Home > Blogs > Peggy Harmeyer- Harmeyer Team > Peggy S.'s Blog

The Pitfalls of For Sale by Owner

By Peggy Harmeyer- Harmeyer Team

Real Estate Agent with RE/MAX Real EstateGroup.com

March 20, 2011 09:50 AM

Money pit

======================================================================= Many homeowners think that selling their home alone without the help of a real estate agent will help save them money in the end. The fact of the matter is that selling your home on your own isn't easy work. In fact, you may actually lose a substantial amount of money when you try to swell your pockets you aren't formerly trained in the business of real estate. A Realtor can not only save you money, they can save you time and stress so that you can make the transition from one house to the other as smoothly as possible. Putting Your Home on the Market Did you think you could erect a “for sale by owner” sign and everything else would be smooth sailing? While this is a start, there is a lot more to it. Many homeowners learn about multiple listing services, which is basically an index of homes that are on the market and then pay about a few hundred dollars to have their home listed. When calls don't start flooding in inquiring about the home many sellers wonder what the problem is. The problem is that it takes more than a listing to get Realtors to visit your home with their clients. Realtors are loyal to other Realtors--that's just the way it works. Also, when you work with a Realtor he or she may be able to network with others to be sure that your home is getting as much exposure as possible, all for the price of the sales commission. A Realtor will also have other avenues to explore with listing your home on the Internet and locally. The Value of Your Home Sellers lose money when they attempt to sell their home on their own because they don’t know the true market value. A Realtor knows all of the current market values and trends and can help you get the most for your home no matter what the market situation is. Reputation The majority of people in the market for a home go with a Realtor; in fact 80% of buyers work with a Realtor because the Realtor has a good reputation and they need help maneuvering the real estate market. If you put a sign in your yard, in the newspaper, or on bulletin boards in various areas buyers have no idea who they are dealing with. Though a buyer may be able to get a good deal on a home that is for sale by owner, they are leery of working with someone that they don't know and may or may not have real estate experience. Final Thought As you can see, there are many reasons to work with a real estate agent instead of trying to sell your home on your own. While a Realtor may take as much as 7% of the selling price, this is peanuts for all of the work and stress that they are saving you from. Just think; the legal paper work, home inspections, showing your home, and marketing with other Realtors to sell your home as quickly as possible for a reasonable price is what a Realtor does and simply stated what you cannot accomplish.

=========================================================================== Original Article Source www.agentsuccessclub.com For personal use of AgentSuccessClub members only. Any other use is prohibited.

Comments(5)

Comment

Show All Comments

Sort:

Sonja Patterson

Keller Williams - BV - College Station, TX

Texas Monthly 5-Star Realtor Recipient for the Hou

Peggy, I just saw a For Sale By Owner this afternoon. It rarely works down here, and yes, it takes an awful lot of work that few people have the time (or knowledge) for.

Mar 20, 2011 10:00 AM

Joanna Szwyd

StoneHouse Properties - Great Barrington, MA

Peggy, many o us will of course agree with you. For Sale By Owner may not be necessary easier or less expensive for the owner, but perhaps these owners want to find that out on their own? The hard way?

Mar 20, 2011 10:15 AM

Peggy Harmeyer- Harmeyer Team

RE/MAX Real EstateGroup.com - Altoona, IA

Licensed in the State of Iowa

Sonja,

Yes, It rarely works here in Iowa either. Selling a home isn't just a matter of putting the sign the yard and hoping they will call because, you have the best house in the best neighborhood. The reality is that as REALTOR® we do have buyers and know many agents who have buyers. The resource are much larger than many FSBO seller's have. When I make financial decisions I contact a professional, Need health care I contact a professional so of course I would say contact the professional - A REALTOR®.

Joanna,

Yes, They do sometimes have to find out the hard way that is their choice and sometimes they get lucky but, more time than not they will have to hire a professional to sell their home.

Thanks for both of your remarks.

Peggy

Mar 20, 2011 01:52 PM

Mel Ahrens, MBA, Kelly Right Real Estate

Kelly Right Real Estate - Hood River, OR

Customized Choices for your Real Estate Needs

Hi Peggy
The primary reason owners sell FSBO is they do not perceive the price/value relationship in the traditional real estate commission compensation system. It is high risk high reward for all parties involved. Paying a commission to cover costs for expenditures on unsuccessful marketing efforts means the commission is more than the cost/profit margin to market/sell the property. The seller or buyer not having any skin in the game upfront means the real estate agent/broker must get a higher reward when a transaction is completed. Simple risk/reward concept.

Alternative compensation systems, such as fee based services are being developed to meet such seller's needs. Pricing can be addressed by hiring a real estate office to do a CMA or an appraiser to complete an appraisal. Options do exist. Attorneys are also available to assist in the transaction and avoid potential legal mine fields. Alternatives exist to the traditional real estate commission compensation model and often result in significant savings to the seller (often the buyer too). Many in the real estate industry apparently do not recognize owners are fully capable of handling many, if not all, of the steps in a real estate sales transaction. Or they can hire for specific tasks and/or skills. We do agree For Sale By Owner is not right for some sellers; if they do not have the commitment or skills to complete the transaction they should not try to do so, unless they obtain the needed skills by hiring for the task.

To quote above: "agents/brokers take as much as 7% of the selling price, this is peanuts for all of the work and stress that they are saving you from. Just think; the legal paper work, home inspections, showing your home, and marketing with other Realtors to sell your home as quickly as possible for a reasonable price is what a Realtor does and simply stated what you cannot accomplish." Bold is my emphasis.

Your quote is your opinion and MAY be true in some situations but certainly not the statement of fact you present. 7% is not peanuts - on a $300k home it is $21k. Even paying a buyer agent/broker 50%, it is still quite a bit of money. All of the items you mention are able to be accomplished by hiring an attorney, a marketing services company, a lockbox, a Flat Fee listing, an appraisal for pricing, etc.... Our clients have been able to accomplish what you state is not possible. We help with the marketing; they take care of everything else. Is Hood River the exception to the rule? I doubt it.

I see the industry needing to change the compensation system - tie it to the services received. Many FSBO's would use an agent/broker if they had an alternative compensation model. Taking the all or nothing factor out of the relationship and setting realistic expectations would enhance the price/value perception. And the buyer or seller having some skin in the game (paying for advertising costs, agreeing to an hourly fee for services, etc..) would reduce the overall cost to the buyer and seller. It would also reduce your risk allowing lower fees to be charged. CPA's are paid for their knowledge and expertise - why shouldn't you be paid in a similar fashion? Tradition is holding back a more efficient method of compensation.

My opinion, which I realize differs dramatically from yours. This is one of the reasons I like Active Rain so much as it provides a forum to exchange opinions.

Take care,
Mel

Mar 20, 2011 05:24 PM

Peggy Harmeyer- Harmeyer Team

RE/MAX Real EstateGroup.com - Altoona, IA

Licensed in the State of Iowa

Mel,

Yes, You have some good points In my area CMA's, Staging tips ect are free but, maybe it would be better for all if we would charge for all our services and help to FSBO's but, I have several clients that had experience's with the few in our area and they basically put it on the MLS and were no where to be found when they needed them. I will say I am willing to help people with their FSBO's with tips, CMA ect and wish them luck but, it is the ones that have their home $40,000- $50,000 overpriced and they know the market and they will not pay any commission or fee as they feel it is the buyers place to pay. I don't work for free so I say good luck to them and I will be here if you need my professional services. I know there is certainly many that FSBO is their only option financially but, I call a professional when I need financial, Medical or legal advise so maybe contacting a REALTOR® (a professional) wouldn't be so bad after all.

Thanks for your spin on things.

Have a Super day!

Peggy

Mar 21, 2011 11:10 AM