Why a Realtor® can net you more money than selling your home yourself


November 11, 2018

You’re thinking of joining our December pre-licensing class at our Cherry Hill real estate school. You think you’d do well in a real estate career . Then you meet a friend who telWhy a Realtor® can net you more money than selling your home yourselfls you, “I’m going to sell my house soon, but I don’t need a Realtor® because I can sell it myself.” Now you are unsure about your career choice. You have seen a shift in how consumers shop: everybody buys their goods online, their travel online, they even do their banking online. Is the day of the real estate agent dead?

Everybody likes to save money. I certainly do! That’s why some people decide they can save the real estate agent’s marketing fee by trying to sell their home themselves as a For Sale By Owner, or FSBO.

Rather like brain surgery, selling a home is not as easy as it might initially appear!

But they often find that it is not so easy. In fact, according to a study by the independent research firm Collateral Analytics, “less than a third of all FSBO attempts were successful. Most FSBO sellers lost patience very quickly and ended up listing with an agent.” The white paper analyzed an enormous amount of data: home sales from 2016 and part of 2017 from 13 counties in states across the USA that accounted for 1.35 million sales.

The aggregate average revealed “an average differential of a 5.02% lower price-per-square-foot for FSBO sales as compared to sales made by agents and marketed in the MLS.” They changed the criteria to use different home sale samples from 770 ZIP codes, and this showed a differential of 7.26% lower prices for FSBO sales compared to agent-handled sales. The report—and this research firm has no connection with the real estate industry—surmised, “Both results suggest that sellers would be ill-advised to sell their own property.”

So in the end, those FSBO sellers walked away with lower net proceeds than if they had hired a Realtor to do all the work and paid him or her say, 6% for their expertise and guidance. (In such situations, the listing broker typically only gets 3%, while the broker bringing the buyer earns the other 3%)

But why would a real estate professional be able to sell the homes for more money?

There are several reasons. One is that it is a basic rule of economics that the more potential buyers exposed to a product, the higher the likelihood that the product will sell faster, and for more money. On the one hand, a FSBO puts a sign on their lawn and hopes a passing driver will see it. On the other hand, when we market a client’s home, we pay for it to be distributed to 106 different real estate websites. We market it to our own stable of buyers, and to those among our 160 agents in our office. We constantly bring it “top of mind” to the 3,100 other local real estate agents—and they are the ones who have the buyers!

A buyer can be driven around, bought lunch, rely on their agent’s local expertise and market knowledge, and have someone to handle the myriad details of a home purchase for free! And we have heard many instances of a buyer approaching a FSBO and negotiating the price down, and then when they agree on a price, the buyer will say, “But you would normally pay 6% to a Realtor. I don’t see why I should have to pay that, so I want that 6% you’re saving deducted from my price.”

A good real estate agent brings marketing expertise most sellers just don’t have

A true real estate professional will know how to price the home, know how to stage it, how to market it, how to negotiate hard for their seller, and then walk them through the 52 different steps that get them to the settlement table.

Rest well! As we can see from the people who graduate from our real estate pre-licensing classes every month, there are still plenty of opportunities for those who choose real estate for their career!

David C. Forward is a licensed real estate broker and instructor and was first licensed as a Realtor(r) 30 years ago. He is School Director of Garden Real Estate Academy, has won numerous awards for real estate sales, is a much-requested public speaker who has addressed audiences on six continents and is the author of 13 books. David can be reached at Support@GSREacademy.com

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