Some economists, including ones cited in a recent story by the New York Times and the authors of "Freakonomics," don't have much use for realtors.
Research cited by the Times showed that people who sold their homes through realtors didn't get a higher price than those who sold it themselves, although agents sold homes faster. Though the researchers caution against extrapolating their data to a nationwide trend, it's likely going to happen. Of course, the National Association of Realtors has its own studies showing the exact opposite conclusion.
The growth of sale-by-owner homes would seem to be an inevitable consequence of the housing slump since people are going to try and squeeze every last dollar of profit from the sale of what is likely their most valuable asset. But realtors don't seem to be suffering.
In fact, they are making higher commissions, according to writer Kenneth Hamey of the Washington Post Writers Group, writing for Realtors Magazine Online.
Properties simply need more marketing muscle to sell, which means that real estate practitioners must work harder and spend more money in order to help the sellers get top dollar," he writes. "Some agents also are adding services, such as staging or professional photography, to get the listings noticed in markets where inventory is supple."
Maybe there are different methodologies in the studies done by economists and the industry. Regardless, I don't think the job of the realtor will ever go away completely. Buying a home is pretty scary, particularly if it's your first time, and it can be comforting to have someone guide you through the process. Plus, there are thousands of details that are too much bother for many people.
Even so, I'll sell my home myself if my wife and I ever decide to move. The economics are just too compelling to ignore.
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Reader Comments (Page 1 of 1)
6-11-2007 @ 7:03PM
Zac Bissonnette said...
Great post Jon!
It reminds a little bit of hiring a financial planner/advisor...not only do they have to do better than you'd do on your own but they have to do better by a lot -- enough to justify the huge fees.
In most cases -- Realtors and financial advisers -- they really don't create enough value.
Zac
6-12-2007 @ 1:58PM
jo said...
Beleive it or not there is still value in having a professional handle a transaction of great complexity and leagal liability.
Unlike financial advisors you investment in real property is not one click and ninetynine cents away. Unlike stock and equity investments these are tangables we are talking about, peoples homes for life in some cases.
You and your wife might want to protect all of your other holdings in a corporation before you sell your own house and expose your nest egg to the liability of a real property transaction.
Maybe in your spare time you can take up home denistry. I hear dentist are over rated and I know personally that they get paid too much.
8-05-2007 @ 10:13PM
Roman said...
Zac is right, most realtors are not worth what they charge. They want to list the house, spend virtually nothing on marketing, hoping that the percentages will work in their favor, with a lot of listings they're thnking is "something should sell sooner or later."
Go for it Zac; it is easy to sell your house, just price it right for the market after reviewing the local competition, and then pay a few bucks for a lawyer to do the paper work. The other alternative is to hold a realtor to his specific written marketing
plans, with deadlines, reviews, and sanctions, after all you are employing him, and one vital question top ask him or her--how many other homes do you currently have listed, where are they, what are they selling for? And then you will have a good ideal how much time he will devote to your home. Good luck, one way or the other.