An investigation has been carried out by a group of three economists in order to establish whether using a for sale by owner (FSBO) web site could really make homeowners more money in comparison to selling a house with a traditional real estate agent. The answer, at least in Madison, Wisconsin, is yes.
Long before the light of the Internet shone across the land, Realtors were the ones who had access to the lists of properties for sale in a given location. This information could be extremely difficult to gather on one’s own without flying to the desired city and driving the side streets, jotting down addresses. But along with the development of the Internet, it’s easy to list and share information, and even Realtors are opening up their listings to public access. In such a situation, does it still make sense to pay a 6% commission?
If you expect a low-stress selling experience, a Realtor is probably your choice. But if it’s all about the bottom line, it is being argued that selling a place yourself can be more profitable in a city with a well-used FSBO web site. Madison, WI has such a site (FSBOMadison.com) and provided to be an excellent test case for the already mentioned economist to compare FSBO results to Realtor results between 1998 and 2004.
To put it simply, their research indicates that the FSBO homes sold for an average price of $175,068 in Madison, while Realtor homes sold for $173,205 in the same period. When we remove commissions from that figure, the FSBO sellers came out a good deal ahead. However, using a Realtor’s multiple listing service (MLS) makes the time a house is on the market shorter and prevents you from having to witness strangers tramping through your home and pointing out the water stains on your woodwork.

When you decide the time is right to sell your house, you usually interview a number Realtors from various companies to decide which of them is best for your needs. You’d want somebody who will be your representative as well as someone you think will do a good job at marketing your home.
However, when someone makes a decision to purchase a home, they often end up with their Realtor through sheer accident. Why don’t they do a home buyer search for a Realtor the same way that home sellers do?
Instead, homebuyers typically end up with a Realtor they picked up from an advertisement. The advert will provide a short summary of a home available for sale along with the price, but it doesn’t say a word about the Realtor.

So… does it really make a difference?

Bear in mind that there are two “parties” in every sale. The listing side and the selling side. Usually deals have an agent representing each of the sides, so there are normally two agents involved. The seller’s side is represented by the listing agent. The buyer’s side representative is the selling agent (also referred to as the buyer’s agent).
Agents can deal with both buyers and sellers, but the majority tend to focus their work on one or the other. Some can even exclusively handle only buyers or sellers.

So what should you do?

It is generally recommended that you hire a real estate agent with as much care as you would with any other kind of professional. Ask them questions about their education, experience, and focus. In the end, buying your future home is presumably the biggest and most important purchase you’ve ever made in your life. Does it seem more sensible to find your agent by accident…or by design?