Why selling without a real estate agent could lead to disaster
Factors to consider: Time, Hassle and Money
1. Let’s start with the big motivator: Money
How much would you save? Quite possibly nothing. Overall, data show that FSBO homes sell for less — sometimes a lot less.
- Lower sales price: Research data from 2016-2017 shows that FSBO listings sell for about 5.5 percent less than comparable properties, according to Collateral Analytics. So FSBO sellers lose money right off the top — Especially if they end up paying a buyer’s agent a commission of 2-3 percent. (Any buyer without their own agent faces a whole other set of problems!)
- Knowledge: What you don’t know can absolutely hurt you financially, and it can come back to bite you in a lawsuit. A real estate agent’s knowledge is priceless. Realtors know how to make sense of the data and the entire selling process so that sellers and their home are fully prepared before hitting the market, navigate the complicated escrow process and close the sale with the fewest possible hassles.
- Time Everyone’s time is valuable, but as a seller, do you truly have time to schedule showings or to personally show your home in a safe manner at any given moment? Do you want strangers knocking on your door when they see the sign in the yard? What is your plan for days you work, or go on vacation?
- Negotiating: Do you feel confident to negotiate with a buyer or a buyer’s realtor? Are you capable of answering questions about home conditions without getting defensive?
- Disclosures: Realtors have a legal duty to be honest with all parties in a transaction. A FSBO seller must be honest about the property as well, even when it means disclosing uncomfortable facts about the property. If a buyer questions an issue or has a concern, can do you have access to inspectors, repair people or other experts? If not, you may lose the sale. Can you say lost opportunity?
2. Preparation and Presentation = Money
Image is everything when it comes to real estate. Good Realtors explain how to prepare your home to show it’s best, and ranges from re-arranging furniture to fixing long-neglected items that turn buyers off — from chipped paint to leaky faucets.Realtors offer dispassionate advice that may translate into a higher sales price.
Hint: Buyers notice everything. A dirty oven can scuttle a potential offer.
Photos: Realtors pay for professional photography out of their commission. As a FSBO seller this cost — anywhere from $150 to $500 (or more) falls on you and cuts into your “savings”. Will you invest in photography? Or will you take cell phone photos, because in Reno, homes sell no matter what?
- Fact: Studies show that homes advertised with dark, out of focus photos, or photos of messy homes tend to garner fewer visits, take longer to sell and lower offers.
- Fact: More than 90 percent of people look at a property online before visiting it. This is a money issue. For me, it is part of my branding whether I am representing a condo or a castle.
Do you have a the facts, a plan and a marketing budget? Do you know the buyer demographics for your property? The neighborhood? A competent Realtor does, and can show you the difference between what you “want” and what the market will pay. Numbers (generally) don’t lie.
Reno home prices are rising. At the same time, buyers are not stupid. Nor are lenders and appraisers. Sellers confuse sentimental value and “news” with what buyers will actually pay and the data appraisers use to support a loan.
An overpriced home will sit, or sell for thousands less than a properly priced home. Do you know the buyer demographics for your neighborhood? Your type of home? A good Realtor will. Some websites such as Zillow allow FSBO sellers to post information. Will that be enough? It won’t be in the Reno Sparks Multiple Listing Service — cutting out thousands of potential buyers. What other marketing will you do (and pay for)?
Chase International Real Estate has extraordinary worldwide connections and marketing networks to share information about your property. Some other brokerages also offer expanded marketing. Some just input data into the Multiple Listing Service (MLS), then sit back an wait. What if your property needs a wider audience? Homes listed for sale at Chase International receive local, regional, national and international exposure.
5. Negotiation experience
When an offer comes in, how will you evaluate it? What parts of the purchase agreement impact your bottom line? How would you evaluate multiple offers? By price alone? A Realtor digs deeper into the terms and conditions. How do they strike a delicate balance between protecting their interests as a seller and working with the buyer toward the goal of putting an agreement together?Here’s where what sellers don’t know can hurt them the most.
6. Inspection and repair know-how
Inspections and repairs can be the most difficult parts of a real estate transaction, even for Realtors. Do you know which inspections are needed/advised? Inspections often reveal items or systems that need repair. There’s a protocol for divvying up who pays for what. This can cut into your “savings.” Lenders may require certain repairs as a condition of funding a loan. Certain types of loans prohibit a buyer from paying for some repairs. Are you, as a seller prepared to deal with this? Do you know licensed repair people who will come to your house immediately — at a fair/reasonable cost? Fixing it yourself or hiring an unlicensed worker can land you in court years down the road if the repair fails.
7. Transaction management
Once you accept an offer, how do you shepherd it through the escrow process? Who makes sure all the provisions of the contract are met? Who makes sure the deed is clear, that the sale transfers properly? How do you verify the buyer’s financing? How do you follow up to make sure the financing actually happens? Have you disclosed everything required by law? If you “forget” to say there was a leak years ago, or a tree fell, or any of thousands of other defects, a buyer could sue you years down the road.
8. Clunky Closings
Finalizing the sale — the escrow and closing process — is generally handled by a third party in Reno. Last minute issues often arise — the lender needs an addendum, the buyers or sellers have to waive a condition of the contract, one party or another makes a concession that must be documented. If the paperwork isn’t right, the sale (and your money) is delayed.
Are the “savings” worth it?
Only you can decide. Consider: The funds you “save” on commission by listing your house as a “For Sale by Owner” could quickly disappear. The perceived savings can evaporate through uninformed decisions and costly mistakes that — in the long run — end up costing sellers more money than if they had used a Realtor to protect their interests and help them justify their home’s value in the first place.
Holly O’Driscoll is a full-time professional Realtor with Chase International Real Estate in Reno, Nevada. Search for property here