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Agents Sell Homes for More Than FSBOS - New Study Shows

Photo Source: Catalyst Group

You'll see better results when you use a real estate agent and it won't cost you more - new study shows.

It is a common belief that you can save money when selling your home by putting it on the market yourself; that way you avoid commissions of real estate agent services. However, a recent study by Collateral Analytics shows that is not the case. The study suggests that homeowners will net roughly the same proceeds whether they sell through a real estate agent or take the FSBO (for-sale-by-owner) route. This is because agents tend to achieve higher sales prices for properties on average than comparable FSBO listings. 

The study shows that on average, FSBO listings sold for about 5.5 percent less than comparable properties sold through the MLS, with FSBO listings tending to sell for a little less than their automated valuations and MLS listings tending to sell for a little more. Many sellers think that by selling on their own they are avoiding commissions while netting the same home price less that they would with an agent represented sale, but that is rarely the case. 

This research makes for a strong case for hiring an agent. Agents help reduce work, risk, and reduce the time of selling a home. More than that, they posses 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, exposing the home to a much larger buyer population.

“Overall it is clear that FSBOs have a low probability of selling, and if they do they will likely net the same or less after closing issues, plus 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 Norman Miller, who produced the study with Sklarz and is a real estate professor at the University of San Diego. 

Producers of the study were also quick to point out that the 5.5 percent differential “is remarkably close to average commission rates.” Showing that, other benefits of using an agent aside, using an agent doesn't cost sellers more. 

The valuations were generated by Collateral Analytics’ software. To control for property attributes, such as home size and location, the 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. Sklarz noted that in the past studies have shown up with differing results because, "they mostly did aggregate comparisons while here we do a micro level individual property control study, the most detailed ever undertaking.”


The full study can be found here.


Agents Sell Homes for More Than FSBOS: Study [InMan]

Collateral Analytics [Collateral Analytics]

Saving Real Estate Commissions at Any Price [Collateral Analytics]

Photo [Catalyst Group]