Hiring a REALTOR to Sell Your House May Cost You NOTHING! #TimeToSell

By
Real Estate Agent with Allison James Elite CA. BRE 01501699

#TimeToSell #ChrisBJohnsonRealtor 

Your home is probably the biggest asset you own. This is why you should hire a professional to guide you through all your real estate transactions. My goal is to help 24 to 28 families each year either buy or sell a home.

 

Hiring an Agent to Sell Your House May Cost You NOTHING! | MyKCM

There is no doubt that it is easier to sell your house when using the services of a local real estate professional. The agent will provide:

  • Greater exposure to more buyers
  • The skills of a professional negotiator
  • A layer of protection from possible legal liabilities
  • Professional guidance in navigating any pitfalls that may arise
  • A level of safety while showing the home

There is no doubt that these services are valuable to any family that decides to sell. The only question is – how valuable? One of the main reasons For Sale By Owners(FSBOs) don’t use a real estate agent is because they believe these services are not worth the fee an agent charges. But, what if those services didn’t cost the seller a penny?

study by Collateral Analytics, however, reveals that FSBOs don’t actually save anything and, in some cases, may be costing themselves more by not listing with an agent.

In the study, they analyzed home sales in a variety of markets in 2016 and the first half of 2017. The data showed that:

“FSBOs tend to sell for lower prices than comparable home sales, and in many cases below the average differential represented by the prevailing commission rate.” (emphasis added)

Why would FSBOs net less money on their own than if they used an agent?

The study makes several suggestions:

  • “There could be systematic bias on the buyer side as well. FSBO sales might attract more strategic buyers than MLS sales, particularly buyers who rationalize lower-priced bids on with the logic that the seller is “saving” a traditional commission. Such buyers might specifically search for and target sellers who are not getting representational assistance from agents.” In other words, ‘bargain lookers’ might shop FSBOs more often.
  • “Experienced agents are experts at ‘staging’ homes for sale” which could bring more money for the home.
  • “Properties listed with a broker that is a member of the local MLS will be listed online with all other participating broker websites, marketing the home to a much larger buyer population. And those MLS properties generally offer compensation to agents who represent buyers, incentivizing them to show and sell the property and again potentially enlarging the buyer pool.” If more buyers see a home, the greater the chances are that there could be a bidding war for the property.

Three conclusions from the study:

  1. FSBOs achieve prices significantly lower than those from similar properties sold by Realtors using the MLS.
  2. The differential in selling prices for FSBOs when compared to MLS sales of similar properties is about 5.5%.
  3. The sales in 2017 suggest the average price was near 6% lower for FSBO sales of similar properties.

Bottom Line

If you are thinking of selling, FSBOing may end up costing you money instead of saving you money.

 

 
 
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Rainmaker
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Pete Xavier with X Group Real Estate Advocates
Investments to Luxury - Pacific Palisades, CA
Outstanding Agent Referrals-Nationwide

Many don't understand, they only think they understand that they'd save the total commission if they went FSBO, thankfully most of them realize the issues and enlist the help of a professional to bring them the highest and best possible price

Oct 21, 2017 11:44 AM #1
Rainmaker
313,677
Chris B Johnson
Allison James Elite - Moorpark, CA
REALTOR®Quality Not Quantity #ChrisBJohnsonRealtor

Thank you Pete Xavier with X Group Real Estate Advocates 

Oct 21, 2017 11:57 AM #2
Rainmaker
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Mel Ahrens, MBA, Kelly Right Real Estate
Kelly Right Real Estate - Hood River, OR
Customized Choices for your Real Estate Needs

I'm not sure the Collateral Analytics study conclusions can be broadly applied.  The study only focuses on 13 highly populated counties.  Only 150 counties (of over 3,000 counties) in the US comprise 50% of the population.  The study uses AVM methodology as a tool to derive their results.  AVM models do not work well in low population housing markets.  Extrapolating high population urban results to less populated and/or rural areas is risky.

The Collateral Analytics study also indicates it was a normal market. “The data used for this study came from a rather normal housing market, not one in rapid rise or decline, and covered all of 2016 and the first half of 2017.”

A quick review of the markets the study covered showed the following info:

·   Clark County, NV, “The median sales price of previously owned single-family homes in Southern Nevada in June was $257,373. That’s up 2.9 percent from May and 9.5 percent from June 2016, according to a new report from the Greater Las Vegas Association of Realtors.”  Las Vegas Review-Journal 07/06/17

·   Cook County, IL, “Feb 2017 median home price was $210k, a 12% increase over Feb 2016” Illinois Realtors Blog 03/22/17

·   King County, WA,  “median home prices grew 15.7% compared to a year ago”  Seattle Times 05/04/17

·   Prince George’s County, MD, “Prices rose fastest in Prince George’s County, climbing 19% from Feb 2016 to Feb 2017”  WA Post 03/31/17

Double-digit median price increases year over year is a normal housing market? 2.9% increases month over month?  Sounds more like a rapidly rising market.  Only one of the counties in the study had a median price increase less than 5% (Fairfax County, VA 4.8%).  According to Keeping Current Matters, who provided your blog, 38% of the US states had year-to-year price appreciation greater than 6%.  Washington (including Seattle & King County) had 12.9% appreciation statewide.   

I do not believe the study was done in a “normal market”.  

Also, it does not appear the study excluded Flat Fee Listings, which are typically used by FSBO sellers to advertise in the MLS.  Including Flat Fee Listings as agent represented most likely leads to overstating agent represented results and under-representing FSBO results.   

 

Finally, one comment my stat professor consistently mentioned: "Correlation does not necessarily mean causation".  

Oct 21, 2017 03:03 PM #3
Rainmaker
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Chris B Johnson
Allison James Elite - Moorpark, CA
REALTOR®Quality Not Quantity #ChrisBJohnsonRealtor

so Mel Ahrens, MBA, Kelly Right Real Estate , are you saying that FSBO net more than a full commissioned Broker would?

Oct 21, 2017 03:32 PM #4
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Rainmaker
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Chris B Johnson

REALTOR®Quality Not Quantity #ChrisBJohnsonRealtor
Is it Too Late to Short Sell My Home??
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