List Price & Sales Price - Issues the Realtor Needs to Address to Remain Relevant
... Professor of real estate at the University of Georgia talks about his provocative study that shows it is better to wait for a higher price because you will likely get it - if only your agent weren't in such a hurry. The implications of Hayunga's study and those he refers to have profound implications for the industry as it begins to grapple with the intrusion by home data websites, such as Zillow, into the agent's hitherto exclusive domain of home sales.
When selling a home, the ideal list price should be 3-4% above market to allow for some negotiation flexibility. If the seller is not in a hurry to sell, setting the price higher than this and waiting for the right buyer to come to the market will likely yield a higher price, even if it takes longer to get there. However, if the price is set too high, a seller may have to reduce the asking price and provided this does not happen more than once, a decent sales price should be attainable. On the flip side, if a seller does want to sell quickly, and you don’t set enough extra price in to allow for some negotiation, not only might it take you just as long to sell anyway, but you may end up selling for less than you need to.
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Agents Motivated to Sell Quickly for Less
With the advent of Zillow instant offer and other online platforms beginning to encroach on the real estate agent's traditional territory, failing to address serious flaws in the agent system presents impediments to tackling the digital competitive onslaught. The current agent system is structured to disincentivize agents from prolonging a marketing effort to maximize price. It is better to sell quickly for less, than to allow a listing to sit longer and hold out for the higher price. Hayunga and his co-authors show that agents do not contribute meaningfully to the list price decision when comparing homeowners who use agents against those who do not. Indeed, he talks of studies where agents are found to sell their own homes for more, and to buy for less than when they represent clients. Other studies show that using an agent can actually result in a lower sales price – by 6-7% less!! These results may not be palatable to the agent, but they echo sentiments that the public are expressing through their own actions online, and diminishing regard for the agent relationship.
Is Access to MLS Data the Only Competitive Edge?
Hayunga concludes that the only advantage that an agent has is access to proprietary data through the MLS. His findings imply that the agent function is becoming obsolete and that studies indicate an industry that is facing the disruptive influences of technology. Why shouldn’t we sell our homes online without an agent - Wouldn't you, if you could? What value do agents bring and is that value enough to compensate for lower prices and steep commissions? Did you know that in London, agents typically charge 1% of sales price to sell your home, not 5 or 6% as is the norm here? Please comment here or on social media about these provocative findings. The National Real Estate Forum does not take a political position for or against the agent function. The challenging questions that studies such as those of Professor Hayunga and others bring up present opportunities for forward thinking agents to capitalize on as technology finally disrupts the status quo.