Oh, not much.....
Youâ€™ve heard it quoted hundreds of timesâ€¦"The median home price for sellers who use an agent is 16.0 percent higher than a home sold directly by an owner; $230,000 vs. $198,200;â€
This figure comes from the NAR 2005 Buyer and Seller Profile. This figure is quoted religiously by the real estate and the media.
"Don't Try This At Home", targets unrepresented sellers (the FSBO market). The commercial features a hard-hitting message: REALTORSÂ® have the experience to price your home effectively, so it can sell for up to 16% more than selling it yourself.
--- This is a pretty bold claim. 16% is a big number so letâ€™s analyze this a little more using different figures. Here is what a home buyer would be led to believe hearing this statistic.
FSBO $300,000 / REALTOR $348,000 â€“ 16% would be $48,000 more
FSBO $400,000 / REALTOR $464,000 â€“ 16% would be $64,000 more
FSBO $500,000 / REALTOR $575,000 â€“ 16% would be $75,000 more.
These numbers would make everyone consider selling with an agentâ€¦ but how true are they.??
-- What is interesting to me is that the data set used to make this claim is not available anywhere. I have looked for it and cannot find it. If you have it great, letâ€™s make it public so we can see how the NAR arrived at this statisic.
--- Everyone seems to believe this number and no one seems to want to question it? At the same time no one appears to understand what it really means. Could it be a fairly creative use of a statistic created to try to protect millions in real estate commissions?
Here is why. The report states that the â€œmedianâ€ price is 16% higher not the â€œaverageâ€ (or mean) price. Most people donâ€™t understand the difference between a â€œmedianâ€ and â€œmeanâ€. Here it is:
*Median - the middle number in a sorted list.
*Mean - The value obtained by dividing the sum of a set of quantities by the number of quantities in the set. Also called average.
The difference between median and mean can be significant.
Here is two random data sets of 5 numbers to demonstrate the difference of median and mean why itâ€™s important for the NAR to release the data set used to calculate this statistic. These are grouped by FSBO and REALTOR.
FSBO - 129,000, 156,000, 198,200, 297,000, 345,000
REALTOR â€“ 121,000, 154,000, 230,000, 290,000, 330,000
So letâ€™s view the â€œmedianâ€ value of each of these data sets. Remember â€œmedianâ€ is the middle number in a sorted list. Therefore the â€œmedianâ€ numbers would be the third numbers in the above data sets.
FSBO median = $198,2000
REALTOR median = $230,000
(Itâ€™s no coincidence that there is a 16% difference between the two and these are the same numbers quoted by the NAR for display purposes)
So all the other numbers in the data set donâ€™t matter, just whatever the â€œmiddleâ€ number of the data list is. Does this seem to give an accurate estimate?
--- ***(Itâ€™s no coincidence that there is a 16% difference between the two and these are the same numbers quoted by the NAR for display purposes)***
--- Possibly, look at Federal Trade Commission Act, Section 5 that pertains to interest of all consumers to prevent deceptive and unfair acts or practices. The Commission has determined that a representation, omission or practice is deceptive if it is likely to:
- mislead consumers and
- affect consumers' behavior or decisions about the product or service.
In addition, an act or practice is unfair if the injury it causes, or is likely to cause, is:
- not outweighed by other benefits and
- not reasonably avoidable
Now you be the judge if this fits under the billâ€¦
A) Does the 16% mislead consumers?
B) Does it affect the consumers decision to sell using an agent?
C) Is the cost substantial?
***Letâ€™s see how common this statistic really is. If you actually know of a property that sold FSBO for 16% less then other REALTOR listed properties, please send the address and date sold?***
The only fee you may save by selling without professional representation is the commission.
So it's a simply question: if Realtors have been around over a hundred years, why?
The facts are that in every study that I have read, sellers make more money, Period.
You might be interested to know that a recent survey of sellers showed that:
Owners selling without professional representation sold to someone they knew 5% of the time.
Sold to someone they did not know 5% of the time
86% of the time listed with a Realtor
If you can sell on your own, do it. If time and money are important, then I would at least intervew some Realtors, then you figure out what is in your best interest.
First of all, I am not one of those stuffy Realtors who believe people who attempt to do FSBO are bad, in fact, I believe if you can do it, you should. So with that being said, let me share some insight as to why FSBOâ€™s have the highest failure rate in the Real Estate Industry.
Most homeownerâ€™s just copy what they see the agents do. They put a sign in the yard, an advertisement in the paper, they hold an open house and even put their listing on some website like, â€œForSaleByOwner.comâ€ Then the set back and think, â€œWOW, this is easy!â€ The truth is, only about 10% of all FSBOâ€™s ever sell. That is a horrible statistic however, only about 10% of homes listed with agents get sold by the actual listing agent. My point is, the percentage is the same for a Listing Agent selling a home themselves as it is a Home Owner going FSBO. This isnâ€™t a random statistic of fate, itâ€™s a result of how the Real Estate Industry actually works. Think back when you bought your home, how many agents were involvedâ€¦.most likely 2, in fact out of all of you reading this post, 90% had 2 Realtors involved in your last transaction. You had a Listing Agent, he was the one who represented the Seller and you had a Buyerâ€™s Agent and he was the one who represented the Buyer. Only about 10% of the time do you have transactions where only 1 agent is involved and, that would be the Listing Agent.
So, why would that 10% statistic be true for both FSBOâ€™s and Listing Agents. Simply put, Listing Agents arenâ€™t trying to directly sell your home to a buyer. As a Listing Agent myself, I am more concerned with targeting my marketing efforts to the Buyerâ€™s Agents who are working with qualified, ready, willing and able Buyerâ€™s. This type of marketing effort ensures that those viewing your home are actually people who can make an offer. The are 4 main types of marketing efforts that you donâ€™t see that Listing Agents do.
First is the Office Tour. An office tour is when a whole office of Realtors come through and tour the home. This is typically done as part of the officeâ€™s regular weekly meeting and can be rather interesting to watch. Most of the time each Realtor has a score card or feed back card and as the tour the home, they provide their feedback on these cards for the Listing Agent to collect and read over. This Office Tour is a great way of getting the word out about your home to those people who work with qualified, ready, willing and able Buyerâ€™s
Secondly is the Broker Open. The Broker Open is when the Listing Agent send out open house invites to only Brokers. Most of the time the Listing Agent will have food and other incentives like prizes. The Broker Open typically will find Mortgage Lenders, Title Attorney, Closing Agents and all sorts of other Real Estate Industry professionals. Once again, the idea here is to market the home to those people who are working with those Buyerâ€™s that are qualified, ready, willing and able.
Thirdly, is the Office Flyer. This is a flyer that is distributed among all the local Real Estate Agents through their offices. Sometimes, now that we are moving more and more into a digital age, this hard copy flyer is followed up with a email flyer to all these agents. The same ides is at work here and that is, spend marketing dollars on those people who are working with qualified, ready, willing and able buyers.
Last but not least, the MLS, the single most powerful reason to use a Realtor. The truth is, Realtorâ€™s who work with Buyerâ€™s typically and statistically proven only look in the MLS when it comes to deciding what homes are available, list price and more. So, in essence, if your home isnâ€™t in the local MLS, then 90% of all your prospective buyerâ€™s arenâ€™t even going to see or know your home is for sale.
In closing, let me put it another way, when youâ€™re serious about buying yourself, are you going to go find a Realtor or look for homes that are for sale by owner. I can confidently say that 90% of you reading this, will be working with a Realtor and that is exactly why FSBOâ€™s fail. - Thu Jul 3 2008, 09:15 - Wed Jul 9 2008, 13:23
. . . the typical FSBO home sold for $187,200 compared to $247,000 for agent-assisted home sales. (That's 32% MORE than an FSBO sale!)
But more telling than the decline in FSBOs is the fact that 40 percent of all FSBOs sold their homes to someone they knew prior to the transaction. This means that only 7 percent of all home sales are open market FSBO transactions. The rest are simply unrepresented sellers in private transactions.
Most Difficult Tasks for FSBO Sellers:
Getting the right price . . . 15%
Understanding paperwork . . . 18%
Preparing/fixing up home for sale . . . 15%
Attracting potential buyers . . . 9%
Having enough time to devote to all aspects of the sale . . . 7%
Source: 2007 National Association of REALTORSÂ® Profile of Home Buyers and Sellers
Your question has been asked before on Trulia, so you might also search for those questions.
Sometimes after the answers are posted, the questioner's reaction is "Oh, I didn't realize all that went into selling a house." Other times it's "You still haven't convinced me that I couldn't do it all myself, and save the commission." Fair enough. If you end up in the second category, give it a try. There's a chance, albeit a small one, that you'll be successful. And it'll definitely be a learning experience either way.