Some home-owners believe that selling their home by themselves will save them money, but here are some important things to know about ‘For-Sale-By-Owner' (FSBO) and why hiring a professional real estate agent is well worth the price of commission.
Why hire a real estate agent?
Some homeowners believe that they can save thousands of dollars by selling their home without an agent. They underestimate the amount of effort, time and cost that will be involved and soon discover that they need exceptional negotiation skills, legal knowledge and market savvy to sell their home without a professional real estate agent. Here are some compelling ways that hiring a real estate agent will far outweigh the price of paying a commission fee.
1. Real estate agents have access to large listing networks
A real estate agent has connections with buyers and contacts who are kept informed of their new listings on the market, and agents quickly spread the word about the property they have just listed. Even if the homeowner believes that they have a large network that will share the listing, this will undoubtedly be a much smaller pool of potential buyers. A small pool of potential buyers will not garner much demand for it. The owner will wait longer to sell his home and probably not get the price for which he is hoping.
Also, keep in mind that in some countries, buyers hire real estate agents to help them find a new home. In these countries, a buyer's real estate agent might discourage their clients from viewing or even placing an offer on a FSBO home. Agents have often had negative experiences with FSBO sellers, who set an unrealistic price, generally don't know what they're doing, and have an emotional attachment to their home.
A realtor has access to multi-listing services (MLS), especially if they are international listing networks, where there is potential for millions of buyers to see the home listing. Sellers often cannot get their home on the MLS and/or must pay out of pocket to market their home.
This leads to our next reason that hiring a realtor is worth the price of commission.
2. Agents represent the business of selling a home
Selling your own home is an emotional process and hiring an agent to represent those interests will keep personal feelings one step removed from the business of selling the home. With an agent representative, it is less probable that the seller will make mistakes; like overpricing, being offended by low offers, or failing to maximize their position in negotiations. The real estate professional will communicate with potential buyers on the seller's behalf without the eagerness, desperation or lack of cooperation that may surface in a FSBO situation.
Without an agent representative, sellers will also have to deal directly with rejection, disappointment and negative feedback. An agent can present these things in a constructive way, advising and discussing the seller’s options and responses from a less emotional state. Selling a home always has a degree of emotion, but this will be easier with an agent who represents your best interests and is on the seller’s side. An agent is the catalyst that separates emotional attachment to the house, from the act of conducting a business deal.
Realtors liaise between agents, escrows, title companies and inspectors while sellers will have to do all these negotiations themselves.
3. Realtors bring added value
If someone sells a home without an agent, the costs to stage it, capture photographs or video, and pay for marketing are all on them. These expenses can run from hundreds (up to thousands!) of dollars, out of pocket. Don’t forget there is the time and effort of hosting open houses, and viewings by appointment, where sellers must accommodate bookings into their regular schedule. There will be a flood of queries, often by unqualified leads – people who are just curious to see inside the home. Take note that a FSBO seller does not always dodge all the realtor fees, as a buyer’s agent will most likely ask for a commission (usually 3%) from the home sale for their services to the buyer.
For most sellers, hiring an agent to take care of these things is worth it to them. A realtor will help them stage their home for potential buyers, take pictures, develop high-quality videos or renderings, and list the home on Multi Listing Service (MLS) and listing portals. Open houses, property viewing appointments and consultations with potential buyers will be scheduled on the realtor’s time, so sellers don’t have to take time off from work and reschedule their life to show the property.
Statistics show that on average, you get more money from a sale with a realtor than you would in a personal sale. (NAR)
4. A realtor knows the legal aspects of a property sale
A home sale is a legal contract, so a seller who goes on his own will be required to negotiate and handle all the paperwork associated with this process. There is a legal process for interactions with the buyer, his attorney, the home inspector, the appraiser and the bank. Then there are negotiations and legal procedures for dealing with the seller and financial institutions. Sellers who are unfamiliar with the legalities, the terminology and the process may find themselves in legal difficulties, if not done correctly. Some jurisdictions have specific regulations for a home sale and may not even let you close on a home sale without having a real estate attorney present.
Realtors will broker the negotiations and business transaction between agents, escrows, title companies, attorneys, inspectors and all the steps mentioned above. A real estate agent knows the legal aspects of a property sale and their service on the seller's behalf can make sure that they don’t end up with a lawsuit on their hands. In your lifetime, if you sold all your homes, you would probably sell 1-2, but a realtor negotiates that many homes in a week, as it is their full-time job.
5. Being a real estate agent is a full-time job
Many FSBO sellers believe that they save the costs of hiring a real estate agent, but they often fail to consider the price they pay in other areas; like time spent and lack of expertise. If a seller cannot take time off from work every time a buyer wants to view their home or excuse themselves from commitments in order to negotiate and submit paperwork, their property often stays on the market longer than it should – which may cause buyers to suspect that there is something wrong with the home. This costs the seller money, as the longer the home is on the market, the less it will generally sell for.
A realtor dedicates time and energy to sell the home, while sellers usually have a hard time managing the viewing and appointments. It is for these reasons (and more) that hiring a real estate agent means the seller benefits from the service of a full-time professional. A real estate agent will offer the seller advice on staging, advise them on the best listing price for the market, find and qualify potential domestic and foreign buyers, and manage inquiries, viewings and offers. Agents work long hours, including evenings and weekends, to sell the home for the right price in the least amount of time. Realtors know the market, recognize buying trends and understand the legal standards of the industry. When you hire a real estate agent, you get the benefit of sales experience that has been earned through a full-time commitment to the profession – something that an average seller would not be able to come close to matching.
Advantages of hiring a real estate professional
People who sell ‘For Sale by Owner’ hope that they will keep more profit from the sale of their home. However, real estate agents have the necessary experience and skills required when it comes to pricing, marketing, and negotiating. Because of this, FSBO sellers can end up making less money on the sale than if they had hired an agent and paid commission. It can also take much longer to sell the home by themselves, as the seller’s market reach is limited to their budget and restricted to their knowledge about where to market. To sell a home by yourself means that it will take over your life! Seller's need to understand the investment of time, effort and money it will take to make a sale on their own. Taken all together, you may want to consider other options for selling your home.
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