Disadvantages of the MLSLOOK what agents don't want you to know:
The MLS can slow the sale of your home. In 2006, our 6,000 FSBO customers sold on average, twice as fast as homes listed on the MLS. National research commissioned by agents, for agents, proves FSBOs sold 3 weeks sooner than those who used an agent.* In March 2003, Realty Viewpoint (an independent research group specializing in trend information to real estate professionals) conducted a random online survey of 3,654 home sellers who had sold their homes in the past year. This was a first of its kind study to determine the needs of sellers and their level of satisfaction while selling their home. Much to even their surprise, they found the following: 1. MLS listed homes sell for less money than FSBO homes. According to our local KC area statistics and the same national survey mentioned above, FSBO homes averaged 29% more gross profit than MLS sold homes.* A recent study, June 7, 2007, conducted by economists from Northwestern University confirmed that FSBO properties sell for more money that agent listed properties. It also confirmed that agent listed properties net much less equity than FSBO. Another study conducted by a major University also commissioned by agents, concluded the same result: Ò...it is concluded that the decision to use the MLS decreases the sale price of a property.Ó "We calculated profit as "average selling price-average purchase price". On the resale side, both FSBO and Real Estate Sellers made a lot of money $76,800 FSBO vs $72,300 Real Estate Agents in gross profit. The most important finding here is that FSBO Sellers made 6% more gross profit on their homes than sellers who used a Real Estate Agent." "This shows that people who sell their home on their own do, in fact, make more money than people who use a Real Estate Agent. This is gross profit and does not include Real Estate Agent fees. So, if you factor in the average of 6% Real Estate Agent fess that would reduce the profit for those who sold with a Real Estate Agent to 42% or $59,400. This data shows that FSBO's actually made 29% more in total on the sale of their home than those who use Real Estate Agents." Gross Profit: FSBO 59% ...Agent 42% "Selling your home on your own and making more money has been a common myth for years. This data proves that FSBO's actually make 29% more in total on the sale of their home than those who use Real Estate Agents." 2. It is expensive to be on the MLS. You must pay a commission to both listing broker and selling broker. Usually this is several thousands of dollars! Don't be fooled into listing on the MLS with a broker you charges a seemingly low flat fee. There are many brokers who will slap you on the MLS for $100 or $200, whatever. But rest assured you still must pay a buyer's agent a commission, on top of the $100 fee. When you offer a buyer's agent a fee (and you are required to offer them a fee) you are actually paying an agent to beat you up and get the lowest price from you! Don't do your math on your asking price - no buyer's agent will ever give you full price. Most will offer you substantially less than your asking price. Then, they request you pay thousands in repairs after a buyer's inspection, then they want you to pay for a warranty for the buyer! The TRUE cost of a discounted MLS listing fee is thousands and thousands of dollars away from your original asking price. 3. You must pay a broker to list you on the MLS. Be aware of Discount Brokers true costs. You must pay a broker to put your property on the MLS, a flat fee or a commission. If you buy a discount broker's MLS listing, for say $100 to be listed on MLS, rest assured they are not working for you. Do not expect any advertising and plan on spending $50 to $75 a week for a small classified ad in the newspaper every week. Discount brokers use your home and yard sign as bait to attract buyers, so they can snag drive-by buyers and become their buyer's agent. Many times they sell them a different property (not yours) and they take a 3% or 4% commission from the buyer! (they don't make money selling you a discount $100 MLS listing, they make it stealing your buyers who are calling them off your yard sign or your MLS listing and helping them buy a different home). 4. You must pay a buyer's agent a commission to be on the MLS. Buyer's agent try to demand 3%, on average, or more of your sales price to show your house to a buyer. Plus, in addition, you must pay a "full-service" listing broker another 2% - 5% commission.5. Buyer's agent are working for their client, the buyer. Not you, the seller. Any buyer's agent that brings a buyer will be working for the best deal for their client, the buyer. They will hammer you down on price, ask you for huge repair concessions and make you pay for a warranty among other things. Do not expect a full price offer from a buyer's agent! 6. MLS is for agents only, no buyers ever see the MLS. Contrary to popular belief, MLS is only viewed by agents. The public does not have access to the MLS or its data. Tiny bits of information from the MLS may be available on a some web sites. 7. You must sign a long-term listing contract to be on the MLS. To be listed on the MLS, you must sign a long-term listing agreement with a broker which is extremely hard, if not impossible to cancel. Once listed, you are trapped with that broker for the duration of your agreement. 8. Home buyers always shop FSBO homes first, not MLS. Today, with the internet and emergence of FSBO magazines and FSBO retails stores across the country, home buyers shop private sale homes first (FSBOs). Home buyers are smart. They know that every home listed with an agent has an inflated asking price to cover the agents high commissions. Today, home buyers always shop private sale homes first (FSBO). They know FSBO is a win-win for both the buyer and the seller. 9. MLS actually sells many fewer homes than you are led to believe. Every house listed by every agent is put on the MLS. Buyers (with and without agents) driving in neighborhoods often find houses for sale. Up to 50% of all home sales are due to buyers driving around themself and seeing a yard sign in the front yard! These sales have nothing to do with the MLS, yet the MLS is given credit for the sale!? Nationwide, as many as 40% of MLS listings expire with no sale, frustrated sellers, or cancellation by the seller. Hence the true effectiveness of the MLS is much closer to 5% to 10% effective in terms of being the procuring cause of the sale. 10. MLS listed homes are initially overpriced. Most agent grossly overprice the initial asking price of homes listed on the MLS in an attempt to seduce their seller into believing that they might be able to sell their home for much more than it is worth. This is the oldest listing-agent trick in the book i.e.: trying to snag or dupe a buyer into overpaying. This rarely happens and they are forced to lower their asking price. 11. MLS listing agents rarely sell their own listings. Real estate sales is a game of listings...their motto is: list to exist! The more listings an agent can get, the more commissions they can take. It is not about selling homes, its about listing homes. It is extremely rare that an MLS listing agent will be the actual selling agent. The majority of MLS properties are sold by agents other than the listing agent. However, it is the listing agent who tries to convince the seller that they alone have the magical marketing power and expertise to sell your property. They alone can out perform the other 10,000 agents in town...be leery of listing agents. 12. Due to new real estate laws - Agents with real (not phantom - pretend buyers) buyers show FSBOs just as often as they show any home, listed with any agent! Recent real estate law changes have made FSBO much more successful! New laws mean that a buyer's agent with true buyer, will show your FSBO property just as often as they show any property listed with any agenct. Because they are hired by and are paid by the buyer, not seller. The seller pays zero commission. Don't let a buyer's agent tell you that the seller always pays - not true!
13. If you list and sell via the MLS, your actual sales price is forever in the MLS data base for future buyers and agents to see, lowering your selling leverage when time comes to sell your property again.
14. The number of days on the market (DOM) is always known to buyer's agents and buyers, significantly reducing your bargaining power as a seller.
15. Nothing is more important to real estate cartels than controlling the Multiple Listing Services (MLS), the databases of homes for sale. Real estate websites often allow home-buyers to peruse local MLS listings on the Internet. Yet they sometimes censor or omit listings sponsored by a discount broker. And many established real estate agents won't allow their own listings to appear on a discount broker's site. That spiteful move led the U.S. Justice Department to sue the National Association of Realtors (NAR), the industry's ultra-powerful lobbying group, for allowing members to discriminate against Web-based brokers. (The Justice complaint is expected to take years to resolve.)
