3/7/2011 11:29 AM ET|
How the pros sell their own homes
Real estate agents get better deals for themselves than for their clients. To be a smarter seller, look at your home through an agent's eyes.
With house prices dropping and the real estate market in disarray, real estate agents are not the most popular professionals these days. As home prices continue to slump, many homeowners are loath to pay a real estate agent on a home sale that isn't likely to be profitable for them no matter what they do. And there's a lot of contention about how much value a real estate agent even brings.
Most people have heard of the well-publicized statistical evidence that that when real estate agents sell their own homes, they tend to keep them on the market longer (by about 10 days) and get a higher sale price (by about 3%) than when they sell homes for their clients. These figures come from the wildly popular 2005 book "Freakonomics" by Steven D. Levitt and Stephen J. Dubner. The authors assume that this is because getting a few extra dollars for a seller doesn't have a sizable impact on the agent's commission.
Actually, these well-promoted statistics offer no details about why real estate agents might have such success with their own property, and the authors appear to assume the worst. However, there are some not-so-nefarious reasons why a real estate agent might be able to get a higher price for his or her own home. Here we'll take a look at the other side of the coin and what you can learn from it, whether you decide to hire an agent or sell your home yourself.
Making an impression
If strangers were to walk into your home, what would their first impression be? This is one thing that many people get wrong -- even when they use a real estate agent.
For example, in the A&E television series "Sell This House," potential buyers are videotaped as they tour houses that the homeowners are desperate to sell. As a general rule, homeowners are shocked by strangers' first impressions of their homes. A home is largely a reflection of its owner, so it's hard for an owner to accept that other people find the décor, cleanliness or even the smell of the home distasteful.
A real estate agent is often the sounding board for buyers and their complaints about the homes they visit, and she is therefore more likely to address important deficiencies in her own home.
According to the National Association of Realtors, the second-biggest reason a home won't sell is because the homeowner hasn't taken care of details like ensuring the house is clean and uncluttered, the décor is neutral and the house has been "staged" to play up its best features. The biggest reason a home won't sell is, of course, the price. We'll get to that next.
Evaluating your property
So do real estate agents really command higher prices when they sell their own homes? In 2005, the National Association of Realtors responded to this question, but because there are very few data beyond what was collected for "Freakonomics," they weren't able to deny that the book's data may well be true.
However, one of the top reasons for this, according to real estate news provider Realty Times, is that real estate agents know how to evaluate a property in terms of what is likely to garner the highest resale price. Therefore, they are likely to analyze the resale values of the properties they buy for themselves in an attempt to ensure a higher resale value.
Setting a price
According to the National Association of Realtors, people selling their homes often choose a price based on one of three factors: need, ego or greed. Particularly in a tough real estate market like the one we're seeing in the United States now, sellers often want to price their homes according to how much they need to get out of the sale in order to purchase a new property.
Unfortunately, what a seller needs to make on a property has nothing to do with market conditions, which are generally governed by supply and demand, along with other economic factors. The same goes for sale prices that are dictated by ego or greed. Just because a neighbor's house sold for an attractive price doesn't mean yours should as well, unless your home truly is more valuable or market conditions have changed.
Accepting an offer
The final piece of the puzzle in selling a house is deciding which offer to take. Levitt and Dubner say their data suggest that a real estate agent "holds out" for a higher price on his own home. Assuming this is true, it is important to remember that when it comes to selling his own home, the real estate agent is the decision-maker. When an agent is selling a client's home, that seller is in the driver's seat. The agent must balance his desire to get a price that will please the seller with the need to ensure that the home actually sells in a timely manner -- or at all.
When selling his own house, an agent can afford to gamble on the fact that a better offer might come along -- even though this plan will often fall through, particularly if the house stays on the market too long. This is much the same as when your stockbroker makes more money trading for herself than for you: She's willing to take more risks in her own account than she feels are appropriate in a client's account.
In addition, a common practice for real estate agents is to relist a home that isn't selling. This is because a listing's "days on market" can affect the price the seller can obtain for the property. When a home sits for too long, buyers assume the price is too high, the sellers must be desperate or there is something wrong with the property. This can kill a seller's chance of getting a fair price, and real estate agents must balance this risk with the seller's desire to hold out for a higher price.
The bottom line
Type "real estate agents are" into a Google search bar and among the first options to appear are "scum," "crooks" and "liars." This may be why this little fact from "Freakonomics" has had so much staying power -- even though it was published more than five years ago. Perhaps real estate agents really do sell their own homes for more. But just as with many simple statistics, the data can tell us only that a correlation exists. The reasons why are left to speculation.
This article was reported by Tara Struyk for Investopedia.
VIDEO ON MSN MONEY
For Sale By Owner gets a bad rep but, depending on the sellers situation, FSBO can be the absolute best way to go.
Next is to get into business, evaluate your property with the current market value and well highlight the pros on your property, make your quote and stand on it, if interested let them come back coz you have got plenty of others looking for an opportunity that can get you a fair deal. Additionally make some minor tweaks to your property that should look nice and attractive to the buyers eyes.
Instant Property Cash Buyers:
I have written an article on this topic.You can go to sellitonyourown.blogspot.com and check it out.
I have given an info there that people can sell their homes without paying any kind of commission through different fsbo websites.I found it quite interesting throughout the internet.And the reviews I have seen from people have finally convinced me that this INTERNET thingy has gone way farther into the skies.Now,we can sell our homes through internet with the help of these websites.We just have to pay flat rate fee,rather than the 1-2% commission demanded by the broker.
I don’t mean any offense to broker community.Its just that we are helping people out there who want to sell their homes on their own.
I can list a few websites that will do the job for you:
Hope this info helps you.
Another option would be to try a service like iBuyHouses.com which matches you up with real estates investors in your area that are willing to buy your home directly from you so you don't have to deal with a real estates agent which can save you thousands all by itself.
If you're able to do that it will go a long way in selling your home. Also another option is go through a company that specifically buys houses like ibuyhouses.com. That can be a very simply way for you to sell your home.
I’m appalled by how the public sees REALTORS. I think to clarify the issues on the article, first and foremost, as per article, there is no correlation nor a fact-finding truth that REALTORS sell their property for more. Hence, it is all an assumption. I believe a writer is supposed to write facts, not assumption.
Secondly, when a listing agent does due diligence, it is always about price, condition, location, et al. REALTORS are motivated to do their job and that is: sell the house. Many REALTORS will educate the sellers on what needs to be done in order to sell the home. Fact of the matter, the sellers that do not listen to their agents, their homes will not sell. In essence, REALTORS are to blame for the “lack” of work. In reality, REALTORS will do their homework, but as with the saying, “you can lead them in the water, but you can’t make them drink.”
Last, INVESTORS, not REALTORS will buy properties 30% under value unless REALTOR is also an investor. There is no favoritism for agents nor are there “for agents price only.” In fact, it’s quite the opposite. REALTORS are held to a higher standard.
I am distraught about this article as I’m disturbed about how the public views REALTORS. I work hard for my money, strive for perfection, goes beyond what is expected of me. In fact, my business is 90-95% referrals. If I’m corrupt, why would the public continue to recommend me?
A good Realtor will prepare their property to appeal to the most likely buyer. Most sellers won't make adjustment to the house that will bring a higher price. I don't know why that is, it just is.
A good Realtor will also give him/her self ample time to market the unit, so they will have a little more time with the sale.
A smart Realtor will believe the stats on value and market closer to the sale price. Most sellers want to believe their home is worth more then it is, no matter what you show them.
And any real estate agent who markets the unit him/her self is a FSBO, and becomes the worst seller, just like any other seller. Why? Because they are not objective, but subjective and can't negotiate properly.
Bottom line is a good Realtor should know what their property is worth, and how to market it.
Exposure is the key. Hire someone who has the tools and uses them.
I'm out to change the way folks think about Real Estate Agents, one seller at a time.
I filled out the form provided and my Local Network Member contacted me that day.. It was easy and free and required little to not effort on my part..
Copyright © 2013 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
MSN REAL ESTATE
Preteens, rejoice. The grown-ups have a compelling reason to consider getting you a tablet this year. Adults, listen up.