Don't Sell Your Home Too Quickly
By Ric Edelman
Your house is on the market. You get an offer. You take it. Congratulations -- you probably just cost yourself some money. According to Economists Steven Levitt and Chad Syverson of the University of Chicago, most homeowners accept offers too soon, and as a result, receive as much as four percent less than if they had waited a little longer.
How do they know? By studying sales of homes owned by real estate agents, and comparing them to sales of everyone else. In a back-handed slap at the real estate community, the researchers discovered that when real estate agents sold homes they owned, their houses, on average, were on the market ten days longer and sold for almost four percent more.
The economists say real estate agents take longer to sell their houses and get higher prices because, as the owner, it is in their best interest to do so. But when acting as an agent for someone else, they have little incentive to delay the transaction or deny a current offer -- even when doing so is likely to result in a higher price.
Consider this: Real estate agents make no money unless the house sells. Say you’re asking $300,000 and you are offered $280,000. If you accept the offer, the agent earns half of the 6% commission, or $8,400. But the researchers say that waiting could result in a sale of 4% more, or $291,200. Why don’t agents go for it? Because the higher price only increases their commission by $336. Would you risk $8,400 in the hope of getting an extra $336?
This is why agents often tell sellers to take the offers they get. But when it comes to selling their own houses, the entire sales price is at stake, not merely a commission. That’s why, apparently, agents hold out a little while longer. Result: Their homes sell for many thousands of dollars more than the homes of their clients.