With the new year amongst us, it means a salary increase for many of the people I work with at my company. With that, some of them are looking to upgrade to a new home this spring and are just starting the leg work in getting pre-approved to determine what they can afford.
This morning a co-worker of mine (who spoke to me in the Fall about selling his townhome in the city (Chicago)) asked me if I knew anything about selling a home by owner. I told him that I have never sold a home this way (or bought one for that matter) but was intrigued as to how the process worked. (Why he asked me about this, I have no idea, maybe because I've bought and sold a home before..I dont know...).
So, I basically told him that if it were me, I would consult with a realtor to handle the transaction taking into mind that he is new to the selling process (from a home owners end) and its a tougher market these days (not to mention other factors). Thus, he began his research on selling by owner and scoured the internet for resources and made a few phone calls (while he should have been working on a custom web application that needs to be rolled out ASAP..)
Of course, he went to buyowner.com and someone contacted him shortly. He was pitched, and soon thought the idea was the greatest thing since sliced bread. Having a been involved with selling and buying a home, I began to give him a little caution before he just "jumped" into the idea (once again, Im not a realtor..).
His first response was, "Well, you dont pay commission on the sale of your home...that could be approximately 5 percent of the sale price...thus, I get more revenue..all I have to do is show the house." (I think he's spotted the increase of these commercials in the Chicagoland area on TV..)
My response was, "Well, in so many words, thats somewhat true; however, do you want to be dealing with handling showings, dialogue with clients, the possibility of clients just browsing and not pre-approved, marketing that needs to be done, doing the comps and getting the right price set, and the eventual negotiation and sale processes, etc.?"
Being excited, he was still on the "for sale by owner" train and wanted to get started right away. I just told him that if it were my home, I would contact a few realtors (referrals, agents in the area, research, etc.) and interview them before making such a committment. This way, you'll see both sides and be able to draw your own conclusions, but at least you'll be more informed. I also told him, from what I heard, that a lot of home sellers eventually obtain a realtor as the for sale by owner process goes bust and thus time and money are wasted. Not to mention the experience a realtor has in identifying what needs to be completed before the house goes on the market so no time is wasted (staging, etc.).
So to my questions, as I know nothing about this...
- What are realtors feelings about sellers that sell by owner? Obviously, and I am assuming, realtors probably dislike this as it takes them out of the process, but is it a good option, in some cases, for sellers to consider?
- Will realtors show a home to clients that are buying if it is for sale by owner? If not, will they show it if the seller offers an appropriate commission to the buying agent?
- What actually differs in the process in terms of selling by owner vs using a realtor (I'm simply asking..)? Does the process go the same regarding showings (besides the seller handling the calls and scheduling)? How does the process work once a bid is submitted (I assume its seller vs. buyer?)?
- By using for sale by owner websites, does the home still get listed on the MLS system or is that an added fee? Basically, is the home seller betting on the fact that buyers will directly contact them or do realtors still consider a home for sale by owner as a regular listing?
- How does the closing aspect work once a bid is put in? Do the buyer and sellers need to work out the details (title, etc.) or do the attorney's still handle all that?
Just trying to get realtors thoughts on this...