Often, society encourages us to cut the “middleman” out of our numerous daily transactions. In some situations this plan makes sense, as it tends to make things more efficient. However, in the context of a real estate transaction, cutting out the middleman (aka, your real estate agent) could be downright disastrous.
If you’re selling your home, you might be tempted to save money by attempting a For Sale By Owner (FSBO) transaction. A FSBO is a sale conducted solely by the owner of the home, and so he or she circumnavigates the commission fee and cost of hiring an agent. While this idea might seem attractive on paper (“No commission fee? Sounds great! What could possibly go wrong?”), it’s important to understand that, in most cases, a FSBO means big losses for the seller in more ways than one. Read on for an explanation detailing why every homeowner selling a house needs a real estate agent.
Agents Are Professionals
While sellers are obviously driven to sell their homes, this motivation does not make most of them experts in the varied minutia hidden in a real estate transaction. A real estate agent, however, is an expert, and this expertise is vital in successfully navigating a sale.
For instance, an agent generally has an extensive professional network to draw on when advertising each listed property. This benefit more than justifies any commission fees you might pay, as it could dramatically reduce the amount of time your home sits on the market. Additionally, agents are skilled in the art of negotiation, and can turn a potentially devastating rejection into an opportunity for success. This quality is particularly helpful, as most homeowners are liable to get emotional and make irrational decisions when a potential buyer rejects their asking price. Finally, it’s worth noting that many buyer’s agents won’t even consider working with a FSBO, as these transactions have a reputation for being more trouble than they’re worth. Buyer’s agents know that homeowners aren’t professionals, and so brokering a deal with them tends to involve unnecessary headaches on both sides of the transaction. As such, many buyer’s agents will discourage their clients from considering FSBOs.
A hefty volume of paperwork is involved in selling a home, and one of the most important documents is called a seller’s disclosure. Basically, a homeowner is required to disclose any potential information that could affect the material value of a property, and a seller’s disclosure ensures that the homeowner does so. However, the information that needs to be provided varies depending on your state of residence, making it difficult for the average homeowner to know exactly what to include. Leaving any required information out of a seller’s disclosure could make the homeowner liable for fraud, even if the mistake was unintentional. That’s a problem no one wants to deal with.
Working with an agent helps you easily circumnavigate a legal fracas. Agents possess a thorough knowledge of disclosure laws for the state they work in (again, they’re experts), and so they’ll be much better equipped to provide all necessary information than the average homeowner. Additionally, even if an agent makes a mistake, he or she has insurance to protect against legal complications. In short, working with an agent removes the legal burden from your shoulders, saving you the stress of worrying about a lawsuit.
This last point is more of a nuisance than a serious threat, but is still an important point to consider: a homeowner attempting a FSBO sale must attend each showing in person. Often, this fact makes potential buyers uncomfortable, and so serious house hunters will either rush through a showing (which is bad news), or will simply avoid the FSBO altogether (which is even worse news). As such, FSBO sales often attract a large number of “looky-loos.”
Looky-loos are individuals who visit showings casually. They aren’t serious buyers, and they’re often motivated simply by a curiosity to explore the interiors of houses. While a looky-loo might appreciate a home, he’s not likely to buy it, and so he’s a major waste of time.
The presence of a real estate agent tends to discourage looky-loos. Additionally, even if the inevitable casual observer inspects a property, the real estate agent will deal with it, leaving the homeowner free to go about her normal routine. Time is precious, so avoiding the hassle of looky-loos is going to be another big benefit of working with a professional real estate agent.
All in all, it’s clear that working with an agent is far more effective than braving the uncharted frontier of real estate on your own.