You might be surprised that I would engage in this discussion about whether a home buyer or seller would really need the assistance of a Realtor in buying or selling a home, seeing that I’m a Realtor and all. I mean to me it’s obvious, you hire a hairdresser to cut your hair and would never even consider doing it yourself, why then would you not apply the same reasoning to the selling of your most important asset? But for the sake of argument and fairness, let’s take a look at what I do for my clients and then you judge for yourself, sound reasonable?
The bread and butter of any real estate agent’s business is listings. And since the largest investment most of us ever endeavor, is home ownership, home selling seems an obvious place to start. When a homeowner decides to sell their home several discussions ensue. First and foremost is how? Of course the obvious to most of us is to hire a professional Realtor like me to handle the marketing and transaction details, however since we are discussing the need for a real estate professional at all, let’s just start with the “stick a sign in the yard, hope someone comes by, knocks on the door and says, Can I come in and see your home?” OK, that sounds pretty stupid, but it is really one option. But let’s assume you are a bit more savvy and know that that approach is not likely to be successful, since you can list your home with an online service that will at least market your property in the Multiple Listing Service (MLS) for limited expense. Since every Realtor is going to look to the MLS for properties listed for sale, you now at least have some exposure for your home. So what now? Well what did you price it at? That’s right, you need to determine what you are willing to sell for even before you put the sign out and hire an online service to place your home in the MLS. Well, there are those sites like Zillow and Trulia that have value estimates, so you could base your price on them, but are they really accurate? Just what do those services base value on anyway? Frankly their algorithm is a bit of a mystery and as a Realtor the value Zillow posts is something practically every seller brings to my attention, and I must say, they are rarely even close. These services have no way of actually “knowing” or even estimating accurately the value of your home since the only thing they can look at is previously sold comparable properties. They have no way of knowing about your remodel, or your view, upgrades, placement on the street, schools or for that matter any of the comps they are using to base your value upon. It’s lot size and room count and square footage. Did I happen to mention location, location, location in that description, no and that should raise a red flag and tell you something right away about accuracy of online valuation services.
This is not sour milk from someone whose job is being threatened by an online service, on the contrary, I love it when sellers tell me about the “Zestimate” on their home because it gives me the opportunity to show my value as a real estate professional. So reason number one for hiring a Realtor is their knowledge. In fact it’s reason number 1-100.
Knowledge is power, knowledge is key, knowledge is everything. Knowledge of the current market; knowledge of the value of certain amenities; knowledge of the competition, community, school district, availability of financing and of presentation. If you want to know what a real estate professional thinks your property is worth, you have to hire one. Pretty straight forward. Can you figure it out on your own? Maybe, but are you really willing to take on that responsibility and risk? And what if you’re wrong? You price it too low and your buyer takes advantage; you price it too high and nothing happens. Given that your goal is to sell, “”nothing happens” is a disaster. So let’s agree that hiring an expert is one big reason you hire a Realtor.
However, you’re still not convinced so let’s step back and assume you, being pretty analytical, have decided on a selling price and you’ve contracted, yes signed a legally binding contract, with an online listing broker. Uh, “Signed a legally binding contract?” That’s right, you’ll have to sign a listing agreement with an online broker just as you would a traditional full service broker. “Can it be cancelled if I’m dissatisfied?” I don’t know, you tell me. Hmmm, that makes me a bit nervous, how about you? Alright let’s say for argument sake it can be cancelled, you still will have to pay them something; a fee or a fraction of a commission, something, because even online services are not free.
Finally you are on the market. Your home is listed on the MLS and you think you’ve priced it about right, so now all the regular real estate agents are going to line up to show your home, right? Well… are you paying them a commission? “Sure I am, what’s normal?” Though every commission is negotiable, let’s say for discussion sake you offer the “traditional” 3% of the selling price as commission to the agent representing the buyer. “Well, wait a minute”, you say, “can’t I offer less, perhaps 1 or 2% to the agent representing the buyer and save a little more.” Sure, so now you are paying a reduced fee to the listing broker and a reduced commission to the selling broker, more money for you. But then no one shows up to show your home. Selling agents have to make a living and while they will do what is ethical and best for their client, the more you pay them, the more likely they will show your home over another, and there’s always another.
So you conclude, “Alright, I’m willing to pay an agent to show and sell my home.” Then let’s review, how much are you actually saving? Just the listing commission minus the fee to the online brokerage for listing your property in the MLS. OK, that’s still something, but let’s revisit something else I just touched on and that is, the showing of your home. By not using a full service broker to list and market your home, you become the agent in-fact. You will be showing your home, scheduling appointments since you have to be present which means either you have to adjust your schedule for every appointment or you restrict when your home can be seen to “fit into” you schedule. Restricting the showing of your home, hmmm that doesn’t sound optimal. Ever heard the phrase a Realtor works 24-7? There’s a reason, and while perhaps not literally true, Realtors do work weekends, mornings and evenings as the job demands and since you are now the agent, guess what you are doing? Uh huh, working a lot of hours just to show your home. Oh, and who you is going to “pitch” your house, you know, “sell” it to the other Realtor and their client? You that’s who. “Geez, really?” Yes, really.
Let’s take this a step further and assume through the grace of God, someone actually had their Realtor write an offer and that agent brings the offer to you. Again, you’re pretty savvy, maybe you deal with contracts in your job, maybe even far larger government contracts or something, so you’re no stranger to them, but this one has things like contingency periods, cost breakdowns that you the seller have to absorb; reference to wood destroying pests, liquidated damages, mediation, arbitration… are you ready for that? A typical purchase contract can have more than 50 pages. yikes!! What about the requirements to disclose? Can you be sued for failure to disclose something? You bet. But you’re paying the other agent a commission sell your home, clearly this is their responsibility isn’t it? Well actually no, they represent your buyer or thought of another way, your opponent in the chess game of negotiation. They do no “have your back,” rather they are watching out for their client and since you have only limited input from your online discount broker, you are effectively on your own. I don’t know about you but when we are talking about a transaction that involves something that costs “six figures” or more, that would make anyone just a little nervous, no matter how confident you are. By the way, I haven’t even brought up things like inspection, requests for repairs, escrow, title, natural hazards reports… mold.
At this point you should be asking yourself, how much am I actually saving vs. what can I potentially lose? It’s a risk/reward proposition and I firmly believe the risk far out ways any reward or savings by not using a Realtor to sell your home. Additionally you may not be saving anything because after all, I am a professional negotiator, this is what I do, day in and day out so I’ll get the better price over someone with less experience every time, more than offsetting my commission. I liken myself to a scene from the movie The Terminator when Reese says to Sarah Conner, “He’s a Terminator, that’s what he does, that’s all he does, and he won’t stop.” And if you noticed I said Realtor not real estate agent earlier, it’s because a Realtor is an agent who must belong to the National Association of Realtors and is therefore held to a very specific set of ethical standards. Only Realtors are required to follow these strict standards which are almost universally more stringent than that of any state governing organization like the Department of Real Estate. Of course there are bad eggs as in any industry, so choose your Realtor wisely, but know this: by choosing a member of your local Board of Realtors as your representative, you have taken every precaution and in doing so given yourself the very best opportunity to sell your home for the most money, with the least amount of hassle and in the shortest possible time… and what is that worth to you?
For more information on what I can do to sell your home or to refer you to someone capable in your area, please contact me and I would be happy to help you.
Next up, “Why do I need a buyer’s agent?”