Wed 23 Aug 2017 View all news articles

Why estate agents are still needed in an online age

As the digital age enables people to sell their own propertly directly to buyers, it can be easy for property owners to move away from the traditional service provided by estate agents. New research, though, reveals that estate agents are as important as ever.

A study by Collateral Analytics found that FSBO sellers routinely sell their properties for a lower price than professional agents. The research, which uses data across all of 2016 and the first half of 2017, is based on a normal housing market, not one in rapid rise or decline, comparing the sales price achieved for homes sold by private vendors and homes sold by Realtors via the MLS.

Commissions would be the biggest deterrent for sellers considering whether to use an agent or broker and some homeowners try to avoid those costs by going it on their. That, however, may not be entirely successful: while previous research has suggested the only difference between FSBO and agent sales is the speed of the transaction, Collateral Analytics’ analysis found that FSBO sales tend to fetch lower prices, in many cases even below the average differential represented by the prevailing commission rate.

Indeed, the average difference between FSBO and agent sales prices was 5.5 per cent.

“Assuming that both buyers and sellers pay the commission, one might have expected something less than this average -5.5 per cent result. It appears that many sellers are avoiding commissions while netting home prices less than they would with an agent-represented MLS sale. They are avoiding commissions at any price, even one that exceeds the commission rate.”

The research arrives as one notable online sales platform makes a move to include estate agents within its service. OfferPad, which launched two years ago, revolutionised home selling by providing ease, convenience and control to homeowners, but has now announced the introduction of a solution to bring the same benefits to home buyers: as well as browsing and enquiring about properties, they can also request agents on-demand, in a manner not unlike Uber.

The decision highlights the importance of both seller and buyer agents on both sides of a transaction.

Co-founder Brian Bair, who has just been crowned Most Innovative Real Estate Agent of The Year by Inman, comments: “This is all about the customer. When the customer wins, we win.”

“Some 15.5 per cent of the sales transactions in this study are from successful FSBO sales,” adds Collateral Analytics. “It is not known what percentage of all sales are initially FSBO attempts, but it is certainly higher than the 15.6 per cent. This percentage of successful FSBOs seems not unlike those from a few decades ago, despite the proliferation of public internet listing sites, but further study is needed to identify if FSBO success is increasing or decreasing.”

Source: opp.TODAY

READ: What do you know about online estate agents? by our Data Analyst, Andrew Spink

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