Issue Date: June 7, 2006

Ditching the Realtor Hits the Pocketbook

By Jody Zink
Licensed Realtor in Ohio & Michigan

When it comes to selling your home, the quest to save Realtor fees by going it alone can cost you thousands of dollars.

On average, owners working with a Realtor sell their homes for 16 percent more than For Sale By Owners (FSBOs), according to a survey by the National Association of Realtors.

Using county deed records, NAR researchers mailed surveys to 90,000 homeowners who had purchased their home between August 2004 and July 2005. Their findings are based on more than 7,800 responses.

The median price achieved by sellers using Realtors was $230,000 versus $198,200 for sellers doing it themselves with no significant difference in the types of homes sold. That’s a $31,800 difference. A difference that could be used towards gum, I-Tunes or a Chrys Peterson bobble head. Maybe one of those big trampolines with the surrounding safety netting. Or perhaps an education, savings or retirement fund.

Now forget for a moment that these findings could be construed as self-serving and indulgent. For fun, let’s say Realtors really have hit the mark: That in the desire to save an average of 6 percent—which by the way, is the most frequently cited reason FSBOs go it alone, unrepresented sellers lose 16 percent. If you figure that potential buyers automatically lower their offers to FSBOs by 6 percent to trim the fat from their asking price, where goes the other 10 percent?

Of course, not everyone loses. Some sellers do okay and in some markets sellers are hard pressed to do anything wrong. But the desire to save commission dollars can backfire. The survey also shows that limited-service listings sold for 1.7 percent less and took 17.1 percent longer to sell than full service listings. Limited-service brokerages perform only part of the tasks to close a contract.

On the surface, I honestly can't blame sellers for skimping. Before I became a Realtor, I would have done exactly the same thing. Take my red paint example: I wanted to change the color of one of my bedrooms. Only red would do. I toyed with having a professional do it, but decided, eh--I'll just do it myself. How hard can it be? I'll buy the paint, drag out the 'ol ladder and smear a few coats on the wall. After 5 hours and 3 coats of paint (not counting prep-time searching for makeshift tarp with old bedsheets) I remembered that to save time and money, I had dismissed the professional's advice to use primer before starting the first coat of red. None of the paint was even. I put on another coat. Still looked like an amateur did it. Not to mention I wound up getting paint on the ceiling. After six coats and my entire Saturday cast to the wind, I gave up. I decided I would revisit the red room painting project another time. (Revisiting that is still on my to-do list.) If I could start over, I'd pay the $300 to have a professional do it-- or at the very least, use the godforsaken primer like the expert suggested.

The red room painting project cost me more in time and aggravation than it was worth. I had the best intentions. Most of us do.

It's worth noting here that the majority of unrepresented sellers eventually use a Realtor to sell their home. Real estate professionals do more than just make transactions easier. They help manage your risk and make money for their sellers.

Jody Zink is a licensed REALTOR in Ohio and Michigan with the Loss Realty Group. Her column appears every other week in the Toledo Free Press. She can be reached at jody@jodyzinkrealtor.com or 419-725-1881.