In our last installment, I promised a breakdown of several reasons why a middleman is a very, very good thing when buying or selling a house, and here it is:
- PRICE: Your house is not priced to sell, because you want a certain amount, don't really know the market, and price the home out of the ballpark. Some sellers find straight talk about pricing insulting, but the truth is that a home simply will not sell for more than its market value — and it won't be seen at all when priced out of range.
- PRESENCE: Your home is invisible on line, where 45% of homebuyers find their next residence. Worse still... Your home is invisible to the local community of Realtors — where 89% of homebuyers find the right property!
- DUD BUYERS & TIRE-KICKERS: People call from your yard sign or newspaper ad - maybe even from Internet presence if you are savvy and have used some of the resources available to direct sellers. You show them your home. They're not qualified to buy it. Rinse, repeat. A real estate professional knows how to qualify buyers, whether representing your listing or a buyer — we do not waste anyone's time showing homes to people who are unable to purchase.
- LIABILITY: OMG you SOLD YOUR HOUSE BY YOURSELF!! That's fantastic. Did you dot all your I's and cross all your T's? Great! That's amazing, congratulations. Hey wait - it's FIVE YEARS LATER and the buyer just discovered something they *really* don't like, when they went to do a renovation. Maybe it's something you didn't know about - you told them everything you knew! So their lawsuit threat, that's nothing to worry about, right? Wrong. And Heaven forefend if you actually didn't mention that detail that you knew about but didn't think was consequential... Man, wouldn't it be amazing if there were insurance to protect against this kind of thing? And if you had known about the laundry list of things you really needed to make sure to worry about, disclose, fix or otherwise at least be aware of, rather than just taking your best guess? If only there were special people who didn't get paid unless you got paid who had extensive licensing training, ongoing continuing education requirements, professional practice that include orienting laypersons with all the boring and important stuff they'd need to know for their protection, AND who carried professional errors & omissions insurance in the even that someone were to make a (certainly ungrounded, but still costly) legal claim about a transaction six years later? Ohhh....
- REPRESENTATION: You've been looking on line and going to open houses. You don't like pushy Realtors and you don't need help! You have a prequalification letter from a lender. You're good. The listing agent is happy to help you! Doing their job as they should, they either step back from their duties to their seller, provide you with market data to help inform your offer price, and then communicate back and forth without advising either party, OR they draft your offer terms for you, make clear that they are not representing you, and simply present your communication to their seller, who remains the only party to whom they have a fiduciary duty. Hm. Now, if you had a broker working for you (getting paid by the listing agent upon closing), you'd have had the most accurate MLS data access, an orientation with the buying and negotiating process and forms, the closing process, and market analyses of any home you were seriously interested in. Not to mention an ability to pop out and see several homes at a convenient time, without needing to call multiple brokerages and meet multiple agents, all of whom would also be offering you their services as a buyer's broker.
- MONEY: In 2013, the average property sold directly by an owner sold for $184,000. Average sale price across the rest of the market was $230,000. Those sellers got on average just 80% of what they would have using a Realtor. "But they would have paid commission!" Yes, they would have. I charge 6% for residential, 8% for commercial and 10% for land listings. In my case, my sellers would have netted $216,200 after my commission (ALL sellers should expect to pay between 1.5% and 3% in closing costs and other costs of sale - depending upon repairs needed, for instance). That's 17.5% more money than the owner selling by himself nets. Why is this? Most parties interested in For Sale By Owner homes are looking for bargain-basement prices, and it shows.