Did you know that you can start losing money right now? Surprisingly, it's much easier than you think, and you can do it from the comfort of your own home. One significant way to end up with significantly less money is by selling your home without the assistance of a real estate agent. According to The Close, For-Sale-By-Owner homes sold for 35% less in 2022 compared to homes sold through an agent. Moreover, a study by Zillow revealed that 69% of homeowners who attempted to sell their homes without an agent ended up hiring one after failing to sell independently. These figures don't even include sellers who took their properties off the market because they couldn't find a buyer, suggesting that the number of unsuccessful sales without an agent might be even higher. These statistics serve as a reminder that selling a home is not as easy as it may initially seem.
Traditionally, we are taught that making money requires hard work, but it doesn't always have to be that way. It turns out that you can work hard and still lose money. The statistics mentioned earlier indicate that selling your home without an agent can be arduous work, ultimately resulting in a 35% decrease in the sale price. This could cost you much more than simply paying a commission to an agent.
It's important to note that the significant difference in sale prices between For-Sale-By-Owner transactions and agent-assisted sales is a bit more complex than it appears. Approximately half of all For-Sale-By-Owner sales involve transactions between owners and buyers who already know each other. In these cases, making a substantial profit might not be the primary concern; instead, the goal might be to ensure the property goes to a friend, family member, or neighbor. However, considering Zillow's determination that 69% of properties listed without an agent failed to sell until an agent was hired, it seems highly likely that the absence of an agent played a significant role in the lower sale prices of owner-sold homes.
To be fair, many individuals are capable of successfully selling their homes independently and obtaining a good price. However, Zillow's statistics suggest that most owners who believe they can sell on their own tend to overestimate their abilities. I can understand this mindset; homeowners have invested a significant amount of money and effort into their homes and naturally want to maximize their profits when selling. Why would they want to pay an agent's commission? It's easy to think, "People do their house shopping online anyway, so if I just list my home online, buyers will show up." However, effectively marketing a home requires an understanding of the types of buyers in your area, their preferences, negotiation techniques, objectively comparing your home to nearby sales, cleaning and staging requirements, potential improvements to enhance perceived value, and various other factors.
Here is a story I came across recently. During the search for a condo, the buyer had an interesting encounter with a For-Sale-By-Owner listing. One of the initial properties visited lacked a key box, and the owner provided instructions to call their cell number, supposedly posted at the building entrance. However, upon arrival, the number was nowhere to be found. Fortunately, a resident of the building granted access to the lobby. Inside, it became evident that the owner had actually posted their phone number in the lobby itself, making it impossible for prospective buyers without prior access to enter the building. Initially, this buyer considered leaving since the owner mentioned they would arrive in half an hour. Eventually, the owner arrived, he was pleasant and seemed honest. However, throughout the entire home tour, which lacked proper staging, the owner constantly followed the prospective buyer, creating a sense of discomfort and hindering their ability to envision the place as their own. This person felt as though they were in someone else's house with the owner breathing down their neck. In contrast, other condos the same buyer visited were professionally staged, and the owners wisely chose not to be present during the tours, following the generally recommended practice. This allowed the buyer to explore the properties with their agent, freely discuss their thoughts and feelings, and genuinely experience the spaces. Notably, these condos were also priced lower than the For-Sale-By-Owner property, aligning with the common occurrence where owners tend to overestimate their property values by around 5%, as reported by HomeBay.com. Overall, due to the uncomfortable experience with the For-Sale-By-Owner property and its higher price, this buyer opted to purchase a different condominium.
Quantifying the factors that influence someone's preferences for a property can be challenging. However, it's crucial to eliminate any barriers that might make buyers feel uncomfortable in the home. My advice to the owner I encountered would be to carefully consider creating a relaxing and comfortable experience for potential buyers during the tour. This involves ensuring easy access to the property and making sure the owner isn't present. If there are peculiar furniture choices, the house isn't clean, and the owner is constantly shadowing the buyer, it's likely that the buyer will perceive even minor imperfections more negatively. I would have also recommended staging the house with generic furniture to create a neutral canvas that allows buyers to envision the home as their own. It's worth noting that staging and interior design serve different purposes; staging aims to provide a blank slate that sparks the buyer's imagination and doesn't impose any specific taste or style.
Once again, there are plenty of people capable of effectively selling their own homes. However, if you've never done it before, your home might appear less professionally presented, less inviting, and overpriced, which could discourage potential buyers from making offers. By the time you decide to list with an agent, your property may have been on the market for a long time with multiple price reductions, making it more challenging to sell. At that point, you might be desperate to sell it quickly, potentially at a lower price.
While hiring an agent is a highly effective way to sell a property, it's important to note that an agent should never promise a seller that their services will yield a higher sale price. The National Association of REALTORS® Code of Ethics prohibits REALTORS® from misleading buyers or tenants about potential savings or benefits that may arise from using their services (Standard of Practice 1-4).
Credit to Ethan Atkinson onlineed
