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For-Sale-By-Owner Web Site Beats Real Estate Agents

 

Source of graphic:  online version of the NYT article cited below.

 

(p. A1)  It sounds like the setup for a dull economist’s joke. Who gets the better deal: the cautious economist who sells his house through a real estate agent, or his risk-taking colleague who finds a buyer on his own?

But the question — debated by two Northwestern University economists who chose different methods to sell their homes — and the research it helped prompt are serious. And the answer will be of interest to anyone who has paused to consider whether paying a real estate agent’s commission, typically 5 to 6 percent of the sale price, is worth it.

The conclusion, in a study to be released today based on home-sales data from 1998 to 2004 in Madison, Wis., is that people in that city who sold their homes through real estate agents typically did not get a higher sale price than people who sold their homes themselves. When the agent’s commission is factored in, the for-sale-by-owner people came out ahead financially.

 

For the full story, see:

JEFF BAILEY.  "One City’s Home Sellers Do Better on Their Own."  The New York Times  (Fri., June 8, 2007):  A1 & C7. 

 

Economist Handel (left) sold his home by himself, while economist Nevo (right) used a real estate agent.  Source of photo:  online version of the NYT article cited above.

 




Comments

Hi, I am the owner of Find a Home Direct a Texas based For Sale by Owner web site.

With the market weak and two other people I know looking to sell there house as well this summer we decided to run test. The other two individuals were going to use Realtors and I was going to sell my home FSBO (For Sale by Owner) and see who sells there home first as well as who gets closer to there goal selling price. One of the individuals has a house in the same neighborhood as I with almost the same square feet. We all got together and discussed what our plans were and our goals.

We all put our homes on the market at the same time May 25th, as of today I have a contract on my house which I should be closing on Sep. 28th. I sold my house for $3,000.00 under my goal price due to a roof issue I was unaware of. It was brought to my attention during the inspection, I brought in a second opinion and it was in fact a problem. As of this point the two individuals I was competing with have all lowered there price to there goal price or below with no serious offers pending.

By all mean I know there are a lot of factors in place that could affect a home sale and if we ran the test again with 3 other homes with the same setup I’m sure the results could be very. Ether way I new I did not want to pay a realtor 3% for putting up a For Sale sign on my yard, add flyers to my sign and doing a couple open house. That to me was not worth 3%.

I keep stating 3% because I factored in my goal price that I would possibly have to pay 3% to the buyer’s agent. If you don’t offer a percent to the buyer’s agent, then no Realtors will be willing to bring any of there clients by to see your home. I think this is a key peace that most FSBO do not see or consider. Wile I know the whole point of selling your home FSBO is to avoid agent fees, you have to keep in mind that most buyer’s use Realtors to help them find a home because ether the buyer feels safer using a Realtor, they do not want to look for the homes them self, they do not know where to look for the homes or possibly do not have time in there busy schedule. How the Realtors fees are not taken from the buyer they do not have a reason not to use a Realtor. So wile you are selling your home FSBO make sure to factor in a 3% for the buyers agent to your goal price.

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