A homeowner who is selling a home as a for sale by owner (fsbo), or thinking about selling on their own, may ask why should I hire a Realtor and pay a Real Estate Commission?
Homeowners have a choice, they don’t have to hire a Realtor. If a seller hires a Real Estate Agent who charges a 6% commission to to sell a Sarasota home, do they then receive 6% less money at closing?
Conventional thinking would be that the commission reduces the net proceeds to the seller. Therefore, if there is no commission you net more money. This isn’t necessarily so, because of the following reasons:
Real Estate sales is an incentive based business.
Listings that offer an attractive financial incentive (commission) to the Realtor Audience will attract more attention from an audience of potential buyers, who are directed through their Real Estate Agents – it’s simple economics. A good analogy of this is Coke. Coca Cola spends a significant amount of their gross revenue on the cost of marketing their product. Can you imagine if Coca Cola’s business practice was to spend the least amount of money possible to market their product? Chances are, no one would know of Coke’s existence. The same analogy can be true in selling a home. A seller that does not want to create any strong financial incentive to sell their home in the cost of marketing (commission offered to Realtors to attract buyers to their property), should not expect outstanding results in selling their home quickly for a great price. The cost of a Real Estate commission is the cost of doing business and offering a strong financial incentive for Realtors to want to sell a particular property is good business.
A home listed with a Realtor is more likely to be priced properly
Pricing a home correctly from the beginning is critical to maximize the sales price. There are a lot of tools online that can help you get a rough idea of what your home is worth. However, Realtors have access to many pricing tools that non Realtors do not. One of those tools is the Multiple Listing Service (MLS). The MLS has the latest up to date information on houses on the market, pendings, and solds. Real Estate agents have experience interpreting this information because they value homes everyday as part of their job.
To maximize your net proceeds you definitely want a strong negotiator on your side. The difference between having a good negotiator on your side, and not, can mean the difference between gaining an additional 3% to 5% of the sales price. Even if you are a great negotiator, you still want to have someone else involved. I have read that the worst person to negotiate for you is yourself because you are too emotionally involved in the process of selling your home. I have found this to be true for myself.
After the contract is signed
You may lose thousands of dollars after the contract is signed if you don’t know what you are doing. Almost all contracts have a home inspection contingency, and if the buyer is getting financing they will likely have a financing contingency. The contingencies typically allow the buyer to cancel the contract if certain conditions aren’t met. This sets the stage for a second or sometimes third negotiation and it can come up at a vulnerable time for you. An experienced Realtor will know when you should give in to the buyer’s demands and when you shouldn’t.
Bargain Hunter Buyers
The buyers who are unrepresented by a buyer’s agent and are looking at your home have the same exact motivations as you do, save the commission. Buyers assume that they can buy a for sale by owner for 6% less since there are no Realtors involved.
I have given you the reasons why you won’t necessarily net more money by selling your home for sale by owner. Now I will give you the most important reason to hire a Realtor to sell your Sarasota home.
Time is our most valuable resource. You can’t buy more time, so you should spend it wisely. Acting as your own Realtor takes time. A lot of time. You will have to spend time arranging showings and dealing with people who don’t show up. You will have your time wasted talking to unqualified buyers and bargain hunters. You will receive phone calls from buyers and Realtors who will be asking lots of questions. Of course you will need to spend time on marketing. Marketing includes taking pictures, posting to many web sites, writing a good description, etc, etc, etc. You will have to take the time to understand Florida contracts, disclosures, and qualify buyers. I could go on and on, but you get the idea. Do you want to spend your time doing all this if chances are you won’t net any more money than you would listing with a Realtor?
If you are thinking about selling your home or have questions, please contact me. Contact Jason Silverstein.
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About the Author,
Jason Silverstein has been has been a life long resident of Sarasota, FL and a Realtor since 1998, he writes based on his experiences.