When you decide to sell your home, you have many options on how to do it. With most of the choices there are positives and negatives. Your outcome depends largely upon your expectations going into the situation.
My goal here is to explain the differences in the different sales approaches. Obviously I work for RE/MAX so I admit my bias towards the traditional brokerage sales model, but with that in mind, I hope you will benefit in some way from reading this.
For Sale By Owner: If you pay attention to real estate signs I am willing to bet you have seen this scenario play out frequently around town. You notice a house one day and the familiar bright red "For Sale By Owner" sign in the yard. I would argue that 8 or 9 times out of ten, if you watch that sign long enough, it will eventually be replaced by a sign from a Real Estate company. This happens for a reason; people find out that selling their own home is harder than they thought.
Most FSBO's choose this route to save money. Sure, 6 or 7 percent can be a hefty price to pay to sell your home. There is some industry data that suggests this price you pay is actually nullified, because homes listed with Realtors sell for that much more than homes where the owners sell themselves.
This has to do with agents typically knowing more in terms of how to price the home, etc.
One of my biggest issues with people selling their own homes is that the homeowner has to be the one to show the home to prospective buyers. One of the big no-no's I tell my clients about is that they should not be home when I show their house to a potential buyer. It creates an uncomfortable atmosphere when the owner and buyer are together. The buyer does not feel free to say their real thoughts as they tour and the owner generally gets long-winded about things that are not that important to the buyer.
Here is the MOST IMPORTANT PART to know if you want to do a FSBO for yourself. Be prepared and willing to part with 3 percent.
Most buyers looking at homes today have their own agents they are working with. The agent needs to get paid for doing their job. So if an agent calls you and says "I have a buyer who would like to see your home, would you pay me 3 percent if we can get a deal together?" I would strongly suggest finding a way to make this work. If 90 percent of buyers are working with agents, why would you want to eliminate that many buyers from seeing your home. And paying 3 percent obviously beats paying 7 percent.
One move that I have done in the past with FSBO's is taking on their listing at 3 percent. That 3 percent is offered to the agent that brings the buyer, while I make zero. This only works if those sellers are buying another home and they allow me to represent them on that purchase because I make a commission on that deal. The point being, there are many ways to structure a deal in real estate.
Flat Fee Companies: You know these companies with names like Equisave and Next Generation Realty. In my opinion they are about the worst choice you can make when it comes time to sell.
I will use Next Generation as an example. They charge you a flat fee to list your home. I believe it is about $5400. For that money you get your listing on their website and other publications, but what you do NOT GET is of the utmost importance. Your home does not go on the MLS because they do not cooperate with other agents! This is crucial because the field of real estate is cooperative in nature. There is a reason that a Coldwell Banker agent can sell a RE/MAX listing - they know they will get paid on that deal.
The only people getting paid in a Next Generation deal is Next Generation. They eliminate all other agents and the buyers those agents represent from looking at your home if it is listing with them.
Frankly, it makes no sense to me at all. Yes you save some money, but what good is that if you reduce your buyer pool by HUGE numbers.
If you have to save money, you would be much better off doing a FSBO and offering 3 percent to a buyer's agent.
Traditional Model: This is companies like Iowa Realty, RE/MAX, Coldwell Banker, Century 21 and the like. These are full service companies which means once you list, your agent does everything else. They stick the sign in the ground, they make the fliers, they show the house, they negotiate the offer, they guide you though closing. Under this model, you as a seller do very little yourself.
This model costs more, on average 6 or 7 percent; however, I truly believe you get what you pay for.
Choosing the right agent is crucial! Stay away from rookies. Let them cut their teeth on somebody else. You want to work with somebody with a proven track record and somebody who practices real estate full-time! IMPORTANT, do not use a part-time agent, and there are many who work for traditional firms.
I did a deal with one last year and it was annoying to not be able to get a hold of her from 8 to 5 because she was at another full-time job. Real Estate is a career, not a job! Go with a professional and you will get your money's worth.
A Few Random Tips:
1. Interview your agent in your home. You will learn a lot by having them in your living room. Can they carry a conversation? Do they look you in the eye? Do they instill confidence in you? All of this is important to find out since you are trusting this person with a high dollar transaction, and your future!
2. Remember that everything in real estate is negotiable including the commission. Some agents will only take 7 percent and perhaps they are worth that, but if you only want to pay 6 percent you will be able to find a qualified agent who will charge 6 percent.
An agent's flexibility on things like commission or length of contract often comes down to who they work for. In general I have found that certain agents seem to have much more flexibility to decide things for themselves, then some of the other firms which have more of a corporate atmosphere and more rules to play by.
3. If you are a buyer and want to work with an agent ask them this question; "Do you make more money if you sell me a listing that is listed with your firm?"
As a RE/MAX agent, I make the exact same amount if I sell you a RE/MAX listing or one from any of the other firms. That is not always true of other firms. Personally I think this policy is horrific as it tempts the agents to show you properties that benefit them and may not be the properties that are in your best interest.
4. If an agent tells you that if you do not list with their firm, then agents from that firm will not show your house, THEY ARE LYING TO YOU!!! This is unfortunately done by some agents and it is underhanded and dishonest and a cheap way to get you to list your home.
In closing, as always if you have any questions I am here to answer them. Feel free to reach out.
You can reach me by phone or text at 515-864-6444, or by email at Mark@MarkCharter.com.
I am also on the web at www.MarkCharter.com.