Occasionally I hear about someone wanting to "save" the cost of the real estate commission. Everyone wants to save money, right? The real question is, can a for sale by owner really save money by not hiring a REALTOR®? Can a buyer save money by not hiring their own representation?
Let's start with marketing. By hiring a REALTOR®, you can get all this professional marketing done for you, at no cost to you unless and until the agents are successful. A professional brokerage can do all of this amazingly quickly based on their back office staff and agent expertise. For a homeowner there's a 100% learning curve for each step!
recommend best steps to prepare home: Cleaning, Paint Colors, Staging, Decluttering/Storage, Landscaping, Cost Effective Repairs, Upgrades if any- signs that comply with local regulations
- professional photographs
- video, 3d walk through, virtual tour
- fliers
- professional lighted display at the local brokerage office
- key copies at the office to address lock-outs & broken keys
- booties to keep floors clean
- laminated signs pointing out features and highlights
-
electronic secure lockboxes so you don't have to be home all the time nor should you let unacompanied strangers in. They log who has shown the home and when.
- entry into the MLS so all agents and buyers can find the listing
- entry into the brokerage website - with Century 21 it's global
- marketing remarks designed to appeal to buyers
- immediate uploading of photos into the MLS
- enhanced listings on all big websites & social media advertising
- brokers tours
- open houses - hosting / advertising / signage
- e-mail blast to agent database
- networking calls to the agents most likely to have buyers
- calls to agents who've shown the home providing critical follow up feedback
- advertising - depending on the listing: newspapers/magazines/on line
Can you skip some of these steps? If you do, what might that cost you in terms of profit? Will you get offers as quickly? Will the buyers' offering price be as high?
Moving on to pricing. This is the step at which sellers are most likely to falter. Nearly every seller thinks their home is "special." Nearly universally, sellers overvalue their property. They have a very difficult time seeing that once for sale, their home becomes a commodity. Buyers compare houses by their basic features. That special feature that you paid $x to install is unlikely to add full value to the sales price.
Won't a buyer just make a lower offer? Rarely! Usually they pass and won't even look at an overpriced house. The seller looses money because of the extended time on the market. Eventually, the seller drops the price, but by then the house is stigmatized, and sells for less than it would have if properly piced in the beginning.
How about disclosures? In California, there is easily a 1/4" to 1/2" stack of paper of legally mandated disclosures. Fill out a disclosure incorrectly, or forget one of these, and the buyer has cause to seek legal remedies after the closing. How long do you have to disclose a death on the property? How many smoke detectors do you need? Do you need carbon monoxide detectors? Do you have to disclose about "that" neighbor? Should you disclose a repair you made 10 years ago? Taxes? Rental laws? Natural hazards? REALTORs® know these answers.
Let's say you're a buyer trying to buy from a For Sale By Owner seller. Are you confident the seller knows how to fill out the paperwork? Are you comfortable that the seller has really disclosed everything they should? Which things should you inspect? Who are the best inspectors? What does it cost? Who pays? Which city/county offices should you visit? By when?
What terms are best written in the purchase agreement? For whom? Buyer or Seller? Which terms should be negotiated differently or pulled out all together? Home Warranty? : Who should pay? Which is the best escrow company? Title Company? What's the difference? What are good loan terms? When can the seller cancel the deal and how? How to arrive at a purchase agreement that treats both sides fairly is as much art as science. It's what REALTORs® do for a living, day in and day out.
Who says the buyer is really qualified to buy the home financially? Is that lender proven through past experience, or an anonymous internet lender with too big of a work load to be on time and effective? Do you know how to read the lenders' letter and what questions to ask? The risk is, as a seller, your property is "off market" while you're waiting for the buyer to get their loan.
The most important aspect of what a REALTOR® does in my opinion is problem solving. There's simply no way to anticipate what problems will arise during the sale of a property. I'll just summarize the problems I've solved recently, to give you an idea of the complexity of the work we do. If we don't solve the problem, the transaction can fall apart. We are incentivized to figure out solutions, because that's how we serve our clients and earn our reputation as great REALTORs®...besides: if we can't provide solutions that work for everyone, we don't get paid.
Here's a summary of some of the fun problems I've solved recently for my clients, helping them avoid potentially insurmountable nightmares. Bonus: usually there's a combination of problems during any transaction, not just one.
septic system failures- easements
- unknown boundary lines
- a new roof leak during escrow
- imminent foreclosure
- cigarette odor
- standing water under the home
- nosy neighbors with inaccurate memories
- nervous tenant
- pest inspection
- unpermitted expansions
- funky floorplan
- heating issues
- negotiating stalemates
Let's say you are the buyer, and one of these problems crops up. What will you do? What is customary? What is fair? What if you've reached a negotiating impasse?
Buying or Selling a home is likely to be the largest financial transaction of your lifetime. The size of the fee is tiny compared to the potential legal nightmares of doing it wrong. Spending the money to hire professional representation is likely to make you more money, or at the least, save you money in the long run. Buyers in California : the seller can pay the fees out of their proceeds so professional representation costs you nothing out of pocket. Call me to discuss how to work this out if you've found a home that is a for sale by owner.
Whenever you have real estate questions,
just text or call MC at (831) 419-9759, or, e-mail me
at I'd love to help you buy or sell your home. Your home is your castle; I'll treat you like royalty!
Click here to look at homes for sale or sign up for your own custom home alert.
Comments(16)