Growing up, I was fortunate to be around a lot of different types of cars. I loved the lines and the character of the different makes and models. I have always considered cars to be moving pieces of art. How fast and loud they can be is just a bonus to the way they look. Over the years, I have learned more and more about how they work and how all the parts fit together.
I know my way around cars quite well, but I’ll be the first to admit that I am just a shade tree mechanic. Sure, I save a few dollars and work on them myself, but I also know that a professional has the expertise and knowledge that I don’t. For example, changing the oil or moderate tunings are one thing, but rebuilding a transmission is another. So, I know when it’s time to consult a professional.
While it might not look like it on the surface, Realtors® and professionally trained mechanics have many things in common. We both have very specialized skill sets and access to tools and knowledge-based training that make us experts in our respective fields. While both car maintenance and real estate might appear easily accessible fields, it takes time to learn the intricacies of the profession, and failure to recognize the potential pitfalls can result in the owner losing a lot of money relying on limited or outdated knowledge.
My point in this week’s article is this, some homeowners and home buyers are deciding to go it alone without engaging the services of a Realtor®. This For-Sale-By-Owner, or FSBO, approach is due in part to some popular TV shows that suggest the only thing you need is a computer and/or a sign in the front yard.
In the current competitive housing market, properties can sell quickly, but in many cases, it might not be in the parties’ best financial interests to not employ a Realtor®. According to the National Association of REALTORS® 2021 Profile of Home Buyers and Sellers, 90% of home sellers were assisted by a real estate expert. Based on the national median sales price, the typical FSBO home sold for $260,000 compared to $318,000 for agent-assisted home sales. In any price range, a 22.3% difference is a lot of money to be left on the table.
According to the 2021 Profile, FSBOs accounted for 7% of home sales in 2020. In the report, I also found it interesting that 34% of FSBOs did not actively market their property, and 26% of FSBOs relied only on a yard sign. So, this is the part where an experts tools come into play. Realtors® have marketing expertise and reporting to make sure a property is priced correctly and to ensure the home seller gets the most for their investment and a home buyer is educated and advised through the transaction.
I think there are a few key pitfalls to consider when buyers or sellers decide to go it alone when preparing to purchase or sell their home. While many individuals may be competent in representing themselves in real estate transactions, there are still many obstacles that may come into play.
As a seller, one must consider the limited audience a FSBO property will reach. Real estate agents have large networks, and FSBOs are cutting out a significant portion of potential people when not considering the increased exposure a home may attract when using a Realtor®. There is also the risk of dealing with a buyer who is not qualified to purchase the home. Realtors® make sure homebuyers are prequalified before they bring them to your home. These are two examples of what a seller may face once they have decided to place their home as a FSBO. But let’s address the earliest part of the process and that’s the preparation. If you’re a seller, do you know which aspects of your home you should change to get top dollar? Real estate agents do and they know which changes will make a difference to the bottom line and which will not. But let’s say you have found what we call in the industry as “an able and willing buyer.” How do you know what to negotiate? Are their costs associated with the transfer of property? What terms and fees need to be considered for each party to get to the closing table? The simple answer, if you haven’t already guessed it, is to hire a Realtor®. Trust me, maximizing your investment is as much a priority to us as it is to you.
The other side of the coin is if you’re buying a home that is a FSBO. Do you just pay the seller what they are asking and get the keys once you have figured out how to get financing? Would you even know what legal aspects of the property you need to consider? What evaluations could affect the value of the home? Should you do every inspection, or are there any you can forgo? Because real estate agents work closely with Lenders and Mortgage Brokers to assist you from the beginning, important factors like the financial aspects are introduced and defined in the earliest part of the process. A Realtor® also understands how the results of inspections or assessments can affect the value of the home in both the long term and the short term. The simple answer is again, hire a Realtor® because a real estate agent’s advice and expertise is not something you want to skip.
Let’s go back to the car mechanic analogy and consider what happens if someone did fraudulent or unnecessary repairs on my vehicle. For starters, I would raise my concerns to the business owner and the governing body that certifies the mechanic. Every industry has folks that prey on it, and real estate is no exception. Not only do REALTORS® adhere to the Code of Ethics, but we are also trained on potential scams that impact the industry, such as fraudulent loan documents, improper titles, or repair scams. When selling or buying property on your own, you don’t have a REALTOR® working on your behalf to help you avoid these issues or address them, if needed, and avoid unnecessary costs or legal woes.
Buying a selling property can be a process that is wrought with difficulties to the untrained and unrepresented consumer. That’s why utilizing the professionalism and expertise of a Realtor® is so important. Realtors work for our community’s home buyers and sellers every day. That’s Who We R®.