John and Anthony Discuss the Pros and Cons of Selling Your Home For Sale By Owner
Related blog: Should You Sell Your House Without a Realtor?
Thank you very much. Are you looking to sell your home maybe? You might be tempted to go about the process by yourself maybe save yourself some money but is that the right way to go. Here with the pros and cons are our real estate experts John McGeough and Anthony Lamacchia from Lamacchia Realty . Good to see you gentlemen.
All right let’s talk a little bit about this obviously you guys are in the real estate business so people might be like, “why are we asking these guys”
We’re a little biased!
Right but we’re going to try to get the pros and cons. If you are thinking about doing this what’s the first thing you should keep in mind when you go into this process?
If someone’s going to sell their home on their own, the first thing they need to keep the same principles in mind, they have to price right, they have to, and a lot of times what we see with for sale by owners is they price too high. They see everyone’s home in the neighborhood selling for $400,000 and well mine is better my lawn looks nicer, so I can price it at $425,000. And they don’t have a Realtor® telling them and bringing them down to earth. So price is key.
Keep in mind you need to price also to reflect that they’re not paying a commission so most folks who are thinking for sale by owner feel oh I don’t want to pay a 5 to 6 percent commission so if they’re listing for $400,000 they should really be listing for $375,000 to $380,000 because a buyer doesn’t want to pay commission if they’re selling it themselves.
So how do you know what the right price is? I mean you can look at obviously some of the comps in the neighborhood but how do you know what’s inside someone else’s house as opposed to yours?
Well it’s tough, especially if you don’t have a Realtor® to get you better access to things like that but a lot of the pictures and things are a lot more public now they can go on various websites and look but they have to try to look at it like a buyer, that’s key. If I was a buyer would I pay $425,000 or would I want to pay $400,000, that’s what they have to look at.
Is this a reasonable thing to take on or is it a lot more work than people think it is?
No, I mean once again, we’re a bit biased, I wouldn’t say it’s reasonable just because as an example we pulled some stats last month, and there were 1,376 single family homes sold between $300,000 and $500,000, only 35 of those were For sale by owner so it’s less than 2% or right around 2% which is much less than the industry average of 10% so it’s not really reasonable but in the rare case where it made sense once again as Anthony said you got it priced right and you’ve got to somehow get reasonable comparables and you got to market it correctly so actually buyers just outside putting a sign on the lawn and actually seeing the home to come in to make an offer.
But if you’re able to do this you can save yourself a chunk of money.
Well that’s up for debate. I mean let’s think of it this way, let’s say you’ve got a $200,000 home, most Realtors® charge a 5% or 6% commission, so that’s $10,000 or $12,000 on $200,000, so most for sale by owners realize that when a buyer’s agent brings a buyer you need to pay them the standard 2 ½ %, so there goes $5000, so now you’re down to saving $5000 so of course that’s a lot of money but you could lose that in a negotiation against a Realtor who can negotiate a lot better than you can. And one thing I want to add because you asked about the work in doing it before, you know when your home is on the market that’s a lot of work anyway. You’ve got to make sure the place is staged right; you have to not go home at 6 because there’s going to be a showing so it’s a lot of work even when you have a Realtor®. When you don’t have a Realtor®, it’s a ton more work, you’ve got to field all the phone calls, answer everybody’s questions, negotiate an offer, and it’s in a world of things that you’re not aware of.
What about legal issues that might arise? I mean I think that’s the thing that might make me nervous, what are those in this process?
Well I’ll talk about that but the first thing you want to always do if you’re going to take on that risk is you got to have an attorney. Don’t try and go about this without an agent and without an attorney. Got to have an attorney. Legal issues are usually around disclosures, did you disclose that the basement sometimes has water, did you disclose that the roof had ice damming at some point and those are the things where a broker can be that broker, that in-between person to not have you disclose so much, some people think as a seller you’ve got to disclose everything, and a buyer walks in and all of a sudden they’re telling the life story of the home, bringing the value down, talking about the nasty neighbors—
Or not disclosing enough. There’s a right way to go about it and a right way to disclose.
Unfortunately we have to leave it at that. We could talk about this all day, John and Anthony thank you so much we appreciate it.
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