by Jeff Knox
on Thursday, July 23rd, 2015 at 5:28pm.
In an effort to save money, many people forego selling their home with a Realtor® and instead elect to sell it as a for sale by owner. This can not only be dangerous, but could actually cost you money in the long run. Why have a Realtor® represent you when listing your house? Here are nine good reasons.
Selling your home with a Realtor® is likely to result in a faster sale, since Realtors® are better able to market your property. Real estate agents have access to Multiple Listing Service (MLS) databases, which are widely searched by people looking for homes. Your agent may also know of someone who is looking for a home like the one you are selling, and may even be able to secure an offer without advertising it at all.
For instance, our website generates approximately 300+ leads per month and we currently have a database of over 5,000 potential buyers who receive information and new listings from our firm on a daily or weekly basis. It would probably be very fair to say that not many, if any, For Sale by Owners have this kind of reach into a pool of people actively looking for a home to buy.
Real estate agents also know the market inside and out, and can therefore ensure your home is priced appropriately. Homes that are not priced too high or too low for the market tend to sell much quicker than others.
While there are some very good tools available online for finding the approximate value of your home, nothing substitutes for an in person visit from a good agent. Every home is different, so it would take a trained Realtor® who knows how to price a home and how to deduct for certain aspects of the home and add value to the list price for others.
Listing your home with a Realtor® can not only help you sell faster, but also make more money on the transaction. The National Association of Realtors® reports that nationally, the average price of a For Sale by Owner home was $174,900 in 2014, as opposed to $215,000 for homes listed by an agent. This means you could actually realize a profit even after paying the real estate commission.
See, good agents do much more than just put your home on MLS. And, while I know that many discount brokerages now offer a flat-fee MLS package, any good Realtor® goes way beyond just placing the home on the basic MLS platform. The top local Realtors® in any market have spent years networking with other Brokers & agents and can put your home in front of thousands of potential buyers just through their professional network alone.
In addition to placing the home on MLS, our firm starts our listings with custom website as the base for our marketing. The custom website is designed with professional, HD images of your home and is advertised to all 13,000+ area Realtors® via direct email communication. The pictures are paid for by our firm and taken by local, professional, real estate photographers. The website is built by our professional marketing department.
The listing website is then advertised via direct marketing campaigns on social media networks like Facebook by using very specific demographics like age, income levels, probability to move, etc. This allows us to target specific buyers with very good odds of reaching a specific market of individuals who would be looking for a home like we are listing. The targeted demographics click the link or advertisement on social media and are taken directly to our custom website for the listing. If the prospective buyer registers on our site, it allows us direct access to the potential buyer for the home. That way, we may quickly contact the interested buyers without wasting time and losing a possible transaction and/or sale of our listing.
We have spent years learning the in's and out's of marketing homes and it isn't something a For Sale by Owner could just learn overnight. Yes, we do more than just open doors for potential buyers.
You may have your own opinion as to what makes your home attractive. Realtors® on the other hand show properties every day, and are in a good position to tell you what works and what doesn’t. As such, your agent could give you practical advice on staging your home or avoiding certain color schemes. He or she can likely recommend simple touches that will go a long way toward ensuring your home is presented in the best light possible.
All sellers naturally have a favoritism toward their own home. As such, most sellers tend to price their home higher than the comparable homes around the area while an agent tends to stay neutral about the value of your home. This is a job to agents, so they have no emotional attachment to your home. Therefore, you can count on agents providing an unbiased opinion. Some of the top real estate agents from around the U.S. offer some of their best thoughts on FSBOs below...
Ryan Fitzgerald, a top Raleigh, North Carolina Realtor, has penned at least two great articles about how Realtors make FSBO sellers more money than FSBO alone. Strategies Realtors use to Make Sellers More Money & Does Selling Your Home with a Realtor Net you More Money? Ryan discusses key points in these articles, including but not limited to - (1) 12 Things Realtors do to Sell your Estate for More Money, while pointing out the statistic showing Realtors net 25% more on average than FSBO. (2) Great Realtors Interpret Local Market Data & Trends - Realtors understand how to interpret local market data. (3) Realtors know how to determine the best possible listing price for your home. (4) Market your home to its fullest potential online including but not just limited to MLS. (5) Realtors collaborate with other Realtors which includes reverse prospecting to other local Realtors. The articles go into depth on these topics and more.
Bill Gassett, Real Estate Agent Grafton MA, of Re/Max Executive Realty has some great materials on why For Sale by Owners usually fail. But, Bill also offers some advice for those wanting to try the For Sale by Owner route, too. Some of the highlights in Bill's articles are (1) tips on pricing your home right. Bill talks about some of the wacky things he has seen during his time in real estate which come from online pricing tools like Zillow's Zestimates and others. (2) The importance of having a pre-sale home inspection. A pre-sale home inspection will give guidance to a seller on what issues exist on the home and are in need of repair prior to even putting the home on the market. (3) Preparing the home for sale - taking care of pet odors, damage to the yard/landscaping, carpet stains and more. And, (4) Buyers want the commission - Bill illustrates how buyers will also want to share in whatever commission you may be "saving" by not using a Realtor® if you are a For Sale by Owner.
For this piece, Debbie Drummond, Las Vegas luxury Realtor, shared an article she wrote - How to sell your for sale by owner Las Vegas home. While my article is not exclusively about Las Vegas homes, Debbie's tips in her post apply universally to all sellers set on marketing their homes as a FSBO. She offers great expert tips on (1) hiring the right photographer to present your home in its best possible light - "Today's buyers want to see lots of photos of homes. Few homeowners have the cameras and skill of a professional photographer. Hire a pro who can take photos that show how large the rooms are and how nice the home looks." (2) Why to expect calls from Realtors® when you have a home listed as a For Sale by Owner. - "When you put up a For Sale by Owner Sign, you will get calls from Realtors. Many of them will be calling to offer their services. When you answer the phone and it's a Realtor, it may also be someone who has a qualified buyer who is interested in your home. They will start by asking if you co-operate with Brokers. Before you list your home, you should decide if you are willing to pay the buyer's Realtor a commission. You should also decide how much you will pay them." And (3) Holding your own Open Houses - "The National Association of Realtors reports that less than 6% of homes are sold through an open house. There is some question as to whether open houses work. They can be useful for the agent who meets a potential client. They seldom get your home sold. When doing a FSBO, you need to use every marketing tool at your disposal. Holding an open house should at least give you some feedback from the neighbors about your price."
Rochester NY Real Estate Agent Kyle Hiscock contributed to the topic with a blog post titled - Top 10 Reasons Why For Sale by Owners (FSBOs) Fail in Real Estate. Kyle lists strong, valid and tangible reasons as to why FSBOs fail to sell when listed. His article is a great read. In short, Kyle points to a few supporting facts like (1) Failure to prepare the home for showings - "Properly preparing a home for sale plays a huge role in the success of selling homes, whether FSBO or not. One of the most common reasons why FSBOs fail in real estate is because the homeowner has no idea how to properly prepare before it is listed for sale." (2) FSBO's don't know how to screen potential buyers - "One of the biggest reasons why FSBOs fail in real estate is because the homeowner has no clue what questions they should be asking or how to screen the potential buyers." And, (3) FSBOs aren't willing to pay a buyer's agent commission - "Another common reason why FSBOs are unsuccessful is because the homeowner is not willing to pay a buyers agent a commission. A FSBO is able to save the commission they would have to pay a listing broker and some are willing to pay a buyers representative, which is a smart idea. FSBOs who are unwilling to pay a buyers agent a commission will greatly reduce the chance of a successful sale."
Many people grossly underestimate the amount of time they’ll spend showing their property and answering questions about it. You’ll also need to place online ads, respond to emails and host your own open houses. Once you do secure a buyer, you must draw up a contract and complete other legal documents. All of these things can consume a great deal of time that could be better spent doing other things, particularly if you are also in the market for a new home to move into once yours sells.
On top of the things mentioned above, potential buyers will want to see your home and, quite frankly, expect to be able to see your home from approximately 9am to 8pm seven days a week. They might give you an hour notice if you are lucky. If you are unavailable to show your home during the time buyers expect, there is a good chance those particular buyers will not be back to see it. I've stated in prior articles how buyers get their feelings hurt by not being able to see a home when they want. They shouldn't get their feelings hurt, but they do. And, a large majority of the time, a rejected buyer will not come back to see your home.
Most For Sale By Owners don't understand how demanding buyers can be. Again, buyers expect to be able to see your home when they want. So, let's say that you are at work when a buyer wants to see your home. Can you leave work every time to show your home to just a potential buyer? What if you are out of town with your family? Can you be back within an hour to show your home on the weekend? Things like this are definitely questions to think about if you are thinking of selling your home with a For Sale by Owner.
Bottom line is this - you will need to become a full time agent while your home is on the market if you sell it yourself.
Real estate agents will not show your home to just anyone. Any agent who has been in the business for very long develops almost a sixth sense for weeding out serious buyers versus those who only want to look and waste time. Instead, most Realtors® will recommend buyers become pre-qualified for a mortgage first. This ensures they only show people homes that are in their price range and for which the potential buyer has been approved while also providing a greater level of personal safety and privacy for a seller (more on that below).
When selling your own home, you could wind up showing it to people who could never qualify for a loan on it in the first place. In fact, if you don't know to ask as a FSBO seller, you might not know this until you are near closing, which means you could waste a great deal of time or lose out on another buyer during the meantime.
Before even showing a home, I make sure that the prospect has spoken to a lender and, further, that the prospect sends me a pre-qualification letter from a reputable lender. The first step to buying a home is getting your financing secured from a lender. If a potential buyer hasn't even contacted a lender yet, they aren't very serious about buying a home...even yours.
Some potential buyers are smart & almost professional when it comes to getting into homes. In order not to have to present a pre-qualification letter, they will tell you that they are going to pay cash for the home. Here is how to combat that issue - make the potential buyer produce a letter from their bank stating that they do, in fact, have the funds in their account to purchase your home for cash. This letter is called a "proof of funds letter." It is not offensive to ask for this documentation and it is not out of the ordinary. I do it almost daily. If a potential buyer gets offended by you asking for a letter, let them go. They weren't real buyers anyway.
I know this is hard to believe, but some potential "buyers" will simply want to see the inside of your home for various reasons with no intentions of buying your home. Some of the reasons people want to see the inside of your house are fairly innocent, such as - (1) they're dreamers. They hope to one day own a home like yours. They consider your home listing like a free showroom of sorts. They might have seen pictures of it online and now want to see your home in person. (2) They have a home to sell in the neighborhood as well. These people will want to see your home because they want to size up their local competition. They want to see your home in order to make their home more attractive to buyers. They want to see why you are asking the price you are asking, what kind of work your home needs, paint colors, decor, etc.
Other reasons people want to see your home can be not-so-innocent, such as - (1) seeing what kind of alarm systems your home has, what kind of appliances and valuables you possess, etc... These people could be using the excuse of wanting to buy your home to gain valuable information and knowledge for a possible burglary. (2) Sadly, it is not uncommon for people to want to see your home to see what kind of medications and prescription drugs you keep around your home. Some of the medications you have may be very valuable to certain people who can sell them. We tell ALL of our clients to remove all valuables and medications from their homes when a home is listed for sale.
When you have a “for sale by owner” sign in your front yard, you’re vulnerable to having people show up unannounced to look at your property. You never know when someone might be driving by and want to stop out of curiosity. In these instances, you’ll have to stop whatever you’re doing and start showing people around instead. These constant interruptions will not be a problem when you list with a Realtor®. You’ll usually know ahead of time when someone is coming, and will also be able to tidy up first. People will treat your home like a 24 hour Open House when you have a For Sale By Owner sign in your yard.
Realtors® generally use showing services to schedule appointments which allow time for a seller to clean their home and leave prior to a showing. The service we personally use allows us three different appointment options for our seller clients.
Option one for an appointment is what the service calls a "go & show." This means that the agent representing the buyer simply calls the service and tells the service they want to see the home. The service tells the agent how to get into the home, alarm codes, etc. There is no warning to the seller that the agent and their client are coming to view the home. This option is generally used for vacant homes or vacant bank owned properties. Not the best option for a seller occupied home.
Option two for an appointment is what is known as a "courtesy call." This is where the agent wanting to show the home calls the central showing service and the service notifies the seller of the pending arrival of the agent and his or her client. The service is giving you the courtesy of a warning and generally you will have an hour or so before the agent arrives to show your home. In fact, we may set limitations with this option so that there must be at least a determined time (e.g. 30 minutes, an hour, two hours, etc.) before the agent may arrive.
Option three is "appointment required." This means that the agents generally must try and schedule a showing on your home at least 24 hours in advance. While it gives you, the seller, lots of advanced warning about the showing of your home, it is not the easiest thing on the agent and possible buyer. It might lead to agents skipping showing your home due to the amount of effort it requires to coordinate showing times.
You may be thinking - "poor agent...they don't want to do any work." This isn't the case. Here is why an agent would skip your home if you are "appointment required" - see, most buyers do not want to just see one home. They want to see a bunch of homes in a day (maybe 5 - 10). If the scheduling agent has to work too hard to try and fit your home around showing ten other properties that day, it becomes more work than it is worth to the agent. Scheduling home showing times is hard enough because sometimes buyers want to spend a long time in a certain home, while spending only short times in other homes. So, trying to nail down certain windows of time for "appointment required" homes can be a tall order.
So, what's the happy medium? My suggestion is option two - the courtesy call. As a seller, you always need to be prepared as if you are having a showing in the next half an hour. Keep your home ready and available to leave at a moment's notice.
Buyers tend to prefer viewing homes without the owner present. When selling a home yourself, this is not possible. You may also attract fewer buyers, because not everyone is comfortable handling real estate transactions on their own. Buyers who feel intimidated by this process will likely consult with a Realtor®, and will consequently avoid viewing any “for sale by owner” homes.
Many folks who list their home as a for sale by owner make the mistake of thinking their presence at the home will "sell" the property by pointing out all the great qualities. However, buyers hate when the owner of a property is around during the showing. Allow me to repeat, buyers HATE when the owner of the home is present during a showing. I liken it to the feeling you get when you start shopping for that new car. Do you want the car salesperson approaching you as soon as you get out of your vehicle and then hanging around with you as you look at the vehicles on the lot? Most people would answer no. This is the same exact feeling potential buyers get if a seller is at their home during a showing.
I've found several things when a seller is around during a showing, especially in a for sale by owner situation: (1) the buyers will not openly communicate their feelings about the home when the seller is present. The buyer feels as if they cannot talk freely since the seller may think of the home almost as strongly as if it is their child. So, most buyers will politely keep their mouths shut while they look. (2) The buyers will not stay very long at the home when the seller is around. Again, sellers have a tendency to hang around and follow the buyers in an attempt to (a) try and sell their home and to (b) be (what they think) is helpful. Neither of the aforementioned seller actions are helpful. Not only are the actions not helpful, they hurt the sale of the home. Knowing this, you can now understand why buyers will not stay very long at a home where a seller is present. The buyers feel pressured. They do not want to feel pressured...period.
Pressuring a buyer does not sell a home. Having what the buyer wants in upgrades, # of bedrooms, neutral paint colors, pricing the home correctly, etc is what sells a home. Good Realtors® know exactly what sells a home and they can help you with these issues.
The last & most important thing I've learned/heard when a seller is present is this - 99% of buyers personally tell me that it is "uncomfortable" and "awkward" when a seller is present at the showing of their own home.
Price isn’t the only thing that’s negotiable in a real estate contract. Other things such as repairs, taxes, and even whether or not certain furniture is included may all be negotiated as well. If you’re not skilled at negotiating, you may find yourself agreeing to unfavorable terms, simply because the price is right. For example, you may agree to immediate possession when you’d rather have a few extra days to vacate your property.
While almost all things in a real estate deal are negotiable, most are backed by contractual forms separate from the actual body of the sales contract. Examples of things which are negotiable in a transaction include but are not limited to:
Allowing your Realtor® to negotiate for you can ensure you are comfortable with all the terms of your sale, and not just the price.
Your work isn’t done once you receive and accept an offer. Next, you must undergo appraisals, inspections and title searches before you can close on your property.
If you’ve never sold property before, these additional things could leave you frustrated. Inspections are some of the most serious negotiations during the sale of a home. Again, most things are negotiable during a sale, so knowing what is "standard" or "expected" for a seller to repair, while not knowing what is not a "standard" item expected in a repair could cost an owner a lot of money in the end by agreeing to repairs which are not normally accepted repairs within the industry.
A bad or low appraisal opens up a whole new can of worms and negotiating for the sale's price. While inexperienced sellers may just agree to reduce the price of a home to the appraisal price without hesitation, real estate negotiations allow for the seller and buyer to renegotiate a new price but the new price does NOT have to be the appraisal price. Negotiations could lead to a price above the actual appraisal number.
Title searches are generally performed by a title company or an attorney's office. However, some titles will come back with "clouds." Knowing what these clouds on the real estate title search mean could save a buyer from years of grief by walking away from a home before closing as stipulated in the contract.
When listing your property, you can count on your agent to keep you informed as to what happens next. That way, you won’t be quite as stressed out about the events that are to come, and will also be more prepared for your closing.
Overall, your sale is more likely to end up on a positive note when you enlist the help of a Realtor® from the beginning. If you’re considering buying or selling property in the Dallas-Fort Worth area, contact our top Dallas Realtors so that we can be of assistance.
Jeff Knox is the Broker Owner of Knox & Associates REALTORS® in DFW and the creator of most of the content on KnoxRE. Jeff was initially licensed in 2004 and has held a Texas Real Estate Broker's License since 2009. Jeff and his team of REALTORS® work all across the entire DFW Metroplex helping both buyers and sellers with condos, townhomes and single-detached properties. Jeff may be reached directly at Jeff.Knox@KnoxRE.com
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