John thought it was a good idea to sell his house BY OWNER. After all, his house was located in Raleigh in a popular neighborhood and houses seemed to sell quickly at top dollar. So, he wanted to avoid paying commission….well, he wanted to avoid paying a listing agent commission of 3-3.5%(approximately). He still was paying Buyers Agents to bring buyer clients to see view his home, so he knew he would have to pay a Buyers Agent Commission of 2.4-3%.
How does that initial math work in John’s mind? John thought he sell his home for a whopping $325,000 and he would pay a 2.8% Buyer Agent Commission of $9100. He’s thinking his NET is $315,900
Let’s walk through why it is NOT a good idea to sell you house by owner:
FAILURE TO PREPARE YOUR HOME FOR THE MARKET
No, this doesn’t mean that you clean up and tidy/stage your home. This means so much more as a licensed agent can tell you that studies the market daily:
- Completing the required NC Residential Disclosure and Mineral Oil and Gas Rights (yes!)
- Completing repairs
- Removing furniture and de-cluttering to appeal to the masses
- Enhancing curb appeal
- Professionally cleaned
LACK OF MARKETING REACH
The power of the Multiple Listing Service (MLS) by REALTORS® is the key. When properties are entered into MLS, they are syndicated to dozens and dozens websites through the licensed agent affiliations to subscriptions and Boards of Realtors. Many sites will not accept a FSBO listing.
DEALING WITH BUYERS AND AGENTS
A big part of a professional agent’s job is dealing with inquiries and showings. Are these buyers even qualified to buy a home? Can you imagine…Here the buyers come, to see your home and there you are….showing them around. Questions come about like, when is the last time the hot water heater was inspected? Was the HVAC serviced? Do you hear the noise from cars on THAT road nearby? How are the neighbors? (can you even answer that?) Fun times. Is it weird for the buyer to discuss the home with you (the owner)? Yes, probably so.
Many buyers just move on to another listing so they don’t have to feel awkward about dealing with the owner. Remember, it doesn’t cost the buyer any commission to buy a home – that’s paid by the Seller.
INSPECTION RESULTS – UH OH.
So, you are under contract and the buyer is doing his/her due diligence and the home inspection happens and finds repairs needed that you either didn’t know about or didn’t want to deal with.
And then, here it comes….they want YOU to pay for the repairs or give $$$ off the sales price. Bam. You could walk away from the deal as a Seller, but you know another inspector will find the same items and you’ll be right back in the same predicament.
A REALTOR® is an expert at negotiating on their client’s behalf and is market savvy enough to know what is typical and standard in similar circumstances.
MISTAKES CAN BE COSTLY
John is selling his house advertised with hardwood floors. But….the floors are really laminate and the new owner discovers this after the sale and decides to sue John. Does John have errors and omissions insurance to protect him? No. So, that cost John $15,000 to settle. Ooops. This doesn’t always happen of course, but it can.
A licensed agent knows how to navigate and mitigate risk.
CONTRACTS AND CLOSING
THE REAL MATH
John sold his home after 7 months for $299,000, which was reduced for repairs costs from the home inspection and then paid $15,000 for the hardwood flooring mistake and he paid the buyers agent commission of $9100. The market studies showed he should have sold his home in 30 days. The carrying costs on the additional 6 months was apprx. $17,000 (mortgage and utilities).
John’s net house sale was $257,900
Let’s say he did not have to pay for the $15,000 hardwood flooring mistake….his net would be $272,900.
Had John hired a REALTOR®, the data shows he would have sold his home for $319,000 (he priced his home too high at $325,000). Due Diligence out of pocket was $1,000. He paid 6% commission at $19,080. His home was sold in 28 days. He saved $17k in carrying costs.
His net would have been: $299,920. John would have made an additional $27,020 by hiring a licensed agent.