Selling a Property

You have 2 basic choices when you decide to sell a property. You can either hire a conventional real estate broker to sell your home or you can sell it yourself.  When hiring a broker you are purchasing a bundle of services. Only after you identify those services can decide if you have the ability to do the job yourself.

The services that you are entitled to get from a real estate broker are:

• Calculate the market value of your home
• Make recommendations as to what you should do to the home to make it more marketable
• Develop a marketing strategy
• Execute the strategy
• Absorb all marketing expenses
• Verify potential buyers are qualified for financing
• Explain the details of any offers to you
• In the case of multiple offers, recommend the best course of action
• Be the impartial third party that advises you to make all decisions based on facts, not emotion

The cost for this service will range from 3.0% to 6.0% of the sales price of your home depending on where the property is located. So, if you are selling your home for $500,000 you can expect to pay anywhere from $15,000 to $30,000.

The reason homeowners decide to sell their home on their own stems from the observation that there is little or no correlation between the quality of service being provided by the broker and the cost of those services. Why is this? The ever increasing number of people working as real estate brokers and agents. Only a small percentage of those in the business are experienced enough to do their jobs properly. There is a substantial number of people in the business but not in the business as a profession.

Let’s take a detailed look at each service that is provided by a broker. From there you can see what’s really involved and decide if you’re confident enough to do it yourself.

After you’ve decided to sell your home and have an idea as to when you would like to complete the transaction your next step will be to determine an asking price. In a sellers market, such as has existed for the last 5 years, this wasn’t a difficult task. If you priced the home too low, a bidding war would start and drive the price up to and sometimes even over, market price. If your price was too high, you simply waited for the market price to catch up to your asking price. Offers would then come in and the house got sold. It may have taken a few weeks longer than you wanted, but it still got sold. We are no longer in a sellers market. 

We are currently in a buyers' market. There is no confidence in the minds of potential buyers that home values will go up in the future, there is a record number of homes on the market, financing is hard to come by and the economy is in poor shape. If a property isn’t priced right, it is not going to attract offers.

You would think that from a broker’s standpoint pricing your home should be an easy task. He has all the sales data at his fingertips and it is his business to know what’s on the market at any given time. Remember, selling your home is an emotional decision so data presented to a homeowner isn’t looked at objectively. Pride makes homeowners feel their house is more valuable than other houses on the block. This attribute of human nature leads the homeowner to ignore the facts that are presented by an experienced, honest broker and gravitate to the broker that tells him what he wants to hear. What he wants to hear is a high asking price. After all, he does own the nicest home on the block!

This forces, even the most professional broker, to estimate high in order the get the homeowners attention and then get the contract to market the home (the listing), signed. The broker knows that as time passes the seller will be forced to become more realistic in the asking price and lower it to reflect a price closer to market value. All the broker needs to do is to get the homeowner to sign a contract that is effective for a long enough period of time for this to occur. This is why most brokers look for at least a 6-month contract.

What you determine as the initial asking price for your property, will have a major impact on your plans. Besides the obvious problem of anticipating having more money on hand from the closing, starting at an asking price that’s too high will also negatively impact the timing of your plans.

There is certainly more than enough real estate data available to the public. A homeowner can easily develop a market price for his property based on this data as long as his personal attachment to the property is kept in check.

The lesson here is that utilizing the services of a real estate broker does not guarantee that your property will be priced right. Although you have the necessary data available to do it yourself, you may be too personally involved with the property to be objective.

The next service you would expect to get from a traditional real estate broker is some recommendations as to what you should do to make your home more marketable. The basic recommendations here are straightforward. They will be the same things you would do if you were inviting a guest into your home. The only difference is that this guest will see all of the house not just the living room and entertainment areas. The same common sense things you would do in the living room (get rid of the clutter of everyday life, make sure the furniture is in its proper place, get the dirty dishes out of the sink, etc) you also need to do in the bedrooms, basement and all the bathrooms. They will also suggest that you are not around while they are conducting open houses or showing the home by appointment.

If you are selling your home on your own, you may overlook some of the less obvious things that can improve the presentation of your home. You may have too much furniture in the living room, making it look smaller than it is. You may make the assumption that all people are pet lovers and forget that things a pet lover takes for granted can be offensive to some people. While you are taking potential buyers through your home you will probably talk too much. This is why most real estate brokers don’t want you around while they are working.

Talking too much doesn’t mean you are going to say something you shouldn’t. It simply means that when you are talking it prevents the potential buyer from thinking and making a complete inspection. Remember, in a short period of time the buyer needs to gain a feel for the home, decide if his furniture will fit in the rooms etc. The downside of your absence during the showing is significant. You know more about the property than any one else does. You have lived in the home. You know all its little quirks; you add a personality to the home.  

If you are selling an investment property, your presence is extremely helpful with dealing with the tenants. A tenant may feel it it in his best interests to say things that will discourage a purchaser. There may be some friction between you and the tenant that will more easily come out behind your back. A tenant may have given you permission to show the apartment when he's not at home. Accompanying any stranger coming into the apartment not only shows your respect for the tenant's possessions but reduces the risk of damage or thievery by a potential buyer.

Your presence during the showing of the home is extremely valuable; it helps form an emotional connection between the potential buyer and the home. I can give you insights that will enable you to give the buyer the freedom from verbal distractions, allowing him to do what he needs to do and at the same time develop a comfort level to conduct business with you. The best of both worlds.

Developing and executing a marketing strategy sounds more impressive than it really is. From a broker’s prospective, he will follow the same formula he does with all his listings. A standard pattern of open houses, advertise in the local papers, include your home on his web site and submit it into the local Multiple Listing Service (MLS). There is no question that if done correctly, this gives your home maximum exposure.

Going it on your own will not get this exposure. The question you need to ask yourself is, “Is the exposure I’m getting worth what it’s costing me?” Buyers are utilizing avenues today that either weren't available only a few years ago or underutilized by the real estate industry. They primarily use the Internet and travel around neighborhoods dropping in on open houses. Buyers today are using real estate brokers and agents only as a last resort. The Internet has empowered them to research properties on their own and at their convenience. They quickly know as much, if not more about the area in which they're looking to buy as the local agents. 

The most valuable service provided by the real estate broker is the screening of all potential buyers. When an offer is presented you can be confident in the fact that the buyers are financially strong enough to complete the transaction. You can also expect a detailed explanation of the offer and in the case of multiple bids, a comparison of the strengths and weaknesses of each offer. If you decide to market you home on your own you will need to learn the necessary skills to analysis the financial strength of a potential buyer or be able to seek the advise of someone who has those skills.  

Before taking on the responsibility of marketing your own home give me a call @ (516) 627-0800. I'll be happy to supply you with the information you'll need to make the right decision.