In today’s housing market, (low inventory and lots of competing buyers) many people are opting to buy a brand new home from one of the local builders. Many people think they are being savvy to
Myth 3 You Can Save Money If You Sell Your Home Without An Agent
It is a big temptation to sell your home alone. After all, you have bought and sold homes before. You basically know what to expect. And agents will charge 5% to 7% to list your home. On the average price home in the Salt Lake Valley of $235,000, one would think you could save $16,000.
Very tempting. But misleading.
The numbers show a different story. See the Highlights from 2015 Profile of Home Buyers and Sellers where it states:
FSBOs (For Sale By Owner) typically have a lower median selling price:
$208,700 compared to $235,000. Thus, the typical
agent-assisted home sale typically has a 13 percent
higher sales price than the typical FSBO sale.
That means, on average, that you should earn the very amount you were trying to save if you rely on the expertise of an seasoned agent. And that is after the agent earns his or her compensation. The very definition of leaving money on the table. (And I'm not even including the times where you end up paying 3% to an agent that brings a buyer to buy your FSBO. Even more money lost there.)
The bottom line? Why do agents still exist? Why do they still have a job? Because they are worth what they charge. They earn their keep.
Here are some reasons why selling by yourself reaps a lower sales price:
1. Lack of exposure. A very small percentage of people will drive by your home, where thousands of people and agents will see your listing on the MLS.
2. You become a target for the wrong people. Of those few people that see your sign, the biggest chunk of them will be investors that are trying to find a rock bottom deal and agents who want to convert you to a listing. I'm convinced the reason "For Sale By Owner" signs are red and white is because it is the equivalent of drawing a target on your back.
3. Desperation: When you only get three lookers and one offer (which will be a low-ball offer by an investor, most likely) you eventually will cave in and accept it. Hence, the reason for the low average price for FSBOs. Investors don't want an agent involved in their deals because they are counting on the owner's ignorance of the market and lack of exposure to swing a great deal (for them not you).
4. Professional detachment: The agent can more effectively negotiate, since he or she is not emotionally attached to the property. They use their market knowledge to accept or counter offers with numbers that are realistic and up to date.
Michael Barth is a full-time Associate Broker/Realtor with an extensive knowledge of the communities along the Wasatch Front. As the former owner of Sundays Child and Kona Ice he brings over 20 years ....
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