With the average real estate commission being 6%, on a $250,000 sale that comes to $15,000. Which sounds like alot of money when you could just do the job yourself, right? Put a sign in your yard, an ad in the paper, make a few listings on a couple of websites, sounds pretty simple..or is it? Let’s take a closer look at why this isn’t as simple or as pitfall free as it may seem and why you should think twice before you shy away from hiring a professional!
- Pricing – A real estate professional is highly trained in evaluating the market conditions and setting the price on a home to enter the market at the best place possible to sell. Missing this step could cost you thousands of dollars in missed revenue on your home. Priced to low and you will see an influx of buyers that may be too difficult to manage between the phone calls, emails, showings and not too mention if you still have a 9-5 full time job that is NOT real estate. This will leave you left regretful that you didn’t price higher. Priced too high and you may be missing out on good buyers that are passing up on your home for other more attractive opportunities. According to Quickenloans.com statistics have shown that the average FSBO home sells for 15% less than homes sold through the use of a real estate professional. Determining the best price for your home should be left only to a professional, this step in the process alone could make you more money than you would have spent in real estate commission.
- Public Perception of FSBO – Many FSBO sellers may think that they will list their home online and if they put a phrase such as “will work with agents”, Realtors will flock to them bringing their best clients. WRONG! There is a stereotype amongst the real estate community that dealing with a FSBO seller is typically going to be difficult and the agent will likely have to do their job to educate their client as well as educate the seller. Also, many buyers may not feel comfortable dealing directly with a seller on a FSBO purchase who may not know the legalese of a purchase agreement and real estate laws.
- Awkward Negotiations – Have you ever watched a court case in which the defendant represents himself? Did you notice how awkward it was for them to speak of themselves in third person? That is very similar to how negotiations go when a FSBO seller is negotiating a deal for themselves. Most agents study and train in the art of negotiations for years. Although a seller may negotiate in their normal job, negotiating in a real estate transaction is a different animal. Lack of real estate negotiating experience could cost you thousands in a lower selling price or even worse, a bungled contract with language and agreements that are not legally binding. Not too mention that a buyer may have trouble trusting a seller who is negotiating their own repairs after an inspection has taken place. Having a licensed professional can not only increase your profits but decrease your potential for loss due to poor negotiations.
- Showings Inconvenience – Imagine the perfect buyer calling you while you are at work and can’t get away to show your home and you’ve just missed out on an opportunity to sell! Listing your home with a Realtor will give you the peace of mind that random strangers aren’t showing up on your front porch or calling you a all hours of the day and night to take a tour of your home, so you don’t have to be tied to the phone or stuck at home in hopes that the perfect buyer will call you. The other end of the spectrum can happen as well, who has time to deal with 15 showings a week? While that sounds great when you’re trying to sell, what if only 2 of those people are actual buyers? Do you have the experience and knowledge to prequalify these people from wasting your time? Again, this is also the job of a well trained agent. A true professional will only allow the cream of the crop to enter your home and they certainly won’t be unattended! Also, some buyers are reluctant to contact FSBO’s because they find it awkward to walk through the home with the seller and they would rather have someone unbiased who may be able to point out things that they don’t see.
- Decreased Liability – When selling your home by yourself and without the assistance of a real estate agent, you must prepare all of the legal documents and contracts yourself. Which requires that you have knowledge of the contracts and available forms and disclosures. Without this knowledge and experience you could very easily leave out a very important form or possibly even use the wrong form which would open you up to a high level of liability and possibility of lawsuits. Most reputable real estate professionals carry Errors and Omissions insurance also known as E&O. The purpose of this insurance is to protect the home buyer or seller from any errors and omissions or damages resulting from paperwork snafu’s. This peace of mind and assurance alone is worth the cost of using an agent to most people. Typically when problems arise that require entering a court room due to a real estate transaction, it’s not a cheap problem and it doesn’t just go away on its own. FAILURE TO DISCLOSE is the number one reason why litigation arises after a real estate transaction. If you are using a real estate professional and you get sued for “Failure to Disclose”, you can sue the real estate agent. However, if you are representing yourself, the buyer will sue YOU!
While some FSBO transactions have been successful, according to an article in Realtor.com 90% of buyers and sellers would rather work with a trained professional rather than risk an unsatisfactory buying or selling experience. If you do choose to represent yourself, you must remember that you are making a statement to the public and the legal system that you possess as much knowledge and experience as a licensed professional. Claiming to be able to do just as good a job as a real estate professional will set a level of expectation from the public and additional professionals that you will need to cooperate within the transaction such as mortgage professionals, title officers, appraisers, inspectors etc. The inability to speak their language and understand not only the terminology that they use but the process flow of the transaction, can not only be frustrating for the other parties, but very costly for the seller. In the end you must ask yourself the following questions:
- Do I have the proper experience and knowledge to lead this process
- Do I understand the market enough to to adequately price my home given the current market conditions?
- Is the risk of liability, time lost with non qualified buyers and inability to properly negotiate for myself worth the amount of money that I would save, if any..at the end of the day?
If you answer NO to any of these questions, you should explore the option of working with a licensed real estate professional! The AR/haus Group at Keller Williams Realty specializes in working with home buyers and sellers to price their home competitively as well as protect their liability and interest throughout the home buyer and selling process. Contact us today at www.ARhausGroup.com or call 317-564-7100 to speak to a real estate professional today!