They Almost Lost $120,000

I have a story for you.  Clients of ours are selling a home in Florida. A buyer approached them with an offer. They agreed on a price of $700,000 based largely on online price estimates, tax records and word-of-mouth. Then, a week later the buyer cancelled the contract…and it’s lucky they did.  They hired a real estate broker to list their home and now they are now under contract for $820,000! They are overjoyed.

Our clients were lucky. They thought selling their home themselves could be simple and they could avoid paying broker commissions. They almost left $120,000 on the table doing so. After all costs, they walked away with $85,000 more in net proceeds because they properly marketed their home.

I see a few helpful points in this story. First, it’s hard to know the value of a home unless you’re a professional – an appraiser or a broker. Estimates from Realtor.com, Zillow, Redfin and others are struggling to keep up with the torrid pace of the market. Their estimates have been 5-20% off. Here are two examples from sales we just completed.

Estimating real estate value is complicated. When it’s time to sell your home, get a professional opinion from a broker like me. Don’t leave money on the table.

Secondly, what key value did the broker provide?  Do you remember when online auction sites like eBay were born? Suddenly one could instantly market and sell wares to the entire world. A collectible that would have sold locally for a few dollars could now sell for 10x, 20x or 100x that amount. Why? Because now the item was presented to far more potential buyers. The buyer who wants it most, pays the most to buy it. In this way, the best buyer is found and the highest price is achieved. Most importantly, both buyer and seller are thrilled.

This is what real estate brokers do. Through extraordinary marketing networks we find the most interested buyers and those buyers pay the highest price for a property. This is another reason why our client’s second offer was so much higher.

On a related matter, clients are asking us about advertisements they’ve seen on TV offering to buy homes sight-unseen. Companies like Opendoor, OfferPad, Zillow Offers, Orchard and others encourage you to ‘skip the hard part’ and ‘sell it your way’.  But should sellers seriously consider these options?  For most sellers the answer is NO.

The advertising for these programs attempts to convince you that this is ‘The new way to sell homes’.  It is NOT.  Homeowners want to keep the equity (profit) they make from years of homeownership. Selling through an iBuyer program may appeal to a small number of sellers for very niche reasons, but most sellers will find the 10-15% loss unacceptable.

iBuyer programs are created and run by real estate investment companies. Their goal is to make a profit…not to help you make a profit. When they buy a home they pay below market price and either keep it as a rental or they immediately resell it.

These companies look for homeowners in distressed situations who might sell their home under market value. Some reasons might include convenience, a need to sell urgently, can’t easily prepare the home for sale or the seller doesn’t want to allow showings.

In these cases, the unfortunate sellers take a loss of 11-15%, and often more. To see a cost comparison, please scan the QR code. And in all seriousness, if you want to sell your home hassle-free for the most money possible, call a great Realtor.