Deciding To Sell
►Do I Need an Agent?◄
Cost of Selling
When is the best time to Sell
What do I need to disclose
Buy First or Sell First
With the way information is so easily obtained online nowadays, you can get access to a lot of information by just doing some basic searches. A number of people consider selling their house "For Sale By Owner" or abbreviated FSBO. A lot of people want to save on the commission, and I don't blame them. It's the largest cost of selling a home. But below, I'll cover some of the reasons why a REALTOR adds value to a transaction.
Automatic Valuation Models
You can utilize resources that will give you estimates of how much your home is worth in mere seconds. These websites have complex algorithms that they use to generate their estimates, but how accurate are they? What don't they take into account?
There are several things that these models can't account for. Namely: your particular home, how your home is different than the neighbors home, the upgrades that may have been done on your home, the local market conditions, what you will use as your initial listing price, whether you'll get multiple offers or not, and countless many other local factors that a knowledgeable agent can help you with.
Specifics of Your Home
Your home is different than the the rest of the homes around it. Let's face it, homes are really individual and there are really no two homes that are alike. This is true even if they share the same floor-plan. They may differ in the paint colors, or the quality of the appliances, or even the current condition. Each of these differences affects the pricing of your home and ultimately how much it well sell for. That's where I come into play. I can compare your specific home to the others nearby and make determinations of the differences. From that, I can account for the differences and how that affects buyers and how much more / less they are willing to pay for specific differences.
Local Factors of Your Home
AVM models also can't take into account specific local considerations for your specific home. For instance, in every neighborhood, there are specific streets that divide the neighborhoods up into localized higher value areas and lower value areas. These AVM models won't know of these streets. They might also not figure out that a specific school serves one street, but not the next street. These school boundaries can change with time, and some people want to be in a specific school, not just a specific school district.
There are other factors that these AVM models can't take into account, such as whether a swimming pool is a negative or a positive in our area (the answer: it depends), walk-ability vs drive-ability, commute times, transit, local labor costs, etc.
For some examples click on the photo gallery shown below. I just looked for some recent sales and checked on what this particular website thought the homes should sell at. You can see that there is a huge range between what the estimate was, and what it actually sold for. I easily found examples of $100,000 too high, and $100,000 too low. One house was estimated at $260,000 and sold at $369,000. Now granted if you listed the home for sale at $260,000, you would have multiple offers on the first day since everyone would think it was far too good of a bargain. You would probably get 15 offers on day 1 but I'm not entirely sure that someone would offer $369,000 with a list price of $260,000.
Conversely if you listed a house for the estimated value of $485,000 instead of the actual market value of $390,000, it would take a very long time to sell.
Part of having an agent help sell your home is that an agent can take an objective view of your house. Since you've lived there many years, you'll most likely have figured out work-arounds to some of the issues with your home, or have some deferred maintenance, or some deferred upgrades.
Knowing the local market is a huge advantage. In the Minneapolis / St. Paul real estate market, we have seasons that follow the weather patterns. Our market is quite a bit different November - December - January, than for instance March - April - May. Our market tapers off as the weather gets cold, and as we get snow. When the "Spring Market" starts heating up depends on the weather as well.
I have access to a statistical tool called Infosparks. With this tool, I can slice and dice data from the MLS system in many different ways. Want to know the percentage of homes that were distressed sales in Nokomis Community? 7.5% of the homes sold in 2015.
Also there are times when the market changes faster than statistics can catch up. This is a prime example of where having a knowledgeable agent, such as myself, can be very beneficial.
I've been in the business over 12 years, and in this time frame, I've helped hundreds of people buy and sell homes. Every one of these transactions has been different. Each one required different vantage points and skills to get them done. Some of these ended up in multiple offers, while others were just a single offer. No matter what the case, my goal is for a win-win situation, where the buyer is happy with the purchase, and the seller is happy with the sale.
Knowledge of the Sales Process
This is one of the key reasons to use a real estate professional. In the past year, I've helped 28 people close on their homes (both buyers and sellers). Each of these transactions have had differences in the timelines but they all basically have the same sales process. Having sold 28 homes this past year alone, I know the sales process back and forth. How long should an inspection time frame be? When does the TISH report need to be done? What are required repairs on the TISH? How can we ensure the appraisal goes smoothly? What is the timeline for the Closing Disclosure? All of these types of questions are things that I am intimately familiar with. And if I come across something that I don't know, I can ask several people within my office. Combined, we have hundreds of years of experience in our office.
On average, most real estate agents close 8.4 transactions per year (whether buyer or seller). At RE/MAX Results, we average 20 per agent. My production in 2015 was 28 transactions (individual as well as co-listings). Since RE/MAX Results agents are more productive than other agents, we generally have more buyers than the other agents. I can tap into our network of almost 1000 high producing agents and reach these highly motivated buyers.
One of the main reasons that it is better to hire an agent to sell your home is the time it takes. The time involved differs for each home but some of the items include: time to market the home, time to generate showings, time to reverse prospect, time to qualify potential buyers, time to dig through the bogus leads from various social media sites, etc.
Higher Net Sales Price
There are a couple of recent studies that show selling a house with an agent (vs FSBO) yields a higher net sales price. One study shows that typical house sold by a homeowner sells for $184,000, while the typical house sold by an agent is $230,000. Even after subtracting a commission, the net yield is higher!
Another study, the NAR Profile of Buyers And Sellers 2015 shows that FSBO's medial sales price in 2015 was $210,000, vs the median sales price of an agent assisted sale of $245,000. That's a $35,000 difference. Subtract an extra 3% commission ($7300) and you still sell for $27,000 more!
Real Life Example:
Before I became an agent, I sold my own personal home myself. I had interviewed 3 agents and decided to list my house FSBO. I chose an initial list price of $249,900. Keeping in mind that this was a hot market with multiple offers regularly, it took nearly 4 weeks to get an offer. We accepted that one and only offer for $247,900. I did pay a 3% buyers commission, and it closed without a hassle but a few months later, I became an agent. I decided to do a full market analysis of my home and discovered that my home could probably have sold for $275,000. Even after subtracting out a listing commission of 3% (above the buyers commission of 3%), I would have made approximately $18,000 more than selling it myself! Even if it sold for $10,000 less than I estimated, I still would have made $8,000 more! This is an example that I still use with sellers today.
Why did my FSBO sell for less than market value?
There are a few reasons that FSBO homes sell for lower values. The main reasons are: less market exposure yields less demand which in turn yields a lower price, people looking for an FSBO house tend to want a good deal so they tend to offer lower and still subtract out what they think is a listing commission, and some agents don't want the hassle of working with an inexperienced home seller and tell their buyers that issues could arise since they don't know what they are doing. Since our industry is strictly supply and demand (econ 101), prices are directly related to demand. With lower demand you'll get a lower sales price.