Home prices are at near all-time highs, and with inventory in short supply, today’s sellers are smartly looking to strike while the iron is hot and lock in profits they have not seen in many years.
According to the Federal Reserve Bank of St. Louis, the median price of a home sold was $477, 900 per data collected in the fourth quarter of 2021. Some home sellers ponder in this internet and Zillow age, should they list their appreciated asset themselves and save that 6% standard brokerage commission? After all, 6% of $477,900 is a not-insignificant $28,674.
Virtually every financial advisor and financial planner would opine that if you can do something yourself and earn nearly $30,000 extra to pay down debt, save, or invest, you should jump at the chance. However, the majority of advisors would likely opine that there are many traps and issues with selling your home and forgoing a licensed real estate agent.
Looks Easy, But There’s More
While it might look easy to spend a few hours on Zillow to find comparable sales, and put out a “For Sale by Owner”, there is far more to it. Like many other occupations, years of experience combined with the nuances of an industry add up to a great deal of information that is not just available to anyone using Google.
For example, a particular neighborhood’s appeal and historical pricing trends are something that a local experienced agent will know quite well. They will know how likely a bidding war will erupt, what listing price is most marketable, and what improvements, if any, you will need to make to make the property salable in the shortest span of time to hit your ideal price target.
“FSBO” is Odd, for a Reason
When you peruse Zillow, how often do you see “For Sale by Owner”? Not very often. According to the National Association of Realtors, about 10% of people sell their own home and forgo a realtor. One would think that buyers and sellers would use the internet to save money and “split” the 6%, given how prevalent data and the internet is with firms like Zillow making it so easy to get your home in front of many thousands of potential buyers. But that is not happening, because of the nuances and legalities.
When buyers see “For Sale by Owner” it is normally a red flag to buyers, simply because its so rare, and the buyer of course is well aware they could save money.
Buyers know that realtors have to make attestations about the property, as do the sellers, so among the many important roles the agent serves, is making sure disclosures about the property are correct and true. Agents also are unemotional about the properties they are hired to sell. They will tell the seller what looks bad and is a turnoff to buyers, something that most homeowners simply cannot do.
When it comes time for negotiations, an experienced agent knows what is realistic and not realistic during the back and forth of getting the best price. The agent knows what accommodations will get a deal done and which won’t fly. For example, if the home inspection is done by a hyper-conservative inspector, the agent will know what fixes are reasonable and which ones are not, given the market and type of home involved.
Like any occupation or profession where the service involve substantive time, money or risk, using a professional is almost always the ideal course of action and selling your home is no exception.