by Hank Miller
on Sunday, November 29th, 2020 at 2:25pm.
Should you sell your home by owner? Should you sell your home without an agent? Valid questions, especially during times of limited inventory when buyers are pounding everything. The internet offers sites, videos, programs and testimonials on how to save thousands selling by owner. For sellers with buyers already lined up, save the money and hire a lawyer to close it. But that’s not everyone. By owners in the open market fail for two main reasons; an inability to remove personal bias from the equation and a lack of understanding about how complicated this process is. Consider just a few of the other major reasons:
The FSBO Stigma
Homes for sale by owner are not common, but there tend to be common threads. Some sellers have a vehement distaste for the real estate industry, certainly understandable. Some don’t see the point of paying 5% to 7% to do what appears to be relatively simple. But homes for sale by owner can be off putting to agents. Some have little to no desire to show them, knowing that dealing directly with an owner can be problematic. They tend to see them as headaches; from showings to pricing to negation to resolving issues and ultimately to getting paid.
Owners can use Zillow but that is raw data. While Zillow is OK for broadly estimating value, the data is far too broad to be reliable. An option may be to hire an appraiser; certainly a good choice but appraisers focus on sales – the past – and aren’t always looking at current and expected movement. While they are certainly capable of this, that’s typically something beyond the scope of work for a typical report. In the end, many owners form an unsupported opinion of what the home is worth. A home must be accurately priced to sell.
Homes for sale by owner are rarely “scrubbed” prior to listing. Agents will look at the home like a buyer and ensure issues are appropriately addressed. From curb to rear boundary, from roof to basement; the home has to be ready to impress the buyers. Agents know what buyers want; owners think they do but few are capable of honestly/willing to evaluate their home or spend money that they feel is “not needed”.
It's almost impossible for an owner to remove emotion from the home selling process. Hard as it is, it must be done as there will be many pivotal decisions made. An experienced agent is a buffer and will reduce stress and anxiety.
Presentation to Buyers
Homes for sale by owner are rarely presented effectively. Studies show there's about a 6 to 8 second window to capture or lose a potential home buyer surfing the web. Compelling photography is vital; lighting, staging, angles, written narratives…everything needs to target the most likely buyer. Cell phone pix or photographers on Fivr do not get it done. Advertising options through social media and public sites are not even close to the effectiveness of the MLS. Push marketing to agents is virtually impossible. Forget relocation buyers; global relocation firms do not have their transferees flipping through “by owner” looking for homes. The exposure to buyers is simply not there.
No Competing Buyers
The stories of an owner selling a home and being run over with offers are largely urban legends. The National Association of Realtors (yes, easily considered biased) released the following key stats for 2020; 8% of homes were by owner (lowest since '81) and of those, 77% sold to someone the buyer already knew was interested. Makes sense (for those sellers), but for the other 23%? Considering there remains a drastic inventory shortage in most markets, how many buyer opportunities were lost? How many buyers (relocation, other states, etc) never saw their home? How many agents never had their home push marketed to them or have it pop up on an MLS search? How many saw poor quality photos or mangled narratives on Zillow and hit next? Experienced agents understand how to leverage tools and changing markets and encourage buyer competition...and maximize seller profit.
Contracts & Negotiation
A contract is a legal, binding document; real estate contracts must be properly written. Home sellers without agents are completely disadvantaged negotiating against an agent. From pricing to terms to stipulations to amendments resulting from inspections, appraisals or other things, sellers will not be at the same level as even the most inexperienced agent. Against an experienced one, it will be worse. How effective is an owner dealing with an experienced appraiser or inspector? Invariably it comes down to “he’s an idiot, I know I’m right” and that jeopardizes the deal. The main block here is the seller’s inability to disconnect from their home; everything is considered personal. Hiring a lawyer is bandied about but most lawyers don’t get involved in contracts and those that do tend to be cost probative.
No Major Savings
Owners selling a home without an agent typically pay the buyer broker commission. That’s typically half the total listing commission and ranges from 3-4%. Assuming 5% listing commission on a 400K home, that total would be 20K; assume 3% or 12K to the buyer agent. So the seller “saves” 8K. Subtracted from that are the costs of initial research, staging the home, marketing, time meeting agents, getting feedback from the agents, negotiation losses and subsequent contract concessions. Inspection issues and seller paid closing costs are almost always asked for - and up against a solo owner, a buyers agent will run it up. This assumes success; most homes for sale by owner fail to sell. Those that do tend to be word of mouth; folks that drop the "if you ever move, call me" on an owner.
Selling a home is a business transaction. The "great savings" selling by owner are realized by a scant few; it takes a lot of work to make the process look easy and boring.
All of the talk about “disruptors” in the real estate industry is welcomed news; the industry continues to encourage anyone/everyone to get a license. The standards to entry and retention are pitifully low by design; agent fees drive everything. However, 15% of the agents are pros and working with a professional agent almost always ensures the best possible outcome for a buyer or seller. Consider as well that the costs to sell a home may be deductible – confirm that with tax professionals.
Vigorously research every agent, do not succumb to pressure to use inexperienced friends or family. In the end selling a home is a major financial transaction and while it’s logical to assume that it’s mindless and easy, that is a siren song. It’s not a 22 minute HGTV show; when things go badly they tend to be very stressful and very expensive. It takes a professional to make it look boring.
The Hank Miller Team puts 30+ years of full time sales & appraisal experience to work for you. Act with complete confidence & make sound, decisive real estate decisions.
678-428-8276 and firstname.lastname@example.org