Despite most experts’ predictions, the house selling market has continued to soar to record highs into 2022, despite mortgage rates inching up.
Given the real estate market’s lengthy run of multiple offers and selling prices well over the asking price, it’s no surprise some are wondering: is it necessary to hire a real estate agent in these hot market conditions?
It is one of the more difficult decisions facing homeowners right now. Should they do a For Sale By Owner (FSBO), or would a realtor make the process easier? There are a few factors to consider, but in the end, it all boils down to two things: time and money.
Listing a Home is Time Consuming
Some homeowners place a high value on avoiding paying realtor fees by doing an FSBO, yet fail to realize the high cost of the time to do everything that comes with selling a home themselves.
“Most people don’t realize how time-consuming listing a house FSBO is. You will need to do tons of research online to get the home posted in enough places to get any attention at all, and you will need to be able to show anyone the home when they reach out. With an agent, we handle everything in between while you do your normal day job,” says Chase Michels from The Michels Group.
Amanda Nunziato from Azure Realty asks these questions to potential homeowners considering doing an FSBO. “Can you be available on the days and times someone wants to see your home? Can you excuse yourself from a meeting or take off of work every time your phone rings with a potential buyer? Timing is everything and could cost you. At the end of a long workday, do you have the energy to take advantage of every possible opportunity to market your home? Do you know how to market your home? These are all questions to consider.”
You Could Leave Money on the Table by Selling Your Own Home
FSBOs typically sell for less; FSBO homes sold at a median of $260,000 last year, and only accounted for 7% of home sales, signiﬁcantly lower than the median of agent-assisted homes at $318,000 as reported in the NAR 2021 Report.
Donald Olhausen Jr, the owner of WeBuyHousesInSanDiego, comments, “many times sellers will try to save a 6% commission, but forget that they need to pay 2-3% to the buyers’ agent representing those who are shopping in the area. Even worse, statistics show that homeowners walk away with up to 26% less money by selling FSBO than if they used an agent. This also doesn’t include all the work involved with preparing the house for sale, open houses, staging, negotiating, and navigating the legalities of selling a home in your state.”
Real Estate Agent Andrew Karpiak with andrewkarpiak shares a recent experience. “I placed a call to an FSBO listing and was routed to a call center. From there, the call center employee had no information on the specific listing I inquired on but said she would have the homeowner call me back right away. Five hours later, the homeowner called to tell me he had already accepted an offer on the listing. This listing wasn’t even live for a full day, and the offer he accepted had two weeks’ worth of conditions.
Karpiak continues, “Did the owner actually let anyone view the home? NO. Did he have a viewing schedule created to maximize the number of interested people? NO. Did he set a date in the future to review offers? NO. So in taking the first offer presented to him, the homeowner potentially missed out on a multiple bid situation where he likely would have sold for more than asking and with no conditions. This is a prime example of someone who thinks they know what they are doing until a professional points out the faults in the execution.”
Exposure to Legal Issues
One of the most important things that can happen when you do an FSBO is that you do not have access to legal advice like many do with an agent.
This past year brought significant changes in real estate law and new risks for sellers. Amanda Nunziato from Azure Realty reminds homeowners that “a lot of legal paperwork is involved in a home sale, and it needs to be completed correctly by an expert. One of the most important items is the seller’s disclosures. A seller can be held liable for fraud, negligence, or breach of contract if they do not disclose certain information properly.”
There are also essential details for buyers considering purchasing a home listed by an FSBO. Andrew Karpiak from Kamloopsliving.com comments, “When a buyer deals with a ‘for sale by owner,’ there is no fiduciary duty from the seller to the buyer. Chances are crucial information won’t be relayed, or if it does, it’s too late in the purchase process. What happens if the seller willfully misrepresents a latent defect? Does an unrepresented buyer or seller even know what that means?”
The Failure Rate is High
The truth is, selling your own home can be difficult. Many statistics and reports indicate that the failure rate is high. According to Zillow, 36% of sellers want to sell their homes themselves, but that number gets reduced to under 10% because of the difficulty in doing so. The National Association of Realtors reports that over 90% of all For Sale By Owners fail and hire a real estate agent.
You don’t have to pay a commission fee or the service of a real estate agent if you sell your house yourself or FSBO. But making a successful sale is easier said than done.
On the flip side, statistics show that homeowners who use a real estate agent to sell their homes are more than satisfied. Kurt Walker, CEO at Cream City Home Buyers, cites these stats from a recent Zillow survey:
- 87% of buyers suggest a real estate agent because of their value-added services, including well worked out paperwork
- 84% of buyers were satisfied with the option of visiting houses to reach a final decision with the help of an agent
- 84% were satisfied with their contraction obligations completion with the help of an agent
Negotiating is a Skill
Negotiating is an art and a skill that many people simply do not possess. Real estate agents are trained professionals at handling these situations, whereas FSBOs generally do not have the training or experience – or the ability to compartmentalize.
“If you study negotiation tactics, it also pays to have somebody between you and the buyer. If you do not have this barrier, it is harder to negotiate, and the process becomes more emotional, leaving the seller at a disadvantage,” comments Christopher Avallon, Broker/Owner of Avallon Real Estate Group.
“The only possible exception to this is when the seller may be an experienced investor or home builder. Usually, these types of people do well with for sale by owner listings, as they know additional ways to market the property rather than just listing it on Zillow or FSBO.com. They are also more seasoned negotiators, so they may be better equipped to handle savvy buyers trying to lowball the home,” continues Avallon,
If you do not know how to negotiate, do yourself a favor and hire an experienced professional to do it for you.
Real Estate Is a Full-Time Job
Marina Vaamonde, Real Estate Investor & Founder of HouseCashin, says, “all things considered, whether to go the FSBO route or hire an agent depends on each individual situation. I generally only recommend FSBO for people who understand and are experienced in the real estate world.”
Do you need a realtor? In the end, it’s all about time and money. If you do not have the time to do everything in between to get your home sold, then hiring an agent might be your best option in this tight market.
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