In the wake of the Competition Bureau’s move to open up the MLS system to everyone, realtors and real estate boards have been talking up the risks of selling your own home. One of their arguments is quite persuasive: you’ll get a lower price if you sell on your own. But is it really true?
A 2007 study by Northwestern University’s Igal Hendel, Aviv Nevo and François Ortalo-Magne found that there was no difference in sale price between houses sold without an agent and agent-sold homes, though sellers did save between 3% and 6% on commission. Another paper, published in 2008 by Stanford University’s Douglas Bernheim and Texas A&M University’s Jonathan Meer, says that houses at Stanford University actually sold for 7% more when no agent was involved.
Meer says that could be because houses sold by realtors sell faster. “Agents are acting in regard to their own interest—to sell the house quickly—even at a lower price,” he says, adding that waiting another month to sell a house for an extra $10,000 will only net the agent about $150 after expenses.
There are some drawbacks to selling on your own. Having your house on the market longer can mean more mortgage payments. People selling on their own also have to factor in advertising and legal costs, and “inconvenience costs,” like having to show the house yourself. Plus one-third eventually give up and switch to a realtor anyway.
But despite the downside, Hendel says selling without a realtor is an attractive option that could put pressure on realtor fees. “There’s such an easy alterative platform,” he says. “It’s surprising that agents keep charging their 5%.”