Real estate agents list their own homes in pursuit of a higher price
GalleriesTop Long Island real estate brokers of 2012 If you want a short sale Most expensive homes for sale on Long Island
Doctors shouldn't treat themselves, and there's that old adage that any lawyer who represents himself has a fool for a client. But when it comes to selling their own homes, real estate agents hold differing opinions on the best course of action.
Unlike doctors or lawyers, there aren't many restrictions on real estate agents who choose to handle the listings to sell their own homes. Under the code of ethics of the National Association of Realtors, agents who self-list have a duty to disclose their ownership in the properties. In some cases, it's possible that an agent's company or insurance policy may prohibit the agent from handling the listing.
But for the most part, agents are free to list their own homes, and most do, says Anton Stetner, founder of the Real Estate Solutions Group at Keller Williams Realty in Marysville, Wash.
"Aside from saving on the commission, I think it makes sense for an agent to handle it on their own because they're the expert," Stetner says. "For me, the main reasons why an agent wouldn't handle their own listing is [that] they just don't have the time, or it's a short sale."
In the short-sale scenario, a common feature of the current housing market, agents hire colleagues to help insure that the purchase is an arm's length transaction -- something banks insist on when the price won't cover the mortgage.
Even under normal conditions, it may be the case that agents who list their own homes reap a greater reward. Authors Steven D. Levitt and Stephen J. Dubner wrote in their book "Freakonomics" that real estate agents who list their own homes earn about 3 percent more on the sale prices.
Levitt and Dubner found that, on average, self-listed homes stay on the market an extra 10 days. That prompted the authors to hypothesize that agents might be a little more aggressive about their own homes because a 3 percent fluctuation makes a fair difference on the total sale price, but not that much of a difference when it comes to the commission. But not all agents see the same upside.
From the buyer's perspective, a seller who happens to be an agent can be a red flag.
"You can't say all the time, but 99 percent of the time, when you look at the [Multiple Listing Service] and see an agent as the owner, you know the property is going to be overpriced," says Burt Bakman, a real estate agent in Studio City, Calif.
Setting a good list price is one of the most important things a real estate agent can do, but to do it well, the agent needs to be objective, says Janice Leis, associate broker with Prudential Florida WCI Realty in Boca Raton, Fla.
"If it's your home, it's almost impossible to be objective," Leis says. "Even if you say you're going to list at just below what the last comparable home sold for, you're going to be fighting against all of the emotional memories -- good and bad -- that are a part of having owned that home."
The listing price is just part of the equation. Leis, like many other agents, prefers her sellers to be scarce when she shows the home to a potential buyer.
"People tend to get chatty when they're showing their own home, even if they are an experienced agent who knows better," she says. "They volunteer things they shouldn't, like the fact that they need to sell fast, and that will cost them money."
While price may be the key thing on a seller's mind when listing a home, Leis says the experience of working with a colleague to list her property taught her a valuable lesson about some of the other services agents provide.
"It's more than just the listing and negotiating the price," Leis says. "A seller has to manage a lot of documents, figure out their disclosures, and figure out moving -- it's stressful.
"Having someone else to keep you on track and help you maintain perspective is really important," she says, "because there are a million little details that can overwhelm anyone."
Leis says that when she sold her home, she got multiple offers from buyers who wanted her out sooner than she had planned.
"I got very panicky because I thought, 'If I don't find a new place. I'll be homeless,'" she says. "Of course, I wasn't going to be homeless but accelerating the timetable really put the pressure on. Having an agent kept the transaction on track while I adjusted my plans."
LISTINGS: LI homes for sale and open houses