Today's real estate market is one of the fastest moving in recent memory. We are seeing multiple offers and bidding wars. This begs the question the need for a real estate agent. Why not try FSBO (for sale by owner) or IBUYER (instant/investor buyers)? We all like to save money however, when it comes to your largest asset, forgoing professional representation may not always be in your best interest.
For sale by owner or FSBO (pronounced fizz-bo) offers sellers the opportunity to price their own home and handle their own transaction, showing the home and negotiating directly with the buyer or his or her real estate agent. According to data compiled by the National Association of Realtors, about 8% of homes are sold by owner.
One of the biggest problems FSBO's run into, however, is pricing the home appropriately. Without access to key information about the comparable properties in your area, you could end up overpricing your home (causing it to languish on the market) or underpricing your home (leaving thousands of dollars on the table). Even during last year's strong seller's market, the median sales price for FSBO's was 10% less than homes sold with the help of a real estate agent. And during a more balanced market, like in 2018, FSBO homes sold for 24% less than agent represented properties.
Without the services of a real estate professional, it will be up to you to get people in the door. You will need to gather information for the online listing and put together the kind of marketing that today's buyers expect to see. This includes professional photographer, writing the listing description, and designing marketing collateral like flyers and mailers or hiring a writer and graphic designer.
You will need to offer virtual showings and develop a COVID safety protocol. You'll then need to schedule an in-person showing for each potential buyer. Then you will need to evaluate offers and determine their financial viability. Is the buyer really approved or somewhat approved? You will need to understand legal contracts, contingencies, discuss terms, disclose property issues, respond to home inspection repair demands, coordinate with appraisers, lenders, title companies, escrow companies as you navigate the closing process. Be ready to spend a lot of time and energy learning how to do many unfamiliar tasks.
While you're doing all of this work, it is likely that you will still need to pay the buyer's agent's commission. The potential savings comes with significant reis and effort. You don't know what you don't know. If you choose to work with a listing agent, you will save time and effort while minimizing your personal risk and liability. And the increased profits realized through a more effective marketing and negotiation strategy could more than make up for the cost of your agent's commission.
Ibuyers provide sellers the option of a direct purchase from a real estate investment company rather than a traditional direct to consumer sales process. Ibuyers tout their convenience and speed, with a reliable, streamlined process that may be attractive to some sellers.
Sellers, however, will pay for the convenience with, generally, a far lower sales price than the market will provide as well as fees that can add up to as much or more than a traditional real estate agent's commission. According to a study conducted by MarketWatch, Ibuyers netted on average, 11% less than a traditional sale when both the lower price and fees are considered.
QUESTIONS ABOUT BUYING OR SELLING? WE HAVE ANSWERS
The best way to find out whether you need a real estate agent is to speak with one. We are here to help and to offer the insights you need to make a better-informed decision. Let's talk about how we can help you buy or sell in today's competitive real estate landscape.