Why using a realtor in a seller's market is still the smart thing to do.
When we have a real estate market like we are in now where inventory is low and there are buyers chomping at the bit to buy homes the natural tendency for some seller's is to try and sell it on their own. Before Jennifer and I started selling homes for a living we would have thought the exact same thing. Why not right? You can save all that money on commissions. Now that we are in the business and have seen our fair share of "bro deals" go bad we wanted to share the pit falls that most homeowners don't think about and why would they. Sometimes you don't know what you don't know.
What if we told you we can get you the same or more money than you would by selling it on your own even after paying for our services. In most cases homes that are for sale by owner sell for less money and take longer to sell. So why is that????
- Inaccurate pricing: There are a number of factors that play into pricing a home. First off, what has sold in the last 6 months to a year. Second, what is the demand like for homes in the neighborhood/area and third, what is the supply like in the neighborhood. All three of these factors effect how a home is priced. It is as much an art as it is a science. Right off the bat I have seen homes under priced because they didn't know how interpret these three factors and this contributed to them selling for less than they needed to.
- Decreased exposure equals decreased demand: We market homes at a very high level utilizing numerous channels to get our listings in front of every buyer out there. If a seller is only getting their home in front of a fraction of the buyers actively looking then right there you have a decrease in demand which according to the laws of supply and demand will equal a lower sales price. We have seen this be true time and time again.
- Professional Marketing: We are expert marketers and we spend quite a bit of money making sure you home looks better than the competition. This helps sell homes for more money. Plain and simple.
- Emotional Attachment: Jennifer and I sold our home in Alanton a few years ago and moved around the corner. In all honesty, that was the worst negotiation we have ever been a part of. If I had an agent cave like we caved on the terms of the deal and the inspection repairs, I would have fired them immediately. The reason for this is we were emotionally involved in the home. This was the home where we were raising our three kids. We had pride of ownership so anything they asked for we gave it to them regardless of what the market conditions were at the time. That is not how we represent our clients. We want to make sure they do what they feel is right but at the end of the day this is a major financial decision and having an unemotional advocate is invaluable.
- You are going to likely pay a buyers agent 3%: 90% of home purchases have a real estate professional involved. If a seller isn't willing to pay the commission of a buyers agent then the likelihood that a buyers agent will bring a buyer to see their home is slim to none. So if a homeowner is willing to pay a buyers agent 3% then we are now talking about 3% being the determining factor to not hire a listing agent.
- Sellers can get taken advantage of: Another thing that a lot of sellers don't realize is that if they receive an offer from a represented buyer they a non represented homeowner are negotiating against someone that sells homes for a living. Do think that those are fair odds? I have helped buyers purchase homes that were for sale by owner and after I negotiated the best deal possible for my buyers the home appraised for 75k more than what we negotiated. Had that seller been represented they would have walked away with a lot more money in their pocket.
- Buyers want to share in the savings: A buyer that is buying a for sale by owner home expects to get a deal. They know what the sellers are are doing and they want to get a piece of the savings as well. That's only fair right.
Here is an example of home in our neighborhood that just recently sold for sale by owner. There were very few homes on the market at the time and the price point was at the entry point for the neighborhood. All the indicators of a quick sale for the highest amount of money. We received a phone call after the home had been on the market for a few months and they were not seeing any buyers. We sat down and explained that we could net him more money than he would net on his own. In between the time of us meeting and the seller making a decision they received an offer which they accepted and ended up closing on. In this situation I truly believe we would have made them more money. Here is a summary of how it played out.
For Sale By Owner Listing Price: $445,000 Market Price (what we listed it for): $460,000
Sales Price: $440,000 Projected Sales Price : $455,000 -$460,000
Broker Commissions (3% for buyers agent): $13,200 Broker Commission (6%) : $27,300 - $27,600
Seller Concessions (estimated): $9,000 Seller Concessions (estimated): $6,000
Net Proceeds: $417,800 Net Proceeds: $421,700-$426,400
Before you sell your home to your friend or through facebook or on fsbo.com, give us a call. I know it sounds easier that way but the reality is you end up losing money in the long run.
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