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Ask Adam: ‘Million Dollar Listing’ vs. Real Life

by ARLnow.com — May 15, 2012 at 12:30 pm 10,324 34 Comments

Editor’s Note: This periodic sponsored Q&A column is written by Adam Gallegos of Arlington-based real estate firm Arbour Realty. The views and opinions expressed in the column are those of the author and do not necessarily reflect the views of ARLnow.com. Please submit follow-up questions in the comments section or via email.

How similar is the TV show Million Dollar Listing to real estate in Arlington?

Probably not that much more similar than your life is to the Real Housewives franchise. The shows are crafted for entertainment, featuring plenty of showboating and drama.

My favorite scenes are the face to face negotiations. They’re a great way to breed drama. In contrast, almost every real estate offer in Arlington is presented over the phone and then transmitted via email. I’ve only ever had one agent deliver an offer in person, but the negotiation had already taken place.

What’s also interesting is that they negotiate verbally without anything in writing. As a listing agent, you’re not going to get me to present anything to a seller without all the terms written out and signed by the buyer. There’s way too much that could go wrong and there are a lot more variables involved than price.

The broker open houses are much more fabulous on TV. The nicer broker open houses in Arlington usually consist of a catered lunch and maybe a drawing for a $50 gift card. In reality they are probably just as effective as the lavish events you have seen in Million Dollar Listing. In my opinion, brokers opens are as much about educating the realtor community about a home as they are about creating buzz. Education is especially important with some of the high performance green homes being built.

One practice some of us share in common with the agents on TV is staging . I’m sure this sounds like a waste of money to some of you, but I can tell you from experience that how a home shows goes a long way towards how it sells. According to the staging company I use, 94.9% of their staged homes sell in 45 days or less.

Though the guys on TV drive around in Porsches, wear $25,000 watches and strut around town in Gucci loafers, this is not how we roll in Arlington. Maybe there is a little of that in Great Falls, but I don’t see it around here. I should point out that far less than 1% of realtors earn the level of income that these guys on TV are making. According to CNBC.com 12 Most Overrated Jobs, the average annual income of a realtor is $40,357. That’s a respectable income, but it doesn’t get you far in Arlington and it sure doesn’t look anything like the $594,000 commission I just saw Ryan earn on Million Dollar Listing New York.

So how many million dollar listings actually sell in Arlington? Thus far in 2012, 63 homes have sold for $1,000,000 or more. The two most expensive homes sold in Arlington this year, went for $3,100,000 and $4,200,000. The latter is a penthouse condo at Turnberry Towers.

I have to give Bravo TV a lot of credit. If they can make real estate look cool or at least entertaining, then they are good at what they do. Today I had a walkthrough, closing, home inspection to negotiate and emails to respond to leading up to writing this article. Trust me, it had very low entertainment value.

Continue to send your real estate-related questions to: adam@arbourrealty.com

  • JamesE

    When I bought my condo the previous owner refused to repaint it, it was a darker blue with a pink bathroom, this resulted in a lack of offers because no one wanted to repaint it. I gave her an initial offer much much lower than asking and three months later she contacted me and agreed to my price, then I spent one weekend repainting. She did all this without a realtor which obviously worked out great for me but not her. Probably would have had multiple offers if she just painted it a neutral color. That is my rant about proper staging.

    • WantonTaco

      I’m sure she still made off well.. and like you said, had she painted it, she would of done way better then paying the ridiculus commissions these guys make. I say good for both of you and is proof that a good propert willl sell itself. you need a good attorney and inspector. Skip the realtors (on 95% of the occasions).

    • drax

      Also shows how dumb many buyers are.

      You got a lower price and the paint color you liked.

      • drax

        (I was praising you for your wise deal, Taco – after posting I realized it might have sounded like I was bashing you as a buyer. Not at all!)

  • .T.G.E^OA

    When I sold my place on my own, my staging consisted of throwing white sheets over tables. Then throwing all of my crap below the table so the prospective buyers wouldn’t see it.

  • WantonTaco

    Yeah, 40k annual for the nation, what’s it here in Arlington?

    You guys pocket all the equity on the such low profit margins most of us that have own anything purchased last decade. 5-6% goes to people that do very little, that % is really more like 95% of the profit. One of the realtors did little work of posting a listing and taking the phone call/email. How about we pay 5-6% on the profit portion uh???

    SO if you aren’t wearing the 25k watch and driving a 40K car, who is? cause someones taking my money.

    Down with realtors!

    • DSS10

      Don’t get angry at the real estate agent. They like car salesman don’t make a lot of money its the person who owns the agency that is bringing in the bucks. The only way you are going to get really rich as an agent is to either “invest” in the market or move up the food chain. Growing up we had a family friend who now has one the larger real estate agencies on the east coast. Over the years I have known a lot of people who have gone to work in his agency but no one made the totally obscene amount of money he did.

      To get a better feel for the business you should watch the movie Glengarry GlenRoss. Search for it on youtube, and look for the clip with Alex Baldwin.

      I do agree, however, that there is no reason for the current real estate system we have now and that it only exists because of lobbying from NAR. The whole real estate purchasing process was developed to enable the transfer of title but with the digitizing of real estate records it has become more of a financial transaction. Real estate firms have used this to both inflate prices and impose fees that are ridiculous given the amount of work required (why not fixed fees as opposed to percentages!!!). The other big problem is that any purchasing agent that you sign a contract with has a conflict of interest in representing you in a transaction and can not act in your best interest.

      Maybe after health care Obama can tackle this problem….

  • CW

    Million Dollar Listing also deals with areas where demand doesn’t outstrip supply by several orders of magnitude. What does an average listing last these days, a week maybe? I think I have dead relatives that could be realtors here.

    • http://arbourrealty.com Adam G

      So in your opinion the guys on TV earn their commissions, but agents in Arlington do not because homes sell themselves?

      • CW

        Well, that’s a very absolute way of putting it; this being the internets and all I was of course taking a little artistic license with the first post. But I do think that catering to a bunch of snooty Angelenos having their pick of a bunch of listings is probably a bit more effort than throwing open the doors to a 50′s split level and having three dozen desparate yuppies throw bids at you in the first day.

        • AllenB

          I’m not a realtor, but I have two friends who are. They make very good livings but they work pretty hard. Remember, they are working nights and weekends when you and I are enjoying our time off.

          • AllenA

            Yet they don’t have a lot to do during the day when you and I are working, so what’s your point?

          • AllenB

            My point is they work during hours that most of us would prefer to have off to spend with friends and family. What’s yours?

          • AllenA

            That work is work and free time is free time. How one chooses to distribute it shouldn’t be viewed as evidence that someone is “working pretty hard”.

          • http://arbourrealty.com Adam G

            AllenA,

            Your comment is ridiculous. Unless you’re a doctor in the ER, I guarantee I work more hours than you do any given week.

            Please also keep in mind when it comes to compensation that most agents are working on a contingency basis. That means that they don’t get paid unless they are successful at finding you a home you love or selling your home. If unsuccessful, we get paid $0. In fact we not only lose the time we invested, we also lose the money we have invested if it is a home sale.

            If you take this risk out of the equation, I’m sure a lot of us would be willing to work for less money. For example, if you are willing to pay me by the hour or a fixed amount regardless of our success, I’ll take that all day long over a contingency relationship.

          • AllenA

            And you completely miss my point. Let me spell it out in as simple of terms as I can:

            Person A works 40 hours a week M-F 9-5.
            Person B works 40 hours a week at nights and on weekends.

            Which one works harder? Contingency basis compensation is irrelevant. AllenB says his friends work hard because they work on nights and weekends. I say the time of day you work do not determine how hard you work.

            Get it now?

      • bacon

        Homes in Arlington are no longer selling themselves. Since the housing crises, home prices in Loudoun and Fairfax dropped in some cases 30%. Arlington only dropped a little and is inching its way back up, but since the drop in other places, Fairfax homes are more competitive with Arlington homes. If a buyer can do Loudoun, there is no comparison.

        • CW

          All the home shoppers I know would beg to differ. Go to an open house sometime. FFX and Loudoun vs ARL are apples and oranges. If I “could do” West Virginia or Richmond, there’d be no comparison there either.

          • bacon

            I have been to plenty of open houses in Arlington. The last two I went to was a two Bedroom townhouse in South Arlington, and a three bedroom home in Westover. You know what I didn’t see when I was at these open houses? Younger married couples or families looking at the properties. If you have kid(s), Arlington becomes a less favorable option for you, so most people with kids are taking advantage of the more house rule and choosing Fairfax or Loudoun.

            If you have no kids in the house, and you work in DC or at the Pentagon, Arlington is a great option. Fairfax or Eastern Loudoun become more attractive if you work in Fairfax County and have kids.

          • arlhomeowner

            why does Arlington become ” a less favorable option” if you have kids? Last time I checked Arlington County Public schools were ranked pretty high….. Maybe you don’t see younger married couples because of the cost.

          • Juanita de Talmas

            How come there are so damn many strollers around Clarendon and Shirlington if no one here has kids?

          • CW

            “Fairfax…become[s] more attractive if you work in Fairfax”

            Brilliant.

          • Bacon

            A) Parsing a sentence and then criticizing the perceived new intent is unacceptable. Fairfax is a large county; a Shirlington (Arlington) to Springfield (Fairfax) commute is more desirable than a Springfield (Fairfax) to Chantilly (Fairfax) commute. A McLean (Fairfax) to west Tysons commute may be less desirable than a McLean to Rosslyn (Arlington) commute.

            B) Strollers are for toddlers, not kids. Yes, there are lots of strollers in Shirlington, but as a former resident of Shirlington, I can tell you, there are very few kids in the area over the age of seven. Most people with non toddlers, and/or more than one kid move out for more space. I believe people planning on having kids soon most likely opt for more family oriented neighborhoods in Fairfax or Loudoun County.

            C) Arlington becomes less desirable because of its cost per square foot. for $430,000 you can get a three or four bedroom single family house in Fairfax or Loudoun, or a two bedroom townhouse in South Arlington. With kids, not toddlers, you need more space.

          • CW

            I couldn’t help myself with the sentence-parsing.

            This whole discussion is irrelevant though. You started by saying that you didn’t see any young families at the open houses you went to. Fine. So maybe your favorite demographic was not well-represented, but that has no bearing on my argument that Arlington houses are still selling like hotcakes.

        • Greg

          Homes in Arlington are no longer selling themselves!? Might want to brush up on the Arlington real estate market. I put an offer on a house 40k above asking and they cancelled the 1st open house after 3 days on the market… only I wasn’t the winning offer. Good homes are receiving multiple offers, escalation clauses are becoming routine, and many attractive properties are going for above asking. There is some of that in Loudon now, but Arlington’s incredibly low inventory makes it very easy to sell a house right now.

  • Roycroft

    I am not a real estate agent but know quite a few. Some of them do very well, while others just get by.

    Most on this forum will not agree with me but I would suggest all of you who think being a realtor is easy work for big $$$ give it a try. I think you will change your tune.

    I would say that the majority of agents in Arlington make less than 40K a year if you factor in the expenses of doing business.

    Most real estate offices have only a few agents that really can say they are making a good living at it and those that do work their ass off…Realize that the 5 – 6% commission is split many ways often with the managing brokerage firms on both sides of the transaction taking a big split.

    Yes, from the outside it can look easy but in most cases there is a lot more to it than offer/acceptance.

    And for those that have agents that are not working on your behalf for a sale/purchase…..FIRE THEM!

    • WantonTaco

      exactly. someone else that does nothing for the seller takes a huge cut because they “bla bla bla cost of office bla bla bla”. look. shut the fancy office, go work from a home office, keep the full amount of the commission but bring it down to something fair that doesn’t milk the seller. and charge at one end of the transaction not both.

  • Arlington Cat

    In my experience, the home in Arlington we sold last year (and probably most homes in Arlington), bucks conventional wisdom on staging.

    Most homes in Arlington are older and smaller than what you will find in Fairfax, South Alexandria, or Loudoun, so, if you can, move everything out, paint the walls an airy color, and go from there. Most houses in Arlington feel bigger when empty.

    We sold in 30 days for about what we were asking in 2011.

    We sold an empty house

  • Vikram

    Doing TV show reviews on this site now? blah.

  • anywaybacktome

    The Economist had an article on this recently. It wondered why Americans are so willing to pay overpriced real estate fees. 6% is a total rip off, I am glad to see Redfin trying to pull things down.
    Average prices in Arlington were 220k-280k ten years ago, now they are double that. Do real estate agents deserve a 100% raise in ten years? Of course the average salary is low, there is very little barrier to entry and lots of people are not cut out for it that still does not mean I should pay 6% to sell a house.
    The only way to change things is don’t pay 6% Also don’t get me going on the extra $325 they try to tack on for admin fees.

    • Helen

      Negotiate! Negotiate! There is nothing that says you must pay 6%. Commissions are negotiable and plenty of brokerages that will negotiate with you. When you buy a car do you just accept the price the dealer ask? Real Estate is the same, negotiate and if you are buying ask for a rebate.

  • RebeccA

    FYI – you can post your home on MLS for $500 and let Zillow do the rest. My sister recently sold her home this way and it sold in about 2 months. This is in Alexandria. She and her husband held 2 open houses. No realtor.

    • JohnB2

      Did they pay a commission to the buyer’s broker? Or was it direct seller to buyer with no brokers involved at all? Did they hire an attorney to assist with the paperwork or just use a title company? It would be great to save 25k or so in commissions…

    • Helen

      There are brokerages that will put it in the MLS for a flat fee also and it will then upload to over 30 internet sites, zillow being one of them.

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