by Karina Gafford
In a recent article, we discussed how real estate agents can help sellers price their homes and negotiate a successful closing through impartial mediation. Real estate agents offer additional benefits in the form of marketing and helping sellers avoid litigation, too. This article aims to define some of the ways in which an agent can help you both achieve a higher sales price on the sale of your home as well as avoid any legal pitfalls in the process. Should you choose to avail of the services of a real estate professional, MilitaryByOwner’s Business Directory can help you find one who works in your neighborhood!
Is choosing a Real Estate Agent an option for you?
Critics of using a real estate agent suggest that an agent is an unnecessary expense, particularly now when listings are relatively inexpensive through most online resources. In the age of easy online assistance for home marketing materials, home sellers question whether they still get good value for their money by using a real estate agent to help with the sale of their home.
As the case of Founder and former CEO of For Sale by Owner (FSBO) Colby Sambrotto showed in the challenging sale of his New York condominium, it is crucial to reach not only a wide audience, but also the most appropriate audience for the sale of a particular home. Prior to hiring a real estate agent, Sambrotto had spent six months trying to sell independently, but as his broker explained, he had not marketed his home at the right price point. When his broker finally did achieve a sale, he managed to garner Sambrotto $150,000 in excess of his original listing price. Through effective analysis of the market, Sambrotto’s broker proved that appropriate re-pricing of his property better positioned the condominium into a market where it would reach the most suitable audience.
Kurt Wannebo, CEO of San Diego Real Estate and Investments, explained that Sambrotto’s situation was pretty typical. Given that he was ranked number 73 in the country for real estate transactions last year by The Wall Street Journal, Wannebo knows what he is talking about. "A good agent should be able to sell a property for 5 to 10-percent higher than any seller who has had no experience in doing so," Wannebo explained. If, therefore, your house is currently listed for $200,000, a real estate agent may help raise that price to between $210,000 and $220,000.
A seller considering hiring the services of an agent, however, must also keep in mind that he must then pay a portion of that sale to the agent. For example if the commission is 6%, then that will go directly to commissions. To see how this works in effect, if the house sells for $220,000, then $13,200 will go to commission. This does not mean, though, that the entire 6-percent goes to the seller’s real estate agent; the 6-percent is usually divided in two, so that both office of the seller’s agent and the buyer’s agent each receive 3-percent, or $6,600. This commission usually gets further divided between the agent and broker of each office, so the seller’s real estate agent may actually only wind up with approximately $3,300, depending on the cost shares within each real estate broker’s office. Assuming, then, that you had originally sold by owner for $200,000, but an agent helped attain $220,000, costing $13,200 in the process, you would net $206,800, meaning that you would still have created a net gain by using an agent. If, however, you had sold successfully for your listing price of $200,000, you possibly would still have had to pay commission for the buyer’s agent.
Then again, not every agent can achieve a higher sales price than an individual seller with great persistence and negotiating skills. A homeowner who can attract numerous offers, for example, can use those multiple offers to better bargain with prospective buyers to achieve a higher total sales price; whereas, a real estate agent who puts forth little effort in the negotiations, however, may not achieve the same success. "Some agents do nothing other than list in the MLS (Multiple Listing Service) and hope that another agent finds the buyers," Wannebo explained, "However there are other agents who understand marketing and will spend a great deal of their commissions on marketing the property in order to bring in more buyers…in the end this will sell the property for a higher price."
One real estate agent who does know his market well is Charlie Fossett, an MilitaryByOwner partner who operates near Shaw AFB in South Carolina. As a local with intimate familiarity with many of the neighborhoods in the surrounding city as well as the marketing tactics that work best in his area, Fossett can expertly position houses at a higher price than a seller, or even another local agent, may otherwise list. In a recent sale, Fossett had a homeowner who had previously attempted to sell his house for $255,000, the estimated sales price of the home which he had found through online market reports. After receiving no offers, he hired Fossett to sell his home. Fossett explained that no house in that particular subdivision had ever sold above $204,000, so at $255,000, the house would not receive any offers. After reviewing the upgrades to the property in light of a comprehensive analysis of the local market, Fossett and the homeowner determined that the house could list for $225,000; this was a price much lower than the online estimate, but significantly higher than what any other price in that neighborhood had ever achieved. Using an Open House, Fossett showcased the value of the property, winning over even the agents from outside his office who initially had balked at the high listing price.
Avoiding a Law Suit!
Even for sellers who can successfully list and achieve a great sales price, many other pitfalls remain in the real estate transaction that, if not carefully navigated, can result in a whole host of legal ramifications for the seller. Not only can a buyer pursue a seller for problems with the home after the sale, but also the seller can expose himself to litigious situations during the marketing and showing process of the home, too. As Phil Georgiades, the Chief Loan Steward of VA Home Loan Centers, explains, "This is real estate and not a used couch. A seller who has no legal background and no understanding of real estate can wind up in hot water by not following the letter of the law or by misinterpreting how home sales work."
An agent can help provide a buffer for any legal situation that a seller may encounter both during and after the sale of a home. The seller, for one example, must ensure the accuracy of all paperwork for the home pertaining to the sale when selling independently; whereas, an agent or an a la carte broker can take on the responsibility of verifying the paperwork, including the Title Insurance, in lieu of the seller. In South Carolina, Fossett relayed, a seller must provide a property disclosure for the home in advance of closing. He also explained that in most states a seller must also provide a letter indicating a clean termite inspection, too. Since most homes are sold through agents, sellers rarely have to worry about taking the time to understand all of the paperwork involved in the sale of home, but more importantly, they are less likely to have to worry about the possibility of a law suit for failure to accurately complete the requisite paperwork and fulfill the terms and conditions of the sale. Wannebo warns, however, that as increasingly more homeowners choose to sell independently, lawsuits will increase, which he says will, "…eat away [at] the profits for sellers with legal fees alone."
The advertising and marketing of a property also presents many opportunities for litigious situations. An experienced, licensed real estate agent knows not to steer buyers to certain neighborhoods or to certain schools or school districts. Agents operate within the guidelines of the Fair Housing Act, a federal law under the U.S. Department of Housing and Urban Development that has enforced prohibiting housing discrimination since 1968. Under this act, a seller must know that he may not use terms such as "safe neighborhood," "suitable for married families with children," "no stairs make this home perfect for an older couple," or "historically African American neighborhood." Further, a seller may neither refuse to negotiate a sale nor falsely deny that a property is no longer available for sale or inspection. Additionally, the act states that a seller may not change any of the terms or conditions based on a prospective buyer’s "race, color, national origin, religion, sex, familial status, or handicap." Those who violate the terms of the act incur the possibility of hefty penalties. A real estate agent can help a seller avoid these costly legal pitfalls.
Advertising on MilitaryByOwner can be done with or without a Real Estate Agent. If using a real estate agent is your best option, make sure to consult MilitaryByOwner’s Business Directory to find an agent near your home!