When it comes time to sell your home, one of the biggest decisions you’ll face is whether to hire a realtor or go the For Sale By Owner (FSBO) route. Many homeowners wonder if the potential benefits of using a realtor outweigh the commission costs. A key question in this debate is whether realtors actually help sellers achieve higher sale prices for their homes.

To shed light on this important topic, we’ve delved into several research studies that examine the impact of realtors on home sale prices. In this post, we’ll break down the findings and help you understand what the data really says about the value realtors bring to the table.

The information provided in this website was derived from sources deemed to be reliable to is not guaranteed or warranted.  All information, content, and materials available on this site are for general informational purposes only and are not intended to be legal, financial or tax advice. The information contained herein is not a substitute for professional legal, financial or tax consultation and should not be relied upon for any legal, financial, or tax matters. If you require legal, financial or tax assistance, please consult with a qualified attorney, financial or tax professional who can provide guidance tailored to your specific situation.

The National Association of Realtors’ Perspective

Let’s start with the most dramatic claim. According to the National Association of Realtors (NAR), homes sold with the assistance of an agent had a median selling price of $250,000, which is $60,000-90,000 more than typical home sales without an agent. This statistic certainly paints a compelling picture of realtor value.

However, it’s crucial to approach this information with a critical eye. The NAR, as a professional association for realtors, has a vested interest in promoting the value of its members’ services. While their data may be accurate, it’s important to consider potential biases and look at other sources of information.

The Agent Advantage: Insider Knowledge

A study published by the National Bureau of Economic Research offers an interesting perspective on the value of realtor expertise. The research found that agent-owned homes stay on the market longer and sell for more, suggesting that agents may use their specialized knowledge to maximize their own home sales.

This finding implies that realtors possess valuable insights and strategies that can lead to higher sale prices. When selling their own homes, agents appear to leverage this knowledge to their advantage. The question then becomes: do they apply these same strategies as effectively when selling clients’ homes?

The Northwestern University Study

Adding another layer to the discussion, a study from Northwestern University found that homes sold by realtors had an average premium of 11 percent, or $14,800, compared to similar homes sold without realtors. At first glance, this seems to support the idea that realtors do indeed help sellers achieve higher prices.

However, the study goes on to point out a critical factor: this premium was offset by the realtor’s commission. In other words, while the sale price was higher, the net proceeds to the seller may not have been significantly different from an FSBO sale.

This finding highlights the importance of considering not just the gross sale price, but the net proceeds after all costs, including realtor commissions, are factored in.

A Different Perspective on FSBO Sales

Some researchers argue that the apparent price difference between realtor-assisted and FSBO sales may be due to other factors. One analysis suggests that the price difference may be due to FSBOs being more popular with less expensive homes, rather than realtors actually selling homes for higher prices.

This perspective reminds us of the importance of comparing apples to apples when analyzing home sale data. If FSBO sales are more common in lower-priced housing markets or for less expensive properties, it could create the illusion that realtor-assisted sales always result in higher prices.

Interpreting the Data: What Does It All Mean?

After reviewing these studies, it’s clear that the relationship between realtor involvement and home sale prices is complex. While some research suggests that realtors can help achieve higher sale prices, other studies challenge this notion or suggest that the benefits may be offset by commission costs.

So, what should you take away from all this information? Here are a few key points to consider:

  1. Market Knowledge is Valuable: The study on agent-owned homes suggests that real estate professionals do possess valuable market knowledge. Whether you choose to work with a realtor or not, gaining a deep understanding of your local market is crucial for maximizing your sale price.
  2. Consider Net Proceeds, Not Just Sale Price: As the Northwestern University study showed, a higher sale price doesn’t always translate to more money in your pocket. Be sure to factor in all costs, including realtor commissions, when evaluating your options.
  3. Every Market is Different: The studies we’ve looked at provide general trends, but real estate is inherently local. What holds true in one market may not apply in another. Research conditions in your specific area when making decisions.
  4. Individual Performance Matters: Not all realtors are created equal. If you choose to work with an agent, their individual skills, experience, and effort will play a significant role in your outcome.
  5. FSBO Can Be Effective for Some: While realtors may provide valuable services, the research shows that FSBO sales can be successful. If you have the time, knowledge, and skills to manage the sale process, this could be a viable option.
  6. Consider Your Property Type: As suggested by some analysts, FSBO sales may be more common for certain types of properties. Consider whether your home fits the profile of a typical FSBO sale in your area.

Making the Right Choice for Your Home Sale

Ultimately, the decision to use a realtor or sell your home yourself depends on various factors, including your local market conditions, your personal skills and available time, and the characteristics of your specific property.

If you decide to work with a realtor, here are some tips to maximize the value they bring:

  1. Interview multiple agents: Look for someone with a strong track record in your local market and property type.
  2. Discuss marketing strategies: Ask potential agents how they plan to market your home to attract the right buyers.
  3. Understand the commission structure: Make sure you’re clear on how much you’ll be paying and what services are included.
  4. Be an active partner: While your agent brings expertise, you know your home best. Stay involved in the process and provide input as needed.

If you choose to go the FSBO route, consider these strategies:

  1. Educate yourself: Learn as much as you can about your local market, pricing strategies, and the legal requirements of home sales in your area.
  2. Invest in marketing: Create a strong online listing, use high-quality photos, and consider virtual tours to attract potential buyers.
  3. Be prepared to negotiate: Brush up on your negotiation skills, and be ready to handle potentially emotional discussions with buyers.
  4. Consider a flat-fee MLS listing: This can help you get your property in front of more potential buyers without the full cost of a traditional realtor.

Final Thoughts

The question of whether realtors help achieve higher sale prices doesn’t have a simple yes or no answer. While some studies suggest a positive impact, others challenge this notion or indicate that the benefits may be offset by costs.

What’s clear is that selling a home is a complex process, and success depends on a variety of factors. Whether you choose to work with a realtor or sell your home yourself, the key is to arm yourself with knowledge, understand your local market, and make informed decisions at every step of the process.

Remember, the goal isn’t just to achieve the highest sale price, but to maximize your net proceeds while minimizing stress and time investment. By carefully considering your options and leveraging the insights from these studies, you’ll be well-equipped to make the best choice for your unique situation.

Do you have a property to sell?

If you have a property that you need to sell, now is the time to call Quantum Realty Advisors, Inc. for a free, 30-minute consultation to discuss your immediate needs and how we can help to address them. 

On behalf of our clients and strategic partners, we have successfully sell over hundreds of residential and commercial properties in most major markets nationwide. 

Our team has an extensive network of highly experienced partner brokers who can assist with all the local requirements, and we will personally be there for you every step of the way. 

The information provided in this website was derived from sources deemed to be reliable to is not guaranteed or warranted.  All information, content, and materials available on this site are for general informational purposes only and are not intended to be legal, financial or tax advice. The information contained herein is not a substitute for professional legal, financial or tax consultation and should not be relied upon for any legal, financial, or tax matters. If you require legal, financial or tax assistance, please consult with a qualified attorney, financial or tax professional who can provide guidance tailored to your specific situation.

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