Will Hiring a Real Estate Agent in Stockton Get a Higher Sales Price

Real Estate Agents… By the Numbers in Stockton

The last 7 years has seen a resurgence in the number of real estate agents in Stockton and in 2018 there were 3,563. That is a big number, and one has to wonder how successful they can all be if there were only 3,600 homes sold in Stockton last year. Even if every house that sold had a real estate agent on either side of the transaction, the average real estate agent would be making one to two sale per year. You can do the math, the rank and file is hardly making a living and that corresponds with the high turnover rate of real estate agents at 87% of all agents within the first years.

It really doesn’t matter what market we talk about either… We can look at Stockton, Sacramento, Modesto, or anywhere for that matter and the numbers will be quite similar. It is an industry where the top half of 13% of all real estate agents are performing over 90% of the work.

Maybe it’s that the barriers and education required to become a real estate agent are so low that the profession attracts so many. Maybe it is because to become a real estate agent it requires the taking a test where a passing grade is a C-.

Maybe it’s that the selling public just doesn’t understand the real numbers surrounding real estate transactions and most homeowners just dont see a difference between one agent and another. If you look at the numbers, that makes the most sense, as 78% of sellers just pick the first real estate agent that they talk to. That is hardly a recipe for success, but it falls in line with the marketing narrative that NAR puts out to the public every year. In order to sell your house for the most amount of money you need to hire a realtor. That by the way is JUST NONSENSE as we’ll discuss in detail further on.

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While real estate has always been a numbers game, the problem is that the vast majority of sellers dont know how the numbers work because real estate agents are not required to disclose them to their clients. Certainly the local boards of real estate agencies are not going to publish anything but the top 100 or 200 agents. Even more certain is that the National Association of Realtors (NAR) is not going to talk about it either.

Conventional Thinking or Just Cashing Out?

When you’re selling your home, you usually have your eye on two Objectives: Getting it sold fast and getting the right price. The problem is there are no guarantees and even if you hire the very best real estate agent in any market, you may still be better off representing yourself or just selling your house to a cash home buyer in Stockton. The statistics dont lie and as much as NAR wants to advocate for real estate agents unless you hire the best, all of the rest will just cost you more of your equity.

Here is the thing… the residential real estate market has changed forever. Discount brokerages, Real Estate Investors, I Buyers and on and on… Real estate agents no longer have an exclusivity on the data because it has been sold from underneath them. The mass exodus of real estate agents in 2009 created permanent vacuum of of agents and expertise, that has never been backfilled. Certainly there has been a resurgence of the numbers of real estate agents in Stockton, but of those only 13% are going to survive in any 5 year period.

Sellers today have a lot more options to sell than just picking up the phone and calling a real estate agent. Some people just dont want to be bothered and will follow conventional wisdom of the industry and continue to hire the first real estate agent that they talk to. When you consider the savings from repairs and upgrades, delays for inspections and your commission savings, the mathematical comparison may surprise you.

I am one of the premier cash home buyer in Stockton, Sacramento and Modesto and I can scale the cost and sale of any house minus the cost of repairs and some holding cost and often times put more cash in your pocket at closing than if you hired a real estate agent. Why? because I know what I am doing and I cannot afford to waste your time. It really is that simple. I am not paid a commission when your house sells. I pay you cash at closing. There is a big difference between hoping that your house sells and someone actually writing a check. That is why if you are saying “sell my house fast in Stockton”, cash house buyers may be the best and least costly.

Real Estate Agents and Sales and Marketing

Real estate agents dont buy houses… and for the large majority of them, most real estate people do not know how to sell a house either. They know how to list your house and put it up on the Multiple Listing Service, but marketing geniuses, they are not. Let me go one step further… taking a state test on real estate law is not a degree in sales and marketing nor is it training.  The truth of the matter is that real estate people are not trained in either Sales or Marketing except for the techniques that they use convincing you to sign that listing agreement. As for negotiation skills… that takes practice and if an agent is selling one or two houses a year, those skills are non existent. That is a fact.

Why I am Hard on Real Estate Agents

For years I have been asked who handles my listings on houses that I fix and sell. For years I get the same contemptuous looks from real estate agents when I explain that I handle 95% of my own sales. There seems to be an entitlement attitude among the rank and file real estate agent whereby they truly believe that they are entitled to a portion of anyone’s EQUITY just because they have a license.

Some have actually challenged me on why I would deny them the commission… after all it’s what they do for a living. Some have honestly believed that because I am not a real estate agent and that I am by representing myself I am doing something unethical or illegal. Others have outright called me an idiot for not recognizing that real estate agents add value to every transaction.

I use my own money and for years I have been on the receiving end of real estate pitches to sell my properties. I have on occasion used their services for listing properties that I wanted buyer traffic from the bay area markets and buyers. That is a strategy that I will employ, but what I have learned is that hiring a real estate agent is a time consuming process and I have learned that there are some skills sets that very rare within the real estate industry. Negotiation is one and Marketing is the other.

I know that some real estate agents actually believe the crap that comes out the the NAR marketing machine. Therefore if the National Association of Realtors says that you are more likely to get a higher sales price and close faster if you hire a real estate agent then it must be true?

The truth of the matter is, that after 11 years and hundreds of transactions, I have witnessed the opposite and my research indicates that those statements from NAR may NOT BE TRUE!

So I asked the Question “Will hiring a real estate agent in Stockton get a higher sales price”?

Study after study asks “for the sale of a home does the inclusion of an agent lead to a significantly higher sale price?” A 2009 study by researchers at the University of Wisconsin found that “After controlling for house and seller heterogeneity, we find no support for the hypothesis that listing with a realtor and appearance on the MLS delivers a higher sale price (before subtracting commissions) than the For Sale By Owner transactions.”

In other words, using a real estate agent will not increase the sale price of a home. A study by Stanford University researchers Douglas Bernheim & Jonathan Meer agrees: “We find no evidence that the use of an agent significantly affects either the selling price or the initial asking price,” they wrote, “though it does lead to a more rapid sale.” The researchers studied a neighborhood of Palo Alto controlled by Stanford University. Despite homes with an agent selling faster, they weren’t sure if that justified the price:

For the median home in our sample, a 6 percent sales commission totals $34,000, a steep price to pay for the value rendered.

Bernheim & Meers also found that agents actually had a negative effect on sale price when homes were given the same type of marketing. Homes selling with an agent actually sold for 5.9 to 7.7 percent less than similar homes if both were entered into the MLS (Multiple Listing Service).

Selling with an agent has advantages such as selling faster, handling paperwork between parties (that commonly also lead to delays because of the back and forth) and communication, and offering resources and recommendations. But if, as the research suggests, the inclusion of an agent ends up getting a lower price, a seller could be paying up to 13% of their home’s value by using an agent with no positive outcome.

Peter Westbrook

Peter Westbrook is a local Cash Home Buyer / Real Estate Investor in Stockton, Sacramento and Modesto CA and Tulsa Oklahoma. He has written numerous real estate articles that have been published here and by other blog and news outlets. Peter has appeared on several local and national news reports regarding the state of the Stockton and Sacramento Real Estate Markets.

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