Commissions paid to real estate agents and brokers totaled $46.6 billion in 2008 – a $12 billion decrease from 2007 levels -- according to an analysis performed by ForSaleByOwner.com. The nationwide average commission paid on a home sold through a residential brokerage during 2008 was $12,600. Sellers in the West paid the most to get their homes sold ($16,230), followed by home sellers in the Northeast ($15,500), South ($11,050) and Midwest ($9,540).
The cost of paying real estate commissions has clearly been magnified by declining home values. With home prices falling across the country, losing another five-plus percent in the form of a real estate commission is simply a luxury that today’s sellers cannot afford.
The National Association of Realtors recently found that people who sell their home themselves sell quicker and for closer to asking price than agent-assisted sellers. Agents do provide some convenience but, with commissions averaging $12,600, selling ‘by owner’ is a much more cost effective approach to getting a home sold.
A recent survey from the National Association of Realtors found that people who sell “by owner” get closer to their asking price and sell quicker compared to those who sell through an agent. The trade association found that those who sell without an agent receive 97 price of their asking price, while those who sell with an agent receive 96 percent of their asking price. The trade association also found that a home sold through an agent takes 10 weeks, while it takes just six weeks to sell a home “by owner.”
In addition, separate studies from Northwestern University and Stanford University found that FSBO sellers are as effective as agents in maximizing the sales price of their homes. After commissions are factored into equation, the studies reported, sellers who sell “by owner” actually save more money, and retain more equity, than sellers who sell through agents. The September 2008 issue of Consumer Reports magazine also reported that FSBO sellers are more likely to get their asking price while agents deliver, on average, a sales price that is $5,000 less than the original asking price.
http://www.forsalebyowner.com
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3 comments:
It seems to me that ForSaleByOwner is a real estate licensed company, and since it promotes listing homes on the Realtor.com website, it seems ForSaleByOwner is a member of the National Association of Realtors, with that in mind it also seems that the articles written by ForSaleByOwner come very close to, if not cross the line regarding the Code Of Ethics for Realtors.
As an aside, I'm not sure how you can advertise commission savings on your website without presuming there is a standard commission fee in this industry which all Realtors know there isn't and also know that to infer a standard commission rate is a violation of License Law and the FTC.
You do what you do and that is OK, why not just tell the consumer what you do for them rather than imply you are somehow better for them than anyone else simply because of "implied commission savings?"
There's nothing wrong with this post. The goal of high commissions certainly helped contribute to the real estate problems we're facing today. Pointing out the drop in overall commissions in 2008 compared to 2007, helps bring some security to the minds of consumers. Never fear the truth.
Joe
California Home Loans
What your "studies" fail to anaylze is what was the ratio of the sale price of the homes sold versus the market value of the home. Maybe the FSBO's sold at a good ratio to asking and so fast because they underpriced the home and didn't get what is was worth. How about the number of FSBO buyers & seller's that had property or contract issues that caused headaches or the contract to not close? Paying a commission can be cheap compared to the mistake or incorrect pricing or the problems that can occur that a licensed professional is trained to look out for.
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