Most homeowners take pride in the homes they live in and we all know the statistic that for many Americans their home is the most valuable asset they own. It’s more than an investment though because we raise families in our homes, celebrate holidays there and build a community with the people who live around us. In other words there’s a lot of emotional value in our homes in addition to the financial value and this makes the selling decision COMPLICATED for passionate homeowners. Since we have so much invested in our homes, it’s understandable that some people have a hard time giving up control of the selling process or paying the fees charged for managing that process effectively. In an honest effort to protect their investment and maximize returns, some homeowners turn to Flat Fee listing brokers, without realizing they’re actually gambling with their families future. Here are the Top 3 ways that Flat Fee listings cost homeowners money.
Flat Fee Brokerages
Wastes Critical Early Days on MLS
As Realtors® we closely track and manage Days on Market (DOM) as an indicator of market velocity and pricing accuracy. In Orlando we’re currently in a low-inventory seller’s market which means that new listings have high visibility and will get more views, showings and offers in the first 14 days than they will in the next 90 days combined. In fact, as DOM increases, the percentage of list price sellers can expect to net will decrease. What’s worse is that a home has to sit off the market for months in order to reset the DOM clock. Flat Fee brokers promote and profit from the fallacy that there’s a benefit to simply entering a listing into the MLS. These brokers will spend 10min or less entering home data into the MLS for a flat fee of $300-700.00 to unsuspecting homeowners. The reality is that the busiest Realtors®, who sell 80% of the homes in Central Florida, don’t have time to look through new listings every day because they’re negotiating offers, showing homes, preparing offers, attending appraisals and so on. Without a comprehensive marketing plan being worked daily to expose your home to the right agents at the right time, an MLS flat fee listing is simply squandering the most valuable days on market that your listing will ever have.
Establishes Pricing History
Homebuyers don’t sit down for a consultation and say “I want an okay price” or “I’d like to pay the average for the neighborhood”. Homebuyers want a GOOD deal and in the past few years this meant looking at distressed sales like foreclosures. In today’s market, foreclosures are virtually gone and the few that remain are highly sought after and often wind up selling for more than fair value. A GOOD deal in today’s market means finding a motivated seller that’s listing because of job transfer, divorce, bankruptcy or some other change that’s created pressure to sell. We identify seller motivation by analyzing the frequency and amount of price decreases over time and this pricing history is tracked in the MLS. Flat fee brokers will happily let a homeowner list their home too high because they get paid upfront, before any services are rendered. Since they don’t have any incentive to see your home actually sell, they specifically avoid and in most cases refuse to give guidance on pricing. By the time these listings wind up with a full-time professional Realtor®, they’ve already established a pattern of price reductions that attract bargain hunters and “low ballers”. A listing with high days on market and a pattern of reductions in price is going to make serious buyers fear there’s something wrong with the home and make time wasting investors think there’s a desperate seller to be profited from.
Virtually Guarantees Buyer-Agent Involvement
When you hire a flat fee broker to enter your home on the MLS, you’re virtually guaranteeing that your buyers will be represented by professionals who are trained and skilled in negotiations, property inspections, contract paperwork and more. In the same way a Realtor® would be crazy to try and diagnose their own illness, defend themselves in court or change their own transmission, a doctor, criminal attorney or mechanic would be crazy to think they’re skilled enough to negotiate and manage residential property sales with the same proficiency as an expert. A flat fee listing effectively stacks the deck against you and will likely lead to lower sale prices, higher repair concessions and less favorable closing cost distributions then a full-time listing agent would achieve for the same deal.
Start the Conversation
I know you want to maximize the amount of money you take away from the closing table and I also know you don’t want to waste time when the need to sell arises. If you’re thinking about selling your home then Contact Us today to learn about our proactive marketing plan and how we can net you more money in less time than other options. If you’re curious about your homes value then Find Out What Your Home Is Worth using our free and instant home valuation tool.
This is part 1 of a 2 part series where I’ll be pointing out some of the pitfalls of selling your home without a professional Realtor®. Part 2 will look at FSBO sales and how those can cost you money by:
- Detering Buyer Showings
- Attracting Solicitations from Inexperienced Agents
- Increasing Chances of Lawsuits