Checking The Pulse Of The Kansas City Real Estate Market
No doubt, the reason that most Kansas City home sellers would attempt to sell their homes For Sale By Owner is to save on the real estate commission. I’m not just a Kansas City Realtor. I’m a consumer and I want to SAVE just like you do when purchasing products. I don’t walk into a car dealer and open my wallet. But along with some downsides there’s also upsides to going to the professional to buy a car. You definitely need to weigh the options and be careful you don’t make a rushed decision on the best route to take. In addition to possible savings, you will also need to consider whether you can even get the job done at all — much less save money.
I had a Z71 truck a couple of years ago that took me 3 months to sell (after purchasing a newer Z71) and the truck was in good shape and only a few years old. I just didn’t have the time I thought I would to devote to selling the vehicle outright. I should have traded it in. The argument against trading in a car is that you’ll lose money by doing so. I believed that for years, but is that true? Well, in most cases you should be able to sell your vehicle for more outright than you’ll get by trading it in… But you also have to factor in that if you’d traded in a $10,000 vehicle on a $20,000 vehicle, you’d also have saved paying sale’s tax on half the vehicle — at least that’s how it works in Kansas. You also have to factor in that there is ZERO marketing dollars spent when trading in your vehicle. Time is also money and you didn’t have to meet anyone or deal with all the other hassles of selling a car to an individual. What’s all that worth? It’s difficult to quantify exactly and it’s the exact same thing when it comes to selling a home.
Let’s look first at how much a home seller might “save” by selling their home FSBO. Well, it’s almost guaranteed that a FSBO seller won’t be able to sell their home to a buyer who isn’t represented by a buyer’s agent — 85% of real estate transactions I’m seeing involve one. And because the buyer isn’t going to pay the buyer’s agent commission (since it’s already factored in to the list price on all other listed homes), the seller will be expected to pay it. Do they have to? Of course not. But the buyer is sure to move on to another home if the seller isn’t accommodating. And if you think you’ll just wait until one of those 15% of buyers walks through the door unrepresented to save money on the commission, think again. Buyer’s not working with a buyer’s agent AND looking at FSBO are looking to “save” the SAME commission that the seller is looking to save!
In nearly all situations I can think of, a seller is going to need to pay a buyer’s agent commission. How much is that? I doubt an agent would show a FSBO if the Seller won’t pay at least a 3% buyer’s agent commission. So, assuming a FSBO is going to pay a 3% commission to get their home sold, what a FSBO seller is REALLY looking to save is anything over the 3% buyer’s agent commission. If you’re assuming the commission would have been 6% (remember there’s no such thing as a “standard commission”), then a FSBO is hoping to save 3% on the sale of their home.
But now let’s say I’d list your home for 5% if you’d also agree to have me as your buyer’s agent in your following home purchase (after selling your home). That means you’d be fighting to save just 2% commission. On a $150,000 home, you’d be trying to save $3,000. That’s a lot of money, but what exactly are you going to have to do to save that $3,000? Well, you’re going to have to show your home at all hours of the day. Think you won’t have to do that? Think again. This is a buyer’s market we’re in and you’ll need to accommodate buyers and buyer’s agents or your home will get pushed aside. There are so many homes on the market that it’s taking longer for homes to sell. This means likely dealing with the real estate sale process for 2, 3 or maybe 4 times longer than it took you the last time you sold a home.
So what else do you have to do to save that $3,000? You’ll also have to meet and write up the sales contract. I have been involved in HUNDREDS of real estate transactions and I know the contract documents backwards and forwards. But it still takes a couple of hours to get through writing up the average real estate offer. If it takes that long for me to go over each clause of the real estate contract and be sure the seller understands the process, it will take a novice a day or more to do so. You could hire an attorney to do it for you but I doubt that’s going to get done for less than a $1,000 when it’s all said and done.
If you do hire an attorney, now you might be looking at “saving” $2,000. What else do you have to do to save that $2000? We haven’t even begun to discuss marketing, yard signs, brochures, web site listing, MLS (you’re almost guaranteed to NOT sell your home if you don’t list it somehow on MLS), your own web domain, your own web listing, professional photos, upgraded listing on Realtor.com, listing your home on other high-ranking and high-visited real estate sites, networking with other agents, etc.
So, what else is there to consider? The negotiations with the buyer. The buyer’s agent will be representing the buyer’s best interest and looking to kick your butt. They won’t say that but you can bet they’ll be fighting for every dollar for their client. They’ll be pulling out all the tricks and you won’t even know many of them even happened. Now, an attorney could write up the contract documents for you but he won’t be handling the negotiations – well, actually he would for an additional fee. It’s certainly much easier to negotiate the best price when the negotiations are being handled through an agent, rather than directly yourself. It makes it much easier to posture for a better deal.
Then there’s the CRITICAL inspection negotiations. If you don’t have a good agent representing you, there’s a very good chance that your transaction will fall apart at the inspection process. This part of real estate sales process presents the highest cancellation risk of them all. And who’s going to be checking up on the other buyer aspects of making the deal happen… like making sure the loan is in place and the appraisal gets done?
Everywhere I look, stats are showing 75 to 80% of FSBO’s will fail. Yes you can succeed but even if you do, it’s very likely you won’t have saved any money. In fact, you’ll probably have gotten a lower sales price, given up more in inspection repairs, paid more for things like title insurance, given too many buyer concessions, etc. I know I’m a real estate agent and that you’ll take my advice with a grain of salt. After considering all the issues above, if you decide the challenges are too overwhelming, please contact me for assistance with getting your home sold.
Posted by Jason A. Brown