just went and reread my single comment on Russ’s original post. I only talk about the MS attorney service. Is there some chance you’re projecting?

    I’m not angry. Sure, I would have liked the business, but I’m glad it worked out for him (so far — for everyone’s sake I hope nothing ugly pops up in the future). And the “FSBO” comment was my attempt to live up to your advance billing of my “agenda.” Just a little blog humor.

    As for your comment, I was not aware that someone could list on the MLS without providing for a minimum fee for a buyer’s agent. It was my understanding that there was a minimum required. If I’m mistaken, then it does undercut my argument. At that point, it becomes a “MLS culture” issue, rather than one about the rules. Even still, I suspect that, as time goes by and more and more buyers find the properties themselves, and combined with the various other “alternative” models that continue to grow, that culture will change.

  22. What did you think the minimum fee was? I’m pretty sure it’s illegal for an mls system to fix fees of any kind.

    They did used to have a rule against the listing agent keeping too much of the fee without the seller’s consent. But I think when XA became more popular that rule was stricken. I’ll check. That rule was to protect the seller, not the agent. Now that sellers can list for almost free, the rule became unnecessary.

  23. Craig says: “I’m not angry. Sure, I would have liked the business, but I’m glad it worked out for him (so far — for everyone’s sake I hope nothing ugly pops up in the future).”

    My Mom would be saying it’s time to put a big red ribbon out front to ward off evil wishers. My Dad would hang the horns to put the evil wishes back on the sender…actually two horns for double back.

    Things can go wrong, ugly things can pop up, with or without agents or attorneys. Those who go it alone know that they may have the same things happen in a transaction that happen every day. Maybe they can handle them just as well between themselves. But clearly “ugly things popping up” or not, is not about whether or not there is an agent or lawyer around. It has to do with how old the heater is 🙂

  24. Ardell:

    “Evil wishes”? That’s must be in the same post where I express Anger at Martin for not using my services. Or maybe your browser has some sort of “paranoia filter” that changes my comments to better suit your pre-determined view of the world.

    If the deal blows up, Martin may suffer a loss, and (believe it or not) I’d feel bad for him. If that loss is due to some flaw or issue in the contract that you did not appreciate in your review, which an attorney would have appreciated, then youd be on the hook for that loss. Again, believe it or not, I’d feel bad for you (even if I represented Martin and sought to recover every last nickel from you). Also, you might be liable on a Consumer Protection Act claim for the unauthorized practice of law. Again, not good for you.

    Say what you will, but I’d wager dollars to donuts that, where an attorney is involved, an “ugly thing” is less likely to pop up in the transaction.

  25. This is hilarious to behold. I love raincityguide exactly for this kind of defensive, freaked out realtor comedy.

    The days of 6% are over. From here on out it’s just sqauabbling over who gets the crumbs.

    – with a discount broker and loving it!

  26. S, “I love raincityguide exactly for this…”

    As long as you love us! 🙂 I would be very interested in hearing about your “discount broker” experience. Are you a seller or a buyer? What do you mean by “discount”? We’d love to have the conversation, and “spread the news” of what is working out there, for others to read.

  27. S. – I really hope that the people reading RCG can separate out the “freaked out realtor comedy” and realize that one person’s responses are not reflective of the entire industry. There are too many items in this post for me to comment on but in general I don’t agree with a majority of it and the underlying beliefs of how agents go to market. True, you really make money on real estate when you buy, not when you sell, that is something we try to get our clients to understand on a regular basis. But, some of these other tactics – particularly the comment about putting your own home on the market just to make the phone ring is outrageous and on the verge of deceitful, if not truly so.

  28. You’ve never heard of an agent taking an overpriced listing on a busy road to “get their name out there on a high traffic street”? How long have you been in the business?

  29. Time in the business has nothing to do with realizing that this is a poor business practice. It’s great if a listing provides that kind of exposure but to take one just for that aspect and potentially abusing the client in the process is not something I’d advocate. There are too many agents that think more about marketing themselves rather than their clients property which is not where the focus should be. If you provide a good product and can run your business efficiently you should be able to do better than just stick a sign on a busy road to attract business.

  30. I agree. In fact, I think it is bad advertising to have a sign out that sits forever. But I’ve certainly heard that reasoning many times from agents. It’s the same as an agent who does Open Houses to “get buyers”. And then they wonder why they never sell a listing at an Open House.

  31. I’m due for an article. I’ll address that in a post Brian. Hopefully by night end. I want to include some real specifics, and not just a general opinion. I’ll use some “apples to apples” examples to track appreciation rates. Generally the answer is yes.

  32. I found this article very interesting, as well as the article about “Why hasn’t my house SOLD yet?” I have read Freakonomics and enjoyed it immensely. I think the authors had some points, but this is an interesting additional perspective. We are homeowners in South King County in the process of repricing our home after almost a month on the market and no offers. I have a question about terminology – what is a “T house?”

    I have a feeling that we may have made a few purchasing mistakes with our house that is making it hard to sell. For example, the “pavement” (a gravel road in our case) is higher than our house. Is there any hope for selling our home? And how long should we wait after a pricing decrease to see results before we lower our price again?

    I liked the questions to ask the agent before he/she puts in an offer for you – we will be making an offer on another place soon and I will be sure to ask our buyer’s agent those questions.

    Thank you for this interesting and informative blog.


  33. Hi Jen,

    A “T house” is at a T intersection, usually when you enter a development there is a dead end where one must go right or left. There is a house right in front of you. That is “the T house”. In winter when it gets dark early, that house gets the headlights of everyone coming home from work who enters the development. They must stop and then turn right or left and the headlights are usually pointed straight into the living room of “the T house”.

    You touched on the one I rarely mention, but we have a lot of here in Kirkland. The “front door is lower than the pavement” house. It’s not a killer, but where it is hilly, and we love our hills for view considerations, one side of the street is “the high side” and one is “the low side”. The benefit in view neighborhoods is if the land drops down toward the lake, the views from the back of the low side are fabulous. My house would be that except there is a porch with steps up to the front door, so the front yard is steps down from the pavement, but the house is steps up to the porch and front door.

    Some houses are so low that the pavement is at window level of the house. I’ve seen some where the roof is at pavement level in CA.

    You just can’t “comp”, when setting price, to houses on the high side. Don’t think about “next price reduction”. Get it priced properly now before you get more competition come May and June. Value is relative. If the same house with door at or above street level is $350,000, then yours should be about $325,000.

    If you are lucky, you can be at a “price point”, meaning if the high side is $325,000, then you can be $299,950. Same price differential, but better results. The difference is usually not less than 5% and not more than 8%. Pretty much the same for a T house.

    One of the fears of a “low house” is water intrusion, as water runs downhill. So have good records of no water penetration or water runoff issues or standing water in front yard issues. Also below grade sewer lines that have to “run up” to the street sewer connection unless you connect to a line in the rear.

    Was it a “good value” when you bought it? And does your price currently reflect that same “good value” today?

  34. Ardell,

    Thanks for the clarifications – you have given me some things to consider, for sure.

    We are on a hill, so we have a view from the back side of our house – but not as nice as the view from the upper houses, I am sure.

    Yes, our house was pretty reasonably priced when we bought it (but with a lot of positives) and I think our initial asking price was definitely too high, as evidenced by the lack of offers or even much interest. I’ll talk to my agent about some additional repricing to put it in the lower tier, if it doesn’t move soon where we have it now (in the middle of a pricing tier).


  35. Jen,

    Just don’t be “a 59er” as in $259,000 or $359,000. Be a buyer and look at your house on a site that makes you look in price tiers as in $350,000 to $375,000. Look at all the homes and make sure yours “lines up”. give the low side of the street, yours should look like the best home in the price tier and near the top of the tier and not the bottom. A $349,950 will sell better than a $359,950. A $319,000 will often get past over as people “stretch up”.

Leave a Reply