In an age of consumerism it is not surprising that the public is taking an increasing interest in real estate selling. A home, after all, is the largest consumer item of all and how a home is bought or sold may save an individual thousands of dollars. But has consumerism really affected the real estate industry?
The National Association of Realtors estimates that 3.57 million existing homes worth $171 billion were sold in 1977. While there is no question that the majority of these homes were sold though the brokerage system there is substantial argument about the extent and nature of the traditional industry domination of the marketplace.
Virtually every source in the real estate industry will agree that at least 10 percent of all homes are sold by individuals - 357,000 last year. Yet there is reason to believe that the traditional 10 per cent figure is conservative. For example, the Maine Bureau of Consumer Affairs cites a study by lenders which shows that "fully 20 per cent of the homes in Maine are sold by the owner."
A count of classified ads in The Washington Post points to a more moderate figure. On May 21, 1978, 1,019 individual homes were listed in the Montgomery County classifieds. Of these, 164 (16.2 per cent) were by owners. While one would expect that the number of listings in May would be greater than February, the portion of homes offered by self-sellers should not be appreciably different. In this case a change of 63 per cent was recorded in 27 months.
By one estimate, the average price of a Montgomery County home during the first quarter of 1978 was $73,500. Of the 164 homes listed May 21st, 123 had specific asking prices ranging from $38,500 to $244,000. The average asking price was $110,431 - about 66 per cent above the country norm.
These figures represent an approximate index at best. One cannot tell how many homes were offered by signs alone, advertised in other media, exchanged directly between known parties, or retained in-house by brokerage firms. Also, the asking prices may nor may not represent actual selling prices.
Real estate consumerism is often linked exclusively (and incorrectly) with independent selling. However, even though self-selling appears to be on the rise, the most significant consumer problem remains the purchase of real estate marketing services - if only because it is the choice now made by most owners.
It could easily be argued that the estimated $20 million a week saved by self-sellers is lost several times over by individuals who collectively purchase services that they may not need in whole or in part and at rates which they usually fail to negotiate. For this reason, a full discussion of real estate marketing would be fatally deficient without a careful examination of traditional selling practices.
Peter G. Miller has taught the course, "How to Sell Your House - With or Without a Broker," through the Consumer Information Institute in Washington.