Should You Hire a Realtor or Sell on Your Own? Three Deciding Factors
Published April 13, 2016
Selling your home can be both exciting and stressful. As the property seller, you have a long list of responsibilities. Before you stage your property and stick that for sale sign in the yard, you will need to make one very important decision.
Should you hire a realtor or attempt to sell your property on your own? Is it worth paying a real estate professional 6% of the sales price for their services? Can you save money by handling the sale on your own? Here are three important factors that will help you make a decision.
Do you have the time to dedicate to selling your property?
Selling a property can be extremely time consuming. If you work, study or have other family obligations, you may be doing yourself a serious disservice by handling the sale on your own.
According to realtor.org, not having enough time to dedicate to all aspects of the sale is one of the main reasons why people fail to sell their property on their own. Many sellers underestimate the time it takes to complete the entire sales process.
When selling a property on your own, one of your most important responsibilities will be managing the marketing campaign. This can be very expensive as well as time intensive.
Marketing responsibilities include writing and posting ads online as well as in print. Designing signs to post on your lawn as well as in high traffic areas around your neighborhood. Also, holding open houses to attract potential buyers to view your property.
The costs of running an effective marketing campaign by yourself can be a major expense. Also, you still wouldn't be showcasing your property on the most effective marketing platform, the local MLS system.
MLS is short for “Multiple Listing Service.” This is a database of all local real estate activity. Only licensed realtors have access to this information. When you list your property with a realtor, it is entered into the MLS where thousands of other realtors will have access to the information.
The value of having your property on the MLS database is a huge advantage that should never be underestimated. Thousands of realtors who are currently working with active, mortgage approved buyers will be viewing your property information. This is a great opportunity to sell your home quickly for top dollar.
Another reason why selling on your own can be time consuming is dealing with unapproved buyers. A realtor will be sure to get all potential buyers pre approved for a mortgage before showing them a property.
There is nothing worse then showing your home to potential buyers, negotiating, then going through the sales process only to find out that the buyer can't afford the property. That puts you right back at step one after wasting a tremendous amount of time and money. A realtor will be sure to avoid this hassle.
Another time consuming aspect of selling your property is communicating with potential buyers. As you know, buying a property is a major life decision. Buyers will have a lot of questions about the property and they will be expecting to view your home multiple times.
This includes several showings before they make a buying decision. Also, most buyers want to bring their friends and family along to view the property after they have made their decision. Don't forget about the inspection day as well!
Besides opening up your home for buyers, you will have to answer and reply to countless phone calls and emails. If you priced your property right and launched a successful marketing campaign, your phone will be ringing off the hook.
Can you answer these important phone calls throughout the day? Will your boss mind if you spend a lot of time on the phone taking care of personal business?
Answering these phone calls is critical for a fast sale. Buyers have a lot of options when shopping for a property. If they can't get the information they need about your property they will quickly move on to another one.
You should be as accommodating as possible for potential buyers. This includes answering every phone call, promptly responding to emails and scheduling showings of your property at the buyers convenience. Many property sellers quickly feel overwhelmed by how the sales process consumes their daily lives.
Do you know the real estate business?
Do you know what's really involved in selling a property? Many people think that selling a property is as simple as sticking a sign in the ground and waiting for a buyer with a bag of cash to show up. These people are sadly mistaken!
Most people are totally unprepared to deal with the intricate details of selling a property. The first thing you will have to do decide is how much to list your property for. Regardless if you decide to sell on your own or hire a realtor, it's extremely important to get this step right. The best way to get an accurate listing price is to consult with a realtor.
A realtor will do a comparative market analysis, also known as a “CMA.” A CMA looks at recent property sales in your market. A realtor will analyze prices of homes that are similar to yours that sold within the last three months. Based on these numbers the realtor will decide the best listing price for your property.
The real estate market is constantly changing so it's important to get accurate and up to date information on sales prices. Many people who sell their property on their own use outdated sales data and bad comparable properties.
Once your property is listed your job has just begun. Other responsibilities include screening buyers to make sure they are financially capable of buying, negotiating a sales price, scheduling property inspections, doing repairs and dealing with any other issues that come up.
Learning the business as you go can lead to some serious complications during the sales transaction that a real estate professional would easily avoid.
Do you mind selling for less?
Time for some cold hard data about selling your property on your own. In 2013, for sale by owner properties had an average sales price of $184,000. The average sales price for an agent assigned property was $230,000 according to realtor.org.
The fact is, properties listed with a realtor command a higher sales price then properties sold by their owners. Another thing most people overlook is that even if you sell a property without listing it with an agent, you may still need to pay a commission.
In a real estate transaction, the listing agent splits the sales commission with the buyers agent. If your buyer is using a real estate agent, they will expect you to pay them a commission. The average real estate sales commission is 6% of the sales price. That would be 3% going to the listing agent and 3% going to the buyers agent.
Most buyers hire a realtor to help them search for a property. Therefore, it's wise that you agree to paying them a commission in return for bringing you a qualified buyer.
Some real estate agents don't want to deal with homeowners selling without a realtor. They would rather work with a fellow real estate professional for a easy, hassle free transaction.
In the end, if you agree to paying the buyers agent a commission your “cost savings” from selling on your own becomes even smaller. Also, if you don't hire a realtor to represent you during the sales process you will be negotiating with the buyers agent yourself.
An experienced agent knows much more about the local market and sales process then the average citizen. This could put you at a huge disadvantage during the sale!
As you can see by the sales data from the National Association of Realtors, you don't actually save money by selling on your own. Hiring a real estate professional to handle the sale of your property will get you a higher sales price. This makes it worth paying the commission as well as saving you a lot of time and hassle.
Financial adviser Grayson Bell recommends interviewing multiple realtors in your area to find one who is experienced, knowledgeable and offers a competitive rate. Many realtors are willing to give you a discount on a commission.
As you can see, selling a property can be complex and a small mistake can cost you a lot of time and money. Be sure you are ready for this responsibility. If you have any doubts whatsoever, consider hiring a professional realtor in your market.