Example of a 15% (cost/commission) in Shelburne

Stanford economists had found that the real cost of a real estate commission is between 12-13% because agent-listed properties sell for significantly less than owner-sold properties.

Recently, we had a real-life example show up in our mailbox involving one of our neighbors. We received a postcard touting the sale by the agent. Interestingly, this homeowner did try to sell with us for 6 weeks last year. The property was priced with Picket Fence at $459,900 (which was in-line with appraised value according to the owner).

Doing the arithmetic:
$460,000 - $415,000 = $45,000 (the price drop negotiated by the agent)...this is what the Stanford economists found. Now add a 6% commission on the $415,000 sales price, that's another $24,900. The real cost of using an agent for this seller was $45,000 + $24,900 = $69,800. That amounts to a 15.2% cost (price drop + commission) to this seller.

Wow! There really isn't much to say other than shake your head in disbelief.

The next time you get one of these postcards maybe you will see it differently: an announcement that a neighbor just got taken to the financial woodshed and that the only one smiling is the agent (all the way to the bank as they say).

NOTE: One potential issue with the Stanford study was the applicability (external validity for you statistical types) of the population studied to the market as a whole. This one example detailed above, where the initial asking prices, time on the market and other facts are known, suggest that not only is the sudy valid but that it happens right here in our backyard and may be even more costly than estimated by the Stanford economists!

Do you think this may have happened to you? Did an agent pressure you to drop your price below what your best judgement told you was too low? Please send along your story in confidence. We have heard some shocking stories so far...
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