Why Using A Realtor To List Your Home Makes Sense- Using-realtor-list-home-makes-sense
A new home selling study finds “For Sale by Owners” (FSBOs) sell at discount prices. And worse? They get to do all their own leg work. Especially relevant they bear all the costs associated with the sale of the property. They take all the legal risks/costs associated with the disclosure process. Using realtor list home makes sense.
The study reveals agents most often achieve higher sales prices for properties than comparable FSBO listings — enough to offset their commission fee, according to an analysis released by “automated valuation model” (AVM) provider Collateral Analytics.
The study’s findings make a strong case for hiring an agent, considering that agents allow homeowners to reduce the work, risk, marketing costs and time of selling a home, said Dr. Michael Sklarz, the CEO of Collateral Analytics and a co-author of the study.
“Overall it is clear that FSBOs have a low probability of selling. If they do they will likely net the same or less after closing issues. They are more likely to screw up on disclosures which may lead to lawsuits after the fact, when buyers discover material facts not disclosed,” added Sklarz and Dr. Norman Miller PHD.
Noteworthy is the study looks at more than 200,000 FSBO sales and one million MLS sales. They used sales that took place across hundreds of markets in 2016 and 2017.
Notation was made to control for property attributes such as home size and location. Furthermore, the study’s authors took what they said was an original approach: they compared sales of MLS listings and sales of FSBO listings to automated valuations of those properties.
They found that on average, FSBO listings sold for about 5.5% less than comparable properties sold through the MLS. FSBO listings tend to sell for a little less than their automated valuations and MLS listings tend to sell for a little more.
The valuations were generated by Collateral Analytics’ software.
Note that when they controll for property characteristics in two other ways, the authors uncovered a similar price differential.
The 5.5% differential “is remarkably close to average commission rates,” the authors noted.
What Are The Reasons?
The study offered several potential reasons why agents produce a price premium:
For one, they possess marketing expertise, including knowledge of how to stage a home and the best repairs to make.
Second, in contrast to FSBO listings, MLS listings are generally syndicated to broker websites. This exoses the home to a “much larger buyer population.”
Lastly, MLS listings may attract more showings (and bids) because they offer compensation to buyer’s brokers for bringing their buyer. FSBO listings often do not.
“It appears that many sellers [FSBO sellers] are avoiding commissions while netting home prices less than they would with an agent-represented MLS sale,” the authors wrote.
“They are avoiding commissions at any price, even one that exceeds the commission rate”.
The possibility that “buyers do make low-ball offers to FSBO sellers deducting the entire commission, not just the seller’s portion” from their offers would explain the study’s results, they added.
One more point:
Consider that Sklarz elaborated on this last point. “If [buyers] assume the [FSBO] list price is fair compared to other homes in the market that are listed primarily on the MLS, they might also feel that the seller is netting the same thing as they would if they had listed it at the same price with a broker,” he said.
“I’ve heard this logic directly from buyers who took the full commission & deducted it, feeling what the seller really needed was a sale & the net offer some 6% or so below the asking price was a way to provide the same net”.
The one issue not covered in the study is:
California is one of the most litigious state in the union and any mistake by a seller which means they end up paying more to settle legal claims than they ever save in commissions!
I hope this post helps you make that decision to use a Real Estate professional.
Call me at 760-660-0010 to set up an appointment or to justask a question.
Post courtesy of:
Daniel Dobbs (.org)
Mutual Home Mortgage
265 S. Randolph #120
Brea, Ca. 92821
Cell: 949 250-3981