For sale by owner sign

Agents sell homes for more than FSBOs: study in Hunterdon and Somerset County

Agents sell homes for more than FSBOs: study in Hunterdon and Somerset County

Reposted from Inman News

Key Takeaways

  • Agents tend to achieve higher sales prices for properties than comparable FSBO listings, enough to offset their commission fee, according to a recent analysis.

Academic research has often cast doubt on the value of real estate agents, but a new study will come as music to their ears.

It suggests that homeowners will net roughly the same proceeds whether they sell through a real estate agent or take the FSBO (for-sale-by-owner) route.

That’s because agents tend to achieve higher sales prices for properties than comparable FSBO listings — enough to offset their commission fee, according to an analysis released by automated valuation model (AVM) provider Collateral Analytics.

This makes a strong case for hiring an agent, considering that agents allow homeowners to reduce the work, risk, and time of selling a home, said Dr. Michael Sklarz, the CEO of Collateral Analytics and a co-author of the study.

“Overall it is clear that FSBOs have a low probability of selling, and if they do they will likely net the same or less after closing issues, plus they are more likely to screw up on disclosures which may lead to lawsuits after the fact, when buyers discover material facts not disclosed,” added Norman Miller, who produced the study with Sklarz and is a real estate professor at the University of San Diego.

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The study looked at more than 200,000 FSBO sales and one million MLS sales that took place across hundreds of markets in 2016 and 2017.

To control for property attributes, such as home size and location, the authors took what they said was an original approach: they compared sales of MLS listings and sales of FSBO listings to automated valuations of those properties.

They found that on average, FSBO listings sold for about 5.5 percent less than comparable properties sold through the MLS, with FSBO listings tending to sell for a little less than their automated valuations and MLS listings tending to sell for a little more. The valuations were generated by Collateral Analytics’ software.

When they controlled for property characteristics in two other ways, the authors uncovered a similar price differential.

The 5.5 percent differential “is remarkably close to average commission rates,” the authors noted.

The study offered several potential reasons why agents can produce a price premium.

For one, they possess marketing expertise, including knowledge of how to stage a home and the best repairs to make, the study points out.

Second, in contrast to FSBO listings, MLS listings are generally syndicated to broker websites, exposing the home to a “much larger buyer population.”

Lastly, MLS listings may attract more showings (and bids) because they offer compensation to buyer’s brokers for bringing a buyer to a sale — whereas FSBO listings often do not.

“It appears that many sellers [FSBO sellers] are avoiding commissions while netting home prices less than they would with an agent-represented MLS sale,” the authors wrote. “They are avoiding commissions at any price, even one that exceeds the commission rate.”

The possibility that “buyers do make low-ball offers to FSBO sellers deducting the entire commission, not just the seller’s portion” from their offers would explain the study’s results, they added.

Sklarz elaborated on this last point by email.

“If [buyers] assume the [FSBO] list price is fair compared to other homes in the market that are listed primarily on the MLS, then they might also feel that the seller is netting the same thing as they would if they had listed it at the same price with a broker,” he said.

“I’ve heard this logic directly from buyers who took the full commission and deducted it feeling that what the seller really needed was a sale and that the net offer some 6% or so below the asking price was a way to provide the same net.”

The analysis stands apart from related academic research in that it essentially offers a ringing endorsement of agents.

Past studies generally have shown that MLS listings sold more often and sold faster than FSBO listings. But they found virtually no difference between the sales prices of comparable FSBO and MLS listings, undercutting the common claim by agents to sell homes for more.

What could account for the contradiction between the Collateral Analytics study and past research?

The authors said that previous studies often focused on one metro area and used much smaller data samples. They also implied that data from past studies reflected abnormal market conditions.

“[We] think the reason is that they used crude comparison techniques,” Sklarz said by email. “That is, they mostly did aggregate comparisons while here we do a micro level individual property control study, the most detailed ever undertaking.”

“Maybe the academics were trying to show that broker’s were not earning their keep?” he added. “We don’t know, but we had no apriori expectation of a result and it just happened that our results show the opposite.”

The study comes with at least two caveats.

First, the company that produced the study, Collateral Analytics, is a provider of AVM software to real estate brokers, among other customers. That would seem to create a conflict of interest.

Second, the study defines a FSBO listing as a non-MLS listing.

However, many FSBO services now allow homesellers to purchase an MLS listing. (They list the properties as licensed brokers or through third-party brokers and provide limited or no additional service.)

It’s possible that FSBO properties listed in the MLS might sell for higher prices than comparable FSBO listings not in the MLS, Sklarz acknowledged, which would complicate the study’s findings.


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Goldfish to represent clients

Homeowner’s Net Worth Is Still Greater Than a Renter’s in Hunterdon and Somerset County

Homeowner’s Net Worth Is Still Greater Than a Renter’s in Hunterdon and Somerset County

Every three years, the Federal Reserve conducts their Survey of Consumer Finances in which they collect data across all economic and social groups. The latest survey, which includes data from 2010-2013, reports that a homeowner’s net worth is 36 times greater than that of a renter ($194,500 vs. $5,400). 

The latest survey data, covering 2014-2016 will be released later this year. In the meantime, Lawrence Yun, the National Association of Realtors’ Chief Economist estimates that the gap has widened even further, to 45 times greater ($225,000 vs. $5,000)! 

Put Your Housing Cost to Work for You

As we’ve said before, simply put, homeownership is a form of ‘forced savings.’ Every time you pay your mortgage, you are contributing to your net worth. Every time you pay your rent, you are contributing to your landlord’s net worth.

The latest National Housing Pulse Survey from NAR reveals that 84% of consumers believe that purchasing a home is a good financial decision. William E. Brown comments:

“Despite the growing concern over affordable housing, this survey makes it clear that a strong majority still believe in homeownership and aspire to own a home of their own. Building equity, wanting a stable and safe environment, and having the freedom to choose their neighborhood remain the top reasons to own a home. 

Bottom Line

If you are interested in finding out if you could put your housing cost to work for you by purchasing a home, let’s get together and evaluate your ability to buy today!


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I still live with my parents shirt

For Millennials, there’s no place like home when it’s time to save for one in Hunterdon and Somerset County

For Millennials, there’s no place like home when it’s time to save for one in Hunterdon and Somerset County


Reposted from

The road to Meagan Walsh’s dream house wound through the room she grew up in.

Like many Millennials, Walsh graduated from college without a job and burdened by student debt. But the 25-year-old’s fortunes took a positive turn when she moved back in with her parents in Bethlehem, Pa., and found work.

“Originally, it was their idea, and I kind of rolled with it,” she says, later admitting she “didn’t have another option.”

Walsh parlayed her two-year stay with her parents into a home of her own. With no rent to pay and minimal expenses like car insurance and cell phone bills, she began saving most of the money she made, initially at her first gig at a social media startup and then at her current job as a leasing agent for a property management company.

“I was banking 75% to 80% of my paycheck,” she says, even after paying $250 each month for student loans amassed at the University of Delaware. She was able to save a 20% down payment of $28,000 to buy a four-bedroom, cape cod-style home in July 2016 for $140,000.

“It’s cute,” says Walsh, who also had enough cash to restore the hardwood floors and “splurge” on a quartz kitchen countertop.

Walsh’s personal finance success story shows that while returning home to mom and dad might not be “Plan A” for most young Americans — and can sometimes be perceived negatively and as a short-term setback — it can also be an effective way for cash-strapped Millennials to boost savings quickly. Not to mention a viable way to speed up the process of buying a house, building equity in that home and living independently.

It’s also part of a larger trend of Millennials finally starting to get active in the real estate market. After the 2008 financial crisis, many Millennials returned home to live with their parents or shared expenses with roommates. Now, Millennials 36 and younger represent the nation’s largest share of home buyers at 34%, according to the National Association of Realtors.

Saving a 20% down payment is “a major hurdle for young adults trying to buy their first home,” according to a Bank of America Merrill Lynch report. It is even more challenging for Millennials given their high student debt loads. Outstanding student debt has reached $1.3 trillion, according to the New York Federal Reserve.

More than four out of 10 (43%) Millennials who have completed college said student debt caused them to “delay buying a home,” a TD Ameritrade survey found. And 27% of Millennials between 20-26 said education loans delayed them from “moving out of (their) parents’ home.”

Walsh’s boomerang living arrangement after college is not uncommon. Nearly four of 10 (37%) Millennials moved back in with their parents after graduation, according to the TD Ameritrade survey. A boomerang kid is a young adult that goes back to live with a parent after a period of independence.

“Does it make financial sense? Absolutely,” says Tony Ogorek, chief investment officer at Ogorek Wealth Management in Williamsville, N.Y. “It is very challenging for people starting out. Any strategy they can employ to reduce debt and allow them to save is great.”

But there’s a caveat, he says. In today’s “gig” economy, where many people work on short-term contracts and their lifestyles become more “nomadic,” it can be risky to invest in a home unless you plan on living there for many years.

In Walsh’s case, she says buying her own home was a better investment than paying rent, especially since she found renting where she lives more expensive than buying.

Tim Manni, 34, a mortgage expert at NerdWallet, took advantage of moving in with his in-laws in the spring of 2015 after his wife sold her condo in Montclair, N.J., where they were living. Manni stayed about six months as the newly married couple shopped for and bought a new three-bedroom home in West Caldwell, N.J., and then did renovations before moving in.

During that time the couple was able to save the $1,200 they had been paying each month on the condo’s mortgage.

“It really worked out for us,” says Manni, adding that his gracious in-laws let them stay free of charge, while he and his wife reciprocated by chipping in for groceries and picking up the bill for the occasional dinner out.

Returning home is a viable money-saving strategy, assuming there’s ample space in the home you’re returning to and there’s a specified savings goal, Manni says.

“It can be a motivator,” he says. “No one wants to live at home forever or come back home after being out on your own. But if there is a goal in mind, such as a home you are aiming to buy, it is a whole different ballgame.”

In another sign of Millennials’ newfound appetite for housing, 44% of Google searches in the mortgage category so far this year were first-time buyers, up from 11% in 2016, according to Chase Home Lending.

Kate Powers, 23, is one of those young Millennials searching for a home and saving for a down payment while also living rent-free with her parents.

After graduating in 2016 from Marist College in Poughkeepsie, N.Y., her hopes of working and living in New York City flamed out after she realized an entry-level salary wouldn’t provide enough income to afford an apartment without roommates, a living arrangement she wanted to avoid. “My original plan didn’t work out,” Powers says.

She opted to return to Severna Park, Md., to live with her folks and shop for less-expensive real estate closer to home. “My parents were 100% behind it,” she says. “They didn’t want me struggling to pay my bills.”

While working a full-time job as an assistant acquisitions editor at a publishing company, where she earns $32,000 per year — as well as a part-time job — she’s been able to sock away $25,000. She plans to stay put for another year or so to save enough for a down payment for a home in the $200,000 to $250,000 range.

“Right now, it is definitely the best option financially,” Powers says. “My savings target is $50,000.”

“Too many people have a bad view of moving back home,” she adds. “They look down on it. But some of us are trying to help ourselves out.”

Powers enjoys her parents and her sister, who is seven years younger and who she’s never had a chance to connect with until now. Her advice is to give living with mom and dad again a try.

“It is not the end of the world to go home,” she says.


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Housing Inventory Hits 30-Year Low in Hunterdon and Somerset Counties

Housing Inventory Hits 30-Year Low in Hunterdon and Somerset Counties

Spring is traditionally the busiest season for real estate. Buyers, experiencing cabin fever all winter, emerge like flowers through the snow in search of their dream home. Homeowners, in preparation for the increased demand, are enticed to list their house for sale and move on to the home that will better fit their needs.

New data from CoreLogic shows that even though buyers came out in force, as predicted, homeowners did not make the jump to list their home in the second quarter of this year. Frank Nothaft, Chief Economist for CoreLogic had this to say,

“The growth in sales is slowing down, and this is not due to lack of affordability, but rather a lack of inventory. As of Q2 2017, the unsold inventory as a share of all households is 1.9 percent, which is the lowest Q2 reading in over 30 years.”

CoreLogic’s President & CEO, Frank Martell added,

“Home prices are marching ever higher, up almost 50 percent since the trough in March 2011.

While low mortgage rates are keeping the market affordable from a monthly payment perspective, affordability will likely become a much bigger challenge in the years ahead until the industry resolves the housing supply challenge.”

Overall inventory across the United States is down for the 25th consecutive month according to the latest report from the National Association of Realtors and now stands at a 4.3-month supply.

Real estate is local.

Market conditions in the starter and trade-up home markets are in line with the median US figures, but conditions in the luxury and premium markets are following an opposite path. Premium homes are staying on the market longer with ample inventory to suggest a buyer’s market.

Bottom Line

Buyers are out in force, and there has never been a better time to move-up to a premium or luxury home. If you are considering selling your starter or trade-up home and moving up this year, let’s get together to discuss the exact conditions in our area.


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declutting your home

How to Help Your Parents Downsize and Declutter in Hunterdon and Somerset Counties

How to Help Your Parents Downsize and Declutter in Hunterdon and Somerset Counties


When the child is the one charged with helping the parents downsize, these guidelines can smooth the process.

Many seniors eventually need to downsize to a smaller space, whether to a retirement community, a nursing facility or a room in a family member’s home. Often, the task of decluttering and packing falls to their children.

If you’re the person faced with going through an aging parent’s belongings, it may be tempting to rent a storage unit and just pack it all away. However, that can be an expensive way to merely delay the inevitable. Instead, I recommend you start the decluttering process as soon as possible. Here are some tips to help you through it.


1. Acknowledge the true magnitude of the task. Moving from a home filled with years of memories can be a very emotional process for your parents. Not only do they have to downsize the physical memories of perhaps as long as a lifetime, but moving may also summon unwanted reminders of their mortality.

For both parent and child, decluttering takes patience. And for the child especially, it can be difficult to stay motivated, since you won’t directly reap the rewards of a tidier space. Further, your decluttering standards may be different than those of your parents. What you consider trash may be your parents’ treasures, and this can sometimes lead to friction. It’s important, though, to involve your parents in the decision-making process rather than taking over completely. Soliciting their input and accommodating their desires is a way to show them you value their decisions and respect their belongings.

So before you get started, mentally prepare yourself for what’s to come. Know that some items may be easy to declutter, such as clothing that doesn’t fit. Others will take more time, patience and thought.


2. Schedule bite-sized work sessions. Decluttering is time-consuming, and it can be tiring for aging parents. If time permits before the move, space out your sessions so you and your parents can maintain the energy to complete the entire house. I recommend no more than four hours at a time, and perhaps just two to three times per week. This schedule allows for a balance between making efficient use of your time and not exhausting your parents.

3. Understand your parents’ lifestyle. Getting a snapshot of how your parents plan to live in their new home will help you narrow down what they keep – with the goal of retaining only what they actually love or need. Even if you think you understand their lifestyle already, it can be helpful to sit down together and sketch out a few details that can serve as guidance as you sort.

For example, if your parents typically launder their clothes once a week, then 10 to 14 sets of clothing for each season would be more than enough to last between washes. If they won’t be entertaining at their new location, they may feel confident donating their punch bowls and tablecloths. If formal events are few and far between, then three to four comfortable formal outfits may suffice.


Below are some questions you could use as a starting point for your discussion with your parents. You could even use their answers to guide a first pass at eliminating irrelevant items on your own – leaving fewer decisions for your parents to make.

  • What type of clothing do you need? (Daily comfort wear? Weekly church outfits? Occasional formal outfits?)
  • What is your current range of clothing sizes? Is it OK to donate all clothing outside of this range?
  • To what extent will you be cooking and baking?
  • Will you be entertaining? If so, what would be the maximum number of guests?
  • Which suitcases and bags are no longer practical for travel (too large to manage, lacking wheels)?
  • Will you want to decorate seasonally?
  • Which books do you still read and which music do you still listen to?

4. Start with the least sentimental items. As with most things, practice makes perfect. My clients have found that the decision to keep, toss, sell or donate becomes easier the more you practice. Starting your decluttering process with the least sentimental items, such as linens and clothing, and working your way toward the most sentimental, such as photos and letters, can be a helpful way to ease into harder decision-making territory.

5. Declutter by category rather than room. Separating your decluttering into categories is helpful in terms of keeping your parents – and yourself – motivated and focused. It’s easier to make decisions when items are grouped, as this helps you see all at once how many belongings you’re dealing with. Also, you can all feel a sense of accomplishment with the completion of each category. I recommend separating items into the smallest categories possible. For example, instead of creating a category of tops, separate the items further into short sleeves, long sleeves, sweaters. Accessories can be separated into belts, hats, scarves and handbags.


6. Keep only sentimental items that will be displayed. Many of my clients have a hard time parting with sentimental memorabilia. But the truth is, some of these items have been buried in their houses for decades. I usually encourage them to keep only the items they’ll have out. After all, memorabilia can’t be enjoyed while hidden away, and disposing of the items doesn’t diminish the memories associated with them.

One possible way to ease the permanence of losing sentimental items is to take photographs of them. However, I don’t recommend this in cases where the photograph can’t be filed away immediately, whether in a digital album or a physical scrapbook. If there is no defined location for the photograph, whether digital or physical, then it becomes clutter. Also, if it’s likely that looking at these photographs will bring on feelings of regret for your parents, I also don’t recommend this method.


7. Take charge of your childhood items. If your parents have saved all of your childhood memorabilia, they may be willing to turn those items over to you for sorting through. This can be quite helpful for parents who are overwhelmed with culling their own possessions. Now is also the time to remove any of your adult possessions that have been stored in their house.


8. Remove unwanted items from the property. You haven’t truly finished decluttering until all the unwanted items are no longer in your parents’ house. Consider ordering a dumpster for trash, scheduling a charitable organization to pick up donations and selling items at a consignment store or online. Although it would be wonderful to earn money by selling some items, if you don’t have time to list them or your items don’t sell quickly, permit yourself to donate instead. It’s important to keep unwanted possessions moving as you continue the decluttering process, as storing them in the house may hinder progress.


9. Treasure this quality time with your parents. Decluttering is undoubtedly hard work, and tensions often arise amid differing viewpoints. So try to adjust your perspective when these moments inevitably come. Instead of viewing the task as a chore, consider it a special time spent with your parents. You may even hear some priceless stories about their youth and your childhood – especially if you maintain a patient attitude, and if you take the time to ask.

Also See:

  • Pick Up a Clothing Rack to Organize Their Garments
  • Clean Out and Sort Through Storage Cabinets
  • Consult a Professional Organizer For More Help




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