Agents grease the wheels of real estate sales
John Adams is a broker, investor, and author. He answers real estate questions every Sunday at 3 pm on WGKA-am(920). He welcomes your comments at Money99.com, where you will find an expanded version of this column.
Recently, a reader suggested I write a column focused on how to sell a home and avoid paying a real estate broker. The reasoning was that, with the market improving, a seller should be able to advertise and sell his property without the added expense of an agent.
OK, here goes:
Provided you are willing to perform the following functions:
* remodel and prepare the home so it shows to maximum advantage
* design a web presence that will reach a worldwide audience
* prepare a flier and marketing package to hand to visitors
* hold open houses inviting strangers into your home
* be prepared to wait for full market exposure
* accept and evaluate offers unemotionally
* respond quickly and constructively to complicated legal contracts
* accept and legally hold earnest money
* overcome (or satisfy) inspector concerns
* overcome buyer’s loan challenges
* overcome lowball appraisals
* overcome inevitable “buyer’s remorse”
* satisfy all contract contingencies
* work with buyer’s closing attorney, and
* overcome emotional settlement procedure;
then, I suspect you will be able to sell your own home without the assistance of a real estate professional.
Know that the above is just a partial list. As a real estate broker, I have personally encountered all of the above and many more obstacles to a successful transaction, and many more. It’s simply a complicated process, with many potential potholes.
As an example, it is not unusual for buyers today to be pre-approved for a loan only if they can sell their existing home. And unfortunately, that sale is totally outside your control. To make matters even more complicated, they may find a buyer for their home who is trying to sell another house somewhere else, meaning you are at the end of a string of contingency contracts. The failure of any sale in the chain can cause the whole series of transactions to collapse. And that’s just one example.
In today’s market, perhaps the biggest challenge facing sellers is the appraisal.
Remember, the appraiser works for the lender. And under current rules, the lender may not select a specific appraiser. Instead, the lender must hire a firm that will assign an appraiser to the transaction. No one can even communicate with the appraiser. The appraiser may have never seen your neighborhood before be totally unfamiliar with the features and benefits of your community. In such a case, it’s up to the seller to educate and persuade the appraiser.
One of the thorniest problems with selling yourself is that most of us are only involved in a real estate transaction once every seven or ten years. And I assure you that the market of seven or ten years ago was very, very different from the market today. In fact, the market has turned upside down in just the past 18 months - it moves that fast.
Don't get me wrong. It is entirely possible for a seller to put up a "for sale by owner" sign, find a buyer with plenty of cash, and sell a home quickly without a hitch. It is possible - but unlikely.
The good news is this: In today’s real estate marketplace, sellers can choose the level of service they want from brokers willing to offer a cafeteria of real estate services at differing cost levels.
It is important to remember that real estate commissions are always independently negotiated between the principal (most often the seller) and the broker. Brokers are free to set minimum fees, and agents licensed with that broker must adhere to those rules.
I once encountered a seller who told me it was more important to him to avoid paying any commission than it was to get his house sold. If that is your situation, please disregard all of the above. But if your actual goal is to sell your house for the best possible price in the shortest possible time, my advice is to call a real estate professional.
