When selling a home, its important to remember the homeowner has every right to hire, not hire, sell, and not sell as they wish. It is not for a REALTOR®, or any other real estate broker, to try and strongarm the owner into hiring and selling. The homeowner retains that right and needs no other’s permission – unless they’re in a short sale situation.
With that said, it equally important to understand the differences, the challenges, and possible pitfalls of not hiring a professional, full-time REALTOR®.
Why is this topic worth exploring?
The reason being is: when homeowners decide to sell a property and choose to either hire a flat fee agent / brokerage their primary reason tends to be saving money – mainly real estate commissions. I agree, commission do add up and are a line item that if can be saved, why not.
I mean, its always smart to save money and if a home owner can save $25,000 then that is $25,000 more that can go to the home owner’s bank account.
However, it is not that simple.
There are many differences folks don’t necessary know when considering hiring a REALTOR® or a Flat Fee Agent / Brokerage
As a member of the National Association of REALTORS®, we have to adhere to a higher standard of practice and NAR's REALTORS® Code of Ethics whereas non-member brokers and agents do not. This may seem arbitrary and every real estate agent should have its client’s best interests in mind when recommending or negotiating a home sale. While we like to think that is the case there is also a reason why some agents have poor reputations throughout the industry.
Let move on-to the nitty-gritty of challenges and pitfalls of a real estate contract and why hiring a REALTOR® should be of the utmost importance.
For many, selling a home (and purchasing for that matter) is the single most important and stressful financial decisions they'll make in a lifetime. A home is typically the single largest asset a person(s) will own and its not as simple as posting an ad online, slapping a dollar figure on the home using a Zestimate, receiving multiple offers (commonly known as a bidding-war), and selling for 20% over the originally asking price. Its far more complicated that, from start to finish.
To start, here are the details of a Flat Fee Agent..
A Flat Rate Agent / Brokerage has a set fee to list the property on the Northwest Multiple Listing Service (NWMLS), or MLS. The NWMLS is how all properties are posted (syndicated) to our website as well as Zillow, Redfin, Windermere, John L. Scott, Remax and the Keller Williams offices. Not one website has an advantage over the other as they all HAVE THE SAME PROPERTIES. All of them. So, for $500 a Flat Fee Agent / Brokerage fills out a limited service listing agreement, NWMLS listing input sheets, and inputs the property information in the NWMLS. Voila. The homeowner’s house/property on the internet and all the above mentioned websites. Simple enough. So why hire a REALTOR® for more money just to do that? Right?
Now, what does a Flat Fee Agent / Brokerage not do? That is where the challenges and pitfalls come in. A homeowner will have to the following:
- Determine the Listing Price: Does the homeowner have access the most recent data with Active, Pending Inspection, Pending, Contingent, and Sold Properties? Probably not.
- Does the homeowner typically understand the various statuses and how they factor into a recommended list price? Probably not. Does the homeowner watch the housing market on a daily, if not minute by minute basis? Probably not.
- Manage All Showings / Access: Many homeowners are uncomfortable with any ole looky-loo / neighbor entering their home and looking around. Furthermore, home owners typically have full-time employment where they cannot answer phone calls to schedule showing appointments and answer questions regarding the property because they’re on the company’s time. A homeowner typically schedules showings for when its convenient for them and not the potential buyer which leads to less showings in a given period of time.
- Negotiate the Contact:
- Understand the terms contained within a Purchase & Sale Contract
- Understand what is Earnest Money and its purpose
- Manage Closing Dates & Possession
- Set Up Title Insurance
- Selecting a Qualified Closing Agent (Escrow)
- Understand the Different Financing Types
- Understand How Different Financing Types can Impact a Seller.
- Navigate a Home Inspection
- Negotiate Buyer Requested Work Items
- Keep Buyer on Schedule to Meet Deadlines
- Avoid Pitfalls
- Keep Emotions Calm Throughout the Transaction
Now, what do REALTORS® do?
A REALTOR® makes sure the recommended list price is accurate to yield the best results for the homeowner.
A REALTOR® manages all showings per discussed showing instructions, schedules all showings, controls property access through a secured NWMLS keybox, and makes sure buyers have been prequalified through a lender prior to showing properties (that way a buyer is not looking at home they cannot purchase).
A REALTOR® has extensive training in contract negotiations and know how to yield the most favorable terms for the homeowner. In my case, in additional to holding a Washington Real Estate License since 2008, I've earned a BA in Business Administration from the University of Washington.
A REALTOR® is familiar with all NWMLS forms, individual contract terms, and contract timeliness. There are many forms and terms that if missed, can be devastating for a homeowner during their sale. This includes earnest money and how earnest money is handles and its purpose, what happens if a buyer defaults on the Purchase & Sale Contract, the reason to obtain Title Insurance, recommending and selecting a qualified Closing Agent / Escrow Company to prepare all the closing documents and be in receipt of buyer’s earnest money as well as receive the buyer’s loan documents in a timely fashion.
A REALTOR® also know the various type of home loan programs and how they can impact a seller as well as knows how to follow up with buyer’s lender to make sure loan application has been made and is on schedule to close on the purchase on time.
A REALTOR® knows how to navigate a home inspection, provide recommendations on how to respond to a buyer’s home inspection requests, and knows qualified and trusted contractors to provide good, timely work. Leaving all this to chance or lack of experience is something that should be weighed heavily.
A REALTOR® is a great communicator and knows how to regularly follow up with all parties to make sure closing is on schedule, no items go left unaddressed, and there are no loose ends that can delay closing and possession.
There is a lot to selling a home, and its always key for us REALTORS® to remember that hiring or not hiring us is ultimately the home owners decision and that decision should be respected. All we can do as REALTORS® is make sure that homeowner has the best information possible so they can make the best decisions for themselves.
If we can be of any service, please feel to reach out to us and we’d be happy to discuss the benefits of hiring professional and full-time real estate brokers.