I just finished reading Freakonomics, a bestseller by Steven D. Levitt and Stephen J. Dubner in which they share with the readers how economics has been applied to everyday situations. It is a must read. It is so fun to read that you'll breeze through it and it will change your perception of things.
A chapter that definitely ruffled my feathers and I bet it will do the same for you is How is the Ku Klux Klan like a group of Real Estate Agents? You would obviously have to read the book to put everything into context, but I will summarize a little bit and cite a few phrases so we can share opinions on the authors' point of view...
The book explains how the KKK -and real estate agents- are groups whose power is derived in part from the fact that it hoards information and insitutes fear. Fine, Realtors do hoard information (c'mmon, we have the MLS), but how is it that we can make the public be afraid of selling their own home? Aside from the fact that selling a house is probably the largest financial transaction in someone's life, the public is afraid that without the right information, they'll either sell the house for far less than it is worth or that it will not sell at all.
The case in which Realtors have the information and the public doesn't is called information assymetry, which the book claims has been "mortally wounded" by the appearance of the internet. While it is true that the public has now more information than ever before thanks to the internet, we all know that relying solely on raw data is dangerous and professionals of the real estate industry have the knowledge and skill to analyze raw data (I mean, look at Zillow.com).
The book continues to claim how a study found that an agent keeps their own house on the market an average ten extra days, waiting for a better offer, and sells it for over 3% more than a client's house. The reason why (they claim) is that by an agent selling their house for lets say $10,000 more, that is $10,000 more into the agent's pocket, but for an agent to sell a client's house for $10,000, means only $300 more in their pocket. While this sounds somewhat coherent, and we can't deny that a study was conducted and numbers don't lie, I personally get more emotionally attached when it is my home that I am selling and because I don't want to lose the buyer I budge and when I am buying, I am afraid I am going to lose the home of my dreams and so I pay up. With clients, I keep a cold head and I usually am able to negotiate great deals for them. When I am meeting with my clients, they are all nervous and excited and if they were to show those feelings to the other party, they'd be eaten alive, but I act as a buffer for those feelings and when I present offers to other agents I act all tough and that benefits my clients.
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