Pitfalls of selling your home on your own(and some low-price alternatives)
As most of us already know, there has been a severe shortage of available homes throughout the USA and Canada. This has created an “ultra-seller’s market” where homes have been sold within a matter of days (and sometimes, hours) of going on the market, selling way above asking price. This "seller's market" is showing signs of weakening as out side events such as rampant inflation ($5.00 - $6.00 gas and accelerated home prices), product shortages and war have dampened demand for homes.
It is the general consensus that home inventory (especially new home construction) will dramatically increase the supply of available homes, which, in turn, is being countered by a reduction in qualified buyers due to outside factors highlighted above. Despite these new issues, many of us continue to feel that we are perfectly capable of selling a home without using a real estate broker, thus saving the “outrageous” commissions they charge for just putting out a sign and sticking a listing in the MLS.
The truth is that professional real estate agents do a lot more than put your home in the MLS.
Here is a quick list of what they will do for you–
Provide actual sale prices on closed homes
Provide information on homes currently on the market that will compete with your home
Advise you on what should be done to make your home more salable
Provide professional Marketing materials (including professional looking photo for brochures, internet sites and MLS)
Place your home on the Multiple Listing Service (MLS), their company website(s) as well as Zillow, Trulia and Realtor.com
Set up the appointment scheduling service for showings, feedback, and security
Provide state required disclosures such as Seller condition affidavit and other documents that must be completed to ensure a legal and binding sales contract
Screen buyers to ensure that they are financially able to buy the home before permitting them to view the home
Provide all state approved purchase documents and disclosures
Will, with a full-service broker, represent you in sale and repair negotiations
Make sure that all conditions and contingencies are met in a timely manner
Handle closing details so that the sale is smooth, on time and without loose ends
If you choose to take advantage of our no cost Concierge Services, we will assist you in identifying vetted Realtor® resources for your approval.
Before you decide to handle the marketing of your home without a real estate broker, ask yourself these questions honestly -
Are you comfortable handling all these details?
Do you feel comfortable showing your home to people who you don’t know?
Do you know how to qualify and verify a buyer before allowing them to view your home?
Are you familiar with what you can / cannot say or write under Fair Housing laws?
Do you understand the various forms connected with selling and closing your home?
Do you understand the home selling process from beginning to end?
Are you ready to deal with the onslaught of new agents that will call, email and stop by in the hope of getting the listing?
If you feel that you understand all the aspects associated with selling a home on your own, then go for it. If not, use a Realtor® who can offer various levels of services which are reviewed in in this post.
Let’s start off by defining the term Realtor®.
A Realtor® is a licensed real estate broker or salesman who is a member of The National Association of Realtors®, which gives them the right to place your home on the Multiple Listing Services (MLS). This nationwide service allows your broker to notify all other member brokers and non-Realtors® that subscribe to the MLS as well as the general public, that your home is available for sale. This is an essential tool for marketing your home.
All Realtors must subscribe to a strict code of ethics that are updated yearly, in order to become and maintain their NAR membership.
Non-members can also have access to the MLS as a non-member. In most cases, the Realtor® fees and non-member fees are the same. The difference is that they do not subscribe to the Realtor® Code of Ethics.
There are 3 basic lower cost listing options that maybe available in your market
Flat fee brokers that provide listing services for a flat fee which can range from $300 to $5000 or more depending on the services they perform. Fees for these brokers are expected up front.
In addition to putting your home in the MLS, some flat fee brokers offer “ala cart” pricing for services ranging from taking photos for the MLS, offering lock boxes and a sign to setting your home up on the appointment services that ahear to strick security protocol, provide documents and so forth.
In all cases, keep in mind that in addition to their fees, you still will be obligated to pay the broker that represents the buyer their fee, usually for a percentage of the sale price. Make sure that you offer a fee that will is compatible with the market*.
In most cases, where permitted by law, these brokers will not be representing you. They are there to put your home in the Multiple listing Service(s) as well as provide the paperwork. All negotiations will be handled by you, the seller.
Full service flat fee brokers will represent you in all aspects of marketing and negotiations on your behalf, just like traditional brokers. The difference is you pay a flat fee vs a percentage of the sale price which is usually paid at closing. These brokers generally share a portion of their fee with the broker that secures the buyer. Again, make sure that the fee being offered to the selling broker is compatible with the market*.
Full service flat fee brokers generally handle higher priced homes as their fee for lower priced homes will be higher than market.
Discount brokers are “full service” brokers that charge a discounted commission –
These firms will offer a discount for a variety of reasons such as –
Your home is in a “hot area” that sells in days at full price or above
You’ll agree to retain the broker to represent you in the purchase of a new home
You will let them refer you to another real estate firm if you are relocating
As with flat fee brokers, make sure that they offer market compensation* to the broker that represents the buyer.
*All commissions and fees are negotiable and any reference to “standard” fees is a
violation of Anti-Trust laws.
It is crucial that you “employ” a Realtor® who is a member of the MLS (Multiple Listing Service(s) that serve the market where your home is located since your home will likely be sold by a Realtor® through their membership in the MLS.
What should I ask for your home?
Pricing your home will vary based on why you are selling. This we’ll call motivation. Once you understand your motivation you can go to the next step. Here are some examples of motivation to sell your home -
You are building or renovating a home
You are being transferred
You have contracted to buy another home. When is the closing date?
Do you have to pay off your existing mortgage/deed of trust to close on your next home?
Are you having financial issues?
Lender has given you a specific period to sell your home because you can no longer afford to pay your mortgage payments
Since your motivation is directly correlated to the pricing of your home, you can use your motivation to establish your pricing strategy. Here are 2 examples –
Since your new home will not be ready for 6 months, you might not want to list your home until you get closer to the completion date of your new home. If you want to list it now, the pricing should be aggressive (but “not off the wall”) as you will most likely face the inconvenience and additional expenses for temporary housing, extra moving costs, and furniture storage. On the plus side, you’ll have the funds in hand to close on your new home.
Your lender has given you 4 months to sell your home at market value before they initiated foreclosure actions. Since a foreclosure sale will, most likely, be at a significantly lower price, your motivation will be to offer an “attractive” listing price to sell your home quickly. This strategy can sometimes produce a “bidding war” which can result in a sales price that is higher than what you listed the home for.
How do I determine what to ask for the home?
The best way to do this is to contact a couple of Realtors® serving your area to do a CMA (Comparative Market Analyst) which they should do for free in the hopes they will get the listing. A CMA is a written report showing the sold prices of similar homes that have closed as well as what homes currently on the market that will be competing with your home.
Even though you may want to sell your home without a broker, 75% to 80% of “For sale by Owner (FSBO) homes are eventually listed and sold through a Realtor®.
If you’re not ready to call in a broker, you can do your own CMA. To start off, go to Zillow, Realtor.com or Trulia to search for homes like yours that have sold as well as homes currently on the market that would compete with your home.
Make sure you choose similar homes that are in your neighborhood, school district and are similar in style. I.E., a 20-year-old ranch should not be compared to a 3-year-old, 2 story home.
In most markets, homes are marketed based on price per square foot for heated living area. However, in some major urban areas, older homes may still be valued by the number of rooms and/or bedrooms.
While Realtor®.com is considered the most accurate resource for obtaining this data, they are not always 100% accurate, but they are a good free resources you can use to determine your listing/asking price.
In closing, please consider using a professional resource to market your home. They offer knowledge, security and training to get your home sold at a higher net price to you. We here to assist, just click here.