This week’s Q&A column, sponsored and written by McEnearney Associates Realtors®, the leading real estate firm in Alexandria, is a bit of a departure from our usual format. To learn more about this article and relevant Alexandria market news, contact us at 703-549-9292. You may also submit your questions to McEnearney Associates via email for response in future columns.
Question: Why should I use a Realtor to list my house in a hot market instead of selling myself?
Answer: In a hot seller’s market like what the D.C.-Metro region has experienced for several years, it might seem like all owners have to do to sell a property is to stick a sign in the yard and wait for buyers to stream in. But, according to NAR’s research, For Sale By Owner (FSBO) transactions accounted for just 7% of home sales in 2023, a historic low that tied with 2021 for the fewest number of FSBO listings.
Even more striking is that the typical FSBO property sold for a median of just $310,000 compared to the median of $405,000 for properties sold with the assistance of an agent — almost $100,000 and 30% less.
What these FSBO owners discovered is that a buyer liking a home is just one of many steps on the path to closing a deal, and without a professional Realtor® who understands not only the real estate transaction process but also the local market dynamics that shape how deals come together, it can be a long, lonely, and costly process.
Not All FSBOs Are the Same, Except When They Are
There are some circumstances where a FSBO can make sense, for example in rural areas which make up 14% of FSBO sales compared with 3% in urban areas. Or, if the seller and buyer know each other like a neighbor or family member; 54% of eventual FSBO sellers knew their buyer.
But by and large, FSBO sellers found it difficult to reach the widest selection of qualified buyers and then manage the work that came once a buyer was interested. FSBO sellers must manage multiple methods to market their home through “word-of-mouth” to friends, relatives, and neighbors making up the majority (20%) of how properties are promoted and a yard sign running a close second (19%). Only 5% of FSBO properties were promoted on a Multiple Listing Service (MLS), meaning a huge number of buyers and their agents would likely never even know that FSBO property existed because site aggregators like Realtor.com, Zillow, or Homes.com pull listing data from MLS feeds.
For FSBO sellers lucky enough to land a buyer who found their needle-in-a-haystack property and then would agree to work with an unrepresented seller, that’s when the real work kicks in. NAR’s report showed that some of the most difficult tasks for FSBO sellers were:
- Getting the pricing right (15%)
- Understanding and completing/performing paperwork (7%)
- Selling within the planned length of time (7%)
- Helping buyers obtain financing (5%)
- Preparing/fixing up home for sale (4%)
- Attracting potential buyers (4%)
Why a Realtor® Matters
With so much stacked against FSBO sellers, why attempt to go it alone? The obvious answer for most FSBO sellers is that they want to save money by not paying a Realtor® fee. However, 75% of all sellers paid a fee to a Buyers’ Agent regardless of whether they used a listing agent to sell their home. So if a FSBO seller is likely paying commission fees while also receiving a lower sales price and carrying costs, the value of hiring a listing agent becomes a lot more clear.
One of the best tools an agent will share with their seller is a smart pricing strategy. Realtors® live and breathe local statistics and use them to tell a story, one that helps sellers understand where their home sits in comparison with other homes in the market. An agent’s pricing knowledge can be the difference between a property that goes under contract in a week and one that “tests the market” and sits unsold for a month or longer, costing the seller money in the long run.
The guidance a Realtor® provides can also ensure that oversights don’t become lawsuits. Agents use contract, addenda and other sales paperwork that has been vetted by local Realtor® associations, allowing for clear understanding of terms and conditions. Realtors® are governed by NAR’s Code of Ethics and uphold the highest standards of conduct in working with clients, customers, and colleagues, ensuring that everyone is treated fairly and in the clients’ best interest.
But the most important role a Realtor® can play for their seller clients is to be a Trusted Advisor who understands the value of a home, both in market dollars and as a significant personal investment. Selling a home is a huge undertaking, both in the logistical and emotional sense, and it’s not easy to navigate a process with so many moving pieces. It’s also why many Realtors® refer to what they do as a “calling,” a deep satisfaction in helping others achieve their real estate goals and pride in building stronger communities with each new sale. It’s what they’re trained to do, it’s what they love to do.
Learn the lesson from many regretful FSBO sellers: to earn more money and have fewer headaches, consult a McEnearney Associates | Middleburg Real Estate | Atoka Properties Realtor® and let their expertise guide you to your next real estate adventure.
To paraphrase “Field of Dreams,” it would appear that selling a home is a lot more challenging than simply intoning, “If you list it, they will come.”
If you would like a question answered in our weekly column or to set up an appointment with one of our Associates, please email: [email protected] or call 703-549-9292.
McEnearney Associates Realtors®, 109 S. Pitt Street, Alexandria, VA 22314. www.McEnearney.com Equal Housing Opportunity. #WeAreAlexandria