Realtors Get More for Their Homes
Apr. 29, 1999
STATE COLLEGE, Pa. (AP) _ A new study showing that real-estate brokers sell their own houses for 3.1 percent more on average than their clients' homes isn't getting much credence from area brokers.
``I think that's baloney, I really do,'' said Janet Stahlman, co-owner of Linn Realty Group in Bellefonte. ``We don't determine the prices. Something is only worth what someone is willing to pay for it.''
Added another Linn co-owner, JoAnn Knupp: ``The business is too competitive to have anyone pulling strings. We make money no matter which property we sell. If they don't want mine, they're going to want someone else's.''
The new study of more than 21,000 home sales in Texas also indicates that brokers' homes do not languish on the market any longer to get those higher prices, either.
``Commissions fail to give agents an incentive to work hard to get a better price for you,'' explained Abdullah Yavas, a professor of business administration at Penn State, one of three universities that conducted the study. ``They would rather get the deal done.''
While brokers work to secure the best possible price for their clients, they are also motivated by a need to work quickly. At the same time they are selling homes, they are also competing for new clients _ and vying with other brokers to find buyers for listed houses.
Commissions from a sale range from 2 to 10 percent, although sometimes they must split that with their brokerage house.
If the average commission amounts to 6 percent, that means for an extra $1,000 in the sales price, they get a grand total of $60.
``But if it's their own property, that's $1,000 more for them,'' Yavas said.
The study _ which also involved researchers from the University of Texas at San Antonio and the Florida Atlantic University _ examined the sale of 21,235 houses in Fort Worth between 1993 and 1995. Nearly 400 houses were owned by brokers themselves.
The data included age, square footage and location of the houses. The listings also detailed the number of bathrooms, when a house was sold and whether someone lived there at the time of the sale. That information allowed the researchers to control for variables, Yavas said.
On average, brokers' houses were listed at prices 3 percent higher than the rest of the group. Yet they sold just as quickly, leading researchers to assume the brokers must have worked harder to sell their own.
If homeowners believe Yavas' research, why not simply force their broker to boost listing prices by 3 percent? Yavas said it's not that simple.
``There is a trade-off between getting a high price and selling it quickly,'' he said.
As for Yavas, he hasn't had a chance to test his theory personally _ despite moving from Iowa to Illinois to Michigan to State College, Pa., in recent years.
``I still haven't bought a house yet,'' he said with a shrug.