A new job. Down-sizing for retirement. Found that Forever Home you’ve always dreamed of. Whatever the reason- you know you are going to move and you need to sell your home. You start thinking about what you may get for your home and the costs involved in selling. Those of you who are perfect models of how to find discounts would look into what Realtors® are paid and make that face. You know the one- just like the face you make when you just found out the movie theater has raised the price of tickets yet again face. But in this case, it’s much more than $1. Naturally, you begin calculating what you could save if you sold your own home. You wonder: Is taking on the Realtor’s® job all that difficult and time consuming? Would it be worth it?
As a Realtor®, I’ve heard stories of how a For Sale By Owner transaction went wrong and read court cases of the mishaps surrounding For Sale By Owner transactions. This is information though, that people not in my industry would not come by readily. Below are reasons why you should use a good real estate agent who sells homes for a living rather than dive into the largest financial transaction you’ll ever complete on your own. In the interest of brevity I will give you four reasons not to go the For Sale By Owner route today and post another four next week.
A For Sale By Owners sell for less money than those with a Realtor.
The National Association of Realtors®’s 2016 statistics on the mean home sale price for agent-assisted homes was $245,000 while for Sale By Owner mean home sale price was $185,000. Bear with me a moment here while I do some basic math. The national average Realtors® commission sits between 5%-7%. So, for example’s sake, let’s say the commission is 6% (split 4 ways between the selling and listing agents’ offices). A sale price of $245,000 would mean a deduction of $14,700 for commission which would leave a seller with $230,300, well above the $185,000 price tag the For Sale By Owners could achieve. Don’t forget the For Sale By Owner still doing months of unfamiliar real estate work to sell their home at that lower price tag.
Realtor® listed homes generally sell higher than For Sale By Owner homes for many decades now and is a testament to the difference it makes to hire a Realtor® who makes a career out of learning and knowing the real estate market and how to attain the best price possible.
Some home owners miss the “golden time” and with it, the best possible price for their home
This point delves deeper into the sale price difference listed above. The “golden time” is the window starting the date of listing the home on the market to two weeks later. During this window is the time when your home is new and fresh to agents and buyers alike who are looking for a home and haven’t found one yet. If the home is priced right, offers will come inside that window, and those offers represent what is the best and highest possible price that can be achieved for that home at that time on the market. Overpriced homes field little to no action from buyers during that window, and after a home has sat idle on the market for months, buyers and their agents, begin to wonder what’s wrong with it and will bring low ball offers to the table, sometimes well below what the home is really worth.
Who’s saving money, the sellers or the buyers
So, an often overlooked factor in going the For Sale By Owner road is who will save money avoiding the Realtors’® commission-the sellers or the buyers. While For Sale By Owners choose selling on their own to save money, they sometimes don’t take into account the buyers’ perspective. Buyers can have a Realtor® do all the work for them and after all is said and done, their Realtor® is paid by the sellers. So why would they choose to do the work themselves in lieu of a professional? They expect to pay less for the home. Let’s revisit that math I did earlier. $14,700 would be a number of importance not to just the sellers but to the buyers too. If they are going to attempt completing one of the largest transactions of their lifetime solo, they would desire incentive to do it, like paying $14,700 less. Buyers may not feel $7,350 is enticing enough to bravely go where few will and navigate the lengthy contract’s clauses and contingencies, especially when their other option is for someone else, a professional who knows the contract well, will do it for them and at no cost to them.
Of all homes sold, very few are by For Sale by Owners
Of all home sales, in 2016 only 8% are For Sale By Owner. This number consistently remains low and has shrunk over the decades from the highest at 19% in the 80’s. Couple this with another stat-90% of home owners that started as For Sale By Owners end up handing it over to a Realtor®. I think these two numbers speak for themselves and are reason to skip this plan, hang onto that golden timeframe, and let a professional market your home for you. But, just in case this was not enough to push convince you that For Sale By Owner isn’t a good plan, I will post four more good reasons why not to next Sunday.