Do Most People Need A Broker When Selling Their Home?

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Wall Street Journal article – 3/18/19
Two experts offered their opinions: one for – one against.

Here are some important facts for Consumers and WSJ Readers to consider:

1. Real estate always has been, and always will be, a local business. Know Your Neighborhood is a cardinal rule in this business. A real estate professional knows what is going in their local market area. An automated valuation model does not (AVM algorithm). And as a result produces wildly inaccurate valuations. If you want comical proof of this fact, the founder of Zillow, sold his Seattle home for 40% less that the Zillow estimated value!

2. Critics falsely claim, Licensed Property Appraisers are the only professionals, who can estimate the market value of a property. Nothing could be further from the truth. Property Appraisers work hand in glove, with local real estate professionals, to find our what is really going on with values, in their local markets. They pull all of their critical sales data, from local MLS systems. Who supplies this “critical sales data” to the local system ? The local real estate community. Appraisers could not do their job, without the critical sales data, Realtors supply every day to the MLS system.

3. The MLS system is the most important and effective sales tool for Sellers. The MLS system exposes your property for sale to thousands of qualified Buyers, by informing hundreds, sometimes thousands of licensed local Realtors, that your property is for sale. and by offering to pay them a commission if they sell it. No For Sale By Owner (FSBO) Ad can do this, whether it be a private ad, or an ad on any of the popular real estate websites. The vast majority of For Sale By Owner homes, do not sell in a timely fashion, and if they do sell, they typically do not sell for top dollar. Why is this the case ? Selling real estate at a Fair Price is a numbers game. Exposing your property to hundreds of potential Buyers, is far more likely to produce a fair market offer, than exposing it to a few Buyers, through the private ads. Most private buyers are tire kickers and bottom feeders, happy to take your home off your hands, if you want to give it away, at a fire sale price.

4. Real estate commissions. Critics claim fees are too high. Here are the facts. In majority of real estate transactions, fees are split 50/50 between the listing agent and selling agent. Top Listing and Selling agents typically spend 50% or more of their commissions in marketing and administrative costs. Your agent pays a percentage of their commissions to their Broker for MLS access, E&O insurance, Board membership, etc. Add in advertising costs, vehicle costs, and all the other costs involved in running any small business. Anyone who thinks being a professional Realtor, is an easy business, full of easy money, is in for a rude awakening. Just ask any FSBO seller, who has tried for months to sell their home privately, without success. Being a professional Realtor is a full time job. Typically 6 plus days a week, 60 plus hours a week, that most Consumers are happy to have handled by a Professional Realtor.

Professional Realtors are in the business of helping Consumers solve a problem. Whether Buying or Selling a home, which is the single largest investment and financial transaction, most Consumers make in their lifetimes. Our ability to help Consumers successfully navigate this complex and time consuming process, is the sole reason Realtors exist, and why professional Realtors will not be replaced by Robots or Online Websites anytime soon.

Brent Leathwood, MBA, Licensed Real Estate Broker, SRQ Boomer Homes, Sarasota, FL, 4/8/19

BRENT LEATHWOOD, MBA

LICENSED REAL ESTATE BROKER | BK 3300751

CROSS BORDER REALTY LLC | CQ1046895
2100 CONSTITUTION BLVD. #207
SARASOTA, FL, 34231
(941) 882-2995
Contact
3 Big Mistakes Buyers make:

  1. 1. NOT KNOWING THE NEIGHBORHOOD...ContinuedReal estate always has been and always will be a local business. Know your neighborhood is a cardinal rule in this business. A real estate professional knows what is going on in their local market area. Hire a knowledge, local professional. When we see folks wandering around with a notebook and a list of questions, we know they are the most likely to make a costly mistake. A PROFESSIONAL Realtor, (please note the word professional), can spend 15 minutes listening to your needs and wants, and probably rule out 90% of the local market options, and focus your attention, on the 3 or 4 or 5 communities that will meet your needs, and make sense from both a financial and lifestyle point of view. I am amazed at how many people from out of State, go it alone, end up buying in the wrong community, and come to regret it. I meet people like this everyday, and everyone single one of them will say to me: “I wish we had met you first.”
  2. 2. GETTING STUCK IN AN HOA NIGHTMARE...ContinuedHome owners association nightmares are the stuff of legend in our State. Do not buy the wrong property in the wrong community. A knowledgeable real estate professional can explain to you upfront, the ins and outs of the HOA regulations of the community you are considering, and help you avoid 99% of these potential pitfalls. This is another very costly mistake.
  3. 3. THINKING YOU DO NOT NEED A REALTOR WHEN BUYING A NEW HOME...ContinuedEverybody knows you need a Realtor to represent you, when buying a resale home. Many do not know, you also need a Realtor to represent you, when buying a new home. The new home sales person in the model home works for the Builder, not the Buyer. They are paid to look out for their employer’s interests, not yours. You will not save $1 by going it alone. You will lose money. A lot of money. One of our largest local builders reported 872 annual sales, of which, 762 were handled by Realtors representing the Buyer. That is 87% of the total. The Builder has already factored paying a finder’s fee into the price. The Builder will not rebate $1 of this money back to you. Builders laugh under their breath, when Buyers try this negotiating tactic, even though they will politely agree with you. Professional representation costs you $0, why would you fend for yourself, in a market you know almost nothing about? Buyers know less than 20% of what they actually need to know, to get a great deal. Having gone through the new home buying process hundreds of times with clients, we know all the pitfalls to avoid, and how to make the process go smoothly. Do not go it alone, get professional representation, it costs you $0. Not doing this is the most costly of the 3 mistakes. But everyone has heard the old saying, you can lead a horse to water. We are in the business of helping our customers solve a problem. Our ability to do that, is the sole reason we have a thriving business. We are here to help you through the entire process, and get a great deal.

4 Big Mistakes Investors make:
  1. INCOME... ContinuedThe rental income does not justify the $/sq. ft. purchase price.
  2. EXPENSES... Continued The monthly expenses are too high, relative to the property type and rental income produced.
  3. CAP RATE... Continued The capitalization rate is too low to justify the investment.
  4. HOA REGS... Continued The home owners association regulations are too restrictive, or do not permit the intended use. Frequently overlooked or glossed over by some sales people, the long run financial consequences are catastrophic if a mismatch occurs.
Avoid Costly $$$ Mistakes: Hire Brent. Costs you $0.