The question has been asked again and again, and homeowners in Folsom are no different than anywhere else – how hard can it be to sell a home? When the issue of a real estate sales commission comes into play, this question and the related discussion can get heated, oftentimes with homeowners asking exactly what they are getting for such a high commission price to sell a home.
First off, while six percent tends to be the commonplace figure to peg a commission at, it’s a contract. And when hiring an agent, every term of a contract is negotiable, including the sales commission. That said, the principle of “you get what you pay for” also applies. So going too cheap, and you’re going to be stuck with an agent that doesn’t do much of anything for a sale. On the other hand, there are plenty of “premium” agents who don’t seem to earn their keep either, so the idea of a FSBO can seem attractive, especially to those who have never gone through the actual process but have a very attractive home for sale that’s worth a big figure.
Keep in mind that first off there would be no functional real estate industry if selling a home were as easy as mowing your front lawn. It is a complicated process that is regulated, requires a number of forms for the government and contracting, it demands savvy selling and marketing efforts, and experience. The best sales agents have made lots of mistakes in the past, losing sales commissions doing so. And from those mistakes they’ve learned the valuable tricks of the trade for a higher rate of success. A “for sale by owner” or FSBO is not going to start with that advantage.
However, America is definitely the land of opportunity, and anyone is allowed to try real estate, including homeowners in Folsom. That said, make sure you have some good answers and responses ready to the following questions before getting started:
Source:wikimedia.org
1. Will going the FSBO route really save money?
Six percent of a sales figure can see very attractive. After all, $6,000 for every $100,000 adds up pretty quick when Folsom homes are going from $400,000 to $800,000 easily. That said, will ditching the agent avoid paying the costs? Maybe not. You will need to pay fees to access market research, listing services, and comparable research to determine your sales price and list your home. You will likely need to hire an attorney to help guide you through the major legal aspects of a sale and the paperwork because you won’t have the benefit of a broker. That can be anywhere from $200 to $300 an hour for most attorneys. FSBO sellers could also find themselves agreeing to lots of closing costs to get a home to sell after its been listed for a long time, and that cuts into profits big time, as much as $8,000 or more. And don’t forget, if the buyer comes with an agent, the FSBO will still have to shell out three percent commission to the other agent due to a split representation sale.
Source:flickr.com
2. Do you have the time to actively sell your home? Agents work day and night and on weekends to move homes because that’s when buyers are available and interested. If you’re already working a full time job, you’re going to have a hard time answering calls, making appointments and dealing with every email communication from potential buyers and interested parties. If you don’t have help, this can be extremely overwhelming and, since you don’t know which party is the serious buyer until you connect with them, you could lose sales prematurely. Agents also prescreen parties to make sure they’re not a risk to the homeowner during a visit or open house. Do you want to deal with unknown parties in the evening or on your weekends out of the blue because a “for sale” sign is posted in your yard with “contact owner” as a FSBO?
3. Are you good with details? Everything about a home sale is details. Whether they are negotiated terms, issues to fix, leads to follow, or communication to handle, there’s a lot of information that has to be processed quickly and involves multi-tasking. Are you the kind of person who can manage an extra part-time job in addition to your regular life responsibilities? This is where a potential FSBO seller has to be really honest with himself before getting started. Miss the wrong detail and all sorts of heartache can happen, especially in the legal sense.
4. Do you know the signs of a real estate scammer or grifter? There are plenty of characters who would love to confuse a FSBO out of a home, and they are very good at what they do. Since the real estate process often involves lots of complicated steps and third parties to handle escrow, these characters work up an extensive system to not just steal a home but a FSBO’s cash as well. There has been more than one story where everything seemed perfect and the buyer turned out to be a professional liar and thief to the millions of dollars. Then the homeowner is out a home, his money, and someone else is living in the place whose money has been stolen as well. It can take a long time and lots of court appearances to get everything restored again. Agents help avoid these problems significantly.
Source:flickr.com
5. Are you familiar with the related tax rules of home selling and tax exchanges? If you’re not well-versed in what’s required to meet tax laws with real estate, then going into a FSBO can be a huge mistake. The federal IRS is not very forgiving when a taxpayer fouls up his tax returns or avoids paying taxes for whatever reason. And that minor profit can disappear pretty quick after an audit when a taxpayer gets hit with interest and back tax penalties as well as the potential for criminal charges. Again, an agent can help avoid this with a broker managing the regulatory side, including taxation.
Folsom real estate agents are obviously not the cheapest way to sell a home, but in the long run they offer a lot of benefits for homeowners and good defenses against legal problems. That in itself may be very much worth paying a commission as a type of insurance protection from problems.
