For Sale by Owner: Is the Juice Worth the Squeeze?

Many sellers weigh the option of whether to use a Realtor, or take on the daunting task of selling their property on their own. Real estate transactions involve one of the biggest financial investments most people experience in their lifetime. With a small upside cost and a large downside risk, it is foolish to consider a deal in real estate without the professional assistance of a Realtor.

While some homeowners decide to list their home “For Sale by Owner” in an attempt to save money, many actually end up spending more than they would have paying the 3% commission to a listing agent. After all, on average, an agent spends $1,000 on marketing initiatives for each listing alone. Aside from the marketing expense, they also are familiar with the most effective platforms to market their listings so that they sell at their most profitable price as quickly as possible. In addition, sellers lack the expertise required to effectively price the home and negotiate with buyers, which could be even more costly.

In summary, real estate professionals assist sellers with the pricing, marketing, security, negotiating/renegotiating, and the closing of their home. If you are considering listing your home “For Sale by Owner”, it is imperative that you are aware of the pros and cons and understand all that you are potentially sacrificing by forgoing representation of a seasoned professional.

Pricing:

In all honesty, pricing a home is probably THE most important marketing strategy, as it is essentially the most critical factor that draws in buyers or turns them away. A home that is not priced competitively may result in a longer time on the market, price reductions, and a lower selling price than it would have had if it were priced correctly in the first place.

Real estate professionals guide clients to make the right pricing choice based on the key factors in selling the property. They know the most current sales information in your neighborhood, including current listing prices, physical property conditions, financing terms, and other relevant data. In addition, they provide the average square foot costs of similar homes, median and average sale prices in the area, the average days spent on the market, and the ratios of list-to-sold prices in order to price your home at its most competitive price. Homeowners who choose to list their home themselves do not have the tools, knowledge or experience to know what price will move the home quickly, which can be more costly than anything else.

Marketing:

Real estate professionals also help market your home to other real estate agents and to the public. The choice of media and the frequency of advertising depend a lot on the home and specific market. A qualified real estate professional will know when, where, and how to advertise your property effectively. Plus, their industry contacts and networks provide a marketing outlet that sellers simply don’t have.

Aesthetically improving a home is another marketing tactic that real estate agents bring to the table. Often times, listing agents also work with buyers, so they know what features buyers are looking for in their home! This is a huge benefit to sellers, as listing agents will often recommend specific improvements, updates, etc. that will make the home more “marketable” and ensure it is more appealing to prospective buyers.

Staging a home is another important aspect of marketing a home. A real estate agent knows how to make the rooms look bigger, create an inviting ambience, enhance curb appeal, and highlight the most desirable qualities so that your home leaves a lasting impression after showings and open houses! Not to mention, the same staging techniques can be executed for listing photographs, videos, etc. After all, a picture is worth a thousand words, so displaying high quality, eye-catching photos online is one of the most powerful, if not THE most powerful, component to marketing a home!

Security:

The power of the internet can be a blessing and a curse to home sellers. Sure, you have a platform to maximize exposure of your property and reach more buyers (most of which start their home search online), but it also puts you at risk for the growing number of threats and scams circulating the internet, many of which target “For Sale by Owner” listings or rental properties.

Realtors help keep sellers secure. Real estate professionals are committed to treat all parties of a transaction with honesty and subscribe to a strict code of ethics. In addition, they are expected to maintain a higher level of knowledge of the buying and selling process, which includes identifying potential threats and handling them accordingly before their client ever becomes aware of the problem.

Keeping your family and home physically safe is probably the utmost concern to home sellers. After all, countless strangers will enter your home and explore its rooms, amenities, and features during open houses and showings. Without the proper training, knowledge, experience, and tools, you are not only more likely to unknowingly allow the wrong person into your home, but also to be ill-prepared in handling a threatening situation if it presents itself.   However, real estate agents who are trained on safety know the necessary precautions to take to keep themselves, your home and family safe. Not only do they manage open houses and showings, but they also prescreen prospects and filter phone calls to eliminate potential danger. As a result, homes that are advertised as “for sale by owner” are more susceptible to both being targeted by – and falling victim to – these criminals.

Negotiating:

The power of effective negotiation skills can make all the difference in the world to delivering the most favorable outcome!   A Realtor objectively evaluates every buyer’s proposal without compromising your market position. If bid proposals are outside of the listed price, the real estate agent will devise an in depth analysis of the current market, advise their client on how to proceed based on what choices are available in the market, and mediate on the seller’s behalf until they are satisfied with the terms of the contract.

Keep in mind, the initial agreement is only the beginning to a long process of appraisals, inspections, and financing. A Realtor can help write a legally binding, win-win agreement that will be more likely to make it through the process.

Closing:

Between the initial sales agreement and the closing agreement, questions may arise. Unexpected repairs are sometimes required to obtain financing, or a concern with the title could potentially be uncovered. A real estate professional is the best person to objectively help you resolve these issues and move the transaction to settlement.

In addition, a real estate professional will coordinate the process of inspections, appraisals, and financing. They stay on top of contingency dates, process the required paperwork and documents, scrutinize every file, and most importantly, make sure their client is protected at all costs. All of these combine to prevent closing delays and ensure a smooth, pleasant experience from beginning to end!

If you are still considering listing your home without the help of an experienced Realtor, there are a few recommendations that will help you avoid some of the common pitfalls that most sellers make. Hire an attorney to review all documents before you sign them, invest some time and money into marketing your home, research your current market prior to determining the listing price, pay someone to come stage your home, hire a professional photographer, and contact your local police department for safety tips!