More Prospects May Sell It
Kate asks if she should sell her house herself or use a realtor. She wants to save the commission. Dave recommends a realtor.
QUESTION: Kate on Facebook asks if she should sell her house herself or use a real estate agent. She wants to save the commission. Dave recommends an agent.
ANSWER: I can tell you that I would personally use a real estate agent. Why? Because you're not really saving that much money. There are several studies and pieces of research done on people selling homes themselves. The biggest problem you've got right now is you've got to list and market your home in such a way that it sells in this marketplace. You have to be competitive. When you put the house on the market and you don't have good, solid information about the other properties in the area that are for sale—your competition, other properties in the area that have sold—which will be used for the appraisal on yours, you're going to make a mistake on your pricing model. If you price it wrong, if it's too high, no one will come see it. If you price it too low, you're giving away money and leaving money on the table. Either way, you made a mistake that's going to cost you money. If nobody comes to see it, you get to sit there and live in it and make payments.
The fact that the house is more likely to sell if it's priced right and you don't make a pricing error is enough to justify the 6% in my mind. But your house is much more likely to sell if it's exposed to more people. If your real estate agent puts the thing in the MLS—the multiple listing service—and you don't, you're going to have 1,000 people look at it with him and two people look at it with you. Who's going to sell it? Who's going to cause it to bring the most money? The one that exposes the property to 1,000 or the one that exposes it to two? Obviously, a thousand prospects creates more likelihood of sale and a higher selling price.
Studies have also shown that for various reasons, an agent-listed property will bring an average of 3% to 4% percent more than what we call a FSBO property—for sale by owner.
You're not going to save the commission. You're not going to save the whole 6% that you've got in your head. Three percent goes to the agent that has the property listed and three percent goes to the agent who brings the buyer—the selling agent. They split the 6%. Why would I come to your FSBO property versus one listed with a real estate agent? Because I know you're not paying a commission. You'll probably cut me a better deal. Translation: I want some of the commission that you're saving.