Global Real Estate Highlights

I remember in business school, we were asked by our professor “Which is the most important department in a business; finance, marketing, operations or administration? There was no right or wrong answer, but we had to justify our choice. My answer was marketing. Even if I don’t have the money, I can market my product to someone who will finance my business, which will allow me to hire people to operate it, while I concentrate in the administration part.

A good marketing strategy is essential to successfully sell a product. In real estate, most Realtors come up with a marketing package to effectively sell a property. It can include home staging; to present the property at its best to a combination of internet, print, TV and radio ads. More marketing channels means more exposure of your property to potential buyers.

Meanwhile, selling your home yourself; also known as “For Sale by Owner” (FSBO) can be quite a challenge, especially if you don’t have any experience in selling one. Some sellers choose this option to save on the agent’s fees. They find it too expensive to sell a home using a Realtor.

However, most of the time from a buyer’s point of view, they think that the savings from not using a Realtor should be passed on to them. Thus, when they make an offer they would usually discount the cost of the agent’s fees.

Moreover, FSBO listings usually have less exposure than the properties listed by Realtors. You may have access to the same marketing materials that agents use, but you don’t have the benefit of their network. Usually, when you hire the services of a Realtor; while you may deal only with one Realtor, chances are you have a team of Realtors marketing your property and cooperating with other buyer agents. This is especially true if you hire the services of big real estate agencies who usually have a network of agencies working together.

Most buyers are represented by Buying Agents. Thus, you still have to pay a commission. In fact, instead of a standard 3% commission, some sellers are even giving a 4% commission just to encourage buying agents to bring in clients. In the end, the total savings is not substantial. Some would argue that if it is a million dollar property, the savings will be huge.

However, if I am the seller of a million dollar property, he more I will utilize the services of a Realtor to sell my property for the following reasons:

1. Most high-end buyers are not price sensitive.
2. For security reasons, I don’t want to expose myself and my property to illegitimate buyers.
3. For a big amount of money, I don’t want to be caught out negotiating with ridiculous offers.
4. I want maximum exposure for my property; the more buyers, the more offers.
5. If we are only talking about a savings of 2-3% in commission, I would rather let the professionals handle them.
6. I am hiring the services of a Realtor to represent my best interests as a Seller not just his marketing materials.
7. I would rather trust a team or network of Realtors to market my property than be a one-man band trying to sell my property.
8. It is too risky for me to take chances trying to sell my property in a buyer’s market. I don’t want to try selling it now and only end up hiring the services of a Realtor. Time is money in real estate. The longer it takes for me to sell my property, the lower the selling price will be.
9. I don’t have the time to concentrate on just selling my home, I would rather hire someone who is an expert to devote his time selling my home.
10. I would rather associate my million dollar home to a brand name; the agency represented by a Realtor. Selling it myself, might just give the wrong impression to the buyer that he can discount the cost of the agent’s commission. If that will be the case, then I’d rather hire the services of a Realtor than give the commission away for free.

Sometimes, to be more efficient and effective you have to delegate the work. The cost savings is not worth it, if you can’t do a proper job. I would rather channel my efforts in presenting my home’s best features than do everything myself.

To add, most sellers still have to worry about finding a new home. They can get too exhausted and stressed selling their old home that by the time they need to look for a new one, they might do it in a rush. Whatever savings they had from selling their home can be lost in not having enough time to look around for a good value home to buy.

However, I’m not saying that there are no successful FSBO. I’m just saying that for a huge amount of money, I would not take a risk selling it myself, especially in a buyers market.

Here and here are some interesting discussions regarding FSBO vs. Realtor. It can help you decide which is the best option for you.

Before you decide, talk to several Realtors and see what they have to offer, then check what your local FSBO service provides. Don’t just compare the costs, but also the amount of work and time involved and most especially the exposure that your property will get. If you have a highly in-demand property then it’s not that hard to come up with a choice. But, if you are competing in a tough market, ask yourself if you’re prepared to take the challenge. Whatever you decide, think hard and analyze your situation. What is applicable to someone else may not be the best for you.

Would you hire the services of a Realtor or choose the FSBO option? Maybe you can share your experience, to help other sellers caught in a dilemma of choosing to save on agents fees or using one to sell their property.