When I am working with clients who are buying or selling their first home or perhaps even their second or third home I find most people have no clue what EMD is. How much EMD is necessary, what
How to Lose Money Selling your Home DIY
Dated: July 10 2019
Can you sell your home on your own? Probably…
Should you? Probably not.
I’m a pretty handy guy most of the time. I can fix minor dry rot, I can do some minor maintenance on small engines, I can paint a room. Heck I’ve even replaced the brakes on the truck but I’m not a professional and I don’t do these tasks every day. I can tell you it takes me a lot longer then a skilled professional to get these tasks done and multiple trips to the hardware store (I’m sure you’ve been there).
Look, I am under no illusion that it’s a seller’s market right now and it really doesn’t take much to sell your home in such a hot market. However, there are some significant drawbacks to DIY the sale of your home (think Pinterest fails on steroids).
First let’s talk about pricing because that’s what everyone wants to know. How much is my home worth? With all the technology available to us now home seller’s have more data and information at their finger tips then ever and in all reality it’s not too hard to set the price for your home especially if you are in a neighborhood with very similar homes. Zillow, Redfin and numerous other sites tend to be fairly accurate when it comes to their algorithms in homogeneous areas but as soon as you get to custom homes or country homes these sites typically fall way short. Even in homogeneous areas these sites aren’t always accurate and I have seen multiple times when the value these sites showed was well below the true market value of the home. Check out these stats provided by the National Association of Realtors https://www.nar.realtor/research-and-statistics/quick-real-estate-statistics. On average FSBO sellers sell for sellers sell 24% less then homes marketed by real estate agents. Even if you are paying 6% to the agent you certainly aren’t saving any money.
So let’s talk about negotiations because clearly the FSBO sellers are falling down on the job here. Good agents are skilled negotiators. I’m not saying that all agents are good negotiators because some are most certainly not but it’s up to you to hire the right one and we’ll cover that aspect in another article. They negotiate real estate deals every day. As a seller do you really want to go up against someone that does this on a daily basis? Do you know the ins and outs of the real estate transaction? Did you know there are 3 different times that the price can be negotiated in a transaction? Agents do and I can guarantee you they will take full advantage this knowledge. We’ll touch on the three points of negotiations in yet another article so stay tuned!
Perhaps I have yet to dissuade you from marketing your home and selling yourself. Really the biggest reason for people to go it their own is to save money, right? I believe I have clearly shown that it really doesn’t save you money and in all reality, you are actually leaving money on the table but for the sake of conversation let’s say you are hell bent on selling this home without an agent. You’ve marketed your property, you’ve scheduled the showings and you’ve hopefully negotiated the best price. Now you need to make sure that you have properly disclosed any material facts that could impact the value of your property to the new buyer. Where do you go to get the proper disclosures and how do you properly fill them out? Again, having an agent there for this part of the transaction has huge benefits to your pocket book if something should go wrong. Getting sued by the buyer is not fun and you probably don’t carry E&O insurance to help defend yourself in court, but your agent does.
Another pitfall that FSBOs run into is that buyer’s actively looking for a home typically use an agent. So, you are still going to have to pay 3% to the buyer’s agent in most cases. But let’s say you have decided that you aren’t willing to pay a commission to the buyer’s agent. A large majority of buyer’s do not feel comfortable going it alone without the advice and guidance of an agent so in the process of trying to save a little cash you have significantly limited the buyer pool. According to NAR (National Association of Realtors) 87% of buyers used an agent to help them buy their home. Check it out here. https://www.nar.realtor/research-and-statistics/quick-real-estate-statistics
Honestly working with an agent just makes life easier. Let’s go back to my analogy in the beginning. I am handy person and I am sure you are too. We can take on projects and tasks that we don’t do every day but how many times are you going back to the hardware store and how many curse words do you use in the process? Is it really worth your time and effort? I don’t want to have to schedule showings, stage my house and deal with buyers walking through my home without an agent to screen them first. I don’t want to have to manage the timelines of the contact, open escrow, get signatures, account for all the paperwork and I certainly don’t want the liability resting solely on my shoulder. I would much rather spend the time with my family or making money using the skills that I have developed and use every day.
So, can you sell your home DIY? Probably…
Are you really saving any money? Nope
Do you really want to deal with the hassle? I would sure hope not!
So, do yourself a favor let a licensed qualified real estate agent take on that task and free yourself up for better things and more money in your pocket!
Justin Cooper is a 14-year Real Estate veteran based in the Greater Sacramento region. However, his career has taken him to numerous markets around the country. Justin prides himself on superior custo....