Every real estate investor looks for ways to save money. One of the most common areas to save on a fix and flip deal is with your closing costs. Reducing, or eliminating, some of the fees will have a sizable impact on your bottom line. However, you need to pick and choose your battles wisely.
From afar, selling a rehab on your own is a great way to save on commission and increase your bottom line. However, if you don’t know what you are doing you can throw away weeks of hard work in an instant. For every easy sale that is done without a real estate agent, there are nine others that are a problem. If you can’t generate interest or don’t know specific language on a contract you will create bigger problems that could have been avoided if you used a professional. Here are five reasons why you may not want to sell a property yourself.
- Advertising: Every real estate sale is a little different. There is no question that some properties will almost sell themselves and a real estate agent doesn’t have to do too much. However, there are other transactions where a good agent makes all the difference. If you can’t generate interest in your property it is difficult to get the price you desire. One of the biggest roles a good agent performs is getting eyeballs to the home. They leverage the MLS and instantly get the word out to thousands of agents in your market in real time. As important as you think social media is, nothing is as influential in real estate as the power of the MLS. Every good agent has a defined marketing strategy that generates interest and creates a buzz. You may get lucky doing this on your own, but a professional real estate agent has years of experience behind them.
- Overselling: You can have the best pictures and descriptions of the property, but it is not enough to get it sold. These items are important, but they usually only lead to a showing. At the showing you need to walk the line between salesperson and owner. If you sell too hard and make every feature in the home seem like it is the best thing ever, buyers will get their guard up and be hesitant to move forward. There is a balance between pointing out the positive property features without overplaying your hand. A professional agent understands the rhythm of a showing and knows how to provide information in a way that is appealing while still being informative. It is not unrealistic for an investor to lose an interested buyer based on how they show the property. On the flip side a good agent can attract buyers that may be on the fence and get them eager to move forward. How you show the property and talk to a prospective buyer is one of the biggest challenges when selling on your own.
- Legalities: There is a lot that can go wrong in any real estate transaction. The glue that holds everything together is the contract. If you sell your property on your own, you had better be an expert in every line of it. Just one oversight or omission with the contract can leave you with little recourse in the event something goes wrong. An experienced real estate agent can pick the contract apart, ask for credits and addendums and leave you not knowing which way to turn. You can make the argument that the biggest benefit of using a real estate agent is their knowledge of the contract and real estate law. You won’t have to worry about whether you are doing something that can get you in bigger trouble down the road. Your real estate agent will take care of that for you. This is something that cannot be understand or overlooked.
- Pricing: As much as you may think you know the market, your real estate agent knows more. If you find a quality local agent, they understand every recent sale and current listing. They can use the MLS to find information and rationale behind every transaction and use that to price your property properly. As the owner, you are probably biased and think your property is superior to others on the market. This leads you to price higher than you should, which leads to several problems. The initial interest when the property hits the market will not be as high as it should. This leads to reduced demand which will eventually force you to consider a price drop. Once the price is reduced buyers smell blood and think you are desperate. They will start sending in low ball offers and you will eventually have to decide between talking a low offer or waiting the market out and seeing what offers may come. You are always better off listening to a professional and price properly, right from the start.
- Time: If you have never sold your own home before you will be shocked at just how time consuming it is. Everything from marketing to showings to negotiation is time consuming. If you choose the wrong offer you are forced to start the process from the beginning and even more time is wasted. Whatever perceived savings you think you gain by not using an agent your time is almost always better spent on other areas. Since you are not an expert you will be forced to find answers to most questions, wasting even more time. Your time is the precious commodity you have. Spend it in areas that give you the biggest return.
In most cases using a real estate agent is too important an area to try to save money in. There are other places where you can cut corners and lower your expense sheet.