How real-estate agents sell their homes for more
When agents sell their own homes, they tend to get a higher price, according to a well-publicized statistic. But why?
With home prices dropping and the real-estate market in disarray, real-estate agents are not the most popular professionals these days. As prices continue to slump, many homeowners are loath to pay an agent on a home sale that isn't likely to be profitable for them, no matter what the agent does. There's also a lot of contention about how much value a real-estate agent brings.
Well-publicized statistical evidence says 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 write that this likely is because getting a few extra dollars for a seller doesn't have a sizable impact on the agent's commission. (Bing: What's a typical real-estate agent commission?)
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 less nefarious reasons why real-estate agents could get a higher price for their own homes. Here is 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 walked 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.
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Real-estate agents often are the sounding board for buyers and their complaints about the homes they visit. Therefore, agents are more likely to address important deficiencies in their own homes.
The National Association of Realtors reports that the second-biggest reason a home won't sell is because the homeowner hasn't taken care of details such as 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.
- On our blog, 'Listed': 89% of homeowners would buy again
Evaluating your property
Do real-estate agents really command higher prices when they sell their own homes? In 2005, the NAR responded to this question, but few data are available beyond what was collected for "Freakonomics," it could not deny that the book's data may be true.
- MSN Money: Rent-or-buy calculator
One of the top reasons for this, according to real-estate news provider Realty Times, is that 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.
Okay; so we are refering to a book published in 2005, six (6); yes, six years old ! The information was gathered, compiled and edited long before 2005and an entirely different market and economy! What is the accuracy level and reletivity to todays' REAL ESTATE market?
I may be wrong, but back in '04 realtors could submit "Comps" to the appraiser when they met at the home under-contract, during the inspection by the appraiser for establishing value. Just try to do that today in 2011 !
A real estate agent will hold out for themselves but when they are doing for others it is better to work more homes quicker than sell one for more over a longer time.