Don’t you love to eavesdrop? Yesterday at the local bakery I overheard a heated conversation between two gentlemen about selling a home. Both were in their early seventies. The substance of this debate was pretty thin. The man who wanted to sell his home himself (call him Sven) said that anyone who agreed to pay a realtor a commission was an idiot. His long-time friend (call him Ole) responded heatedly that anyone trying to sell his own home was an idiot. Neither man brought in facts. Here are some they might have considered:
Mortgage bankers report that historically out of every 100 persons attempting to sell their own home, only 10 succeeded in finding an interested buyer. Of those ten, five sold their home and the other five ran into a snag and lost the prospective buyer. A national survey shows that of the 90 brave residents who unsuccessfully attempted a sale on their own, all gave up within 10 to 34 days and asked a competent real estate professional to handle the transaction. By that time, a lot of time and money had been spent and good prospects
Like doctors, lawyers, and dentists, real estate professionals are specialists. I’ll bet Sven doesn’t diagnose his own illnesses, represent himself in court, or examine his own teeth. I’ll bet he uses the services of a professional.
And Sven’s probably not aware of the true market value of his home. His home means a lot to him, but that fact has nothing to do with what buyers will pay. It is the business of the real estate professional to be aware of current market trends. He knows the prices that homes in a particular neighborhood have brought recently.
The difference between the asking price, the appraisal price, and the selling price can exceed 20 percent. The true market value is what a willing buyer will pay and what a willing seller will accept. The true market value of relatively trivial commodities is easy to see: a dollar in change will “sell” for a dollar bill. A “buyer” who wants a dollar bill for eighty-five cents in change will have a hard time finding a “seller” willing to give it to him. Conversely, a “seller” who wants $1.15 cents in change for his dollar will have a hard time finding a “buyer” willing to give it to him. The market value of a home is far more difficult to determine.
The real estate professional has at his disposal up-to-date records of sales in a given area. He knows approximately when Sven bought his home and how much he paid for it. He can also tell him approximately what it will sell for on today’s market.
To Sven, a real estate professional might appear to earn his commission easily. But just as for any other professional service, the Sven would be paying for time and expertise. He is paying for advertising, open houses, telephone inquiries, prospect qualification, and advocacy in a transaction that will benefit both him and his buyer.
A real estate professional would work for Sven, not for himself or for the buyer. He will assist him or her in every way possible. He works strictly on commission, and he does not receive a penny in payment until all the steps have been completed and the house is really sold. Real estate is his profession and his livelihood.
According to the latest survey conducted by the National Association of Realtors, sellers using realtors nationwide net as much as 27% more than sales by owners. Here’s how your realtor can save you money (not all will be evident in every transaction, but a large number of them may be present):
Higher selling price: 3-9%
Quicker sale (saving mortgage payments) 1-2%
Loan discount fees – savings 1- 2%
Legal costs – savings 1- 2%
Possible law suit 1- 3%
Advertising – savings 1- 2%
Needless repairs and expenses ½- 3%
Quicker settlement ½- 1%
Owner’s time 1- 2%
Signs, flags, etc. ¼- ½%
10 ½ - 27%
Another fact: National studies reveal that only 3-5% of prospective purchasers buy the house they called about in an ad. Generally, serious buyers use the services of a buyer’s agent.
So, Sven, consider what your commission buys. Save time, money, and potentially serious trouble. Let a qualified real estate professional sell it for you. The sale down the street probably looked so simple because the realtor solved all the complex problems without troubling the owner in the process.
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