Selling your home or an investment property is one of the most important financial moves you’ll ever make. To help get through the process, most homeowners use a realtor. In fact, the National Association of Realtors estimates that more than 85% of all home sellers hire a realtor to sell their home. Given the cost of using a realtor, a lot is at stake in selecting the right person. So here are eight mistakes you don’t want to make when hiring a realtor to sell your home:
Mistake #1: Hiring a friend or relative because they are a friend or relative: We all know a realtor. He might be a friend in the neighborhood, somebody at church or a 3rd cousin twice removed (whatever that means). You may feel pressured to hire them simply because of your relationship. Don’t! There’s simply too much at stake to hire a realtor for any reason other than their qualifications as a realtor.
Mistake #2: Believing that who you hire doesn’t really matter: Does it really matter who you hire? All they do is add the home to the MLS, slap a brochure together and hold a few showings. What’s the big deal? An experienced realtor can and should do more. They have a large network of contacts within the real estate profession and have developed a solid reputation as a first rate realtor. And particularly in a buyer’s market, like today, how you market the home and at what price you list it could be the difference between selling in a month and selling in a year. So who you hire does matter.
Mistake #3: Failing to understand how the realtor will market your home: There are many ways to market at home for sale, and it’s critical to understand how the realtor will market your home. Will they market the home on the Internet, and if so how? Will they include a video showing of the home on the Internet, or just pictures? Will they create a color brochure? Here, I suggest asking to see the Internet advertising and brochures they have prepared for their clients. Will they hold an open house, and if so, how often? What do they believe should be done to the home to stage it better for a quick sale? These are important questions you should get answered before deciding on who’ll you will hire.
Mistake #4: Failing to negotiate the realtor’s commission: Everything in life is negotiable. The standard commission is 6%, 3% to the seller’s agent and 3% to the buyer’s agent. In the last sale in which I used a realtor, I negotiated this down to 5%. I know of some who have negotiated an even lower price. The point is, by interviewing several potential realtors and negotiated the commission rate with each, you are likely to pay less than the 6% standard fee. Even saving 1% on a $200,000 home puts $2,000 in your pocket.
Mistake #5: Ignoring the realtor’s experience selling homes in your neighborhood: Real estate is local, really local. When Mike and I buy a rental property, we pay attention not only to the neighborhood in which the home is located, but also which part. We have found significant price differences between homes less than 1/4 mile apart in the same neighborhood. Here it is important to consider the amount of experience the realtor has in your specific community. I live in a development of about 1,500 homes. There are several realtors that have made an effort to become THE realtors in the neighborhood. They have sold more homes in our community than any other realtors and have probably developed an expertise in selling homes like mine. That doesn’t necessarily mean I’d hire them, but I would certainly speak with them and put them at the top of my list.
Mistake #6: Telling your realtor your bottom line:
Realtors want to sell homes. That’s how they get paid. At a 6% commission, the difference between selling your home for $250,000 and $265,000 means just $900 for the realtor, but more than $14,000 (after commissions) for you. How much effort is the realtor going to put into the sale to get that extra $900? Often times, not much. For this reason, you should be very cautious about telling the realtor your bottom line. Instead of saying you have to get at least x for the home, tell them you want to maximize the value of the home. I think it is important to communicate that you are going to be a tough negotiator, and that you expect the same of the realtor.
Mistake #7: Relying solely on the realtor to determine your home’s value:
A good realtor should be able to provide you with an accurate estimate of your home’s value. However, given the available resources on the Internet, you should do your own homework in this area, too. In our resources links, we have included a listing of free websites that calculate the estimated value of your home. [include link]. Depending on where you live, the estimates from one site to another can vary widely. The sites do provide, however, comparables to your home, including recent sales. This information should give you an idea of your home’s value and can be the source of discussion with the realtor.
Mistake #8: Failing to consider alternatives to hiring a realtor:
Finally, consider alternatives to hiring a realtor. Selling a home on your own is not for everybody. It will take a lot of work and time on your part, and is likely to take longer than if you hired a realtor. But the savings can be considerable if time is not critical. If you are interested, here are a few resources that might help you along the way:
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