A couple who was trying to save money buying a new home and selling the old one decided to do it on their own, without hiring a real estate broker. The husband figured it would be easy. He was commercial real estate salesperson. How difficult could it be to sell residential?
He wrote an offer on a listing that he and his wife wanted to buy. He told the sellers that he had already accepted an offer to sell his home. His buyers had already done their inspections, and there were no contingencies remaining in the contract. It was a sure thing.
The next morning, he had to call the listing agent of the home he wanted to buy to inform her that the buyers of his home were renegotiating the selling price of his home based on defects discovered during inspections. Unfortunately, he had to withdraw from the contract on the home he had wanted to buy. The deal on his house wasn’t the sure thing that he thought it was.
More than four of every five sellers employ a real estate agent to sell their home, according to the National Association of Realtors. For those sellers who chose to represent themselves, the primary motivation for not using a real estate agent is to save money. However, more than half the sellers who try to sell their own home fail.
One of the reasons sellers find it difficult to sell their homes is that they are unable to negotiate a satisfactory purchase contract. Often their list price is too high–either because they haven’t had the counsel of a real estate agent, or because they have unrealistic expectations.
Even when the list price is not too high, direct negotiations can break down because both sides want to collect the amount of the commission that would normally be paid to a realty agent. The seller wants to bank the commission, and the buyers feel entitled to a discount because the seller doesn’t have to pay a commission.
Another problem that can keep a direct sale from closing is that neither party knows how to move the transaction along to completion. One seller hired an attorney, but not a real estate attorney, to help her sell her home to a neighbor. Three months later all that the seller had to show for her efforts was a stack of bills from the attorney.
HOUSE HUNTING TIP: If you do decide to buy or sell without using a real estate agent, make sure that you do your homework. Whether buying or selling, make sure that you know local market values. It doesn’t make sense to buy direct to avoid paying a realty commission if you end up paying over market value for the property. Sellers who haven’t carefully researched local property values risk selling too low if they accept an offer without first having the benefit of market exposure.
Before deciding to buy or sell without a real estate agent, consider the reasons why sellers use agents. These reasons include such things as: market exposure, negotiation ability, to avoid direct contact with the other party, product knowledge, professionalism and technical advice on such things as disclosure requirements and contracts. If you decide to go it alone, and you feel less than competent in any of these areas, hire someone to help you.
THE CLOSING: Some real estate agents will assist in a direct sale for a lower fee than they would charge if they had to provide marketing. A good attorney can also provide valued assistance. Just make sure that the attorney specializes in residential real estate.
Dian Hymer is author of “House Hunting, The Take-Along Workbook for Home Buyers” and “Starting Out, The Complete Home Buyer’s Guide,” Chronicle Books.
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