Are Realtors Worth the Price?

NEW YORK (MainStreet) — In the 16 years that she's been a real estate broker, Roxanne Durham has come across plenty of homeowners who think they can sell their homes without help.

"They overprice their property, sell their house for less than what it's worth because they don't know the market or their house is on the market longer than it has to be," Durham told MainStreet.

In fact, a Stanford University study found no evidence indicating that the use of a broker significantly affects either the selling price or the initial asking price, though it does lead to a more rapid sale.

"Realtors may be doing their job but charging more than they need to," said Donald Van Dyne, developer of the iGOfsbo.com system and MyOpenHouseAnytime.com "The commission should be negotiable like an open, free market."

Durham begs to differ. She works hard to earn the 6% commission she's paid to sell a home by first studying the real estate market.

"Brokers devote the time to selling the house that the owner may not have," Durham said. "Being a real estate agent or broker is a profession. It's a job."

Yet one-third of Americans who sold a home did not feel the service they received from a realtor was worth the commission, according to a Toluna study commissioned by iGOfsbo.com.

Durham's duties include preparing a home for viewing, marketing, showing the house in rain or snow and fielding offers.

"Negotiating a price is not an easy job," Durham said. "It's a special skill to negotiate a price and harder for the home owner to do because they get emotional and often sell their home for less than what it's worth. When you have the realtor as middle man, negotiating is easier."

And quite possibly more profitable.

Homes owned by real estate agents sell for about 3.7% more than other houses, according to a study called Market Distortions When Agents are Better Informed by Steven D. Levitt and Chad Syverson, and the real estate agent is likely better informed about the value of the house and the state of the local housing market than the seller.

Sellers who are able to sell their own homes alone efficiently, can save considerably. For example, 5% on a $500,000 home is $25,000.

"There are software programs out there that allow people to transact real estate online," said Van Dyne who recently launched iGOfsbo.com software.

About 54% of respondents to the Toluna study would consider a For Sale By Owner (FSBO) home sale if there were more information and better resources available.

IGOfsbo.com software offers tools that walk homeowners through the entire sale from listing to pricing and closing without hiring a realtor.

"For a one-time fee of $2,000, it allows sellers to create a listing and make an offer all online," Van Dyne told MainStreet. "The fee is paid at the end of the transaction with no money out of the sellers pocket until there's an offer and the buyer pays nothing."

For those who fail, there's always the steady neighborhood real estate agent to turn to.

About 80% of the home owners intent on selling their own home alone eventually return to Durham.

"A good amount of people come to their senses and call me for help but usually it's after they've had a negative experience with a buyer," Durham said. "I've seen home owners get themselves into a bad contract that they can't get out of. Selling your own home is a losing proposition."

--Written by Juliette Fairley for MainStreet

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