43 Reasons an Owner Should Hire a Realtor®

The following factors constitute some of the reasons why the owner of a property should not attempt to buy or sell a property.  Most property owners, after learning of these potential pitfalls, see the advantages of being represented by a reputable real estate professional.  Some of these reasons are:

1. SAVING THE COMMISSION

The principal objection raised with the greatest frequency is that the owner can save the commission by selling his property himself.  Experience and facts prove that this is usually not true.

a. The National Association of Realtors conducts a yearly survey on many home sales and has determined that owners net anywhere from 3-9.5% more by selling their property through a Realtor through:


 -Quicker sale saving on taxes, payments, etc. (1-2%)
 -Less legal fees (1-3% )
 -Savings in advertising (1-2% )
 -Needless repairs, expenses (.5-3%)
 -Quicker settlement (.5-1% )
 -Owner’s time (1-2%)
 -Signs, etc. (.25-.5%)

Not all of these will be evident in every transaction, but a large part of each can be present.

b. Buyers today are sophisticated and knowledgeable and they believe, rightly or not, that:

i. Owners overprice their properties

ii. What the owner wants and expects to get for his property is inflated by the amount of a broker’s fee, so in the event he can’t sell his property himself and it has to be turned over to a broker, the selling price will include enough of a buffer to pay the brokerage fee and still net the owner what he actually wants.

iii. Buyers dealing directly with the property owners will argue and insist in most cases on a reduction in price of at least equal to what the commission would be if the owner had to sell at the same price he would net from a sale through a Realtor.  The owner in effect is the loser because of lost time, legal fees, advertising cost, etc., in  addition to selling at a reduced price.

c. Potential for being legally responsible for multiple commissions if the owner is cooperating with brokers on an open basis.  It is possible that the owner could accept an offer directly from a buyer at a lesser price believing that he is not obligated to a broker, only later to discover that one of the brokers is found to have been the procuring cause of the sale.  The property owner under the laws of agency finds that he is obligated to pay a commission after having accepted a price that discounted a broker’s fee—the equivalent of a multiple commission.

d. Speculators with a wealth of experience make their living by purchasing properties directly from owners and later reselling at a profit.  Most property owners sell only 2-3 properties in a lifetime and therefore are not as experienced as the speculator is.  Speculators have frequently taken unfair advantage of the owners by drastically reducing the selling price, including costly and expensive terms, delaying the closing, imposing expensive financing costs which are customarily paid by the purchasers upon the anxious sellers, etc.

e. Almost all corporations, in their transfer of personnel, recognize the value of a Realtor’s services, which are considered to be a part of expenses of transfer.  They also advise their employees not to attempt to handle the sale of their own properties.  These companies have learned form past experience that the employees will not save money; and in fact, find that in the final analysis, their employees end up paying more than a broker’s fee.

2. DANGER OF UNDERPRICING

This happens frequently.  After all expenses and costs are deducted from too low a price to start with, the owner nets considerably less than if he had been represented by a reputable, experienced and competent broker.  Some of the reasons for underpricing are:

a. Rapidly changing market conditions in the community and in the particular area in which the property is located.

b. Wild inflation causes many an owner to be behind the market.  A seller may make a handsome profit over what he paid several years ago, but may still not realize the maximum value from his sale.

c. Supply and demand factors are changing constantly.  The market changes all the time from a buyer’s market to a seller’s market.  It is difficult and time-consuming, demanding daily observation of the market to known what the competitive position price-wise is for a given property in a given area in any community.

d. Many sellers are not familiar with property transfer expenses, prorating, loan charges, and other costs, and agree to accept what started out to be, to them a satisfactory offer only to find at settlement date that they are netting less than they anticipated.

e. Arriving at a competitive market value and not underpricing the property is arrived through the cost less depreciation method, competitive or comparable method and also the income approach.  It takes hundreds of hours of training and experience to arrive at value.  Most owners do not possess this expertise

3. DANGER OF OVER-PRICING

There is always the danger that the owner will over-price his property and drive away potential buyers.  There are many dangers in this, but a few should be discussed further.

 

a. Market-age: If due to over-pricing, a property stays on the market too long, it becomes “stale.”  Potential buyers frequently inquire how long a property has been on the market.  If it has gone unsold for a long time, he immediately thinks something he can’t see is wrong and is completely and psychologically turned off to the property.  Even if the owner is willing to accept a price lower than what he is asking, the buyer will prefer to “pass this one up.”

b. Seller expenses: If over-priced and on the market a long time, the seller incurs many expenses and costs, such as taxes, cost of advertising, interest on his mortgage as well as interest lost on the proceeds of sale being invested, insurance costs, utilities, maintenance, etc.  There is also the value of the owner’s time when he could have been doing something other than babysitting an over-priced property. Most of the dangers of under-pricing also apply to over-pricing.

4. NEEDLESS REPAIRS AND EXPENSES

A seller may make unnecessary repairs and outlays of cash to seemingly improve a property in preparation for marketing, when in reality, his actions have minimal bearing on the marketability of the property.  At times, his misguided efforts could result in the loss of a sale.

5. TIME BLINDNESS

When we are exposed to a negative stimulus for an extended period of time, human beings have a built-in defense mechanism that causes us to overlook that negative stimulus.  This is a very important defense mechanism, because it makes it possible for people to survive in a less-than-ideal environment.  Many conditions of a property which no longer appear as problems to an owner who has been living with it for years may be perceived as major objections to purchase by a potential buyer seeing them for the first time.  How does the seller determine what should be changed, replaced, repaired; and which can be left alone?

6. DIRECT BUYER-OWNER NEGOTIATIONS

Owners are notorious for losing the sale of their properties through over-selling; or for achieving the sale of their properties after having “given the store away.”  Negotiations are always best handled by knowledgeable 3rd parties skilled in the fine art of negotiating, who know how to “give a little; take a little” and still conclude with satisfied parties on both sides of the transaction who feel that they got exactly what they wanted.

7. PERSONALITY CONFLICTS

Buyers and sellers frequently come to dislike one another intensely when they deal with one another on a direct basis.  This occurs frequently because the buyer, feeling that he has a good rapport with the seller, begins asking the seller for one thing, then another, then another.  Eventually, the seller feels he is being “had.”  Need we say more?

8. NON-OBJECTIVITY

Many buyers feel that sellers are non-objective about their properties.  Owners are emotionally involved with their properties, whereas a Realtor has empathy but bases his actions on business judgments, not emotional reactions.  Emotional involvement means that the owner, who has enjoyed his property, sees everything about it in a favorable light.  His emotional involvement prevents his perceiving the property from the buyer’s viewpoint.  This is perfectly normal, but unfortunately prevents a meeting of the minds.

9. LACK OF HOME SELLING EXPERIENCE OR TRAINING

Before a Realtor agrees to work with a potential buyer, he invests time in pre-qualifying that buyer to determine whether or not he is ready, willing and able to purchase.  The prospect is also qualified as to what he needs and wants in his real estate purchase.  Only when the Realtor has an idea of what benefits the buyer wishes to derive from his purchase does that Realtor attempt to “show” him properties which possibly meet the purchaser’s requirements.  When a property is “shown” to a prospective buyer, those benefits which he is seeking are pointed out to him by the Realtor who has identified these benefits during the pre-qualification process.  An owner just is not in a position to do this type of professional selling.  How can he sell benefits when he doesn’t know what benefits the buyer is seeking?

10. ONLY ONE PROPERTY TO SELL

A seller frequently has one product to sell.  Americans are comparison shoppers—they will not part with their money until they are convinced (some are convinced sooner than others) that they are getting ght emost benefits for their money.  How can a seller do this?  He can only wait in the dark and keep his fingers crossed while the buyers are out there “somewhere.”  Most of them never come back.

11. FINANCING

The name of the real estate business is financing.  Financing makes the sale happen.  There are numerous ways to finance the sale of real estate.  Different lenders make different types of loans.  It takes many hours of training, much study and constant updating to understand what is happening in the financing market.  It’s not unusual to see the supply of money go up, down, stay static, become tight and again readily available, in a short period of time.  The Keyes Co., for instance, maintains a “Hot Line” with several financing sources in order to provide up to date financing information to the sales staff.

12. PROBLEMS WITH FINANCING

Most buyers arrange for their financing with the assistance and guidance of a Realtor.  Often, the seller does not have the time or the expertise to assist and guide the buyer in his quest for financing.  The seller takes the attitude of: “It’s not my problem,” when in reality, it is very much the seller’s problem, because without the financing, the sale of his property will not be concluded.  A Realtor, meanwhile, knows how and where to obtain the best kind of financing to meet the buyer’s needs and wants.  Since Realtors assist so many buyers to place so many loans, they can usually get faster service from the lender because of “repeat business.”  Buyers fumbling around shopping with financing , without really knowing what they are getting into, can cost loss of time which costs the seller money while he waits for the closing.  A buyer who fails to qualify costs himself and the seller loss of time and money; and the frustrating of having to start all over again—the seller in finding another buyer; and the buyer in finding another property, providing, that is, that he is still eager to buy, which many of them are not, because of the embarrassment of not having been approved for financing.

13. QUALIFYING EXPERIENCE

Owners frequently lack experience or training in qualifying buyers in all aspects, such as financial ability, emotional stability, needs, wants, desires.  Buyer qualification is a high-skill art and requires ability to direct certain questions to the buyer, and analyzing and evaluating his responses.  Skilled and perceptive brokers have turned seemingly unqualified buyers into qualified ones by probing deeper, re-scheduling assets and debts, and formulating letters of credit and explanations.

14. BUYERS HIDDEN OBJECTIONS

Potential buyers are reluctant to bring out and discuss objections with an owner for fear of hurting his feelings, or that the owner will be insulted by their comments.  They will avoid placing the owner in a position of having to defend his home.  An owner cannot improve his position when he is unaware of the buyer’ unrevealed objections.  The real estate agent is an objective party who seeks to draw out these hidden objections in order to clarify them and also to place the cause of these objections in proper perspective.  In this instance, WHAT AN OWNER DOESN’T KNOW CAN AND WILL HURT HIM!

15. INEXPERIENCE IN HANDLING OBJECTIONS

The most difficult of all techniques to master in selling real estate is the handling of objections in a professional and effective manner with poise and forcefulness.  In addition to price, the serious buyers are certain to raise objections with the intent of justifying a lower purchase price.  An owner seldom has the training or experience in handling objections, and frequently emotions undermine his poise, so that invariably, he attempts to handle the buyers’ objections with a defensive attitude.  Brokers meanwhile, are taught that there are different types of objections, and that they should be welcomed, because they are likened to “windows of the buyers’ mind,” giving the broker an idea as to how the buyer is thinking.

16. FRIENDS AND NEIGHBORS

Well-meaning friends and neighbors are always going to offer suggestions on pricing, marketing, and repairs, etc.  The professional representative makes suggestions based on training and experience.  An owner may take advice from a friend, over-price the property, but eventually sell below market value.  He may also base his asking price on the sale of a neighboring property from information conveyed by the owner of the property.  Often, public records show that the property sold at a price other than that quoted by the seller.  A broker assists the seller in pricing the property at a fair market price based on recent comparative sales.  A price recommended by a broker is a price based on market data that is verifiable, not on false or exaggerated information.

17. LACK OF PROSPECT SOURCES

It is a known fact in selling that the greater the exposure of a product to qualified buyers, the greater the likelihood that there will be a quicker and more favorable sale.  Most real estate property owners are very limited in their marketing methods and sources for potential qualified buyers.  Their customary method of marketing property is through signs, advertisements and friends.  The successful broker has a large and constantly renewing flow of prospective buyers from which to pre-select a larger number of potential buyers and effect a sale.

18. LACK OF ADVERTISING EXPERIENCE

Drafting, editing and writing newspaper advertising takes training and experience in order to ensure a ringing phone.  Advertising is really salesmanship in print.  Tell too much and the buyer doesn’t have to call.  Tell to little and he won’t be interested in calling.  Most good brokers keep a record of which type of ad is pulling in calls and which type of advertisement isn’t.  Most owners waste money in their advertising.  Most properties are sold through a broker anyway, so all the advertising dollars are lost.

19. LACK OF ADVERTISING EXPOSURE

The owner has one property to advertise.  The broker is advertising many properties by comparison.  Fewer than 15% of eventual buyers buy the property they initially called on.  It is not unusual for a buyer to call a broker on one ad, and buy a property other than the one he called on.  The broker, naturally, provides many more possibilities for qualified buyers.

20. OWNER EXPENSES

The owner may incur considerable expense even when he succeeds in selling his property—usually at a higher price, because he was able to “sell for less since there was no brokerage fee involved.”  Such expenses include newspaper advertising, legal fees, taxes, insurance, etc.  When the amount of price reduction and the expenses are added up, the owner has netted little, if anything, over what he would have gotten from a broker-assisted sale.  If he fails to make a sale, all these costs are a pure loss.  When a broker is employed to assist the owner in marketing the property the broker bears the expense of advertising and other marketing costs.  THE SELLER PAYS ONLY WHEN THE BROKER IS SUCCESSFUL.  Is there any other profession that offers such a guarantee?

21. MARKET AGE PROBLEM

When a property fails to sell and is on the market for a long period of time, it assumes the posture of “market age.”  Market age acts as a deterrent to later selling at the proper market price.  In almost all transactions, the question is asked, “How long has this property been on the market?”  Psychologically, buyers think something must be wrong for the property to be offered for sale that long and not sold.  They immediately think of more objections.  The property becomes increasingly more difficult to sell and the price therefore must be lowered in order to entice an offer from a reluctant buyer.

22. LACK OF COOPERATIVE EFFORT

An owner has only one property to sell.  He lacks the exposure and cooperative effort which brokers who are members of the Multiple Listing Service enjoy.

23. IMPORTANT DETAILS

Many buyers, when they are being shown a property, are reluctant to pursue details, such as opening closets and cupboard doors, looking at built-in appliances, etc. because they feel they would be intruding on the privacy of the owner.  Women are particularly interested in details of this kind.  It has been stated that: “A woman will never buy unless she has seen the inside of the closets and cupboards.”  Prospective buyers tend to be uninhibited when dealing with an impersonal real estate representative.

24. THE URGENCY SITUATION

When the owner is pressed for time, it is very unwise for him to take any of that precious time to market his property himself.  If he fails, which is often the case, a broker then does not have enough time to market the home properly before the owner has to move out, leaving the property vacant.  A vacant home, even if redecorated, very seldom shows or markets as well as an occupied one which is being lived in.  Vacant homes are frequently subject to vandalism.  Insurance companies have been known to cancel coverage if the property is vacant.

25. LACK OF FOLLOW-UP SYSTEM

Most properties are sold when they are revisited.  These return visits are brought about by the real estate representative.  Brokers have a follow-up system on all prospects who have yet to purchase.  The broker, by the technique of comparison marketing, can bring the buyer back to a property for reconsideration.  When seen relative to other properties, the property in question can be seen in a more favorable light.  There is no way that an owner can “walk a prospective buyer” through these vital steps.  As a matter of fact, frequently, visitors to a property will refuse to give their real names to the owner so he couldn’t follow-up even if he had a system.

26. DANGER IN FOLLOW-UP SYSTEM

If an owner gets a potential buyer’s name and has a follow-up system as well as the time to follow-up, he is at a distinct disadvantage in contacting the buyer, as it weakens his bargaining position.  A broker, meanwhile, is expected to follow-up.  It’s a part of his job.

27. CONTRACT PROBLEMS

Most owners have not had the schooling, training, or expertise in preparing an agreement that is certain to be valid and enforceable.  A property could be tied up for a long period of time only to get to settlement date and have the buyer refuse to close because the agreement is not enforceable.  The seller is then required to start all over from the beginning.

28. INSINCERE OFFERS

Sellers have accepted offers from insincere buyers or those unable to qualify for financing.  They can spend time and money in expensive litigation to free the property for resale.  Other buyers develop what is referred to as “buyers’ remorse.”  An experienced agent has been taught to avoid such problems, or to meet them should they occur.

29. TIREKICKERS

Homeowner ads bring a great many lookers and curiosity seekers who are not qualified to buy.  These “tirekickers” waste the owner’s time and can even take a property off the market with a great sounding offer to purchase, which the unsuspecting owner accepts in god faith, but is unable to close.  When a bona fide buyer enters the picture, the property is tied up.  Brokers pre-qualify their prospects and then seek out those properties which meet the needs and wants of these buyers, who are then shown the properties.  Brokers are taught to identify and eliminate “tirekickers.”

30. JUDGING A PROPERTY BY THE OUTSIDE APPEARANCE

In order to get a buyer to a property, the owner must disclose the property address.  The buyer frequently is “turned off” by the outward appearances of the property so that he forms a preconception that he doesn’t want the property, or worse won’t set foot into the property, having driven right past without stopping to say anything to the owner.  The inside of the property as well as the other benefits of ownership could be exactly what the buyer wants.  Brokers teach prospects not to “judge books by their covers,” to look at the total real estate package that a specific property represents, and to prioritize the benefits.

31. STRANGERS

The sign by an owner in a yard is an invitation to anyone to ask to see the property.  How does an owner, his spouse, or his children determine which person ringing the doorbell is a true buyer interested in the real estate, and which person is not?  The usual course of action , is that a property is frequently shown only when “Daddy is at home,” thereby turning away a potential serious buyer.  It also makes sense that if someone is up to mischief, he would not take the risk of being accompanied by a licensed agent who later could be a witness against him.

32. NOT AT HOME PROBLEM

Rarely can either the husband or wife be at home all the time to receive potential buyers.  When a potential buyer finds nobody at home, he will go on to the next property and frequently never backtracks.

33. STRESSES OF MARKETING CAN CAUSE MARITAL FRICTION

Inexperience, over-reaction, etc., can cause one spouse to blame the other for a lost sale, causing unrest, unpleasantness and sometimes bitterness.  The sale of property does not have to be an unpleasant experience.

34. JOB CONFLICT

Frequently, it is the husband who chooses to make the financial decisions for the family.  A potential buyer might be lost due to the wife’s inability, unwillingness, or lack of authority to make a decision or answer a strong negotiating question while the husband is at work.

35. LACK OF ADEQUATE SALES KIT

Professional agents always carry with them and have ready access to a myriad of items, tools, forms, etc. necessary to bring an interested buyer to contract.  Such things as neighborhood data, amortization schedules, types of available financing, etc. represent a financial investment on the part of the broker which is justified as a business expense, spread over all his sales.  The owner who wishes to have these tools of the trade can only spread them over one sale.

36. BUYERS HAVE TO SELL ANOTHER PROPERTY IN ORDER TO BUY

A potential buyer might really like your property, but can’t buy until he has ready cash from the sale of another buy until he has ready cash from the sale of another property.  In this type of situation, the owner is virtually hopeless.  The broker is very familiar with this situation.  He has been trained to meet this eventuality with several possible solutions.

37. JUSTIFICATION OF SALES PRICE

Most buyers do not make a decision to buy until they feel that the selling price is right and justified.  Sales agents are taught the fine balance between benefits, value and price.  Rarely does an owner have records of recent sales or accurate data of closely comparable homes in a general area as a justification of the selling price.  A broker always uses a “competitive market analysis.”  Very few owners know how to “build up” a price/value pyramid concerning facts and features of the property, the area, and future trends of the neighborhood, which will result in yearly appreciation of value.  These are just a few of the factors influencing the selling price.

38. DAMAGE TO YOUR SOCIAL LIFE

Are you prepared to be chained to your home and the telephone day in and day out?  Will you be able to leave home with the ever-present fear that you may miss that one ready, willing, and able buyer?

39. POSSESSION DATE

It is difficult to negotiate directly for possession date because it coincides with your exact future plans.  A third party can best do this.  A broker can make arrangements for buyers or sellers who have a possession date problem.

40. DANGEROUS ADVENTURE--OWNER AND BUYER GET TOGETHER

The handling of owner-buyer relationships is a highly technical skill.  Sales have been lost by owner-buyer relationships which have gone astray:

a. Owner indicates too much eagerness to sell—prospect assumes a ridiculous offer will work

b. Owner takes offense at the remarks of the buyer about the property and refuses to accept a reasonable offer to purchase.

c. Buyers often promise anything and then refuse to contract on the same basis.

d. Owner and buyer fall in love with each other, make several verbal agreements which cannot be performed because of legal, financial or other reasons, and a sale is lost.

e. Buyer and Seller have instant dislike for each other—no one will ever understand why!

f. The prospect “bugs” the owner with frequent informal visits to reinspect the property, all the while negotiating for additional concessions.

g. An owner frequently talks too much and “undoes the sale” of his own property, e.g.: “The heavy traffic out front keeps him awake all night.”

h. Potential buyers always seem to arrive without an appointment at any time of the day or night.  Owner frequently does not have sufficient time to prepare the property for proper showing.

i. Under the “Law of Agency,” it can be a violation for a broker to quote anything other than the listed price.  An owner cannot hide behind this umbrella in dealing directly with the buyer who will quickly learn that the owner is willing to take less than the stated price.

j. How would the Seller of the house react if Buyer came in an criticized Buyer's taste in furniture, style of décor, or about undone household chores?

41. GOOD FAITH MONEY

A handshake is not enough!  Brokers are taught to ask for and to receive a substantial earnest money deposit from the buyer.  Owners are not experienced in asking for this good faith money.  IN addition, most buyers are reluctant to place earnest money into the hands of the seller.  Good faith money has proved time and time again, to be extremely important in holding a transaction together.

42. LACK OF FUTURE INTEREST

Most buyers are wary of dealing directly with an owner, because they feel that the owner has no future interest in them.  He knows, though, that a real estate broker has a vested interest in him as a satisfied client, a source of future referrals, and eventually as a seller.  Because of these future interests the buyer accepts the assistance of the agent, and feels he can rely on his statements and representations.  An owner meanwhile, is someone he will probably never see once the property is sold.  From a potential buyer’s perspective, how reliable are the statements and representations of such a person?

43. PROBLEMS OF SETTLEMENT

Once a sales agreement has been reduced to writing, a very complicated process commences.  A multitude of details must be tended to in order for the sale to close.  These details must be tended to in order for the sale to close.  These details and processes must be instigated and followed through.  Any mishandling or slip-up can lead to delays and loss of time.  Time is money—frequently, the seller’s money!  Some of the questions and details which must be tended to are:

    a. Abstract or title binder

    -Which is cheaper; faster; easier to provide; paid for by whom?

    -Where is the abstract?

    -How do we order one?

    b. Financing

    c. Survey

    d. Insurance

    e. Assumption fee

    f. Pre-payment Penalty

    g. Prorations

    h. Attorneys and closing agents

    1. Should there be an attorney for the buyer as well as the seller?

    i. Possession before closing

    j. Follow-up

The purchaser must be advised of all he must do in order to close, and someone has to see to it that he does.  Very often contingencies and concessions have to be negotiated at the “eleventh hour.”  Who will be in the best position to do this crucial negotiation?  If inspections, etc. must be scheduled and required work performed prior to closing, who is going to be responsible for seeing that they are done?  Rarely, by experience or competence, can the owner set up the necessary process and schedule as well as follow-through all that needs to be done in order to close.  Familiarity with the procedures and the people involved is a necessity.  A broker knows the process and the people involved in each step of the closing process.  His expertise saves the owner’s money and assures a pleasant and rewarding selling experience.  CAN A SELLER AFFORD NOT TO BE REPRESENTED BY A REAL ESTATE PROFESSIONAL IN THE SALE OF HIS PROPERTY?  HIRE A REALTOR TODAY.