Friday, June 08, 2007

Bucky Country, A Great Place to Sell Your Own Home

by Ken Houghton

On a more positive Madison note than my last post, the NYT reports that the entrepreneurial spirit is alive and well there in at least one area—selling your own home.
The conclusion, in a study to be released today 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.
The full study is here (PDF). More later.

Tom adds: The temptation was to post about Big Media Us first thing, but I figured I should look at the paper first.

I am not surprised by the headline result. How it might generalize is an interesting and technically open question.

Some of the factors that facilitate the study arguably explain its results. In addition to cooperation from and the South Central Wisconsin MLS, the study authors credit the information available from the City of Madison assessor. The availability of on-line access to city assessment data was roughly contemporary with the ascent of the FSBOMadison website. As a result, technologically sophisticated buyers and sellers of city properties have had good information on comparable sales — arguably, the key pricing information — for some time.

We've been in on a pure-FSBO transaction (purchase of the "old" house), a semi-FSBO (purchase of the "new" house, where we employed an agent), and a pure agent-assisted sale (sale of the "old" house). My overall impression is that real estate agents should be paid on a fee-for-service or maybe cost-plus-incentive-fee basis. This is not even factoring in the experience with the agent who rear-ended my beloved '98 M3 — whose ability to complete the core paperwork, moreover, did not exceed my own.

In short, the basis for our selection into a conventional listing had a lot to do with the factoid that I was very busy, we had one toddler in the house, and Julia was along the way. Our sample experience was that we sold for exactly the price we'd have sought via FSBO.

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