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Selling "By Owner" vs. Hiring An Agent |
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Thinking about selling “By-Owner”? Worried about your chance for success? Read on... 1) Preparation: Whether
you sell “By-Owner” or use an agent, preparation is completely the
seller’s responsibility. Making all necessary repairs, staging &
de-cluttering, improving your curb appeal - these are all areas that are,
(or should be), addressed by the homeowner before your property goes on the
market. Also, the seller is always responsible for filling out Property
Disclosures, regardless of if you use an agent or not. 2)
Pricing: WITH
AN AGENT:
Agents provide free CMAs (Comparable Market Analyses), which are comprised of
comparable home sales and properties in the area currently on the market.
The agent essentially provides an estimate of price, in which they feel
you should start off at. Make sure the information is left with you to
scrutinize later in much greater detail. You should interview at least three
agents and compare their CMAs, as the results usually vary greatly depending on
an agent's experience, familiarity with the market and most importantly, their
desire to get the listing. CMAs are sales tools, which are designed to
promote the agent, the agency and its services. Remember, banks don't lend money
based upon an agent's opinion of market value. They always
hire a professional appraiser to protect their interests before loaning money to
your buyer. BY
OWNER:
Although many private home sellers initially price their homes using figures
supplied to them by real estate agents, the results are often disappointing and
result in inaccuracies. The next step sellers often take is using online
pricing resources. While these services may work well in some areas of the
country, it is very difficult to use electronic data to accurately estimate the
value of most homes. Recommendation:
Skip the free CMA,
and hire an appraiser yourself.
By hiring a professional appraiser (who is not biased and does not have
ulterior motives), you will have a more accurate opinion of value, and more
importantly, the resulting market value given will more accurately match the
lender's appraisal report, and therefore, will allow the loan to go through more
easily. Sellers should be comfortable sharing the appraisal report with a
prospective buyer, because it informs them that you are a knowledgeable and
confident home seller who has done your homework. An appraisal will cost
about $300.00, and the expense is well worth it. It also may be deductible as a
selling expense (check with your tax professional.) 3)
Marketing / Advertising: WITH AN AGENT: The agent is responsible for all advertising and marketing. However, you pay dearly for it, when and if the home sells in the form of a hefty 6% commission. Ongoing advertising varies from agent to agent. It is best to be very specific and get everything in writing when inquiring about how your advertising budget is being spent. For example, if the agent says they'll advertise your home in newspapers - ask, “Which ones?”, “At what frequency?”, “What size ad?”, and “Will a picture be used?” Aside from listing your home on the MLS (Multiple Listing Service), and maybe holding an open house, what else does the agent plan to do that will promote your property? You should realize that in a “buyer's market”, most agents use “price reduction strategies” that you must adhere to in their contracts. Ask what they are, before you sign anything. Also, ask how you can get out of the contract if the agent is not providing the services promised. This is known as a performance clause. Get everything in writing! BY OWNER: Advertising and marketing becomes your responsibility. The key is getting wide enough exposure to bring in serious buyers - and offers. Marketing homes has changed significantly and gone way beyond classified ads and a yard sign. The internet is now used by over 80% of buyers, and should be part of your overall strategy. Research this area carefully as many FSBO websites have no ranking in the search engines. This is extremely important, because without it, nobody will see your home! Additionally, many contain lots of outdated properties and employ the use of call centers to prevent buyers from contacting you directly. Because 85% of buyers purchase locally, you should look for a “By-Owner” service in your metro area. Local services often use targeted real estate magazines to promote your home in addition to website listings - similar to how agent listed properties appear in magazines. In the Detroit area, for example, HomesByOwner magazine is seen next to the Realtor’s Homes publication. Advertising costs will vary depending on how long the home is on the market, and the type of advertising medium chosen. The exact expense can depend on where you choose to advertise. A classified ad in your local newspaper may cost $45.00 for one day, but what will you do to attract buyers the other 29 days of the month? What about buyers who don't read the paper? Did you know that less than 53% of buyers look at classified ads anymore? One ad for an open house might cost $75.00, but failure to link this to an internet ad and magazine placement, where slide show photos are located is not effective use of your marketing dollars. 98%
of our advertisers pay less than $900.00, to market their homes – 24
hours/day, 7 days/week for up to 5 months long. Total! Complete! No other costs!
Homes can go very quickly in a strong seller's market, sometimes within the
first month. Higher priced homes generally take longer to sell, as well as
homes that are overpriced for the market or that are very unique and may appeal
to a small buyer pool. 4)
Showing Your Home: WITH
AN AGENT:
Agents don’t want buyers to meet the sellers. Agents field phone calls from
buyers and schedule showings and maybe host open houses. (Fact: Less than
2% of listed properties are sold as a result of an open house. Agents have open
houses to find more buyers for other properties).
With an agent, your job is to keep the home in “ready” condition and
available…just in case a potential buyer wants to take a look. This
means keeping the entire home spotless – at all times!
Making beds, cleaning baths, dishes in sinks, picking up toys, etc., -
you get the idea - before you leave for work every morning. Don't
be surprised if you notice a dramatic increase in showing activity just
before your contract ends! BY
OWNER: You
will speak to buyers directly. You will answer the phone and note down important
information about potential buyers. Many sellers choose a time of day to return
phone calls, preferring to have all their information at hand and not be
distracted by other things. One of the unexpected stress reducers when
selling “By-Owner” is the ability to schedule showings to fit your
schedule, not someone else’s. You pick-up your home and clean
when you are ready to schedule a showing! 5)
Offer and Negotiation: WITH
AN AGENT:
When you list a property, your ‘listing’ agent will interact with potential
buyers, and “buyer’s” agents who may be representing buyers. The “buyer’s”
agent is responsible for filling out the offer form and drawing up the
purchase and sales agreement. However, the home seller should hire an
attorney and have legal representation, because the
“buyer’s” agent legally represents only the buyer. Real estate
agents are only that – real estate agents.
They do not have any LEGAL training and should not be used for such.
Agents include hold harmless clauses in their contracts that keep them
from being responsible for just about anything that could go wrong, should
anything go wrong! BY
OWNER: When
you sell “By-Owner” you will be meeting directly with your buyers. It is
easier to communicate and resolve concerns during the negotiation process
without a third party.
When you decide to use HomesByOwner.com magazine
to help you sell your home, you have included, a Real Estate
Attorney to prepare and/or review your entire contract – free of charge.
This attorney will handle the entire legal process from the point the
offer is made by preparing the Purchase Offer, holding the deposit monies in
escrow, performing the title search and, among other duties, keeping everything
on schedule. So,
if you have time to answer your phone, schedule appointments, and show
your home, and have a realistic marketing strategy, you are probably an
excellent candidate to sell "By-Owner." How much can you save? Well, you could pay a
$20,000 commission (for a $350,000
home), or you could pay less that $900.00 and keep your hard
earned equity. Having
a tough time getting your house sold? Would
cutting $20,000 worth of commissions (or a portion of it) out of the asking
price make a difference to your potential buyers?
You bet! The choice is yours. We’ve helped thousands of customers save millions of dollars. We’d love to put our experience to work for you and help to make the sale of your home a great experience. |
