Can I make More Selling My Home Alone?
Maybe, but are you willing to fight an uphill battle?
Now that our market in Hampton Roads has showed signs of recovery, some sellers may be tempted to try and sell their home on their own choosing to be an "Unrepresented Seller" or "FSBO," without using the services of a real estate professional.
Many real estate agents are trained and experienced in pricing and negotiation. In most cases, the seller is not. The seller must realize their ability to negotiate and their knowledge of the market, as well as transactional realities, will determine whether they can get the best deal for themselves and their family.
The facts are that homes do not sell themselves and the large majority of "Unrepresented Sellers/FSBOs" end up listing their home with a professional. Why? Let's explore some facts to help a seller make a sound choice based in fact.
The Buyer's Agent
Eighty to ninety percent of all buyers in Hampton Roads may be represented by a trained real estate professional. The customary compensation for this "Buyer's Agent" in Hampton Roads has been in the 3% range. Most MLS Listed homes offer compensation to the buyer's agent for bringing the buyer and doing the work on their half of the transaction. In order to "save on the commission" a seller that refuses to offer a comparable incentive in their marketing, may alienate up to 90% of the potential home buyers. With only 10% of the market left, the odds are a seller will not actually save the 3% that would go to the buyer's agent.
The Seller's Agent
Now consider the other side of a customary 6% brokerage fee to help price, market, negotiate and facilitate this complex transaction. Let's be honest, a main reason sellers may try to go alone is the sad example that many "Real Estate Agents" set in their marketing. Sellers see the poor examples of blurry pictures, dilapidated signs, minimal effort marketing and they say, "Gosh, I can do better than that and save up to 6%."
It's sad but true, many agents are not true professionals, marketers or experienced negotiators. Even agents on those mega teams who guarantee sales with compelling marketing often lacking experience in transactions and the knowledge for getting your house sold. It is critical to consider all options and interview multiple full time professionals with a verifiable track record of success before deciding to go it alone. The right professional will almost always add dollars to a seller's net not cost them equity. If this were untrue then the overwhelming majority of homes would be for sale by owners, not agents.
The Sale, What If
Facts are most sellers don't know what they don't know. This short list of What If scenarios to show the value of a real professional representation.
- What If... you invite a stranger into your home that is not really a buyer?
- What If... your home fails home inspection?
- What If... you fail to disclose material adverse fact properly?
- What If... your buyer is not really qualified for a mortgage at your sales price?
- What If... your contract is missing clauses designed to protect your interests?
- What If... your buyer changes their mind just before closing after you moved out?
- What If... your home does not appraise for the value of the sale price?
By now you get the point we could go on to list dozens more of the potential issues that could cost a seller well over the brokerage fees they set out to save.
Here is a list of some of the people with whom the seller must be prepared to negotiate if they decide to Unrepresented/FSBO:
- The buyer who wants the best deal possible
- The buyer’s agent who solely represents the best interest of the buyer
- The buyer’s attorney (in some parts of the country)
- The home inspection companies which work for the buyer and will almost always find some problems with the house.
- The termite company if there are challenges
- The buyer’s lender if the structure of the mortgage requires the sellers’ participation
- The appraiser if there is a question of value
- The title company if there are challenges with certificates of occupancy (CO) or other permits
- The town or municipality if you need to get the COs permits mentioned above
- The buyer’s buyer in case there are challenges on the house your buyer is selling.
- The judge if the legal aspects of the contract go bad
The Bottom Line...
Considering comparative marketing costs, selling real estate is a super bargain. The fact is that nationwide the agents and brokers have assemble a very efficient free marketplace solely funded by only 5-7% of the house's sale price. Most everything we buy has 10-15 percent marketing included in its price. This could be why the percentage of sellers who have hired a real estate agent to sell their home has increased steadily over the last 20 years. Statistics show that many sellers net substantially less in the end when their home was not marketed by a full time professional Realtor. Meet with multiple full time real estate professionals to see the difference they can make. Consider all of your options before deciding to go it alone in a home sale. There is too much at stake to wing it.