Tip of the Week: Pricing Your House (10/11/99)

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	Pricing Your House Financial Tip of the Week by Deloitte & Touche OnLine October 11, 1999

Brokers sell their own houses for more. Should you ask for more?

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A new study by Penn State University shows real estate brokers sell their own homes for an average of 3 percent more than they sell clients’ homes.

The reason for the discrepancy may be one of incentive: agents collecting a typical 6 percent commission would earn only $180 more by selling a house for $100,000, rather than $97,000, an amount that might logically be deemed too small to risk loosing a sale over. Where they stand to pocket an additional $3,000 in the sale of their own homes, however, real estate brokers may not consider the difference so insignificant.

If that’s the case the research suggests homeowners might be wise to list their houses for slightly more than their brokers recommend. Another possible and less condemning explanation, said Tom Springer, a professor in Florida Atlantic University’s department of finance and real estate and one of the study’s authors, might be that brokers heed their own advice.

"Brokers may tell sellers to paint a room or fix something before listing a house and they may or may not do that," he said. "It could be that brokers are just following their own advice better."

The study, conducted by Springer, Abdullah Yavas of Penn State’s Smeal College of Business Administration, and Rob Rutherford of the University of Texas at San Antonio, analyzed Multiple Listing Service data on 21,000 Texas homes in the Dallas/ Fort Worth area.s