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Ok. So selling or buying a property is not a matter of life and death. But real estate is most likely one of your largest assets. Going to a discount broker in today's challenging market is not a smart idea. Here are my reasons why.
If you are a home owner who is considering being a For Sale By Owner, chances are you will face a number of challenges with today's buyers. Here's why.
1.) It is nothing personal, but most buyers really do not want to meet you and learn about your family, your pets, what you love about your home etc. They want a chance to move freely about the house looking at the space and imagining themselves living in the home with their family. When I show a home and the seller is home, it is always a fast showing. The buyers feel they are intruding on your personal space and they certainly can't talk to me freely about what they think of your home. If they have objections they are not going to discuss them in front of you and as a result I can not offer solutions to those objections.
2.) Many sellers can not look at selling a home as a business transaction and separate their emotions from the process. I know a lawyer who wanted to buy one of our listings. He put his home on the market as a For Sale By Owner and received three offers. He was delighted with the price and terms of the offer he accepted. The only problem was when the buyer went to do a home inspection they asked for $60,000 off of the list price. The seller told the buyer to go pound sand. Although the seller was convinced the buyer would be back, said buyer never came back. The other two buyers disappeared as well. In hind sight I bet the seller wishes he had someone to buffer his emotional response. He scared away a great buyer and admitted he probably would not see another offer like it. Good agents keep transactions together. Had he had one, I can't help but think he would have sold his home and could have bought our listing.
3.) In the lawyer's instance, I wonder how many buyers he would have had for his home had he had his home marketed more thoroughly by a qualified Realtor. Great agents know who the buyer of a home is and where they are located. It is an agent's job to expose a property to as many potential buyers as there are in the marketplace. By merely sticking a sign in your yard can not possibly reach all buyers.
4.) Financing is so tricky today! Assuming a seller does navigate the home inspection process, then they have to make sure the buyer is truly qualified for a mortgage. As an agent, I can make sure a potential buyer is fully qualified to buy a home so that the loan will close. Many sellers don't even know what questions to be ask a potential buyer.
5.) Realtors today have to tell sellers things they may not like hearing but we know what potential buyers are looking for. I have no doubt that sellers who listen to us about how to prepare their home for the market net more money on their home sale. We tell you if your wall paper is outdated, the floors need to be refinished, your paint colors are too bold, you need to do yard work etc. This results in higher offers.
6.) Many savvy buyers know a FSBO is not paying for an agent, therefore they often discount what they are willing to pay. They also have the perception that FSBOs are overpriced due to the above-mentioned factors (sellers feeling that their home is better than other comparable homes due to emotions etc.)
7.) Buyer feedback is very important in marketing a home. By listening to what buyers tell their Realtors, we can make adjustments that result in selling your home quicker. Many sellers think a fast sale means a home was priced too low. Not true! We once listed a property and got an offer immediately that we thought was a very fair price for the home. Our seller rejected the offer. The buyer came back eight months later and purchased the home at a lower price. Imagine how much money the seller would have saved on taxes, heat, etc. had the seller sold the home eight months prior. The data shows that the longer a home is on the market, the less it sells for. We are not trying to earn a fast commission with proper pricing! We are trying to get you the highest possible price for your home.
On the buying side, here are some reasons I also feel it is not clever to save money with a discount broker.
Some of the discount firms who give money back to you at closing send very unskilled Realtors out to the home. Often they have no local market knowledge. How does this hurt you? Let me give you an example. A discount broker brought a buyer to a listing I had. The price the agent had the buyer pay was very favorable for my seller. Then the buyer's agent decided the buyer should waive a home inspection. Really? I have never had a buyer waive a home inspection. Ever! There weren't even multiple offers. Great for my seller, not great for the buyer! The buyer might get a small chunk of change back at closing, but what if the home needed major repair? That could be a very costly mistake. Not only that, the agent had the buyer put 10 percent down at purchase and sale. This could be done if the house had multiple offers, but it didn't. The buyer's agent put more of the buyer's money at risk than was necessary. I don't care how much money the buyer got back, I still feel the buyer would have been better off having a Realtor who looked out for her interests from start to finish.
Sometimes in saving money you lose. I have seen it many times. You get what you pay for. If you are not sure what your agent is doing to earn their commission in today's challenging market, chances are you picked the wrong one.
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.