In a Hot Real Estate Market, Do You Need to Hire a Realtor? was written by Andrew Karpiak and originally appeared in Kam Loops Living. It has been republished with permission. Please note that contributing opinions are that of the author. They are not always in strict alignment with our own opinions.
The real estate market has experienced a lengthy run of multiple offers and selling prices well over asking. Is it necessary to hire a real estate agent or sell your home yourself in these hot market conditions?
It is one of the more difficult decisions facing homeowners right now. Should they hire a realtor or do a For Sale By Owner (FSBO)? There are a few factors to consider, but in the end, it all boils down to two things: time and money.
Listing a Home is Time Consuming
According to the NAR 2021 Report, FSBOs accounted for 7% of home sales. Unfortunately, homeowners tend to put so much consideration into avoiding paying realtor fees by doing an FSBO and fail to realize they need to have the time to do everything that comes with selling a home yourself.
“Most people don't realize how time-consuming listing a house FSBO is. You will need to do tons of research online to get the home posted in enough places to get any attention at all, and you will need to be able to show anyone the home when they reach out. With an agent, we handle everything in between while you do your normal day job,” says Chase Michels from The Michels Group.
Amanda Nunziato from Azure Realty asks these questions to potential homeowners considering doing an FSBO. “Can you be available on the days and times someone wants to see your home? Can you excuse yourself from a meeting or take off of work every time your phone rings with a potential buyer? Timing is everything and could cost you. At the end of a long workday, do you have the energy to take advantage of every possible opportunity to market your home? Do you know how to market your home? These are all questions to consider.”
You Could Leave Money on the Table by Selling Your Own Home
FSBOs typically sell for less than the selling price of other homes; FSBO homes sold at a median of $260,000 last year, signiﬁcantly lower than the median of agent-assisted homes at $318,000 as reported in the NAR 2021 Report.
Donald Olhausen Jr, the owner of WeBuyHousesInSanDiego, comments, “many times sellers will try to save a 6% commission, but forget that they need to pay 2-3% to the buyers' agent representing those who are shopping in the area. Even worse, statistics show that homeowners walk away with up to 26% less money by selling FSBO than if they used an agent. This also doesn't include all the work involved with preparing the house for sale, open houses, staging, negotiating, and navigating the legalities of selling a home in your state.”
Real Estate Agent Andrew Karpiak with andrewkarpiak.com shared a recent experience. “I placed a call to an FSBO listing and was routed to a call center. From there, the call center employee had no information on the specific listing I inquired on but said she would have the homeowner call me back right away. Five hours later, the homeowner called to tell me he had already accepted an offer on the listing.
This listing wasn't even live for a full day, and the offer he accepted had two weeks' worth of conditions. Did the owner actually let anyone view the home? NO. Did he have a viewing schedule created to maximize the number of interested people? NO. Did he set a date in the future to review offers? NO. So in taking the first offer presented to him, the homeowner potentially missed out on a multiple bid situation where he likely would have sold for more than asking and with no conditions. This is a prime example of someone who thinks they know what they are doing until a professional points out the faults in the execution.”
All too often, homeowners selling their own homes accept the first offer that comes their way and leaves money on the table as a result.
Exposure to Legal Issues
One of the most important things that can happen when you do an FSBO is that you do not have access to legal advice like many do with an agent. This can result in missed deadlines, wrong disclosures, not knowing how to price your home correctly, to name a few.
This past year brought significant changes in real estate law and new risks for sellers. Amanda Nunziato from Azure Realty reminds homeowners that “a lot of legal paperwork is involved in a home sale, and it needs to be completed correctly by an expert. One of the most important items is the seller's disclosures. A seller can be held liable for fraud, negligence, or breach of contract if they do not disclose certain information properly.”
There are also essential details for buyers considering purchasing a home listed by an FSBO. Andrew Karpiak from Kamloopsliving.com comments, “When a buyer deals with a ‘for sale by owner,' there is no fiduciary duty from the seller to the buyer. Chances are crucial information won't be relayed, or if it does, it's too late in the purchase process. What happens if the seller willfully misrepresents a latent defect? Does an unrepresented buyer or seller even know what that means?”
The Failure Rate is High
The truth is, selling your own home can be difficult. Many statistics and reports indicate that the failure rate is high.
According to Zillow, 36% of sellers want to sell their home themselves, but that number gets reduced to under 10% because of the difficulty in doing so.
The National Association of Realtors reports that over 90% of all For Sale By Owners fail and hire a real estate agent.
You don't have to pay a commission fee or the service of a real estate agent if you sell your house yourself or FSBO. This money is immediately saved. Of course, making the sale successful is easier said than done.
On the flip side, statistics show that homeowners who use a real estate agent to sell their homes are more than satisfied. Kurt Walker, CEO at Cream City Home Buyers, cites these stats from a recent Zillow survey:
- 87% of buyers suggest a real estate agent because of their value-added services, including well worked out paperwork
- 84% of buyers were satisfied with the option of visiting houses to reach a final decision with the help of an agent
- 84% were satisfied with their contraction obligations completion with the help of an agent
Negotiating is a Skill
Negotiating is an art and a skill that many people simply do not possess. Real estate agents are trained professionals at handling these situations, whereas FSBOs do not have the training or experience.
“If you study negotiation tactics, it also pays to have somebody between you and the buyer. If you do not have this barrier, it is harder to negotiate, and the process becomes more emotional, leaving the seller at a disadvantage,” comments Christopher Avallon, Broker/Owner of Avallon Real Estate Group.
“The only possible exception to this is when the seller may be an experienced investor or homebuilder. Usually, these types of people do well with for sale by owner listings, as they know additional ways to market the property rather than just listing it on Zillow or FSBO.com. They are also more seasoned negotiators, so they may be better equipped to handle savvy buyers trying to lowball the home,” continues Avallon,
If you do not know how to negotiate, then do yourself a favor and hire an experienced professional to do it for you.
Real Estate Is a Full-Time Job
Marina Vaamonde, Real Estate Investor & Founder of HouseCashin, says, “all things considered, whether to go the FSBO route or hire an agent depends on each individual situation. I generally only recommend FSBO for people who understand and are experienced in the real estate world.”
So do you need a realtor? In the end, it's all about time and money. If you do not have the time to do everything in between to get your home sold, then hiring an agent might be your best option in this tight market.