I debated writing about this New York Times article, mainly because all the big dogs are already picking it apart (notably BHB and RCG) and the vitriol against Realtors (some valid) is flowing. But, a couple of readers emailed me the article, so I feel obligated to comment (and I am grateful for that obligation – thank you for reading)
The study (pdf) is less a story of how much more unrepresented sellers sell their homes for than those who choose to hire a Realtor, and more about the effects of a viable alternative to the MLS, which is currently the best way to market a home.
We focus on the city of Madison, Wisconsin, where a single web site (fsbomadison.com) has become the dominant for-sale-by-owner platform.
A few thoughts:
1. All houses are “for sale by owner;” who else could sell them? There is a difference between a represented seller (or buyer) and a non-represented buyer or seller.
2. Referring to alternative/limited-service businesses as “discount brokerages” implies that there is some sort of standard commission; there’s not.
3. The study doesn’t seem to touch on the value that good Realtors bring to the equation – staging, marketing, pricing, timing, negotiating …
4. It would be more interesting to see a study of the effectiveness of good Realtors rather than all Realtors. As in all professions, some are better and some are worse. Real estate is one of the only professions that I can think of where rookies frequently charge the same as experienced professionals. This position by the NAR does a great disservice to those professional Realtors and those who aspire to be professional Realtors.
Working with an agent, and agreeing to pay the commission, gives the homeowner access to a number of services. The National Association of Realtors (NAR) argues that Realtors provide valuable help with setting the listing price, preparing the house, checking potential buyers’ qualifications, showing the house, bargaining the terms of the deal, and handling the paperwork.
5. The value in having an intermediary, a buffer between the parties in the transaction, can be invaluable. Negotiating to a win-win can become much more easily complicated by emotions when negotiating without that buffer.
6. As a buyer’s agent, I try to search all of the local venues for homes for sale in the Charlottesville area (don’t they all?)
7. In the Charlottesville MSA, I would guess that the MLS comprises about 85%-91% of all the houses for sale. There is always room for competition.
8. All real estate is local. What is applicable for Madison, Wisconsin may not (and probably doesn’t) correlate to the Charlottesville/Albemarle market.
9. On this FSBO site, of the first five listings in Charlottesville, one was in the MLS last year and expired, one seems to be truly unrepresented, one is in the MLS, another one is recently expired from the MLS, and another one is in the MLS.
10. Maybe the best “by owner” site in Charlottesville is c-villebyowner, but their market share remains infinitesimal.
In the Charlottesville area real estate market, some neighborhoods are more likely to be successful for those who choose to represent themselves in the sale of their homes – those neighborhoods that are fairly cookie-cutter and high-traffic neighborhoods may be better candidates than those that are not, but why would someone want to limit the number of people to whom they market their most valuable asset? What about the pictures?
By the way, the study is outdated.
The study found, however, that homes listed with agents sold more quickly — with a 25 percent probability of selling within 60 days versus a 16 percent probability for FSBO-advertised homes.
The average days on market in the Charlottesville area, right now, is trending between 74 and 106 days. (click more for more data) I sincerely look forward to their follow-up.
The data we analyzed so far end at 2004. We are in the process of cleaning data for 2005 and 2006. The importance of the additional data is that they allow us to study a market during a more difficult time, during a cooler housing market. We could see if the cost or, returns to, using a realtor vary with the cyclicality of the market.
Personally, next time I sell my house, I’ll hire a good Realtor – I’d rather spend my free time with my family rather than doing new flyers, showing my house, coordinating closings …
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Charlottesville, Albemarle, Fluvanna, Greene, Nelson, 2004 -v- 2007
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