Through meetings with various Sellers over the past 5 years, I noticed a number of Sellers think:
1) Agents working at larger real estate firms are better positioned to represent them and
2) a listing agent’s major added value is in the agent’s ability finding a Buyer himself / herself.
It is time to shed some light on the realities of how the market works. I hope it will help you – the Seller – make smart decisions when selecting your listing agent.
Challenge The Accuracy
A common sales pitch from agents you interview to list your property for sale may include:
“My company has offices across the US as well as global affiliates, which help reach more prospective Buyers.”
“My company will market your property on social media, such as Facebook, Instagram & more.”
“My company will utilize cutting edge technology to research likely demographics to purchase your property and develop a marketing campaign to reach those prospective Buyers.”
“My company has sold hundreds of millions of dollar worth of real estate on Oahu this year.”
“My company sells properties faster than our competitors.”
Ask the agent to give examples from recent history – maybe the past 12 to 24 months – how the Buyer was identified by the listing agent. What you are likely to find is that in many cases where the listing agent also represented the Buyer, it was the Buyer identifying the listing agent via searching real estate websites that list contact details of the listing agent, such as Honolulu Board of Realtors website, Zillow, Trulia, Realtor.com & more – not the agent’s network, not social media, not print, not global affiliates, but online real estate websites.
As for the comment “we sell properties faster,” make sure you ask for a comparison across similar price points. A $300,000 condo in Waikiki will typically sell much faster than a $10,000,000 single-family home in Kahala. I encourage you to read this article about Oahu real estate statistics, which highlights some possible flaws and limitations with Oahu’s real estate statistics.
Social media: Nothing wrong using it, we use it a little here at Hawaii Living too. However, it helps with company brand awareness, but rarely does much in selling your specific property. Sure, the more eyes on your property the better, but that doesn’t change the fact that the impact from the various social media platforms are generally quite insignificant.
Bottom line: Anything that is presented to you – the Seller – as a great value, ask the agent for data to back up the claim.
National Association of Realtors Data
The National Association of Realtors conducted a survey in 2017, asking homebuyers where they found their home. The answers revealed that more than 80% of Buyers identified their property via the Internet, whether that be directly or indirectly via a Realtor, a friend etc. A small group of Buyers found their property via Open Houses or directly from the Seller and less than 1% via print advertising.
Here is the data breakdown:
51% – Internet
30% – Real estate agent (agents use the Internet to look up listings in the MLS)
7% – Yard sign/open house sign
6% – Friend, relative or neighbor (some likely via Internet)
5% – Home builder or their agent (some likely via Internet)
2% – Directly from sellers / Knew the sellers
< 1% – Print advertisement
Oahu Sales Data
According to the Honolulu Board of Realtors MLS data, a total of 27,203 homes and condos sold on Oahu between January 1, 2016 through September 30, 2018. Only 4.61% of these transactions the listing agent represented both the Seller and the Buyer. Another 2.1% of the closed transactions had the Buyer represent himself / herself. In other words, 93.29% of all closed transactions the listing agent relied on another agent representing the Buyer, which demonstrates how heavily listing agents rely on other agents to ultimately find the right Buyer.
Understanding The Mind Of Real Estate Agents
The vast majority of real estate agents are independent contractors – I am guessing more than 95% of all agents on Oahu – and they are typically paid a commission on a successful sale. They are rarely corporate employees with bonus upside if the company reaches certain targets. In other words, if their client purchases one of their colleague’s listings or purchases a listing from an outside agency, it makes no difference to their bottom line.
If anything, selling a property where the Buyer’s agent and the listing agent are both from the same company could result in a less than desirable outcome for you, as the client. That is because a ‘dual agency’ transaction translates into a substandard representation of your interest as the client. The dual agency addendum explains in part: “Dual agents must remain neutral in all negotiations and must not advance the interest of one party over the other.”
What Have We Learned?
Selling your property is about maximum exposure by uploading your property to the MLS system and getting the property automatically distributed to hundreds of real estate websites. In addition, listing agents rely on the cooperation of all other agents to find the right Buyer.
Our Hawaii Living website gets a significant amount of search traffic – 100,000 plus total visits per month. We feature our listings on relevant pages across our website for optimal exposure. As much as I feel confident this is more valuable and relevant to Sellers than having nationwide offices, promotions on social media, print, etc., it still does not have has as much impact, as I would like it to have. At the end of the day, our site, even with the amount of traffic, is still only one out of hundreds of real estate websites.
Find a listing agent who is working more than full-time, offers a high-touch personal service, has a make-things-happen attitude, displays strong negotiations skills, always acts in your best interest, and knows your neighborhood and or condo building well.
We love to hear your thoughts or questions in the comments section below.