New study shows that agent experience can have a serious impact on results vs limited service representation.

A study sponsored by the Real Estate Center in Texas, published in January 2006, shows that there is a significant and measurable impact on results obtained from utilizing an experienced agent vs limited service representation (or discount brokers).

The study was conducted in order to determine whether there was any significant difference in sales price and number of days on the market for similar homes wtih different types of representation, either limited service or with experienced agents. The sample for the study included over 55,000 real estate transactions in the Dallas-Fort Worth Metroplex area, with adjustments for location, condition of the properties, and market conditions.

The study showed that limited service listings sold for 1.7% less than the typical full-service listings and they took 17.1% longer to sell. Since the typical discount offered by limited service brokers is generally around 2%, the study shows that there is no significant difference in net cash to the sellers by using the limited service model of representation.

In addition, if the limited service broker were to charge 4% total commission, then the 1.7% lower price obtained added to that commission would be almost equal to a full 6% commission paid by the seller to a non-discount broker. Therefore, the study claims that there is no dollar advantage to using the services of a limited service brokerage in lieu of a typical full-service brokerage when using the standard exclusive right to sell contract.

The study further analyzed the number of years experience of the listing agent, and determined that agents with less than 2 years experience received about 1.1% less than those who had 2-5 years experience, and the marketing time was 1.9% longer.

As the real estate industry continues to evolve and technology and new business models are introduced, it helps to understand what this means in terms of the bottom line for sellers. This study suggests that sellers who choose limited service representation are not necessarily getting more cash in their pockets than those who choose a typical full-service agent.

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