A common question that many home sellers want to know is “how do you compare Realtors”? Of course there are lots of ways to compare them including -
- Who does the best job communicating
- Who has the best marketing plan
- Which Realtor do you feel most comfortable with
While these are all valid reasons, selling your home, especially in the current economic climate, is a big decision and has large financial implications.
What Really Matters
Typically, what really matters most to home sellers are 2 questions -
- How fast can you sell it?
- How much money will the seller receive?
Fortunately, these are both questions that can be answered by measurement of a Realtors past transactions to show exactly how each compares to other real estate agents that a seller may be considering.
How Fast Will It Sell
When a homeowner makes the decision to sell their home they usually want to get the sales process over sooner than later. Having a home on the market is a stressful time as you need to keep the property in showing condition and be ready to have people interrupt your schedule on short notice. There is a level of uncertainty about when/if it will sell as well as uncertainty about your ability to move on to a new home that better fits your needs. Therefore, having a home sell faster is usually a good thing.
Fortunately, there’s a way to measure and compare Realtors as to how long it usually takes them to sell a home. That is a statistic measured by the Multiple Listing Service (MLS) known as Days On Market (DOM). This shows how long a listing was available for sale before it received an accepted offer. Two of the biggest ways for a Realtor to reduce DOM are to price the home correctly right from the start and to have a proven marketing plan.
To give an idea of an overall average, I looked at every single family home that has sold in Apple Valley, MN since January 1, 2010. There were 147 homes sold that weren’t bank owned or short sales. On average, the typical home sold in 64 days. Therefore, if you are concerned about getting your home sold quickly you might ask your Realtor to give you statistics showing their average Days On Market this year.
In 2010, my average Days On Market is 35 days which is 45% faster than the average.
How Much Will You Receive?
Probably more important to most home sellers is trying to make sure that they receive the maximum amount of money for their homes. A home is most people’s biggest asset and even a few thousand dollars can make a big difference to many people toward their financial health.
There are 2 ways you might use actual statistics out of the MLS to be able to compare Realtors.
Percentage of Original List Price Received
The Percent of Original List Price is a measure of how much a homeowner received at closing compared to the original price that the home was first listed for. To measure this I used the same 147 sales in Apple Valley (2010 sales that weren’t bank owned or short sales). I then compared the original list price to the net sales price. The net sales price is the price received by the seller less any seller concessions given to the buyer at the time of closing.
This number is important because it measures how well a Realtor is doing with setting expectations with their sellers. In other words, the Realtor started at the original list price which is the number they told their seller was close to the market value of the home. When the house sold, how close were they to actually getting that amount?
Of the 147 homes, the average Percentage of Original List Price Received was 92.9%. You get that by taking the average original list price was $290,135 in Apple Valley compared to the average Net Sales Price which was $269,606.
In 2010, my average Percentage of Original List Price Received is 95.6%.
Percentage of List Price Received
The Percentage of List Price is a measure of how much the homeowner received at closing compared to the list price at the time of the sale. This is different because homes may have had price reductions before they actually received an offer.
This number is important because it measures how well a Realtor is doing at negotiating once an offer is received. In other words, you got an offer and how big a discount was required to get to an acceptable price.
Using the same 147 homes in Apple Valley and comparing List Price to Net Price we can see that the average list price at the time of sale was $281,732 and the average Net Sales Price is still $269,606.
In 2010, my average Percentage of List Price Received is 97.2%. If you compare that to the average Realtor it would mean $4,237 more in the pocket of a home seller.
How Do You Get These Numbers
Trying to compare Realtors may be difficult because agents have a hard time producing these numbers for you for a number of reasons -
- They don’t know how to do the analysis
- They don’t have a meaningful number of transactions to compare
- They’d prefer not to give you their true numbers
Therefore, the best way to do it is to ask for details of each transaction they’ve done or to potentially ask more than 1 Realtor to look up the numbers of another agent to get their statistics. I know I’d be happy to have someone verify my numbers or give out the names of the clients involved who can verify them.
You can also get some Twin Cities averages from the Minneapolis Association of Realtors website and reports.
Conclusion
Choosing a Realtor is a difficult decision for many homeowners and making an informed choice is often made based on “gut feel”. Two very important measures are how long it takes to sell and how much money you should expect to receive. Using real statistical data allows home sellers to better compare Realtors by using their previous track record of sales as a barometer of what to expect. I’d encourage sellers to be asking these questions when comparing Realtors so you can best know who delivers the most money in the least amount of time.
