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Investing and Economics Blog

Study on Real Estate Sales With and Without Realtors

Realtors take a large percentage of a home’s sale price for their services. It has never made much sense to me. It does not seem like the services are proportional to the sales price. I don’t see how it costs 5 times more to sell a $1,000,000 house than a $200,000 house. The Freakonomics authors have commented on the problems caused by the way realtors charge for services.

Study Offers Provocative Comparison of Selling a Home:

The research suggests that some sellers seem to be better at getting a favorable price. They might be better at marketing and bargaining or are more patient; they also are more likely to choose to use FSBO. “Sellers in Madison appear to sort themselves as expected across platforms, the more patient and astute ones going to FSBO, and those who need more help or a quick transaction going to MLS,” said Ortalo-Magné.

“Our results are good news for buyers,” he said. “The price buyers pay appears to be driven entirely by the characteristics of the property and of the seller. Whether the property is sold through FSBOMadison.com or a realtor appears to make little difference in terms of purchase price.” “Realtors undoubtedly can provide value to sellers,” Nevo concluded. “But our research shows that for-sale-by-owner Web sites increasingly are making selling your own home more appealing and offering a viable alternative to realtors.”

Study: The Relative Performance of Real Estate Marketing Platforms: MLS versus FSBOMadison.com (pdf)

June 8th, 2007 by John Hunter | 1 Comment | Tags: Financial Literacy, Personal finance, Real Estate

Comments

1 Comment so far

  1. Barry Swedeen on September 14, 2007 9:39 pm

    As an active student in an evening real estate course, I can honestly say that not everyone is going to need the services of a Realtor. I agree that the ones most likely to do a FSBO are those who aren’t in a hurry and are educated in regards to the real estate process.

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