Selling Home without a Real Estate Agent May Cost You in the Long Run
Sep 01, 2017 08:33AM
By Shari Berg
According to the National Association of Realtors®, the prime season to sell a home begins in the spring and lasts through summer. The warmer days, longer daylight hours and the push for some families to find a new home before the next school year starts combine to make that five-month stretch a busy season for sellers and buyers.
Homeowners who wish to sell their homes during any time of year have the option of choosing to list their property through a real estate agency, or to try their hand at the for-sale-by-owner process.
According to the most recent data from the National Association of Realtors®, 89 percent of home sellers were assisted by a real estate agent during the selling process. Conversely, for-sale-by-owner (FSBO) properties on the market during the same time period accounted for just 8 percent of total home sales.
While the advent of tools such as Zillow, Trulia and ForSaleByOwner.com seemingly make it easier for homeowners to place their houses on the market without the assistance of a realtor, the reality is that selling a home is a complex process that many homeowners are unable to effectively navigate on their own.
“The Internet itself makes many complex concepts seemingly easy,” said Gail Carpenter, a realtor with Northwood Realty Services. “Nowadays, you can Google or YouTube just about anything; however, nothing can replace trained, full-time expertise in any field.”
Sites like Trulia, Zillow and ForSaleByOwner.com may get home sellers exposure, but Carpenter warns that that is about all they will get. “Real estate is most people’s largest asset; the selling/buying of which involves important details and a legal contract. It’s never a good idea to treat such important business transactions casually with minimal, if any, experience or training.”
Linda Honeywill of Berkshire Hathaway Home Services said the sites may provide wide exposure for properties, but can be very confusing for sellers and buyers, especially because they are not as accurate as the sites that realtors are able to access.
“Realtors have resources to provide detailed and accurate pricing analyses. The Internet sites use geographic information, not necessarily similar properties in the comparisons they do. Sometimes there is actually too much information and it makes things more complicated,” she explained.
For example, if a property is close to a school, some Internet sites give the impression that those are the schools children in that home will attend, which is often not the case.
Some of the most common pitfalls associated with engaging in a for-sale-by-owner process include:
• Pricing the property for what is expected or needed, rather than for what the market will bear;
• Not recognizing needed repairs; and
• Not understanding buyers’ current methods and expectations.
“When selling your own home, you are too close to the situation,” said Honeywill. “It is very difficult to be objective. It can get very emotional when issues arise and the owner may not be able to overcome these issues without an intermediary to keep things in perspective.”
Carpenter said the biggest mistake homeowners make when trying to sell their own property is not realizing that what they don’t know about the process can be dangerous. She gave the example of a homeowners’ association that had been selling units for 15 years, but had never heard of a resale certificate. The certificate is a legal requirement of every association, and buyers are required to receive one when acquiring property for resale if the property is part of a homeowners’ or condo association.
“That opened a can of worms, as you can imagine,” said Carpenter.
One of the biggest reasons that homeowners try to sell on their own is to save on the commission fee that real estate agents charge to market and broker a deal on the homeowner’s behalf. But homeowners run the risk of costing themselves far more than the commission costs if they make a mistake during the selling process.
“In that real estate professionals work with the buying public on a daily basis, we are very aware of their current preferences,” said Carpenter. “And that’s just the tip of the iceberg. I’ve seen FSBOs accept contracts in which there were several mistakes made–large mistakes. Because I did not represent them, I couldn’t advise them of all the problems heading their way as a result of those mistakes.”
Carpenter said the devil is in the details, which is why real estate professionals receive constant training. “Just imagine your dentist trying to repair your car, or your mechanic trying to clean your teeth,” she said. “If you don’t know what to look for, or what the market is really doing, how can you recognize mistakes in your contract? How can you know how to manage a downline sale, or realize it’s a bad or good one to accept?”
Real estate agents have the savvy to negotiate the best deal for home sellers, moving them seamlessly through the mortgage commitment, inspections, appraisals and settlement details. Sellers who choose to navigate through this process alone may place themselves at an extreme disadvantage to buyers who show up with a real estate agent to negotiate on their behalf.
“Realtors can guide the seller in all the steps of the sale,” said Honeywill. “They have relationships with home stagers, lenders, attorneys, inspectors and others that are a critical part of the selling process. If inspection issues or contract issues arise, the agent can help the seller and the buyer work through these issues to complete the sale successfully.”
While do-it-yourself websites make it sound easy to sell your home on your own, realtors bring to the table the kind of knowledge and experience that cannot easily be obtained by using an online guide. “Being at a disadvantage with the sale of your largest asset is not what most people want,” said Carpenter. “And that’s the reason the majority of for-sale-by-owners eventually contract with a real estate professional.”