Man, I love Trulia Voices. Its good for exercising my noggin and really gets me to consider questions and concerns that my potential clients may have.
A well-spoken, potential seller posited: Why should I use a Realtor® to sell my home?
My visceral reaction was how I respond to my 8 year old: CAUSE I SAID SO! Of course, after I got over that, I gave it some thought, and distilled them into this manifesto:
I think you framed your question perfectly; asking about the advantages of using a Realtor® vs. whether you can do it FSBO. As Realtors®, we often get testy when the concept of For Sale By Owner is raised. We take it as an article of faith that it should be obvious that you can't sell without a Realtor®. That someone questioning that is, by proxy, questioning us, our abilities, and our "career" reason for being. Congrats on a good question; a question every seller should ask.
So it sounds like you have a good handle on the market in your neighborhood, you have a flexible schedule, and you are willing to do the marketing to make your home standout. You appear to be someone who is going to have success selling FSBO.
But most of the FSBOs I list are doing their best to sell their home. So why do they choose to use me and why do 70% of people who start out FSBO end up listing with a Realtor®?
When I list a FSBO, one that has really tried to sell their home, what I tend to find out is that they decided that the effort of trying to sell their home by themselves wasn't worth the savings. They started out with the best intentions, but over the course of time they got tired/frustrated with the process. It's been a couple of weeks (or months) and their house hasn't sold. They question whether they are doing things right; pricing, marketing, staging, etc. (It's the same thing that happens every January when I resolve to get in shape)
Invariably, I also notice that they started out with unrealistic expectations. If average market time is 180 days, they are frustrated when the home hasn't sold in 90 days. If market value is in a $20K range, it seems they're always at the top of that range. So why do they do this? It's not because their dumb; they tend to be bright people. They do it because they are "invested" in the sale of their home and that "investment" clouds their judgment. Some Realtors® do this too: they're so invested in getting the listing; they'll take it at a reduced commission or at an unrealistic list price. I think its human nature.
But for sake of discussion, let's say that you can be objective and unbiased about your home. That you (or you and your spouse) can acknowledge (if true): "there's 10 other homes like mine for sale in my neighborhood/building and mine is the 4th best; average market time is 200 days, but we think it could take 300 to sell; we know that it's worth $400K, but we'll take the 5% off the top that FSBO buyers do and sell it for $380K". You can do this so you are going to be part of the 30% that persevere. So what are the logical reasons (outside of marketing/exposure) for using a Realtor®?
There's one that sticks out for me; it's so you have a "fail-safe" option when you do get a contract. Prior to contract, usually the worst thing that can happen is that you have wasted your time. Not so when you are presented with a contract. Assuming that you have negotiated the best price for your home (a concern in itself), once you have signed a contract you now have contractual obligations to that buyer.
With those obligations comes potential liability when a contract falls out. Your Realtor®, as mentioned in an earlier post, carries Errors & Omissions (E&O) Insurance. E&O, as defined by Insurance Journal, is "the insurance that covers your company, or you individually, in the event that a client holds you responsible for a service you provided, or failed to provide, that did not have the expected or promised results". When you sell FSBO, you go without that protection. And while the unexpected rarely happens, when it does you are hit with the double whammy: you don't have the training/knowledge to fix the problem and you are unprotected when that problem leads to litigation.
I break it down for my clients into 2 analogies. To me the marketing or selling portion of getting a home sold is like the choice between cooking a gourmet meal or dining out at a fine restaurant; both may end up tasting great, but I'd bet on the chef. The closing portion is like making the choice to have life insurance when you are 30 and have young kids. Odds are you aren't going to need it, but what happens if you do. This is the largest financial transaction you may ever make, so how much risk are you prepared to take?
I apologize for the lengthy post, but selling FSBO can have significant ramifications and, as I mentioned earlier, it's a topic that Realtors® usually don't like to discuss. I hope that I have given you something to consider and I wish you good luck with your decision.
Have a great weekend.
Please feel free to visit my blog about SW Chicagoland real estate at the Will/Grundy Real Estate Report.
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