When sellers are surveyed about the reasons why they would attempt to buy or sell a home without the assistance of a Real Estate Agent, their answers are always the same: “to save the commission.” It is important for anyone who is thinking of selling their own home to fully investigate this option. Most believe it will save them time and money, but using an experienced real estate agent who has a wealth of expertise translates into a fast sale with few hassles and a great price. Regardless of the prevailing market conditions or sales trends the unjustified reasons remain the same but this decision comes with a list of hurdles and can be wrought with pitfalls. Consider the following questions and points before trying to sell your home on your own:
Negative Buyer Perceptions
Many FSBO Buyers view a private sale like going to a garage sale, looking for a bargain! Since the seller traditionally is the one who actually pays the agent, it would seem that he would be the one to “save” the commission. But this is not the case in the buyer’s eyes. Studies demonstrate that many potential FSBO buyers will look to deduct what they know would be the commission amount, right off the top of your asking price. In essence, the real estate fees savings in these instances were not retained by the seller. Would you want to lose money this way?
However, when buyers work with an agent, as most do, they know better and expect to pay fair market value, so you as the seller makes more. Additionally, many FSBO buyers are not qualified and are simply kicking tires and wasting your time. I know how to separate window shoppers from serious qualified buyers.
For Buyers, NO Reason to shop FSBO
For Buyers, unless there is money to be saved by them, there is absolutely NO reason to buy from a private sale. In fact many buyers find the concept of dealing direct with the seller quite daunting.
Now, let’s think like a Buyer for a sec. Let’s say you want a 3 level split style home, with 3 bedrooms, 3 bathrooms, minimum 1500 square feet, built after 1995, with a fireplace, hardwood flooring and a walk out basement facing south. Now, go to any newspaper or For Sale by Owner website and try and find only those homes which exactly match this criterion. Chances are you’ll spend all day reading each listing, calling each owner and end up getting thoroughly frustrated. On the other hand, with the tools available at my disposal I can produce a list of homes exactly matching your criteria in about 30 seconds.
Another point to consider: potential buyers avoid FSBO homes because owners are always present during showings. They’ll be shy about discussing its pluses and minuses with their own agent if the owner is within earshot. Having an agent on each side creates an effective emotional buffer between the seller and buyer.
My clients have full use of my wide range of buyer services for free, where I can efficiently show them the best properties for sale in accordance with their wants, needs, and price range, anywhere they want to look. They don’t have to use their own gas, they don’t have to spend hours looking at homes they can’t afford or would never buy. They don’t have to waste time searching through maps trying to find streets in an unknown suburb. When it’s all said and done, buyers using my services elevate their home search efficiency to the max…and with nothing to lose. With a private seller or FSBO – they must have something to gain or it’s just not worthwhile!
Numbers Don’t Lie
It’s a proven North American statistic that For Sale By Owners make less money, usually 10-20% less, at times even as high as 25% less, versus selling with a professional real estate agent. Furthermore, take a look at the chart below published by the National Association Of Realtors showcasing the percentage of sales by FSBOs versus Real Estate Agents over the last 20 years.
If you are considering selling your home privately, consider a simpler approach: the amount of FSBO versus pro brokerages listings in your area. Take a drive through your city and neighborhood. Do you see more FSBO signs on lawns, or professional brokerages? You’ll see that pro brokerage signs trump FSBO signs, and for good reason. We have to be honest with ourselves. If FSBO was a true and effective way to sell your home, wouldn’t all the signs in your city be FSBO?
Lack of Knowledge, Expertise & Experience
In life, none of us are experts at everything, therefore we depend on the expert services of professionals who specialize in given areas to achieve piece mind and get things done worry-free. When your car needs a tune-up, you take it to a certified mechanic to get expert service right? When you’re sick, you got to the doctor to get expert advice and solutions on how to make yourself better. So by the same token, when you’re selling your home why wouldn’t you go to a realtor? Your property is not something you sell everyday. Placing the sale of one of life’s biggest assets in the hands of an experience professional only makes sense.
Keep in mind that as a realtor, I eat, sleep and breathe real estate. To become a certified real estate agent I have personally gone through extensive training to become proficient in a wide array of subject matter including real estate and contract law, sales, building construction, mortgage financing and marketing. So, naturally realtors know so much more about selling a home than the average home owner. Sure, some will argue that the home owner knows their home better than a Realtor however the Realtor is not selling memories, they’re selling property.The selling process requires networking, exceptional marketing, expert contract knowledge, selling and negotiation skills, and top level market and neighborhood know-how. Fact of the matter is, the average person does not have the tools, experience, talent, time, energy or expertise to get the job done right.
When it comes to selling one of life’s most prized assets, maximum exposure is crucial to success and generating the highest price possible. Many FSBO companies will charge you several hundred dollars for a lawn sign and an internet ad. If that’s all it takes to sell a house, then why isn’t everyone taking the FSBO route?
An important point to consider: if 95% of real estate transactions happen via a real estate agent with less than 5% selling For Sale By Owner, doesn’t it only make sense that you are going to get hundreds of more opportunities to sell your home for more money with an agent? As your agent I go above and beyond to ensure your home is seen by the masses through a unique and customized process involving networking, extensive print and online advertising and staging just to name a few. I can say with confidence that neither FSBO companies nor the majority of private sellers can advertise a home to the quality or degree I can do for my clients.
Agents won’t show FSBO Homes
In a typical home sale with an agent, the buyer’s agent receives a percentage of the commission that the seller pays the listing agent, usually 2.5%. Without a listing agreement, there’s no guarantee that the buyer’s agent will be compensated for his or her services, unless the buyer has signed a buyer’s brokerage agreement that specifically provides for such compensation. Even if a FSBO offers to pay the buyer’s side of the commission (most FSBOs don’t offer any commission or offer very little), most agents won’t want to go through a transaction with an unsophisticated self-represented seller across the table. That means the pool of potential buyers for FSBO homes is limited primarily to unrepresented and probably unqualified prospects.
Contract Knowledge & Legality
Accepting an offer is one thing, ensuring a safe and successful closing is quite another.What happens if the sale goes wrong and the Buyer sues you? What happens if the sale goes right, but they STILL sue you? What happens if you’ve broken a law and didn’t even know it? Due to the complex nature of a real estate contracts, rife with conditions, ramifications, disclosures and contingencies, even most real estate lawyers won’t advise you to sell your home on your own. Furthermore, if issues do arise, letting the Buyers and Sellers lawyers fight it out can easily result in a lost deal. Keep in mind Lawyers MUST act only on their client’s instructions and are not paid to negotiate, at least not without a hefty fee. It is times like these when a realtor can act as a great mediator ensuring the deal stays afloat and succeeds.
As your real estate agent, I follow a code of ethics to maximize my professionalism and minimize any litigation. I carry insurance to safeguard my clients and our transactions from silly lawsuits, and do everything in my power to protect my clients throughout the entire transaction. I can provide you with a complete picture of the legal requirements and liabilities to both seller and buyer if certain things are not done properly during the sale of a home. A FSBO website and seller self representation generally offer no such protection.Without this knowledge, buyers may end up inheriting some serious and costly issues which they will either end up being responsible for, or which the seller may be liable for. Know that navigating a real estate contract without the expertise of an agent on your side could end up costing you far more than real estate commission.
It is important to recognize that selling a home requires a very comprehensive understanding of real estate values, specifically, historical sales data. For a non-realtor without access to MLS databases to determine what other similar houses have recently sold for, it is virtually impossible to arrive at an appropriate list price if you’re a seller, or offer price if you’re a buyer.
The result is that many For Sale By Owner listings are not priced properly. Moreover, homeowners have a tendency to overvalue their houses due to emotional attachments and because they’re focused on selling their homes for the highest price possible. It is hard for private sellers to remain objective since the emotional attachment to their home makes the hearing of criticism extremely difficult. Setting a price too high can scare off potential buyers, and it could result in a house staying on the market longer than homeowners anticipate, creating a negative stigma about it. A purchase price that’s set too low could result in a big profit loss for the homeowners much more than any commission paid.Even if you are able to sell your home, did you get what its worth?
In addition to everything else, a private seller has to be concerned with safety. Now, there are some who will say that this is just a Realtor’s scare tactic. Well, I can assure you that a person’s over all safety is definitely not a scare tactic. A For Sale By Owner basically gets a ‘For Sale’ sign and then places an ad in the local newspaper or online and then opens their door to every stranger in the area and beyond. We are taught as children NOT to talk to strangers but then when we get older and own a home, that very important piece of advice goes right out the window. Opening your door to someone you know nothing about is not safe for anyone not just For Sale By Owners. So, to the naysayers, I say no amount of money is worth risking you or your family’s safety. As your real estate agent I know exactly who’s coming into your house every single time.
Lack of Negotiating Experience
One of the most important skills I provide my clients is strong negotiating. Becoming a skilled negotiator is a skill attained through a vast experience of selling real estate, neither of which an average homeowner has.Also, Buyers are less inclined to make an offer if they know they’ll be negotiating directly with the seller. Why would Buyers haggle with a private seller when you have an experienced and skilled negotiator to do it for you?
Furthermore, Working without an agent makes it much more difficult to keep emotion out of the negotiation process. With both parties motivated primarily by the money they are going to save, some serious problems can arise. During negotiation, it can become very stressful as the seller thinks they will get more, and the buyer thinks he will pay less. The end result is often that neither party ends up satisfied and the deal dies, which is why the vast majority of homes trying to sell privately end up employing the services of a real estate agent. Moreover, since the vast majority of local buyers now retain an experienced real estate sales person to represent them in the home buying process, you will probably be negotiating against an experienced professional.
In conclusion, the next time you hear someone justifying their decision to sell privately by claiming they “saved $10,000” by selling their home themselves, ask yourself what a professional agent could have sold it for. If the answer is $10,000 or more, the owner invested all that time, effort and energy for no saving at all. If an agent could have got $20,000 more, then they did all the work themselves and still lost money at the end of the day.
Current owners that are considering selling their property on their own will benefit greatly from my extensive range of specialized buyer and seller services. Having a professional agent in your corner means you have someone with the tools, skills and experience to effectively price, list, advertise and sell your home. I will get you the best offer while handling all the details on your behalf – now that’s where you really save. You have a life and I will let you live it. Real estate is my life. Let me handle all of the details, professionally!