As the old adage goes; “He who is his own lawyer has a fool for a client”. Some believe the same is true of folks who attempt to sell their own real estate. We certainly do not fault those who try but the National Association of Realtors says, listing with a professional will increase their profits. For-sale-by-owners (FSBO) actually end up having to spend a lot more time marketing and showing their property than they ever imagined and tend to end up with a final selling price that is lower than comparable listings that were sold by an agent, according to research.
Take a look at the numbers from NAR’s survey: The median selling price for all FSBO homes was $210,000 last year. When the buyer knew the seller in FSBO sales, the number sinks to the median selling price of $151,900. However, homes that were sold with the assistance of an agent had a median selling price of $249,000 – nearly $40,000 more for the typical home sale.
Aside from disruptive scheduling and always being available to receive inquiries, the biggest challenge to the FSBO property owner is knowing how to price their real estate competitively. Some will turn to a third party aggregator like zillow.com or a local agent’s website to utilize the automated valuation model provided there. These AVMs are notoriously unreliable since there has been no physical inspection of the property. Unlike neighboring states, sold prices of properties in Idaho are not disclosed as public knowledge so the lack of that data presents a real challenge.
We know that lenders hire professional appraisers to visit, photograph and measure properties before they loan against them. If lenders were comfortable using an AVM, banks would have no use for appraisers and that industry would die. Instead, after the collusion that took place in some real estate markets during the feeding frenzy of the last decade, new government regulations are now applied to make sure the banks and buyers are getting accurate information from appraisers. Like our Realtor members of the Coeur d’Alene Association of Realtors, appraisers mine our Multiple Listing Service for data they can use to justify the value of a home.
That data is extremely valuable but it can not identify whether or not the subject property was damaged in one of our recent storms. The MLS comparable sales do not tell us if the subject property was once a meth lab or had its wiring and plumbing or other fixtures stolen. Only a physical visit will reveal some defects so relying on an online calculator is risky at best.
The value of using a Realtor goes beyond their knowing what a property is worth. We do disclose sold prices among ourselves and once a month you read a compilation of that data here. More than just having data though, a Realtor has to stay connected to be successful. That means being available to communicate at all times. We need to be receptive to phone calls, text messages and emails that originate from a variety of sources unavailable to the general public. Because the transfer of property is our occupation we have adapted our lifestyles to facilitate that. Many FSBOs have a hard time making that adjustment.
Most Realtors visit several properties a week which allows us to temper our valuations by comparing other properties we have visited to the one we are evaluating. When we utilize the Comparable Market Analysis program we pay for through our MLS subscription we are adding or subtracting value by making adjustments for extra amenities one property has over another. It takes experience to do that properly. If you are trying to sell your own home you will be money ahead to hire a professional to help you determine its real market value.