This is part 1 in a series of 12 posts for the would-be home seller about the real estate process from the sellers' perspective.
Answer. OK, let's get this out of the way first. Of course you could sell it yourself. The real question should be, “What value does a Realtor bring to the sales process that justifies the commission that I would have to pay?” The answer to that is that the Realtor brings the marketing knowledge and tools of his/her trade to bear on the marketing and sales process to facilitate making the sale faster and at a higher value than the typical “For Sale By Owner” (FSBO) sale.
We collect a lot of statistics about this that show that only 10% of unrepresented seller attempts end up with a sale. About 10% of the unrepresented seller attempts end up with the house being taken off the market and the sale abandoned. The remaining 80% of unrepresented sellers end up hiring a real estate professional for completion of the sale process, often after suffering through months of frustration. According to National Association of Realtors statistics, only 9% of all sales in the U.S. ere FDSBO sales and sellers who are represented by a real estate professional get 16% more for their homes that sellers who go FSBO. A part of that is due to the unrepresented seller’s tendency to overprice in the first place, whereas the real estate professional works very hard at the front-end of the process to get the property properly market priced. So, even if you end up paying the Realtor 6% in commission, you still come out ahead by 10%, verses trying to sell it yourself.
Secondly, there is the issue of advertising. A house won’t sell if no one knows it is for sale. Having a homemade For Sale By Owner sign on the lawn is only a start (and a weak one at that). A Realtor may spend anywhere from 6-10% of his/.her expected commission on advertising in newspapers and real estate books, in addition to the cost of placing the listing in the MLS and the cost of having a professional sign placed on the property. Additional costs may be incurred for placing the listing on certain Web sites and for other techniques that the agent may use to increase exposure for the property. In addition, most larger companies now have mobile apps that can be used to find your property, if it is listed. More and more buyers are “going mobile” these days and you might end up being totally invisible in that world as a FSBO seller.
Third there is the need to deal with potential buyers. Buyers and their agents need to talk to someone to set up appointments and are likely to call at all hours. A Realtor will have an office that people can call for these appointment 7 days a week. A Realtor will also try to pre-screen potential buyers and only set appointments for those that he/she feels are valid buyers for the property. Stick a FSBO sign in your front yard and you invite the whole world to walk through your house.
The last issue is one of time – time that the agent would spend sitting in open houses, so you don’t have to and the time that you’ll lose on the sale just due to it being a unrepresented sale. Without the benefit of the exposure that the Realtor will provide for the house, through the Multi-List Service and his/her advertising and marketing efforts, the unrepresented house is likely to stay on the market quite a bit longer than a listed house. Statistics tell us that an unrepresented seller’s house can stay on the market almost twice the average for a listed property in the same area. Remember that you’re making payments during that extra time and very little of that money flows to your equity bottom-line.
Then there is the fact that most unrepresented sellers will get calls from agents offering to show their house to prospective buyers, if the seller is “Co-operating with brokers”, which means that you give them a 3% commission on the sale (the same 3% they would have gotten had the house been listed). While many unrepresented sellers will initially reject those inquiries, most eventually give in; just to get some activity through the house and poof, there goes half your expected savings anyway.
So, if you’ve got all the time in the world and don’t really don’t care if you get top dollar - go for it. Here are some other readings on this topic –
If you missed the 10-part series for Buyers, click here.