Yesterday morning I had a FSBO (for sale by owner) ask me “…why would I use a Realtor? I talked to a lawyer & he said he could do it for $500.” It’s a great question and I’ll admit he caught me a little off guard. After all… can I really justify the difference between $500 and $20,000? So I started thinking about what I do for a living, why people use Realtors and if I can justify my occupation. So I said I’d write a blog about it… here goes!
Let’s start with a couple of quick analogies before I get into the hardcore facts… The majority of people wouldn’t let someone off the street “doctor” their child when they’re sick, they take them to a pediatrician (a doctor who specializes in children). Most people would consult a dentist to have a tooth pulled or see a dental surgeon for a root canal and not just have a friend do it. The same theories apply to real estate, yes you can sell/buy a home yourself with some minimal help or you can consult a professional, who specializes in real estate. Real estate transactions involve one of the biggest financial investments most people experience in their lifetime. Transactions today usually exceed $100,000. If you had a $100,000 income tax problem, would you attempt to deal with it without the help of a CPA? If you had a $100,000 legal question, would you deal with it without the help of an attorney?
Real estate is my full-time job. It’s what I think about all day and frankly all night. I read about it, I go to classes on it, I had to pass a test & keep up a license to do it, I’m held to a set of ethics regarding it, I deal with buyers and sellers every day, I could go on for hours about how all-encompassing the real estate world is in my life. But the best part is that I love it. I love what I do and I love my clients (99.9% of them anyway!) and many of them have become lifelong friends. Real estate is what I do, it’s all I do. I specialize in real estate. Now let’s get down to the nitty-gritty…
Pricing – I know, I know… FSBOs know exactly what homes have sold for in the area, what properties they’ll be competing with, that their property is always better and the perfect price they should ask for the property. Did I mention this information changes weekly?
Marketing – as a FSBO do you have the time or the access to put your property on over 200 websites. Oh and don’t forget if you decide to change the price, have an open house, take more pictures, do a video, get it sold, change the terms, offer a promotion – you’ll need to go into each of those websites and change the listing information. Don’t forget you’ll need to create brochures & buy a brochure box to put by your for sale sign, start with 20, but in the first week you should plan on 20 per day and then when it rains you’ll need new ones and any time you change anything you’ll need new ones… Back to for sale signs, make sure you have a big enough one in your yard that it can be easily seen and you should probably put something on every corner leading to your property too. Make sure your personal cell phone is on the sign, buyers want immediate information and you’ll need to be available 24/7 to answer all of their questions and show them your property on a moments notice. Oooh and don’t forget to buy lots of print advertising for your house, your open houses, etc.
Security – now here is one item most FSBOs don’t think about when selling on their own. How comfortable are you with showing your property at 8pm to the complete stranger who just called 5 minutes ago, is sitting outside and really wants to see your house right now. Do you know anything about them? Or let’s say you’re lucky enough to spend your Saturday afternoon having an open house and people actually show up… are you ready to follow them around your house & watch them open your closets & look in your cabinets? Have you thought about the fact that your personal cell phone number is now publicly advertised on a street sign, all over the internet and in print?
Negotiation – so you have your pride & joy home for sale by owner, a nice young couple pulls into your driveway, knocks on the door & asks to see your home, you graciously show it to them even though you’ve had no notice & you’re in the middle of supper and the bathrooms aren’t picked up and woohoo! they love it! It’s exactly what they want for their first home. Perfect you think, this is soooo easy! Then the nice young man offers you $50,000 less than asking price… what? I thought it was perfect and you wanted it you say. Well yes he says but the carpets are worn, we don’t like your paint colors, the bathrooms need remodeled, we’d like granite counter tops and its way over what we can spend, we figured since its FSBO you’d take less. Still think you want to do this on your own? Keep reading.
Follow up – make sure you set aside time every week to call back everyone that called on the sign, all the email inquiries and especially to everyone that has stopped in to see the home. I find that it usually takes 5-7 calls/emails before you get a real response so don’t lose faith, keep trying! Ok, so you finally have someone who actually wants to buy the home, you’ve spent 4 days haggling over price and finally have an agreement on price & when you’ll close. Ok great, now what… well now you need a contract for both you and the buyer to sign, as a seller in Iowa you need to fill out a seller disclosure and possibly a lead based paint disclosure, you need to get your abstract updated… that should do it for now. As Realtors we usually say a minimum of 30 days is needed to close but as a FSBO you better go 60 days since everyone involved will be new to what they are doing.
Financing/Re-negotiation – Super! You’re a couple of weeks into the deal and you are soooo happy you’ve saved all this money, I mean really this is so easy! Then the buyer calls and they want to bring their parents and a home inspector to see the house. What? A home inspector? You didn’t agree to that! Well the buyers just assumed you knew that everyone has a home inspection and their parents are in town for the weekend and really want to see the house so you’ll need to be out of the house for about 4 hours tomorrow. It’s a little bit of a hassle but you let them do the inspection, after all your house is in great shape. Then you get the call Monday morning… well the inspector says the roof only has a few years left, there’s some windows that are bad and it looks like you’ve had water in the basement, oh & her parents think they paid way too much for a house with a furnace & a/c that’s 20 years old. Better yet, the buyers didn’t know what to do so they gave a copy of the inspection to their banker who turned it in to the underwriter who now is requiring a full roofing inspection, a quote on replacing the windows and want a physical engineer to check the stability of the basement before they approve the loan. But this could all be avoided if you’d just take $30,000 less for the house or repair all of those items before closing. I’m not even going to go into all of the items & problems that can come up with a title opinion, that needs its own blog post.
Closing – Congratulations! You’ve finally made it to the week of closing! I’m sure by now you’ve had a deed created, you’ve filled out a Ground Water Hazard form and a declaration of value, you’ve scheduled the actual closing with the buyers, the lawyer and yourself. Don’t forget to bring the updated abstract. Whatever you do make sure the buyers have clear to close from their lender, and a cashier’s check for the exact amount you got from your lender two weeks prior to closing but give yourself at least two weeks extra on the interest since you’ll need to overnight the proceeds to your lender and then they’ll have to process it.
Well I know that I sound very snotty about all this. I didn’t even go into all of the benefits this is just what spewed off the top of my head for now. I’ll try to do another post that’s more upbeat & truly shows the benefits of using a Realtor this week. But until you’ve had a transaction go badly I’m not sure you can truly appreciate what a Realtor does day in and day out. More importantly if you’ve had a transaction go perfectly with no problems at all that seemed so easy, then you can rest assured there was a Realtor behind the scenes taking care of all these things, crossing the t’s and dotting the i’s.
So I guess my answer is… You certainly can sell your property on your own, but why on earth would you want to?