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Photo Illustration by Dai Sugano
When the market is as hot as it is in the Silicon Valley, there's a temptation to stick a For-Sale-By-Owner sign on the front lawn and wait for the stampede to begin.
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Market is hot, but dangers lurk
By Sue Stone
Selling a home these days may seem to take nothing more than hammering a sign into the front lawn and letting the neighbors know. Not so, according to the National Association of Realtors. Owners who choose to sell their homes without the help of a licensed Realtor will find their property on the market several weeks, if not months, longer than those listed with an agent, if they are able to sell it at all.
"One thing homeowners are not aware of when they decide to do a For-Sale-By-Owner (FSBO) listing is that they are not eligible to use the Multiple Listing Service or many search engines including Realtor.com which means that their only means of marketing is newspaper advertising and property signs," said Jeff Barnett, vice president and manager of Alain Pinel Realtors in Los Gatos. "The MLS and a Realtor's personal contacts sell homes faster than just about any other method."
Another common mistake Realtors can help homeowners avoid is in setting the price. According to the National Association of Realtor's website, www.realtor.com, homeowners who decide to sell on their own may set the value higher than the market which tends to deter potential buyers. Professional real estate agents provide their clients with an update on market conditions, an assessment of the home's value based on comparable properties in the area and tips for improving the home's buyer appeal.
In addition to improving the speed of a sale, Realtors can help sellers wade through the minefield of disclosure requirements and escrow papers. Barnett contends that a Realtor who is experienced and knowledgeable with contracts and disclosure requirements, as well as highly skilled in negotiations, should be the seller's first consideration.
"Homeowners who sell without a Realtor do not have access to the same forms so if they happen to miss just one disclosure requirement they open themselves up to potential liability," adds Barnett. "One of the most important benefits a Realtor brings to a selling transaction is his or her ability to minimize the homeowner's risk by making sure that the contract is correct and free of errors and omissions."
The typical real estate purchase contract is a complicated maze of legal definitions, requirements and allowances. Experienced, licensed real estate agents are trained in the finer points of negotiating on behalf of clients, but not all agents are trained alike so the National Association of Realtors recommends that homeowners use the following criteria when selecting a Realtor to represent them:
* Look for the "Realtor" logo on the agent's business card, sign and marketing materials. The terms agent, broker and Realtor are often used interchangeably, but actually have very different meanings. Not all real estate agents or brokers are Realtors. Realtors are licensed real estate agents who are also members of the National Association of Realtors and subscribe to a strict code of ethics (that in many cases goes beyond state law). They are also required to pass state examinations and maintain a certain level of continuing education throughout their membership.
* Make sure the Realtor explains and discloses the agency relationship (the role of the agent, i.e., who they are representing--the buyer or the seller) early in the process.
* A professional Realtor advises you on how to prepare your for home for the market, including tips for staging, repair and landscaping.
* He or she should show some enthusiasm for your property, listens attentively, instills confidence, operates in a professional manner and has a complimentary style to your own.
* The Realtor should research your property in the public records and the MLS, and provide you with the comparable data to help set the asking price.
* Ask if the Realtor plans on listing the home on the multiple listing service and when. It is recommended that homes for sale be listed on the local MLS as soon as possible to receive widespread exposure.
* Determine the other marketing activities the Realtor intends to do to advertise the home, i.e., newspaper, agency website, neighborhood flyers.
"Not to diminish the role of newly licensed agents, but in a market that fluctuates as much as the one we are experiencing these last few years it is very important that the seller work with a 'seasoned' professional who has had a lot of experience weeding out the solid offers from the crazy ones," says Lissi Bedford, Realtor with Fine Homes and Estates, Seville Contempo, in Los Altos. "The highest offer isn't always the best offer. Contracts that carry no contingencies at all are not in the best interest of the buyer or the seller."
Bedford goes on to explain that "hot, hot markets are fraught with lawsuits created by sellers who don't adhere to disclosure legalities. The role of a professional Realtor is to help the seller steer clear of any risk by ensuring that all areas of concern are disclosed and accounted for in the purchase contract."
A typical contract is a legally binding document that includes the terms of the sale, rights and obligations of the buyer and the seller, the actions to be taken at the close of the sale, and the timing of the specific steps. For example, if inspections have been requested and approved, that will be noted in the contract as well as the cutoff dates of when the inspection should occur. The contract will also specify who is responsible for making repairs, if any, as a result of the inspection.
"The terms and conditions of a contract can make all the difference in determining the outcome of a sale," adds Bedford. "It is in the negotiation process where the Realtor's experience and knowledge can pay off for the seller."
Deciding to sell a home without the help of a Realtor may save the homeowner the cost of the commission but, experts warn it is a little like doing your taxes without the help of an accountant.
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Los Gatos, California Since 1881
