The Internet has made remarkable changes to the real estate industry, putting vast amounts of information at a home buyer’s fingertips. From maps to videos to estimated prices, more information than ever before is accessible in mere seconds online. According to the National Association of Realtors, 90% of all buyers access online resources when finding and purchasing a home.
With so much home search activity happening online, giving the power of information to the buyer, it would seem home sellers would reap the same benefits. But they don’t.
For the homeowner who wants to sell their own property, known in the industry as “For Sale By Owners” or “FSBOs”, the Internet provides a lot of easy marketing opportunities. These resources can be very effective when a buyer is performing their own research. The buyer can feed these homes to their real estate agent to get more information.
But the typical agent accesses the MLS®, or Multiple Listing Service, to search for homes for their clients. Homeowners selling their own property don’t have access to this service and miss out on the ability to put their information in front of thousands of agents searching for specific properties.
In 2012, only 9% of homes sold were “For Sale By Owner”, meaning 91% of all sales were completed using a real estate agent, and were more likely to be listed in the MLS.
Resources Beyond the Internet
Real estate agents also have the advantage of accessing their own network of Realtors and industry experts. Agents work together to communicate specific needs or properties they have available. Both buyer needs and newly listed properties are often announced at Realtor® marketing meetings, utilizing the network of agents.
Beyond the marketing advantages, agents working in offices have their fellow agents and managing broker to rely on for assistance in any deal. The Denver Post recently reported Private Label Realty, “recruited 35-year industry veteran Ray Sherman as managing broker.” Sherman, a well-known Denver real estate expert, is able to provide all of the agents within the firm advice and direction from many years of personal experience. Agents will often follow good managing brokers because of the knowledge and support they provide.
The Real FSBO Disadvantage
Beyond the inability to market their home through the MLS, the real disadvantage to the homeowner who is selling their own property, is the complexity of the transaction and lack of resources to get through it. In Colorado, a buyer will sign a representation agreement with a real estate agent, who is then obligated to protect and promote the interests of their client. While all parties must treated fairly, the agent will still work to get the best deal for the buyer.
In the transaction itself, there are numerous forms, deadlines and requirements that must be followed, which can lead to a quick, steep learning curve for the seller. When an issue arises with an inspection or loan issue, the Realtor has the ability to turn to their managing broker or expert within their network. The seller may end up relying on information through the Internet or hiring an attorney for assistance, which adds to the cost of the sale.
Why Be A “For Sale By Owner”?
The main reason homeowners decide to sell their own home is to avoid the commission paid to the real estate agent. An average commission, typically paid by the seller is 6%, which is usually split between the buying and selling agents. When an agent’s client wants to purchase a home being sold by the homeowner, the agent will still ask for a commission from the seller, so the seller is only saving 3%.
But the commission is often less than the difference in the sales price achieved when the home is sold by a Realtor. According to the Realtor Association, “the typical FSBO home sold for $174,900 compared to $215,000 for agent-assisted home sales.” That’s a 20% difference, which more than makes up for commissions paid.
Considering the amount of time and energy that is devoted to selling a home, the advantages of using a good real estate agent to sell your home is clear. Remember, when you are representing yourself, you have an agent on the other side of the table with expertise and resources, working to get their client the best deal. A good real estate agent will save you time, protect your interests, and could potentially help get a higher sales price for your home.