Seller-Realtor Value Proposition
Good market or bad there is one constantly nagging question that is consistently asked by home sellers (and buyers) and that is “why do we need to use a REALTOR®?
I thought that this week would be a great time to truly explore the value proposition that working with a highly skilled professional can bring to the transaction no matter what side of the aisle you are on.
The number one argument is that of commission. Be it 4%, 6% or (you pick the number) it is often said that these cost cannot be justified. That the skill sets required to negotiate a purchase or sale do not warrant the cost.
So it is this premise that I will first address. It is a fact that a home listed and properly marketed by a licensed real estate professional will in fact sell for 24% more on average than that of a home that is for sale by owner (FISBO).
This fact alone would argue the point. It has been proven that the average seller would have a net profit that is at least 18% greater from his sale if he engages the services of a REALTOR® when compared to a transaction negotiated without professional assistance. This would suggest that the REALTOR® pays for himself.
However, the higher net profit is but a small piece of the puzzle. I think we all can agree that ours is a truly litigious society. Involving the REALTOR® in the transaction offers both buyer and sellers some level of protection from each other through the proper execution of a well crafted series of disclosures.
Here are but a few examples. Preliminary Title Report. This is one of the first documents that you receive. And, it is critical to the transaction. In this document, matters that could affect the sellers ability to deliver clear title are addressed and the ultimate success or failure of the sale could hinge on what is discovered in this report.
Second (and equally important) is the Natural Hazard Report. This report is statutorily required and any seller who fails to provide it subjects himself to penalties. The seller is required to provide the buyer with information as to whether or not the home is in a seismic zone, a flood zone or, if the property was ever utilized as a toxic waste site. It will also identify former munitions stored on property.
If the land has a high level of methane gas beneath it, this to will show up in the zone disclosure report. Furthermore, required disclosures such as Megan’s Law are also required and should be disclosed in this report.
The seller is also required to notify the buyer of all known defects in the property and, whether or not someone has died in the home over the past three years. The seller furthermore must accurately provide the buyer with a full disclosure of all of the amenities of the property. This would include but not be limited to the type of sewage system, heating and air systems. Whether or not there is a pool, if the stove is gas or electric. What type of fireplace (if any). I think you get the picture.
These are but a few of the items that a seller is required to disclose. I would contend that the average seller would have a difficult time gathering the information and disseminating it in a format that would meet the requirements fully. And, failure to do so could result in an unhappy buyer and ultimately in litigation.
The real estate professional makes sure that the seller meets his obligations of disclosure fully to the buyer. He assures the seller that the information has been received and communicated properly to the buyer and that the buyer’s questions are addressed.
This is but a small snapshot of the REALTOR® value preposition. On top of all that we do, we are governed by a strict code of ethics. And, any breach of that code is dealt with in a serious manner with great expediency.
Next week we will look at the value that the buyer receives from working with a REALTOR®.