One of the most common questions that people ask me is, “Should I sell my house in Mountain Home with a Realtor or By Owner?” This can be a complicated question to answer but I will do my best to sum it up in easy to understand terms.
Certainly you can understand the appeal of listing your house For Sale by Owner. Most people think that if they don’t use a Realtor that they will save money. This sentiment makes perfect sense. I mean come on, who doesn’t want to save a couple of bucks?! When you list your house For Sale By Owner or (FSBO as it is referred to in the industry) you don’t have to pay a listing agent any commission. This can save you 2-5% off the total purchase price but it may not always be the best decision. Here are 5 reasons why people should carefully consider all of their options before choosing to list their house for sale in Mountain Home FSBO.
- You Still Have to Pay the Buyer’s Commission.
So you have decided to do it yourself and list your home for sale by owner. Great! Right about now you are probably thinking that you are going to save a couple thousand dollars because you won’t have to pay any commission. This is somewhat but not entirely true. You don’t have to pay the listing agent any commission because there isn’t one but more than likely you will still have to pay a commission to the agent of the person who purchases your home. This is known as the buyer side or buyer’s agent commission and is typically 3% of the total sales price. Nearly 99.5% of all homebuyers use a Realtor to help them find their dream home and to facilitate all of the complicated paperwork that is required to complete the sale. It is very rare to find a qualified homebuyer that is not working with a real estate agent. There are typically only two types of buyers that will buy a house without the guidance of a licensed Realtor. These are typically landlords that already own multiple rental properties and investors that do “fix and flips.” These types of homebuyers are only interested in one thing and that is buying a home for less than it’s worth. That’s why they won’t use a Realtor; they have completed many real estate transactions in their life and probably have an attorney on staff that can draw up the paperwork for them. Typically these investment type buyers are looking to only buy properties that they can purchase for less than the fair market value. Investors will typically pay up to about 75% of the actual full value of a home that they are going to buy. Clearly selling to one of these buyers is not going to get you the highest dollar amount for your home. First time homebuyers, out of town buyers, and “move-up” buyers will almost always require the help of a real estate professional. The Realtor that is working with the buyer will use all of their expertise and knowledge to help their client (the buyer) get the very best price on your home. Going up against a buyer that is using a real estate agent will surely result in you getting less money for your home. Think of it this way, if you were being sued in court and the people suing you had a lawyer but you decided to represent yourself chances are that they will win the case. No one in their right mind would defend themselves if they knew that it was highly probable that they would lose the case.
- You Want a Professional on Your Side.
Because of the fact that selling your home is likely going to be the largest financial transaction of your life up to this point it’s probably a good idea to have a professional working for you. If you don’t use a licensed Realtor or an Attorney in your real estate transaction you could be opening yourself up to a whole slew of legal problems. Did you know that you must disclose all material defects to the purchaser of your home? I know that it can be tempting to “forget” to list something on your seller discloser sheet but if you do and the new owner finds out you will be held financially liable. The really crappy part is that you will not only be liable to pay for the new owner to fix the problem, you will now have to pay for all of their court costs and any other associated expenses. The potential legal implications are just one of the aspect of the seller disclosure example. The second aspect is this. You know that you are required to disclose any defects but do you know how to do the legal paperwork to make this disclosure? When you have a real estate agent in your corner they will be able to provide you the correct documents that you need to complete to keep yourself out of legal trouble.
- How Good Are You at Negotiating?
When you hire a listing agent to represent you in the sale of your home you will get access to their negotiating skills and experience. Now maybe you are an expert negotiator in your field but have you ever negotiated the sale of real property before? If you have, how many times? Negotiating real estate deals is something that professional Realtors do all the time. Chances are that they are better at it than you. But what if you haven’t ever negotiated anything before? What do you think the likelihood of you coming out on top against your buyer who does have a professional real estate negotiator on their side? I’m guessing that it’s not very good. I have personally heard of many instances where a good real estate agent has been able to reduce the purchase price of a home for their buyer between 5-10%. If that happens to you, clearly it would have saved you money to hire a listing agent. A 5% commission to the listing agent seems pretty darn cheap when you compare it to taking 10% off the price of your home. Remember, this is not always the case but generally speaking you come out with a better deal when you hire the services of a professional.
- Are You a Real Estate Marketing Expert?
If you are reading this online article there is a pretty good possibility that you are at least somewhat internet savvy. Based on this information it’s probably safe to assume that you are already aware that you can list your house for sale by owner on free classified sites like Craigslist. That’s a good start. Most real estate agents will also list the homes they sell on Craigslist. The problem with listing your house for sale in Mountain Home on Craigslist is that there is no actual Craigslist page for Mountain Home! You will either have to list it on the Fayetteville or the Jonesboro Craigslist page. Now sure, there are probably people in both of those cities that would consider buying a house for sale in Mountain Home but I bet that they are few and far between. Where else are you going to be able to market your home for sale by owner? You will surely head on down to Wal-Mart and purchase some of those generic red For Sale signs and put them up in your yard. This will probably be more effective than the Craigslist posting that you made. Unfortunately only people that happen to be driving in your neighborhood looking for homes for sale will even notice your sign. Most people that drive down your street probably already live in your neighborhood and aren’t looking to buy another house. Most people that go out house hunting go look at homes that their Realtor has found and put on a list. They will often only look at homes that are listed in the MLS. MLS stands for Multiple Listing Service and it is the database that ALL Realtors use to list and find homes for sale. If your house for sale isn’t listed on the MLS how will any real estate agents know that it is for sale? Most Realtors have no problem showing an FSBO if they actually know that it exists. Unfortunately the only way to get a home listed on the MLS is to hire a Realtor to sell your house. A great Realtor in Mountain Home will have a multi-faceted marketing plan to get your home sold. They will use a variety of online and offline promotion methods to achieve this goal. You should always check your real estate professional’s plan to market your home before you hire them.
- Your Time is (Probably) Valuable!
How many times do you think your home will need to be shown before you sell it? One of the most beneficial aspects of hiring an agent to sell your home is that they will handle all of the client interaction. Your home may need to be shown 50 times before you get a decent offer. Do you have the time to show your home every week for months on end? When you hire a Realtor they will bear the burden of arranging showings for all potential buyers. There is a pretty good chance that you work during regular business hours. What happens when a prospective buyer wants to see your house at 2PM? Will your boss let you just up and leave work to show your house? Maybe you have a great employer and they are pretty flexible. That’s the case with many people, but I have yet to hear of a manager than is willing to let their employee leave work at a moments notice to go show their house on a regular basis. Sure they will happily let you do it once or twice but when it becomes an everyday occurrence they are going to put a stop to that practice real quick! What about the incessant phone calls that you will surely receive. When you list your home FSBO you are going to be inundated with phone calls – most of which will be from solicitors and not from potential buyers. Realtors and investors are like vultures when it comes to calling For Sale by Owner home listings. I personally know a young man who was very internet savvy that decided to list his home For Sale by Onwer. Within 10 minutes of posting his house for sale online his phone started to ring. At first he thought this was great! He couldn’t believe how much interest there was in his home. After the first day he had received nearly 50 telephone calls about his house. Not a single one of them was from a buyer. They were all from realtors and investors as well as a few from marketing “gurus” who wanted to charge him a flat fee to help him market the house. The next day his phone kept on ringing. He even got a call at 11PM later that night from an automated system. Someone had put his phone number into a computer that would dial his phone at random times hoping that he would answer. But that was just the start of it! By day three he had also received over 100 text messages in regards to his property for sale. Many of these messages were cryptic sales pitches repeated over and over again. On day four he decided that he was going to turn his phone off during the day and only respond to voicemails or texts that were from serious buyers. He did this for a week or so but quickly found out that no one that called or texted him was actually a real buyer. Over the next month he did end up showing the house a couple of times but it was always the same story. Someone would call him up and say they love his house and want to take a look. When they would show up for the tour he quickly found out that these people were investors, not regular buyers. These buyers would come in take a quick look around and say, “Ok looks good I’ll buy it, let me make you an offer.” He did receive several offers from investors. The highest one that he got was for $137,000. He listed his house for sale at $195,000. That’s a pretty bad lowball if you ask me. The really sad part is that later on when I met this gentleman I ran the comps for him and discovered that his house would probably reasonably sell for about $220,000. He was absolutely floored when I told him this. He couldn’t believe that these investors were offering him nearly $100K less than his house was worth. Eventually this guy did end up listing his house with a Realtor, although it was about 8 months later. The Realtor was able to sell his house for $218,000 with no contingences only 2 weeks after listing it. After paying his Realtor a 3.5% commission and the buyers Realtor a 3% commission he ended up walking away with $205,000. Yes you read that right; he got $10K more than he had originally listed his house for when he listed it as an FSBO. Just imagine how much stress he could have avoided and how much time he could have saved if he had just listed it with a Realtor in the first place. Selling your home for sale by owner could be the right decision but only if you are willing to do all of the work and take a lowball offer. If you do want to sell you house below market value to an investor it still won’t hurt to talk to a real estate agent. Agents generally know all of the investors in town and can make a deal happen quickly and easily. Sometimes the Realtor may even want to buy your house themselves.
If you are a do it your self kind of person it’s ok to consider listing your house for sale by owner but do it while fully aware of what you will have to do to get it sold. If you work from home or are retired it will be much easier than if you work full time at an office. If you are a former police hostage negotiator you will probably be just fine negotiating the deal. Maybe you have spent countless hours researching and learning how to properly market a home (although that still won’t get you on the MLS). Maybe you are a retired attorney and feel comfortable writing your own purchase contract, however, I should mention that attorneys almost never represent themselves in court. If any of these profiles sound like you then why not go ahead and give it a shot. You will not risk anything except for wasting your time and losing money but if you can afford to risk either of those things then why not try it!
I will however, suggest that you at least interview one professional Realtor before you make your decision. It costs you absolutely nothing to consult with a real estate professional and chances are that they will even provide you with an accurate comprehensive market analysis for free. Who knows maybe they will even give you some tips and pointers on how to sell your home. Most realtors are friendly people who got in the business because they love meeting people and helping out. It is rare to find a real estate agent that is pushy like a used car salesmen – most just want to help out their fellow man. If you want to get in contact with a no-pressure Realtor in Mountain home follow this link. Thanks for reading this article and please feel free to use any of the other resources here on the Mountain Home Real Estate Guide.