Sellers often find themselves asking the question, “Why should I pay thousands in commissions when it seems so easy to sell myself?” Are agents guilty of making the task of selling a home look too easy?, You bet! There are many self help books published for people who want to sell their homes themselves. I would have to write my own book, or at least recommend a few good books myself, if a seller was adamant about trying it themselves. I think its a smart idea to read one or two, even if a seller had already at some point sold their home successfully without the help of a real estate agent. It might be harder then ever in a buyers market to save all this money, however.
In this crazy uncertain market I’m continually amazed when I see a home that was previously listed with a broker which failed to sell become a for sale by owner without a price drop. Certainly, a price drop equal to the amount of the commission is what most buyers expect. Is it advisable to try to sell your home yourself if you have a limited time frame?
As an agent myself, I certainly advocate a seller who would like to save the commission so long as they have patience and a knowledge of the real estate transaction process. In the absence of a good Realtor, I would advise that they also seek out a good real estate attorney.
An astounding percentage of privately sold homes end up in some kind of legal action, usually arising from some sort of failure to disclose certain latent defects or misrepresentations. I read a report published by researchers from the National Association of Realtors which stated that in a certain year there were as many as 40%. Another staggering statistic, which most sellers are unaware of, is that nationally, for sale by owner sellers net 16- 20% less without an agent. If your wondering why, read on…
When a seller tells me that they’d like to try selling their home themselves, I certainly can’t blame them. The real estate commissions can be astronomical. I do advise them of the surprising statistics, however, especially if they have a limited time in which to sell. Over 90% of F.S.B.O.’s end up selling with a professional real estate agent. The 10% of homes which do sell may still involve an agent. The more fortunate sellers who do sell without some sort of agent participation are normally the ones who sell to a relative or some sort of arms length transaction. In most cases these arms length transactions, sell for much less than market value. The lack of advertising a private seller would have versus that of an agent who is affiliated with a major national real estate brand company and the lack of expertise are two other large contributing factors that make selling for top market value much more difficult for him.
Do they have the time to show the home at a moments notice? I ask this because I know how fickle and impatient buyers can be, especially when there are 1000’s of other homes available to view at a moments notice. Some sellers are not able to stay at home to be ready for a spur of the moment showing. Understandably, the seller has a job and is unable to take the day off to show the house. Even if you do have a flexible job it can be frustrating to drive all the way home and clean your home quickly and furiously only to learn that the buyer fails to show up. (This happens all to frequently in my line of work. Buyers blow off their appointments without regard on a regular basis.)
Selling a home yourself might seem like a good idea at first. Just thinking about all those precious dollars that will be saved is certainly an intoxicating thought. “Just think what I’ll do with all this extra cash!”
Some sellers who’ve had bad experiences with agents in the past are very resistant to repeat a bad experience and believe that the only way to avoid that again would be to go it alone. I have spoken with many F.S.B.O.’s where I have a buyer that would like to see their home and they are not too receptive in participating with an agent. They really don’t want to pay, so I can’t blame them. They are overly optimistic, especially at first, that a buyer will knock on their door and want to buy directly from them without an agent. Many times, I’ll have a qualified buyer in my car who I’ve been working with for several weeks. I’ve shown them several homes and none seem to meet their exact specifications, yet one home, according to information supplied by the private seller on his brochure, looks like an exact match. The seller tells me that they will not participate with me and will not pay me a commission. Maybe my buyer will go around my back and deal directly with the seller since they know that he won’t work with me. This does happen from time to time and it can be very frustrating for the agents. It’s is a chance that we take every time we invest time working with buyers. We’d all like to think that our buyers will be loyal and would only buy if we were sure to be paid for all the time we’d spent with them. Realistically, many buyers don’t think that way and will do whatever is in their best interest. Though it’s always a crushing blow when this happens, it’s a part of this job that is a certainty from time to time and we have to accept it. I believe most buyers feel we make a lot of money and won’t mind losing a deal. Little do they know just how many deals never happen. If every buyer that I’ve ever worked with purchased a home and closed on it through me, I’d have been able to buy a private island in the Caribbean somewhere with a full staff of servants and a private luxury jet and runway to fly me anywhere. Of course I’d have a pilot on staff as well! Agents don’t get paid until we’ve found the buyers a house, successfully negotiated a contract, guided them through the closing process, and not until after it closes. No wonder agents charge such high commissions! Fortunately, I block these bad memories out of my mind, less I wouldn’t be able to get out of bed in the morning. If I dwelled on the many times this has happened to me personally, I would certainly not be able to continue in this field for so long. My survival instincts dictate that I completely block these memories out, so that I can maintain a positive and professional outlook on my business. Therefore I will go on to the next thought without sharing the many horrible stories that I could with you.
In these cases where buyers circumvent the agent, it’s usually the Realtors ads that generated the buyer lead. The agent may likely have been referred by another agency in another city or state prior to the buyer visiting town to look at homes or perhaps they had viewed an ad from a mailing list or a website or a national print publication. Could this be the reason that commissions are so high? Can we place a blame directly on the private sellers who are just trying to sell without an agent??? Maybe not, but it’s an interesting thought.
The private seller may not want to spend thousands of dollars to put their home out there in front of potential buyers. Collectively agents and brokers have a finger on this. An ad placed on another property will likely be the result of a sale on another listing statistically. Very few homes are sold as a direct placement on a single real estate listing. Cross advertising is how most properties are sold. Private sellers, don’t have this cross advertising advantage.
Most buyers prefer to deal with third parties such as Realtors when looking at homes.In fact, I can tell you from many personal experiences that buyers often ask that the seller not be home when the home is viewed by them. The thought of having to deal directly with a seller can scare some people. If the seller is home during the viewing, the buyer usually feels apprehensive. Agents usually have a better understanding about the buyers likes and dislikes and, unlike an unknowing seller, will not likely spend too much time (or any time, for that matter), pointing out a feature that the seller might think is a great selling point. I have seen this happen too many times while showing homes. While most sellers feel that being present for the showings would be better, since they know more about the house, most buyers, (excluding rare, outgoing overly extroverted personality types), prefer that the seller not be present whatsoever.
I have one story that I will share on this subject that happened to me while showing a listing years ago which we were having a hard time selling. I brought the buyer through the home and the buyer loved it. Previously, he had mentioned to me, that he wanted a home with a small lot because he didn’t want to spend too much time on yard work. Of course, the seller did not know this. The buyer told me after we were done viewing the house that he would like to go back to my office to write an offer. Just then the seller came in from the back yard after mowing the lawn. He thought that his large 1/2 acre lot would be a huge selling point. He placed his soiled gardening gloves down on the table so that he could grab a clean paper towel to wipe all the sweat that was dripping off his forehead. He then went on to tell the buyer how much he loved his huge lot and proceeded to tell him that it only took him a few hours to mow it on his new lawn tractor. UGH! Needless to say that offer never transpired, we continued to look at several other homes before the buyer found another that he liked.
Is this why a seller has a harder time selling on his own?
Certainly that is one of the contributing factors. The fact that buyers feel uneasy with the seller being present while viewing the home and the lack of understanding the buyers particular likes and dislikes which are usually shared with the agent beforehand. The private seller also has the disadvantage of inexperience. Keeping deals together is one of most time consuming aspects of my job as an agent and certainly one of the hardest parts of the job. Many many deals fall through the cracks unknowingly to inexperienced sellers. Even brand new agents benefit from their association with their helpful experienced brokers.
Apart from the lack contractual knowledge and loopholes contained in lengthy real estate contracts, private sellers may not be aware how to enforce them. It’s harder for a private seller to be firm with a buyer. It’s difficult to adhere to the rigid guidelines which are set forth in writing for both parties to follow without a third party. I’ve sold my own home myself, so I write about this from experience. After all, a contract is a contract, a legally binding documen. Each party is required to perform certain aspects of the sales contract within specified time frames. It’s too easy to be lax with a buyer if they do not meet their deadlines, which in many cases forces the transactions to extend past the original closing date. The seller wants to be kind to the buyer to make sure they’re happy and will generally bend over backwards to ensure that the buyer is made to feel like everything is fine. This is a horrible situation to face for a seller when they have another contract written on thier next home which may have stiff penalties for non performance or specific time frames. All too often this is the case, most sellers don’t have the luxury of closing on thier next home unless their current home is sold. Many contracts are written with “home sale” contingencies.
Many buyers feel akward about dealing directly with the seller especially when it comes to contracts. Who writes the contract? Is a lawyer going to be involved? If it’s the seller’s lawyer should the buyer have his own representation? Buyers most often use the Realtor because it costs them nothing. In some areas there are Buyer’s Agents who will charge regardless of whether or not a contract closes, but in this area it is extremely rare. Do buyers feel like they might save thousands if they deal directly with sellers? I believe they do but unfortunately the seller, on the other-hand, most times, will not use an agent because the want to save the money, not give it away to the buyer. Occasionally you’ll see a seller who will reduce the price of the home in the same amount that it would have cost them for the commission but to the surprise of most buyers this is actually a rarity. If you think about that fact for a while, it’ll start to sink in. You may want to re-read that a few more times. In most cases, if a private seller would offer his home for much less without a Realtor, he would have normally listed with a broker in the first place.
Most private sellers will participate with agents, some even post that fact on their signs. At least they’ll save the listing side of the commission. I believe that is a great idea considering the odds of them selling without some form of assistance from agents. Since most F.S.B.O.’s involve participation, and will normally pay a 3% commission, most end up doing just that if they don’t break down and list with an agent first. You might wonder if the percieved savings is really worth all the extra work and time. It is extreemly hard to sell a home. I am guilty myself as an agent, making it look too easy. To those of you determined private sellers who are still optimistic, I do wish you the absolute best of luck. My intent was not to make you think it won’t happen, It is certainly not an impossiblility. When I sold my own home myself, I did have other listings nearby so for me to take advantage of that cross marketing was a bit unfair. A buyer was looking for a certain type of two story floor plan which mine had, the others did not have this. I told the buyer that I was going to be placing my own home on the market in just a few weeks, but would agree to show it to them. As it turned out, they loved the house and put a contract offer together with me. It was a truly difficult experience even though I am an experienced agent.
In writing this article I tried not to sound too defensive. I merely wanted to write an article on this subject that tells it like it is. Take it or leave it. I certainly welcome your comments and I enthusiastically encourage you to post them here.
If you are interested in selling your home and would like a no obligation consultation to see how your home would fare in this market, please call or e-mail me. I can expertly tell you if your home would sell and at what price it should sell for. In many cases, sellers are unable to sell if the value is less than what they payed. I will determine a market analysis and consult with you either over the telephone or will visit your home, (within the Greater Orlando Area).