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As the local market has heated up and inventory has remained low, there has been a rush in some areas for homeowners to list their properties as “for sale by owner,” mistakenly believing that they will make more money on a home sale without needing to pay a Realtor's commission. We've already discussed in a previous blog why that idea is generally incorrect, and today we're going to explore it from the buyer's perspective.
At first glance, For Sale by Owner homes may seem like a chance to pay a little less for a home than you would in a Realtor-brokered transaction. Not needing to pay a commission to a seller's agent or a buyer's agent at first glance looks like a great way to keep the price lower, but will that actually be how the transaction plays out? In many cases, working with a Realtor saves not just headache, but potential financial losses as well.
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The seller's choice to sell without a Realtor likely means that they want the most profit possible from the transaction. Although those kitschy, hand-written “For Sale by Owner” signs on the front lawn seem like a great cost-reducing measure, in reality, even a plastic yard sign costs money. A seller with a close eye on the bottom line of the sale is likely to account for each and every sale-related expense and pass it along to the buyer in the form of the asking price. Realtors, on the other hand, advertise widely as part of their profession and are unlikely to increase the expense to the buyer over advertising costs. Additionally, because they have lacked the services and advice of a professional Realtor while attempting to sell their home, they may have accrued many other unnecessary expenses that serve, in the course of the selling process, to inflate the asking price of the home and other expenses that may be passed along to the buyer at closing.
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The buyer must put extreme faith in the seller's honesty, with little recourse for lies except possibly fruitless lawsuits. Buying a home is one of the biggest, most important investments a person can make. Buying a “lemon” or a “money pit” can be devastating. Realtors, both seller's agents and buyer's agents, are held to a strict standard of honesty, disclosure, and ethical behavior. A Realtor who omits important, known information about property defects may be held financially and professionally responsible for that omission. The same is true of actively lying about a property; a Realtor risks their license and livelihood if they engage dishonestly with a client or buyer, while a non-licensed home seller can only be held accountable by taking them to court. If the court rules in the favor of the buyer, the seller must still co-operate or the judgement issued is meaningless.
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Issues with the property could cause funding and therefore closing issues. Without the advice of a Realtor regarding what issues with the property must be remedied in order to pass an inspection and appraise at a value that justifies any money lent via a mortgage, there is a decent chance that come inspection or appraisal day, everyone involved in the transaction receives a nasty shock. Whether it's a missing handrail or roof repairs deemed too serious for as-is funding by the lender, there are so many things that can go wrong, even after the seller has accepted your offer. Working with a seller who has been aided by a Realtor minimizes the possibility of an unpleasant discovery after your offer has been accepted.
There are many reasons why working with a Realtor makes sense for buyers, and as many reasons why it benefits home sellers. Whether you're looking to buy a home, sell a home, purchase an investment property, or upgrade your current home, the team at Pyxis Realty has a great line-up of local, educated, West Michigan realtor estate professionals ready to help make that transaction as smooth and beneficial for all parties as possible.