OK, So why would a Realtor® write an article on homes "For Sale By Owner?"
The answer is simple. I want you to know all the facts about such an undertaking, then you can decide the best way to sell your home - be that with my help, or on your own. I won't insult your intelligence by saying that it is not possible to sell your home by yourself. You can, and in some cases it might even make sense.
Obviously, Realtors® like myself are in the business to make money. Just like other specialists, Realtors® are professionally trained, and in most cases, exceptionally good at what they do. Realtors® make their money by buying and selling real property for others. They are professional facilitators. Service is provided for a "fee" also known as a commission. The fee is the only compensation the Realtor receives, and only once the sale is completely closed (end of Escrow). There is no salary plus a commission/fee as some would be led to believe. By law, real estate commissions are totally negotiable. The traditional "customary" starting point folks seem to focus on is 6%. Usually, there is an equal split 3% to the Selling (Listing) Agent and 3% split to the Buyer's Agent. Again, this is variable and negotiable.
To many Buyers and Sellers, the traditional fees involved seem very high, especially at the full 6%. Many look to discount brokerages that do not offer full service, or that guarantee to "save" money on commissions (compared to a full 6%). Who wouldn't be interested in saving money? I sure would be. Just understand, there are several firms waiting to take your money. "Flat Fee," "Help You Sell," "Do It Yourself," "Assist To Sell" offers abound. In a perfect world, you might even save same money - but at what expense? And, do you really save anything?
Fast forward into reality...California, the Land of Litigation. Again, I'm not here to say you can't or should not attempt to buy or sell a home on your own. Just a caution and observation - I wouldn't.
Would you bet your house or your life savings on the fact that you could fill out all the right forms properly? Hey, I'm in the business and I sweat that very thing daily...and I have been trained to do it. What if you miss a disclosures for California? Can you afford to get sued and lose significant amounts of money and time off work fighting the lawsuit? Believe me, there are people waiting in line to prey on you. They are counting on the fact that you will mess up, even slightly, and the whole deal goes South in a hurry. Who do you call for help? Yourself? A professionally trained Realtor® will keep you out of legal trouble and the transaction on track.
Investors swarm to "For Sale By Owner" signs like flies. Why? They know that selling a home is not as easy as it sounds. They buy houses for a living and know all the little tricks to catch you and leverage their buying position. They know that some For Sale By Owners are frustrated with the California market twists and take advantage of them by offering ridiculous low-ball offers. Oftentimes they win, you lose, because of timing, misinformation, high-pressured buying tactics, or plain old fraud.
It's NOT just like buying a car.
Realtors also look for the For Sale by Owner signs because they know that it is really just a "Help Wanted" sign. If you put a sign in your front yard, or an ad in the paper, be prepared for a lot of attention from people willing to "help" you. The conversion rate on For Sale by Owners to representation by a qualified Realtor is statistically quite high at about 97%.
If the preceding didn't scare the heck out of you, you must be a practicing attorney. They are one of the only groups of people that are qualified to negotiate real estate transactions on behalf of another without a real estate license.
Here's another quick fact to make you think twice (like I did when I had the thought of selling my home before I was licensed):
What kind of Buyer works without an agent and will be knocking on your door? One looking for a bargain. Fact is, when folks see the For Sale By Owner sign in your front yard they automatically reduce the price in their own minds by a minimum of 6% ! So, what has been gained? Loss of time when loans fall through after 90 days, lots of headache, paperwork, and possible litigation (you getting sued).
Also, why would you imagine that the potential Buyers looking to purchase your home would not be working with a Buyer's Agent? Probably because they are:
1. Not serious buyers (Lookey Lous) 2. Can't qualify for a conventional loan, or won't get Pre-Qualified with a Lender 3. Professional Buyers looking to take advantage of you 4. Buyers looking for you to partially finance their loan because they perceive that you are ready to "make a deal." Guess that's OK if you want to. 5. "Just in the area" and want to see the inside of your home for decorating ideas. 6. People who think they are smarter than you. They may be right. These are the Doctor's who do not perform surgery on themselves, The Lawyer's who don't represent themselves in a Court of Law, and the Toyota Car Mechanics that don't work on Rolls Royce Silver Shadows. Everybody has professional limitations...let the Realtors do what they do best.
Fees, Fees, Fees...That's what you are trying to avoid when you sell your home by yourself, right? Not so fast...The realtor's fees/commission are only part of the equation. Again, if you are successful in actually signing the initial contract (and use a legally binding, correct, and approved California form) for an agreeable price, that's great. But it's the bottom line you should be concerned with. There is another approximately 1.5% of fees paid to others like Escrow Holders, Title Companies, California Disclosure Companies, Pest Control/Repairs, Component and Structural Inspections, Title Insurance, Home Warranty's, etc. If you think for a nano-second that these third-party companies will give preferential pricing to For Sale By Owners, guess again. Professional Realtors work with these companies on a regular basis and have established relationships. All fees are negotiable, Realtors are able to negotiate better fees with their preferred partner network.
"Maybe we can skip the roof inspection, Honey" Yea, right...Again, where are you saving money when you get sued a year from now for a leaky roof you should have disclosed? Not to mention how these third parties will jerk you around on your time (i.e. who gets processed first)!
The old adage applies here "If an offer sounds too good to be true, it more than likely is." What "they" don't tell you in some of (most of) the reduced commission/low fee "deals" on the internet and print media is...How do you resolve issues if problems arise (and they will). How can you contact that Discount Internet Broker that does not list their phone number, just has a website address, or is not under the jurisdiction of the Department of Real Estate?
Further, most of the ads compare their "low" fees to a full 6% commission or higher to give the appearance that their price is way lower - Beware. Remember, commissions are not set by law and they are negotiable, with all Agents. If you sell your house by yourself, you will probably still pay a Buyer's Agent 2%-3% commission for bringing a buyer to you since you will not have the national marketing exposure to get Buyers (MLS states in the data base what commission a Realtor gets for supplying one to a seller). Read all the fine print in the reduced commission ads. The fine print oftentimes contains conditions, restrictions, and the possible Buyer's Agent 2-3% fee. By law they have to tell you all the costs to "help" you sell your home. The offers will look attractive with sign packages and the like. Look deeper into the complete proposition and weigh it against the possible liabilities you are exposing yourself to and how much of the work you are expected to do. Make sure you understand the TOTAL costs paid to others, not just focusing on the "low" fees or commission you're paying to a discount broker or do it yourself-type agency.
So, final tips regarding For Sale By Owners:
1. Be sure you understand the Security concerns (unscreened/unqualified Buyers allowed to go through your beautiful home). You also have to be present 100% of the time to show your home. You'll have a lot of drive-bys and unannounced "visitors." 2. Buyer's Financing arrangements may be questionable at best. They'll talk the talk, but...in 90 days will they still have money in their bank account for the down? 3. People are looking for a "deal" and will automatically offer 6% off of your sale price, or more. This assumes you didn't list it too low to begin with! 4. You will probably spend more for all the third party fees (through Escrow) 5. Know which forms/disclosures to fill out. One missing/incomplete form = potential litigation. 6. You may have significant exposure in getting sued
and losing your house. 7. Be intimately familiar with all California Disclosures. So what's the smoke detector requirements for your city? A $12.00 smoke detector could ruin your whole day. 8. You could guess wrong on the price you are selling your home for, way wrong. Your listing price may make someone else very happy. Or, you could be priced too high and mark your home as "unsellable" (old stock). Don't listen to neighbors "in the know." 9. Check how these discount firms market your home. They "might" offer putting it on the MLS (where most homes are sold) but there will be only ONE lame photo of the home. That is so 1980's. The state of the art is multiple photos (like 16), virtual tours, and the like
So, Why hire me?
Quite honestly, I am good at what I do and my service will blow you away. And, I like to write articles...not really. Actually,
More reasons...
1. I walk you through the entire process of selling your home from beginning to end and provide you a professional marketing plan that you agree on before we sign. 2. Provide "comps" in the area to get you the best price possible. 3. Share info with other real estate professionals (and third parties) for best pricing and timing options. 4. I have a professional website, toll free number, and use the MLS to market your property appropriately. 5. I leverage the brokerage name to sell your home. 6. I place all the advertisements for your home (print, internet, network). 7. I field all the phone calls and screen them - I don't waste your time. 8. I qualify potential Buyers to make sure they would be able to purchase your property. And, negotiate all terms including when escrow closes. 9. I skillfully negotiate the terms and conditions of the sales contract with other agents (buyers). 10. Alert you to potential risks and offer professional advice. 11. I comply with the plethora of California Disclosures. 12. Provide you with an estimate of closing costs you will incur. 13. Assist in a smooth closing of the transaction.
OK, So why would a Realtor® write an article on homes "For Sale By Owner?"
