Do you need a real estate agent?
When it comes to selling, are you prepared to brave the lonely road and sell it yourself, without an agent? We take a look at the benefits and downsides of both options.
July 02, 2019 • 8 min read
Too small. Noisy neighbour. Just time for a change? Whatever your reason for selling, you may be considering a DIY venture. Perhaps you want to test your sales mettle, or you might be trying to save a few gold ones in agent fees to spend on your dream bathroom reno. First, let’s look at all the good of self-selling.
All the good
You are the most knowledgeable of the property
No one knows your home like you do. You know exactly when that storm blew the trampoline through the old back fence, and when you last had the air conditioner re-gassed. And the nifty shortcut to the bus stop, and you know the way sound travels through the shower wall straight into the kitchen, for all to hear your significant other’s angelic tenor range. You know every in and out, and you’re the best one to feed the detail-hungry buyers.
No agent fees
Besides government fees and any marketing costs, you’ll need to pay little else to sell your home (unless you’d like to charge yourself an agent fee – y’know, because why not). Save those would-be fees for a rainy day, or invest back into your new buy.
Cut the middleman
Speak directly with buyers and reap the benefits of flexible communication. If you have the negotiation skills, it may work in your favour to have a buyer give you offers directly. Since they’ll know you on a more personal level, it may be harder for them to low ball. And, you only have the one property to sell, so you can dedicate all of your time and energy to the sale.
Pick your own marketing
You know your home, and, if you have a bit of prior marketing experience, you’ll know exactly where to get bang for your buck and drive competition for your home. Your methods of advertising can be as custom as you’d like.
But how about the bad?
It can be tricky to sell your own home. Not only do you need a lot of time on your hands to prepare your house, to conduct opens, to speak with buyers, and to sort all the legal requirements – but you’ll need to negotiate and close a major sale, too. And, will you be able to get as good a price as an expert agent would?
To give us the other side of the coin, we spoke with veteran real estate agent and auctioneer, Matt Smith.
Matt Smith is a director and joint owner of Klemich Real Estate, based in Adelaide. One of the most awarded and skilled agents in the industry, Smith has worked in real estate for more than 15 years. With over $1 billion in sales under his belt, his breadth of experience is second to none. We sat down for an honest chat, and to answer some common questions about whether sellers really need an agent.
I’m selling my first home. What can a real estate agent/agency do that I can’t? Can’t I just sell the home myself?
It’s less about one individual skill, and more about a set of skills an agent can bring to the table. An agent can be multi-disciplinary and may dabble across many different areas in their stride towards a successful sale. “They can make recommendations in regard to target markets and suitable marketing. They can offer expert negotiation skills, which would obviously relate to a higher price for a home. They can give advice around finance and conveyancing,” says Smith.
But the biggest advantage comes from their neutrality in the no-man’s land between buyer and seller.
“This is because they can offer direct feedback from the market, which has in many ways been filtered, or can be filtered, because sometimes the owners may not want to hear it direct,” explains Smith.
I’ve heard real estate agents can be expensive and charge many fees. Will I save money if I sell myself?
There’s no need to beat around the bush: real estate agents charge for the service they provide, usually through a commission based on the sale price of the property. Selling on your own will, of course, spare you this cost. But financially, is it worth it?
“Yes, there are fees and charges associated with employing any service provider,” Smith begins. “But, I think it's not a case of what does this cost me, it's a case of what does this add to the process?”
“In other words, how much more am I likely to earn or to make or to get for the sale of my home if I employ an expert to do it?”
Matt believes you’re likely to earn more, and that it could even cost you a lot more to sell on your own in the long run.
Will I achieve a similar sales price even without an agent?
In theory, yes, you could. In practice, a high sale price often comes down to the agent.
“I think an experienced agent brings to the table many years of high-level negotiations.”
Smith has a few tips to spot an experienced agent, such as offering good advice upfront, making smart recommendations in regard to house presentation, and offering a sensible strategy for promotion and price-setting.
“Your agent needs local knowledge, your agent needs experience, your agent needs a good track record. Your agent needs to be tried and proven, and I would suggest anyone looking to employ the service of an agent speak to someone that they have sold for, or sold to, in the past.”
“You should have family members or friends or work colleagues or otherwise who have had a good experience selling with a real estate agent. And a good experience means an experience which in many ways, really, has been stress-free.”
I’ve heard selling without an agent works even better since one person can dedicate all their time to the sale of a single property. Is this true?
This is somewhat a myth – there are many benefits of selling multiple properties at once.
“One of the advantages of going to an agent is their network,” says Smith.
“The more homes you are standing in, the more buyers you are meeting, the more references you can make to other homes that may suit if a buyer tells you that the home they've just inspected is not quite right.”
Cross-promoting in this way harnesses the power of organic word-of-mouth advertising, which is an effective but otherwise difficult task to accomplish.
Why shouldn't I sell on my own?
Smith reiterates the importance of remaining impartial between buyer and seller, and the perils of emotional attachment.
“I would imagine when a purchaser criticises a home direct to a seller, it's insulting to the seller. And that's what some buyers will do, criticise the home. Not to be spiteful, or vindictive, but because they're voicing their concerns about why the property isn't quite right for them. But of course, it's right for someone else.”
“We don't sell our own homes. I don't sell my own homes for that very reason: to remain at arm’s length from the transaction.”
What’s something people don’t know you can engage a real estate agent for?
Where, in the past, real estate agents were preoccupied in large part with information gathering (and storing, and sorting, and responding), modern technology has transformed the role and the way agents operate. Agents are now freed up to put more focus on the people; to negotiate, to intermediate. To expediate.
As Smith explains, “what we can bring to the table now is expert styling, styling advice, landscapers, builders, cleaners - you name it. We'll bring any service provider to the sale of your home and we will work with the owner at maximising the value of the home through preparing it professionally for sale.”
“We'll come to your property and give you advice on how to present your home for sale. And presenting your home for sale means: where should you spend money in order to capitalise on your asset?”
What kind of questions should I ask an agent when attending an open inspection?
Besides asking yourself if the property is right for you, you’ll likely want to cover a few bases with the agent. But what to ask?
“A lot of the frustration in a sale process from purchasers is a lack of communication or understanding of the process” says Smith.
“You need to understand how the process will be conducted. So, I'd be asking the agent: ‘how are you going to sell this home?’ ‘If I make an offer, what's going to happen?’”
Purchasers rarely have direct insights into the lives of the sellers, and Smith explains how this can cause confusion when there are delays. “If they don't hear back from the agent for three days, they get frustrated with the process. But, if they actually understand that, in that process, for example, we're dealing with a deceased estate in which there's four beneficiaries. And when there's four beneficiaries it's called a committee. And when there's a committee, decisions aren't made. And so, when decisions aren't made the process is slowed down, etcetera.”
“So, I'm just giving an example of what could be at the other end.”
“If they ask plenty of questions, and get communicated thoroughly to by the agent, then they're at ease with the process.”
And the auction process rarely makes things easier for buyers.
“An auction for many buyers is a daunting process, but it doesn't need to be. A buyer can actually sit down with a good agent and/or a good auctioneer and ask the questions about how the auction is going to be conducted.”
“The agent needs to be very clear they're working for the vendor. But in order to work for the vendor, to the very best - or to the betterment of the vendor - it's about working as close as you possibly can with the purchaser,” insists Smith.
What’s a common misconception you face as an agent?
“It's probably that one: what we do is easy, and two: that agents struggle at the best of times with the truth,” says Smith, acknowledging the persisting stereotype of real estate agents.
“But like in any profession, there are really good operators. Mostly, there are good operators.”
What do you look for in a buyer? Is it always about who is willing to pay the most?
“What I look for in a buyer is the motivation to purchase. Why do they want to be there? Why does the time suit?”
“Our job as agents is to get the best deal for the owner. And that comes in both terms of price and conditions.”
“Now, you always strive for the best price and the best conditions. But sometimes, the best conditions are not necessarily the best price. And an owner may go for the better conditions rather than the best price. So, the number one goal is best price, best conditions.”
Smith provides an example: “You might be subject to finance. Or a cash offer. The subject to finance is a higher offer than the cash offer. But, an owner has to wait a couple of weeks for the finance clause to be honoured.”
“In your [Tiimely Home’s] case, it’s the same day, and that's why you'd go to Tiimely Home to get your finance. Because it puts your buyer on an even footing.”
“A vendor is always looking for the best terms and the best price, and if you can get a loan the same day you apply, you put yourself on even footing to those making cash offers.”
So – which is the better option?
Whether or not you’ll need a real estate agent to sell your home is entirely contextual of your situation.
You’ll need to have some understanding of market conditions, your property conditions and approximate value, locational and regional knowledge, and have some spare time on your hands. You’ll also need to consider whether your emotional attachment to the home will impede your ability to achieve the price you want.
However, if you have a good grip of the market, have the know-how about the buying and selling process, and have the time to invest to do it yourself - you’re well on your way to self-selling.
Don’t have the time/confidence/knowledge/skill? There’s no shame in that, and that’s what agents are for. They exist to simplify the selling process and remove the stressors and burdens of doing it yourself. Whether you’re a newcomer or seasoned seller, an agent may be just what you need.
Credit Assessment Team Lead