I've often been asked by prospective listing clients why they should use a realtor instead of selling their home without one. I try not to take that personally, as I know I add value to a transaction. But how to explain this? I am going to discuss some very good reasons to use a realtor, rather than try to market on your own.
According to the National Association of Realtors (NAR), the average selling price of a FSBO or For Sale By Owner property, in 2015 was $185,000, nationally. The average price of a home sold through a real estate brokerage was $245,000. The difference of 60 thousand dollars would more than off-set the price of hiring a realtor, assuming a commission of up to 6% of the selling price, (which, for a $185K home would be $11,100.)
Why do real estate brokerages earn more money for their clients? To start: a person without real estate experience doesn't know the market as well as a professional does and is more likely to price a home incorrectly. The key to getting a home sold promptly is to figure out that sweet spot where the price is not too high and not too low. An overpriced home can languish on the market for months or even years. Even if the price is lowered later on, the home will be stigmatized by buyers who see it has been on the market for a long time.
A trained agent knows how to price correctly. Owners who sell on their own tend to use a combo of online assessment tools (which are often way off the mark,) and their own gut feelings when choosing a price. A realtor will complete a full market analysis instead, and has the tools with which to prepare one.
Owners who avoid hiring a real estate brokerage firm are more likely to do more limited advertising as well. While the internet does make it easier to promote a FSBO than it was 20 years ago, a professional will have access to more and better avenues of advertisement. According to NAR, most FSBOs sell through word of mouth, friends and family, social media, and yard signs. On the other hand, in addition to using an extensive network of internet resources, including social media and distribution outlets, realtors are assisted by their colleagues, through advertisement in their local MLS. Each local realtor's network of active clients will see the advertising for the home. Realtors from out of the area who have clients smart enough to be eager to move to the Hudson Valley, will see it as well.
A very large percentage of homes that start as FSBOs end up being listed and sold by realtors, as the sellers realize they aren't getting sold promptly or for a price they can live with.
Another important issue is liability. Everyone makes mistakes, but a seller not represented by an agent can pay dearly for those mistakes. Selling a home in NYS requires documents that all must be filed, and filled in correctly. Without a competent broker to guide you through the paperwork, mistakes and misunderstandings can happen. Real estate brokers carry error and omissions (E &O) insurance, along with enough experience to catch most mistakes. They know which papers you need to file. Failure to file paperwork correctly can cause delays and result in a whole deal falling though. If you make a false claim, even unknowingly, in your listing or paperwork, you could end up liable for litigation. Unless you have a background in law or contracts, it's way safer to leave the paperwork to the pros.
Working with a good brokerage firm takes a great deal of the stress out of selling a home. They'll market you properly, and pay up front for signage, photography and advertising. They will handle potential buyers for you, scheduling for showings, inspections, etc. Having an agent also gives you an arm's length transaction. It isn't easy to negotiate when emotions are high, and it really helps to have that layer of a professional who has negotiated many deals in the past to help a seller figure out what a proper response to an offer is. That professional will walk you through the paperwork when you make a deal and will also help analyze the fiscal viability of the buyer. They will babysit your deal to be sure it gets to the closing table, keeping tabs on inspections, appraisals, the title search, contract and more.
Once your home is sold, you may decide that the fee that was paid to your real estate broker was some of the best money you ever spent.