What Real Estate Agents Don’t Want You to Know

People use real estate agents because they can get you more money for your home right? Wrong.  A recent study done in the US at Northwestern University shows that real estate agents do not get you more money in real estate transactions. Agents traditionally take three to six percent of the selling price of the home as a commission. Property owners who chose to sell their real estate with out the advice of a real estate agent are traditionally called For Sale By Owner(s) or FSBO. Many real estate industry professionals and pundits believed that using a real estate agent will get you a higher selling price on your home, but is the price six percent higher? The Northwestern University study suggests FSBO’s actually keep more money in their pockets at the end of the real estate transaction.

Here is an excerpt from TheChronicleHerald.ca of Halifax Nova Scotia, which ran the article from the New York Times on the FSBO study.

…the question — debated by two Northwestern University economists who chose different methods to sell their homes — and the research it helped prompt are serious. And the answer will be of interest to anyone who has paused to consider whether paying a real estate agent’s commission, typically five per cent to six per cent of the sale price, is worth it.

The conclusion, in a study based on home-sales data from 1998 to 2004 in Madison, Wis., is that people in that city who sold their homes through real estate agents typically did not get a higher sale price than people who sold their homes themselves. When the agent’s commission is factored in, the for-sale-by-owner people came out ahead financially.

You can read the full article in our Real Estate News Section.

Real Estate in Canada is not exactly the same as in the United States, but we do run a fairly close parallel. If people can get more money selling their home with out the high commissions of real estate agents then what do we need agents for? Canadian real estate does have different rules and regulations than the US, but we already have a huge FSBO selling community in Canada, and the news of this study is only going to expand FSBO sales. If you are the kind of person who enjoys working a little harder for the extra dollar, then selling your home as FSBO should be a breeze. However, if you think $10,000 is a fair price to sell you home then perhaps a real estate agent is the way to go.