Excerpted from NAR Home Guide, written by Kenneth R. Harney
Putting your house on the market can be an emotionally exhausting task. You have to confront questions that involve not only big money but also an intensely personal asset--your home: What's my house really worth? Should I sell on my own to save the agent's commission? How can I be certain I'm getting the right advice about listing, negotiating, and selling smart in today's market.
Along with these tough questions, you come face-to-face with some enduring myths about the home selling process. They're so widespread that it's wise to know them in advance. If you make bad moves based on facts, not myths, you'll fare far better in the selling process.
Myth: The real estate agent will set the price for my home.
Agents don's set any price. However, they'll suggest a price based on their assessment of not only your home but also the current state of the market. Most agents suggest a range rather than a dollar amount, and it's then up to you to accept or reject that recommendation. Their recommendation is usually based on a rigorous review of comparables--houses similar to yours that have sold in recent months.
Myth: I should always list with the agent who recommends the highest selling price in the comparable market analysis (CMA).
Wrong. The CMA is just one of many factors on which to based a listing decision. The CMA's from several agents competing for your listing will probably all fall within a similar range. But if one agent's CMA is significantly outside that range--especially on the high side--don't make that the key reason for giving that agent your listing. Go with the agent whose total marketing presentation, track record, and rapport with you add up best.
Myth: If I sell my house myself, I'll net more money because I won't be paying agent's commission.
Many people look at the fee an agent stands to earn on a home sale and wonder whether there's a cheaper way to sell. In some red-hot real estate markets--where buyers are lining up outside your door with offers and competing for your home--it's possible to do just that. But most markets aren't anywhere near red-hot. Many are soft, sluggish, and slow--the very worst climate for solo sellers or for-sale-by-owners (FSBOs).
The experience of sellers I've spoken with in the past year around the country confirms the fact that when you go on your own in a buyer's market, you stack the odds against yourself terribly. For starters, your home won't be listed in the multiple listing service (MLS), which is the number one sales tool for marketing a house.
And despite your best desire to avoid having to pay a commission, most buyers who respond to your newspaper ad will discount out the commission your plan to pocket. That is, they'll subtract if from your asking price even if you've already done so. The result is that you'll get far more lowball offers than you would if you were working with an agent.
Then there are the sheer practical aspects of selling on your own. Do you have the time or the flexibility to show the house during your regular working hours? That happens to be when many buyers want to visit properties and spend time walking through them with the agent they're working with.
Another important flaw in the I-can-save-by-selling-it-myself theory is that although you may think your negotiating abilities will stand you in good stead when you deal one-on-one with potential buyers, the odds are that you're mistaken. Face-to-face negotiations in the kitchen or living room blows up more FSBO sales than almost any other cause. Rather than having a cool, unemotional buffer--that is, an agent--between yourself and the buyers, you're all alone, and the buyer's demands almost inevitably get you steamed up. After all, the buyer's negotiating strategy will always be to knock down your price by pointing out every imperfection--real or otherwise--in your house.
The hard reality is that if you want to get maximum value for your home, it makes little sense to fly solo. That's why a lost of FSBOs come in out of the cold after a few months and list with a professional.
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Charlotte Laws, Ph.D.
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