If you have the time, please read my previous blog about buyers who feel compelled to search for their own homes, and eliminate the services of a qualified real estate agent.
As for sellers (FSBO – For Sale By Owner)
Oh, ok, so you want to save the typical 6% commission that is charged by real estate brokers who market and sell your home. Ok, I understand that.! Oh but wait – you say that most real estate agents simply take a listing, hammer a “for-sale” sign on your front lawn, and then stop back 2 months later at the close of escrow to pick up their fat commission check. Ok, I understand that!
Instead, you take things into your own hands. You sign up for some internet website, search for recent home sales in your neighborhood, and then the click the button that says “calculate your home’s value”. Dang, that was easy – and now you are definitely convinced that you do not need a real estate professional? Mazel tov to you!
Now … what is your next step in this brilliant action plan of yours? Well ... maybe you go to Home Depot to get a “for sale” sign and hammer it into your front lawn. You might also take a few bad photos, put them along with a puffy description of your home, place ads in the local newspapers, and upload same to a website specifically designed for you - the FSBO. And then what Mr. / Ms. Genius – you wait, and wait, and wait. This is called passive selling.
You see … the problem at this point is that, you are only appealing to 2% of the buying population, and even at that, these people are typically not the type of buyers you want to attract. This means that potential buyers who, for valid reasons of their own, do not want to buy homes through the conventional process in the structured marketplace, and now, they are answering your ads. They are looking to prey upon those FSBO’s (YOU). These buyers, typically have some financial insufficiency, and they will be expecting you, the FSBO, to help make up for their deficiencies. For those of you whom have tried to sell by yourselves, how many offers have you received? Ok, so what! Now of those offers, how many were qualified offers? Were any from buyers who needed your financing assistance via seller-financing agreements? Were any of your offers from investors (experienced and inexperienced) who are only interested to find properties that hold future potential (for them) - homes that they can purchase at a price significantly lower than market, and then fix-up to rent or flip, and then generate a profit margin, at your expense.
Did I mention that FSBO’s generally sell their homes at 27% less than agent-assisted sales (http://www.realtor.org/library/library/fg006). You do the math, but I would prefer to capture that 27% increment and pay a real estate agent their 6% commission – that’s an additional yield of 21%. Consider that, a For Sale by Owner is much like a “garage sale” or “flea market”, whereas a sale by a real estate agent is like a Macy’s or Nordstrom. Real Estate brokers work hard to bring buyers and sellers together for the purpose of trading real estate in a free market. Consider, you probably cannot make a stock trade without some assistance of a Stock Broker, who, in their own trade, also bring buyers and sellers together.
Ok! So, I admit that not all real estate agents will work hard to market and sell your home. Many are only interested to get your listing (so beware if your agent agrees to take your listing at a reduced commission rate). This is called lazy selling. They build a weak reputation for themselves by listing as many homes as possible with the hopes that they sell by the grace of god, all-the-while creating a poor public image for otherwise ethical and highly professional agents. Please understand that by marketing your home via a real estate agent, like us, your home can be exposed to a much larger and wider network of qualified buyers - those who can clearly vision the value that your home represents to them, and those who are ready, willing, and capable to buy. Generally speaking, by (1) marketing your home to the network of other real estate agents via what we call “broker caravans”, (2) exposing your home via the professional Multiple Listing Services, (3) holding open houses to the public, and by (4) aggressively prospecting for buyers via door knocking and phone calling, we can expose your home to the 98% of the market. This is called proactive selling! By proactively exposing your home to a broader market base, and targeting our efforts to find buyers who are ready, willing, and capable, you are more likely to get a higher price than if sold by yourself, and, the length of time to sell, will likely be shorter.
If you cannot definitively articulate the answers to the following 4 questions, then I urge you to seek a professional real estate agent to help you to sell your home.
1. What is the value of my home in today’s market?
2. What is the defined action plan for selling my home?
3. How long will it take to sell my home?
4. What is the cost to sell my home?
Contact us soon - and let us help you to sell your home and to move onward with your goals.
Charles M. Schevker (CPA)
DRE # 01875556
Broker Associate
Prudential California Realty
1299 Prospect St.
La Jolla, CA. 92037
