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There are more than a couple things in how this real estate industry operates that are ready for a change. One of these is how the sale price of a home is reported. The Sales price is the piece of information that others use as a comparable to determine market value of a home. The problem is that the Sales price as reported today isn’t an apples-to-apples comparison as the Realtor’s commission is part of this price. In addition, you don’t know if the Seller gave the Buyer a credit at close of escrow. What we really need is the Sellers NET, or how much they actually received (minus commissions and any credits to Buyer).

Some scenarios. Let’s look at a home that sold for $600,000.

Scenario #1 (6% commission, 15K in credit) = $549,000 to Seller
Scenario #2 (4% commission, 15K in credit) = $561,000 to Seller
Scenario #3 (4% commission) = $576,000 to Seller
Scenario #4 (For Sale By Owner) = $600,000 to Seller

Also, if the current MLS co-op method of the Seller paying the commission for both the Listing Agent and Buyers Agent changes and the Buyer pays their agent themselves, it will further muddy the comparable prices.

What homeowners do when they try to do a For Sale By Owner (FSBO) is price their home using comparables. Today, if they used the above comparable they’d think their home was worth $600,000 and think that a Buyer should pay this. If a Buyer did pay this amount, they’d actually be paying over market value, IMO, unless the home they were using as a comparble to establish a price also was a FSBO. As more and more online home valuators are available, you’ll see properties recorded at the County offices that were FSBO, probate sales, private sales, etc. The comparable prices may not be an apples-to-apples comparison. Unfortunately, you don’t know how these properities were sold which makes it even tougher to know what to use as a true comparable price.

Realtors and the MLS Associations can add a field to the MLS listing to report a Sellers Net so when they change the listing to Sold, the info is there. But…don’t hold your breath as something that seems so easy to change won’t be because everyone is set in the way things have always been done.

Written by Keith Byrd - Go to Keith's Website/Profile