Vol. 4, No. 3, March 2008
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Selling a home
A Realtor can save you trouble, but selling yourself can save money
There are plenty of buyers out there, and homes are still selling every month in this market. According to SalesTraq, a residential real estate tracking firm, more than 1,200 new homes in Southern Nevada closed in December 2007 with a median price of $273,359.
SalesTraq also reported 1,452 resale home closings in December with a median price of $253,000. Nearly 24,000 homes sold in the area during all of 2007. Although many headlines point to a troubled housing industry, the market is still rich with buyers. Families are growing and need larger homes. People are seeking their first ownership in 2008, and plenty of new potential buyers are moving into the Valley.
According to the Nevada Department of Motor Vehicles, more than 5,300 people exchanged their out-of-state driver’s licenses in January for a Nevada state identification card. Projected for the year, that means nearly 60,000 new residents to the Valley, all of whom need a place to live.
Realtors make a difference
In the real estate industry, not only can confusion creep into the equation, but it can also end up costing the seller thousands of dollars.According to Patty Kelley, president of the Greater Las Vegas Association of Realtors (GLVAR), sellers should understand the differences between real estate professionals.
“There’s a difference between at Realtor and someone with a real estate license,” said Kelley. “Realtors tend to be more experienced in the field—received the highest level of education, which doesn’t stop once they get their license—and they abide by a strict code of ethics.”
The GLVAR is a professional organization with more than 14,000 members and has been around since 1947. It also ranks No. 1 among trade and professional organizations in a recent book of business lists.
“A Realtor can help find the best deals available,” Kelley said.
Jim Dahl, a practicing Realtor at Keller Williams Realty, said he believes acquiring a Realtor’s services is a win-win situation.
“Realtors can help with all the technical processes involved in selling a home that sellers generally just don’t know much about,” said Dahl, who quarterbacks real estate transactions every month.
Industry experts point to the expertise Realtors bring to the selling process.
“Sellers don’t have to do the marketing and the paperwork when working with a Realtor,” he said. “We do that for them.”
Kelley added Realtors also help the seller “advertise, host an open house, pre-qualify buyers, show the property while ensuring the security of the home, present and negotiate offers and counter-offers, meet inspectors, write addendums and make sure you’re complying with state law.”
In addition, Realtors also pre-qualify buyers before visiting the property.
In the busy lives of today’s citizens, many sellers point to the time issue as the key factor for hiring a real estate professional.
“The time I saved by hiring a Realtor was unbelievable,” said Sam Mussina, who recently sold his property. “I work weekends, so I really didn’t have time for open houses, researching the home market and all that’s involved in selling a house. For me, it was well worth hiring a professional to handle it—just like I would an auto mechanic.”
And while transactions involving a Realtor usually carry a commission of 5 percent to 6 percent, Kelley pointed out that “national studies show that people who use a Realtor get an average of 16 percent more for their home overall.”
Go It Alone
For individuals with experience in selling homes or with a working knowledge of real estate laws and pitfalls to avoid, the for-sale-by-owner decision can be lucrative.“First off, all proceeds go to the seller,” said one area real estate professional. “The seller is in control of showing the property and is control of the marketing, the transaction process and can sell when they want.”
A for-sale-by-owner transaction can be more profitable, assuming the individual does their homework and knows the associated real estate laws and requirements. And, according to local industry experts, a homeowner’s cost to market and sell the property on their own is little less than 8 percent.
Often times the amount of the money owned on a home is different than the for-sale price. In a case where a property’s equity is relatively low, then a for-sale-by-owner situation could help the owner to walk away without paying the difference.
Individuals need to figure out the home’s value and compare it to the amount owed. Real estate professionals urge individuals to at least have a real estate lawyer review their contract paperwork.
“If selling the property by owner, it also helps to have a financial advisor take a look at it,” said one expert.
Here is an example of how the for sale by owner approach can increase profits. Let’s review a hypothetical homeowner looking to sell a 1,200-square-foot property. With, purchase price of $152,000 and a second mortgage of $48,000, the amount owed is $200,000, and the for-sale listed price is $240,000.
Using an agent, the owner would expect to pay 3 percent for their services, plus 3 percent for the buyer’s agent. That’s $14,400 in agent fees, cutting the homeowner’s profit from $40,000 down to $25,600.
Mistakes to Avoid
Real estate laws are slightly different in every state.According to the experts, the danger of selling a property as an individual without a real estate professional can be significant. “To sell it yourself you need to be aware of the laws and available for open houses and so on,” said Dahl. “It’s really time consuming. So, it really comes down to what your time is worth. Without a professional on your side, it could cost you money in the long run.”
Insurance is another factor to consider. Realtors carry insurance to protect the seller in case of a mistake in paperwork or filing. When homeowners sell on their own, they generally don’t have the necessary protective coverage.
“Bottom line, you don’t want to open yourself up to legal problems,” Dahl said. “Realtors carry insurance to cover you from errors and omissions.”
According to real estate experts, two key factors impact the selling of real estate—price and condition of the home. Sellers should price the home correctly to maximize potential owner interest.
“They should use comparative sales information or pay a professional appraiser to evaluate the property’s worth,” said Cindy Potter, a real estate sales executive for Realty One. “Sellers also need to go through the property and repair any obvious cosmetic problems.”
In a slowed market, experts recommend not waiting for buyers. They suggest sellers be proactive and incorporate a bevy of exposure techniques including open houses, broker open houses, advertising, proper signage at the home and a listing in a local multiple listing service or online listings provider.
