The average estimate for real estate agent fees and closing costs on a home runs 7-10%. Over half of that is agent fees. As a homeowner, it’s tempting to think you can save that money. The problem: many owners who try to sell their own home have no idea what they’re getting into. Sure, they know some work is involved — but the money saved has to be worth it, right?
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Here’s exactly what goes into selling your own home:
You’ll spend every night and weekend working on it
Even with agent-involved sales, selling a home can be take up hours of spare time. You have to get the house clean, declutter, prepare for moving, and so on.
Now, imagine doing all of that and also trying to…
- Find and manage a team of contractors to make your home look its best (which many agents include in their services)
- Do all the marketing of your home — from managing internet listings to talking to and following up with prospective buyers
- Skip work to coordinate and promote open houses during times when people are likely to show up.
- Research all of the legal standards and loopholes to make sure everything is on the up and up
- Learn about the intricacies of the housing market and how to negotiate without turning a buyer off or shooting yourself in the foot
Even if your calendar is pretty clear right now, this is a lot of work to take on. If you’re a busy parent or an over-scheduled professional?
Forget about it — you’ll hardly have time to sleep once you add trying to sell your own home into the mix.
You can’t just list it and forget it: Marketing a home in 2016
If you’re working with a quality agent, they won’t just put your house up on a real estate site and call it a day. They’ll create an entire marketing campaign for your home, covering everything from your home’s unique selling proposition to positioning your home in the market to defining and reaching your target market.
That could take you hours, if not days, of homework.
“Targeting the right audience is crucial. One of my clients has a condo that’s on a canal with a boat slip, right across the street from the beach.
With a property like that, we’ll be targeting boaters as buyers — people who own a boat, or live in a waterfront home somewhere else and want to downsize, but still keep their homes close to them.
So, we’ll advertise at boat shows, in boating-related publications, use social media advertising to target boat owners looking for homes — things like that.”
“We figure out the audience to go after, and then use different channels to find your perfect buyer.”
Marketing a home effectively requires not just knowledge of up-to-date marketing techniques and strategies (can you run a targeted Facebook ad campaign?), but again, the time to implement those techniques.
For example, in 2014, 42% of owners selling their homes were marketing it via yard signs (and 25% weren’t actively marketing at all). But only 9% of buyers found the home they purchased via yard signs.
That just goes to show how out of touch most homeowners are with what actually gets a home sold these days.
Do you watch the housing market like a hawk — every day?
The most common mistake that real estate agents see when it comes to for sale by owner listings:
Your average bystander might think that housing is as simple as home size and location, maybe with one or two other factors like amenities (a yard, a garage) factored in. But real estate agents, who are listing homes day in and day out, know it’s almost never that simple.
“When someone tries to sell a property on their own, they usually use an automated valuation service like Zillow, which isn’t very accurate. And pricing a home inaccurately creates problems — you could be leaving money on the table, or listing it too high and not get any interest in the property.”
However, Richard and his team of agents will…
- Go into the property
- Meet with the seller
- Look at the house as it is now, what improvements have been done on it, and what improvements could easily be done before selling
- Check the view from the windows — what’s across the street? Behind the property? What will people see from their new living room?
- Look at the neighborhood and surroundings — is there a road with high traffic volume, or anything else that could affect the property value (whether positively or negatively)?
All of these are factors that an automated system can’t take into account.
Janet Weidmann, another top tier real estate agent with more than 23 times more sales than the average real estate agent in her area, has a particularly vivid memory from when she started her real estate business.
One of her first clients had his house on the market for three weeks, with zero interest from buyers. He gave up and came to her. Turns out, he’d fallen into the same sort of trap that Richard mentions above — he’d looked at the active listings around him, assumed that if people near him were asking a certain price, then he could too, and priced his house accordingly.
“This is a common problem — people look at active listings instead of the sold listings, when they’re trying to price their home,” notes Janet.
Back to her client: he was determined not to lower the price to match what she suggested (which was the actual market value).
When the house didn’t sell at the inflated price, even with her marketing strategies, he fired her.
Then he hired someone else and it still didn’t sell — so he came back to Janet and agreed to put it on the market at the price she told him. The house sold within the week, and they went on to sell six other houses together.
Do you trust your diplomacy skills with several thousand dollars?
Let’s say you found the time and energy (and had the skills) to successfully market the house, price it successfully, and you managed to find a potential buyer.
There are still more hurdles to jump over: contracts and negotiations.
“Having closed hundreds of millions of dollars in sales, not only for clients but also for myself, I know the contracts inside and out,” says Richard.
He negotiates the best terms for a client and he (like all top real estate agents) can negotiate on issues that most sellers won’t even think to ask about.
For example, traditionally, the seller will pay the taxes when you sell a property — but it can be negotiated so that a buyer pays those fees, instead. A good agent knows which parts of the process are negotiable and which aren’t, and can get a feel for what your potential buyer is likely to negotiate on.
They’re also aware of loopholes and creative solutions that you probably don’t know about.
Let’s say you have a preapproved buyer who wants to purchase your property, but they can’t get a loan.
In that scenario, one option is seller financing — where the seller finances a portion of the purchase for the buyer, so the buyer gives a down payment to the seller and owns the property, then they continue to make installment and interest payments to the seller over time.
As a non-agent, you’re less likely to know about creative solutions like this.
Last but not least, there’s just the sheer fact that most people aren’t very good at negotiations.
On top all that, you’ll likely negotiate against a professionally trained real estate agent — someone trained by the best salespeople, someone who tests new strategies and tactics every single day, and someone who comes to the table with full knowledge of all of your “for-sale-by-owner” weaknesses.
As Janet puts it, “Who better to sell your house than someone who’s determined not to negotiate down their commission?”
Is it hard to sell a house on your own? Short answer: Yes!
If you don’t have most or all of these things on hand, then you’re probably better off using an agent. Yes, you will pay commission fees but here’s what you get in return:
- Your house is likely to sell faster (18% of FSBO sellers said their most difficult task was getting their home to sell in time, according to the NAR)
- You’re probably going to sell your house at a higher price than you’d be able to otherwise (in 2014, the typical FSBO home sold for $210,000 compared to $249,000 for sales involving agents)
- You’ll get hours of your life back to go to the beach, hang out with your kids, learn to play guitar, or do whatever you want to do because you won’t have to waste the time on selling your house.
Put it together and it’s a trade-off worth making in nearly every scenario. When you’re ready to start looking for your real estate agent, we’ll be here.