As the housing market recovers, a new report in CNN Money shows that more homeowners are choosing to sell their property without the aid of any real estate broker. In doing so, they can save thousands in commission.
Homeowners have worked out that even if they have to take a small cut in the asking price, they can still save a considerable amount in commission, even when commission to the buyer’s agent is taken into account. Real estate brokers typically take around 5% to 6% of the sale price. Approximately half of this amount goes directly to the listing agent and their brokerage. They are responsible for negotiating the sale, hosting any open houses and listing the property on the MLS. The remaining commission is paid to the buyer’s agent and their brokerage.
Not surprisingly, given the large commissions that can be earned, homeowners think the pay structure is out of kilter. An increasing number have turned to sites aimed at helping them sell the property themselves. These sites contain valuable information such as the comparable sales prices in the neighborhood, and sellers can list descriptions and photographs online.
Websites such as Zillow have made it much easier for sellers to do away with real estate brokers. These websites have seen a considerable increase in listings during the past year as the housing market recovers. This is hardly surprising as people tend to use these services when the housing market is relatively hot, and when it's much easier to sell a home without the help of an expert. Some sellers prefer to handle the sale themselves as it allows them a greater amount of control. This is especially true for sellers who aren't in any particular hurry to sell and who would rather hold out for a higher price. In comparison some real estate agents prefer to list the home at a lower price so they can get the sale more quickly.
This view seems to be upheld by a study carried out by Stanford University and which found that homes on campus sold using real estate brokers typically fetched between 5.9% and 7.7% less than the homes sold without the aid of real estate agents. This is something the National Association of Realtors disagrees with, as it holds the view that real estate agents can obtain much higher prices for properties.
Sellers who have been successful without using a real estate broker have pointed out that it might be necessary to pay more money up front in order to have the property listed on MLS, but even so the savings could be huge.