Recently, a Berkeley, Calif., couple sold their home. Before they put the house on the market, several neighbors asked the sellers if they were going to use an agent. The response was: "Absolutely, this business is too complicated. I wouldn’t dream of trying to sell it myself."
Given the coveted location of this property, it might have sold without the help of an agent. Several people on the block knew of prospective buyers who might be interested. However, not having seen the property, it’s hard to know if any of these prospects would have panned out.
Even if someone did come forward and make an offer, it’s hard to know if the property could have sold for more had it been given broad exposure to the market. The sellers bought in 2007; they anticipated losing between 20 percent and 25 percent selling in 2011.
By listing the property with a full-service real estate broker, the listing benefited from an aggressive marketing campaign, including Internet exposure with a visual tour, a color brochure, newspaper advertising, multiple listing, catered open house for local real estate agents, two public open houses and a feature spot in an upper-end home-sale magazine.
Three buyers made offers on the property and it sold for over the asking price. The property sold for 17 percent less than it had in 2007. Without the broad exposure, this probably would not have occurred.
Market exposure was not the key concern for these sellers. They were worried about making sure they fulfilled all the point-of-sale compliance ordinances and disclosure requirements — both of which vary from one locale to the next and frequently change.
For example, Berkeley, Calif., has an energy retrofit and a sewer lateral ordinance that must be complied with at the time of sale. This is in addition to federal and state disclosure requirements.
HOUSE HUNTING TIP: Sometimes sellers know someone who indicated interest in buying the home if they decided to sell. To save on the brokerage fee, these sellers might agree to sell to the acquaintance without the benefit of market exposure. In this case, make sure that you hire a real estate attorney to help you with the transaction.
One problem you have in selling without an agent is that you have to negotiate directly with the buyer, both initially when the offer is made and often after the buyers have completed their inspections.
You probably won’t have a backup offer, as was the case in the above example. A backup offer tends to strengthen the first buyers’ resolve to go forward with the transaction, and perhaps not ask the sellers for much if any concessions toward correcting inspection-related defects.
Selling directly can cut down on the hassle factor of a conventional sale — there are no open houses or buyers previewing your home at inopportune times. However, you’re unlikely to sell for top dollar using this approach.
Sometimes, sellers who are planning to list with an agent know one or more prospective buyers who have expressed interest in the house and would like to have first crack at it. If you’re so inclined to give them that opportunity, it’s best to have them look at the property and make a decision before the house goes on the market.
Let’s say you don’t and the buyers are to be excluded from the listing agreement during the time the property is on the market. This is a material fact affecting the sale that must be disclosed to buyers. A buyer who is excluded from the listing agreement can purchase the property for a lower price than buyers who aren’t excluded because they don’t have to pay a commission.
THE CLOSING: This could dissuade other buyers from making offers and botch up your marketing effort.