Why would an agent Sell your house for FREE???

I just heard an advertisement on the radio that inspired me to write this blog.  The ad says "It is a seller's market and why pay 6% commission when I will sell your house for FREE?" I would hope that an intelligent person would ask themselves A. "What's the catch? Why would anyone work for FREE?" An even better question would be B. "How much is the 'free' service going to cost me in the end"?  There are discount brokerages and agents that will discount their wages and I will tell you why a real estate agent would list your house for free or at a discount and how much it will end up costing you.


A.  These are agents and companies that are too lazy or inexperienced to prospect to find business and are using Seller's who are trying to save a buck to attract buyers and sell them another home because they will make the 3% or more that is being offered by the other listing agent. I looked up the production of this particular agent and less than 1/2 of his listings actually sold, the rest of the listings expired (meaning that the home did not sell during the listing period). This is very unfortunate for the sellers that are trying to get a "good" deal on selling their home because it cost them months on the market and an opportunity to purchase a home that they may have wanted and the energy and motivation to move.

B. You get what you pay for! When you go to Walmart to buy an item, you expect that the item will be lesser quality and you aren't disappointed when you find out that the life of that item was minutes or days rather than years. A lot of times, you end up having to purchase the same item over and over again when in the end, it would've cost you less money had you just bought a quality item for a little more money.  This rings true for Real Estate Agents. When you are looking for a discount in a Real Estate Agent, the chances of your home actually selling are slim to none. And in all of the cases where I have found the listings did sell, they sold for tens of thousands less than they would have if a full service agent had sold their home and actually negotiated for them. Because after all, If an agent can't negotiate their own wages and value, how will they be able to negotiate the equity and value in your home?!?!?

Some good questions to ask an agent before listing your home would be:

1.  How long is the listing period? Unless your home is drastically over priced, 3 months should be a sufficient listing period. A red flag is 6 months to a year and your home is a buyer magnet for the agent to spin off the buyers to sell them something else.

2.  How much is this going to cost up front? Some Companies will charge you an upfront fee to list your home on the MLS. Once they have gotten their pay, they have no motivation to sell your home and will not negotiate for you. When these listings do sell, they are generally in the buyer's favor because the buyer has an agent representing them and looking out for their best interest and the seller is left on their own.

3.  What is your average list to sale ratio? What percentage of your listings sell and what percentage expire? The only way you will be able to verify this information is to ask another agent to look it up for you on the MLS.

4.  What is your average list price to sold price ratio? This is a good way to find out what the original list price is compared to the actual sold price. If it is less than 95% then you are better off listing your home with a full service agent that can sell your house for more money to cover the commissions.

5.  Ask for references (not related to the agent). Ask them for 5-10 references of people that they have helped sell their homes and ask how the experience went.

If all else fails, consider the money that you are trying to save (the actual dollar not a percentage) and see if it is worth losing more than that by selling your home for less money. If it sounds too good to be true...It really is!!! No one can work for free and stay in business, there is a catch!