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Can I Buy or Sell A Home Without a Real Estate Agent?

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Can I Buy or Sell a Home Without a Real Estate Agent?

Today’s real estate market is one of the fastest-moving in recent history. We witness record-low inventory, multiple offers, and bidding wars in many high-demand neighborhoods. This has led some sellers to ask, can I buy or sell a home without an agent without investing money, if it seems you can simply put a for-sale sign in the yard?

Some buyers believe they would be better off buying a home without an agent. They assume they will get a discount and assume the seller doesn’t pay the buyer agent commission.

We all want to save money. For a large financial asset, it may not always be in your best interest to buy without professional representation. What benefits outweigh the risks (and considerable time and effort) of going alone to get to the closing table confidently.

SELLING YOUR HOME WITHOUT AN AGENT 

For Sale By Owner (FSBO)

A “For Sale by Owner” price their home, handles the transaction, shows, and negotiates directly with buyers and their agents. The National Association of Realtors shows approximately 8% of homes sell FSBO.1

One of the biggest problems FSBOs face is the appropriate pricing of the home. Without accurate data on comparable homes, you run the risk of overpriced (which means longer market time) or underpriced homes (leaving money on the table).2

In 2020 the median sales price for an FSBO was 10% less than sold with an agent.1 2018 FSBO homes sold for 24% less than agent represented properties.3 By yourself, pricing and marketing a home leads to potentially greater loss than the costs to pay an agent.

FSBO Responsibilities

Without a real estate expert, it’s up to you to get people in the door. You will gather information for the online listing and put together marketing that today’s buyers expect. You will have to a professional photographer. Responsibilities include writing listing copy, designing flyers, and mailers, or hiring someone to do it for you.

Virtual showings and developing a COVID safety protocol must be offered. As well, you’ll schedule showings for each potential buyer. You’ll be on your own to evaluate offers and determine their financial viability. Knowledge of all legal contracts, contingencies, and ability to discuss terms, including those regarding the home inspection and closing process.

After paying the buyer agent commission, be sure to weigh your potential savings against the significant risks and effort.

Choosing a listing agent saves time, effort and minimizes your risk and liability. Increased profits through a more effective marketing and negotiation strategy make up for the cost of your agent’s commission.

iBuyer

IBuyer offers sellers direct purchases from a real estate investment company.4 iBuyer companies appreciate their convenience and speed, with a reliable, streamlined process that might be attractive to some sellers.

iBuyer wants homes in good condition, desirable neighborhoods, simple flips and fall within the company’s algorithm.

If focused on speed and convenience, an iBuyer may offer an attractive alternative to a traditional real estate sale. iBuyers evaluate a property quickly and make an upfront offer without requesting repairs or other accommodations. 

Focused on speed and convenience, an iBuyer could offer an attractive alternative to a traditional real estate sale. iBuyers quickly evaluate a property and make an offer without requiring repairs or other accommodations.

The convenience comes with lower sales prices and fees that can be up to or exceed an agent’s commission. A MarketWatch study found sellers received 11% less, with lower prices and fees considered.5 Studies show 15% more fees and costs are paid than with a real estate commission.6

The alternative to using an agent with iBuyer gives the advantage, the comfort of a quick transaction, and the security of a professional negotiating on your behalf.

BUYING YOUR HOME WITHOUT AN AGENT

Statistics show 88% of home buyers use a realtor in a home search.1 A buyer’s agent is with you every step of the way through the home buying process. Buyer’s agents find the perfect home, submit winning offers, navigate the inspection and closing processes with invaluable expertise and guidance. Buyer agents are no cost to buyers!!

Putting together a winning offer against multiple offers is a challenge. And the buying process can be emotional. A trusted agent can help you avoid overpaying for a property or glossing over “red flags” in your inspection. Buyer agents offer a streamlined, professional process that clients may be more likely to recommend.

Agents will write competitive offers, submit, negotiate, review, prepare documents, communicate with the seller’s agent, lender, inspector, appraiser, title company. They schedule inspections and negotiate repairs. Without an agent, you’re alone.

Sellers pay a buyer’s agent and cost you nothing. You receive fiduciary guidance for an important financial transaction. Alone you play fast and loose with an important financial decision.

IS A REAL ESTATE AGENT RIGHT FOR YOU?

Consider your options if buying or selling a home without a real estate agent. Are you comfortable in real estate transactions, legal contracts, negotiating in high-stakes situations, with plenty of extra time? You may find that an iBuyer or FSBO sale works for you. 

Expert advice from a real estate agent in managing the process gives you security and peace of mind.

The diverse services and expert negotiation skills of a real estate agent financially benefit buyers and sellers. The average seller using a real estate agent receives more money than those who go FSBO or iBuyer. 3,5 buyers pay nothing for expert representation to avoid costly mistakes from contract to closing.

NAR’s profile of most buyers (91%) and sellers (89%) is pleased with the representation of their real estate professional and would recommend them to others.1 In terms of time, money and expertise, most buyers and sellers find the assistance of a real estate agent invaluable.

QUESTIONS ABOUT BUYING OR SELLING? WE HAVE ANSWERS

The best way to find out if you can buy or sell a home without a real estate agent or broker is to speak to one. We are here to help you and give you the insights you need to make better-informed decisions. Let’s talk about the value-added services we offer to buy or sell in today’s competitive real estate landscape.

Sources:

  1. National Association of REALTORS –
    https://www.nar.realtor/research-and-statistics/research-reports/highlights-from-the-profile-of-home-buyers-and-sellers
  2. Washington Post –
    https://www.washingtonpost.com/business/2020/12/09/factors-consider-when-determining-whether-use-an-agent-buy-or-sell-home/
  3. National Association of REALTORS –
    https://www.nar.realtor/blogs/economists-outlook/selling-your-home-solo-to-save-money-you-ll-actually-make-less-than-you-think
  4. Seattle Times –
    https://www.seattletimes.com/business/real-estate/redfin-is-first-major-ibuyer-to-sell-in-seattle
  5. MarketWatch –
    https://www.marketwatch.com/story/selling-your-home-to-an-ibuyer-could-cost-you-thousands-heres-why-2019-06-11
  6. Forbes –
    https://www.forbes.com/sites/nataliakarayaneva/2020/03/19/billion-dollar-real-estate-businesses-ibuyer-suspended/?sh=c7f59f921747
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Call In To Win

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Each month on the 10th of the month you can Call In To Win. Denver Metro Only. This month we celebrate entertainment with family and friends.

G I V E A W A Y! Our March giveaway is a Vizio Theater Soundbar System. Denver Metro only. Features:

  • Low-Profile Design and Brilliant Clarity with 6 Full-range Speakers
  • Powerful 5″ Wireless Subwoofer and Bluetooth Music Streaming
  • Complete Immersion with Discreet Volume Adjustable Surround Speakers
  • Optimized for 4K TVs with Dolby Audio 5.1 and HDMI (Cable Included)
  • Control with TV Remote using HDMI, Audio Cables Included for Easy Setup

Call 303-217-3821 this Wednesday, March 10th between 9am-5pm for your FREE chance to win!

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Is the Real Estate Market Going to Crash?

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While many areas of the economy have contracted, the housing market has stayed remarkably strong. Can the good news last?

COVID-related shutdowns began in March, real estate brokers and clients scrambled to respond to the change. Record-low interest rates led lenders to stop new underwriting, and homeowners debated whether to put their homes on the market. At the end of the year, average home prices were up 13.4% from the previous year, and with 13 fewer days on market .1

Now, as the spring market approaches, you may wonder whether the reliable times can continue. If you are a homeowner, should you take advantage of this opportunity? If you are a buyer, should you jump in and risk paying too much? Below, we answer some of your pressing questions.

Todays market vs. the 2008 meltdown?

Pandemic fears of an economic recession and a subsequent mortgage meltdown were at the forefront of homeowners. For buyers and sellers the two seemed to go hand in hand, as they did in the 2008 economic crisis.

The conditions of 2008 recession differ from the current downturn, with the housing market the source of good news.2 Historical patterns of housing prices remain stable. Homeowners are staying put, and investors are investing money in bricks and mortars to avoid an uncertain the stock market.

Lessons of 2008 show banks better funded, homeowners holding more equity, and economic activity focused on financial factors outside the housing market. As many industries quickly pivoted to work from home, early fears of widespread job-loss foreclosures have failed to occur. The Federal stimulus and the Paycheck Protection Program helped offset some of the worst early effects of the shutdown.

Are we facing a real estate bubble?

A real estate bubble occurs with rapidly rising housing prices and investor spectulation. When the values drop rapidly the real estate bubble pops. This leads to lower equity, or in some cases negative equity conditions.

Low-interest rates and lack of homes are attributed to current rising home prices. The principle of supply and demand works as it should. Experts predict a strong seller’s market for 2021, with increases in new construction.3 Allowing supply to gradually rise to meet demand, slow down rising home values, and offer a gentle correction.

Effects of low interest rates

Freddie Mac states, projected rates to continue at current low levels throughout 2021.4 Contributing to home affordability in markets considered overpriced. These low interest rates should keep the market lively and moving forward for the foreseeable future.

Effects of low inventory

Low inventory with high demand attribute to higher average home prices.5 Home prices will gradually ease, vaccinations rollout, buyer demand drives homeowners with delayed sales, and new home construction increases to meet demand.6

Aren’t some markets and sectors appearing soft?

Stories of young professionals and families fleeing attached dwellings, high-priced urban areas to move to wide-open spaces of suburban and rural markets. Along with reinforced work-from-home policies that became permanent at some of the country’s biggest companies.

The death of the city and the end of the condo market rumors of these two residential sectors were greatly exaggerated.

With vaccine rollouts, renters returned to major urban areas, attracted by the rise in available inventory and discounted rental rates.7 Laser-focused buyers looking for a single-family home now take a second look at condos.8 Nationwide condo prices lag behind those of detached homes. Observed are significant price increases and days fewer days on the market year over year.

The 2020 migration has spread the economic wealth to suburban and rural enclaves that normally don’t benefit from increases in home values or an influx of new investment. As many of these new residents set up housekeeping in their rural retreats, they’ll revitalize the economies of their adopted communities for years to come.

How has COVID affected the “seasonal” real estate market?

The real estate market is a seasonal phenomenon. The widespread shutdown in March 2020, which came at the beginning of the market’s growth cycle in many areas, has led to a protracted, seemingly endless “hot spring market.”

Fannie Mae’s chief economist Douglas Duncan predicts slower growth from 2020 historic numbers, the outlook is positive as we embark on the 2021 spring selling cycle. Duncan expects an additional boost in the second half of 2021, as buyers return to business as usual and expect to put some of their pandemic savings to work for a down payment. We’re looking at a longer than usual, hot real estate market.

How will a Biden administration affect the real estate market?

A projected housing policy promises to boost the real estate market in many cases.10 Real estate investors bemoan proposed changes to 1031 Exchanges, the Biden plan for a $15,000 first-time homebuyer tax credit aims to increase affordability and bring eager new home buyers into the market. Biden’s policy identifies low inventory as the driving factor of unsustainable home values and geared towards affordability through investments in construction and refurbishment.

According to most indicators, the real estate news will be overwhelmingly positive throughout 2021, and possibly beyond. Pent-up demand, consumer-oriented policies, and a sustained low-interest environment and rising inventory, should help homeowners maintain their increased equity without unbalancing the market. The increase of long-term work from home policies promises to boost many markets now and in the years to come.

HAVE QUESTIONS? WE HAVE ANSWERS

Economic indicators and trends are national, real estate is local. We are here to answer your questions and help you understand what is happening in your neighborhood. Reach out to learn how these larger movements affect our local market and the value of your home.

Sources:

  1. Realtor.com –
    https://www.realtor.com/research/december-2020-data/
  2. New York Magazine –
    https://nymag.com/intelligencer/2020/06/why-this-economic-crisis-wont-be-as-bad-as-2008.html
  3. Washington Post –
    https://www.washingtonpost.com/business/2021/01/11/2021-housing-market-predictions/
  4. Freddie Mac –
    http://www.freddiemac.com/research/forecast/20210114_quarterly_economic_forecast.page?
  5. Wall Street Journal –
    https://www.wsj.com/articles/housing-market-stays-tight-as-homeowners-stay-put-11611226802?mod=re_lead_pos1
  6. Marketwatch –
    https://www.marketwatch.com/story/new-home-construction-activity-soars-to-highest-level-in-over-a-decade-as-builders-rush-to-produce-single-family-homes-2021-01-21
  7. Forbes –
    https://www.forbes.com/sites/noahkirsch/2021/01/14/signs-of-a-rebound-new-york-city-rent-prices-are-climbing-back
  8. Washington Post –https://www.washingtonpost.com/business/2021/01/07/condo-sales-rebound-amid-dwindling-inventory-houses/
  9. Mortgage Professional America –https://www.mpamag.com/news/fannie-mae-chief-economists-forecast-for-us-economy-housing-market-in-2021-244045.aspx
  10. Inman –
    https://www.inman.com/2020/11/09/what-a-joe-biden-presidency-means-for-real-estate-and-housing/

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$25B in Rental Assistance Is on the Way: Who Will Qualify?

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Credits Realtor Magazine:

As part of last month’s COVID-19 stimulus package, $25 billion in federal assistance funds are expected to be disbursed to states today, Jan. 26.

There could be a rush for funds with an estimated 14 million Americans are behind on their rent. Further, rental arrears in the country may be near $70 billion, CNBC reports.

To qualify for rental assistance, at least one member of a household must have experienced income loss, significant expenses due to the pandemic, or are eligible for unemployment benefits. They will need to show they are or could be at risk of homelessness. The person’s current income level also can’t be higher than 80% of the area’s median income. Several states are prioritizing applicants who are at 50% or lower on the median income level and who’ve been unemployed for 90 days or more, CNBC reports.

Renters could be eligible for up to a total of 12 months of back rent and utility bills. They may also be eligible to get payments to cover future rental payments. The funds are paid directly to the landlord or utility company.

Landlords may also be able to apply on behalf of their tenants, as long as they get approval from the tenant.

Some states are already offering existing rental assistance programs under monies previously provided through the CARES Act. They may add the new funds to their existing rental assistance programs or start a new program.

“Where or how will apply will vary city by city,” Emily Benfer, a visiting law professor at Wake Forest University, told CNBC. “Renters should contact local housing groups, their representatives, or the local 211/311 lines to identify programs and learn how to apply.”

Johanna Wells Real Estate
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Related posts on Home Staging:

  1. Is the Real Estate Market Going to Crash?
  2. Call In To Win
  3. The New Normal: A Strong Housing Market Expected to Continue into 2021