Real Estate Agents Need to Educate Home Sellers
Whether a homeowner is selling their home for the first time or the fifth time, the process can be confusing. According to a new Clever Real Estate survey of 1000 Americans, home sellers often lack the knowledge and experience needed to navigate the challenges of selling a home.
Many need a knowledgeable real estate agent to walk them through challenging home selling processes, from negotiating with buyers to closing paperwork.
The majority of sellers want their real estate agent to provide them with market guidance. In other words, how is the market performing? How will my home fit into the equation? Will selling my home be a challenge this year? What are the common obstacles to a successful sale?
Real Estate Commission Fees
One key finding from the study was that home sellers don’t realize they’re expected to pay the buyer’s agent commission.
45% of home sellers thought home buyers pay buyer’s agent commission, and only 35% knew what standard real estate commission fees are for a home. With this lack of knowledge, it’s understandable that many sellers are uncomfortable negotiating without an agent (53%).
Although many of the Americans surveyed had sold homes in the past, most of the respondents didn’t understand the nature of real estate commissions. There were over six million homes sold in 2018, yet the average home seller doesn’t fully understand the complicated home selling process and its minor fees and costs.
“Many home sellers don’t understand commission fees,” said Chris Doss, an Atlanta-based Keller Williams agent. “Closing costs are important, and many sellers don’t realize the true costs until I’ve met them and gone over their net price. It’s been so long since they bought their first home, and they forget (or maybe never knew) sellers pay commission fees. I recommend real estate agents be open and honest when courting clients to avoid uncomfortable conversations down the road.”
Clever’s study also found that 34% of respondents thought real estate fees are costly and unfair to sellers, but 46% of respondents said that Realtor fees are expensive and fair, and 20% answered that realtor fees are reasonable and appropriate.
In the face of home seller ignorance, it’s up to real estate agents to start relationships off right. A good agent should explain their commission structure upfront, especially to first-time home buyers, who are more likely to be confused.
How Long Will It Take to Sell a Home?
The housing market has been consistently hot for sellers over the past few years. For example, signed homes and condo sale agreements in Massachusetts were each up more than 20 percent in January.
However, Realtor confidence is starting to wane. There was a 31% decrease in the Massachusetts Association of Realtors confidence index from January 2018 according to a recent report. Housing industry experts are preparing for slower markets.
In fact, when asked how he expected the Massachusetts Real Estate market to perform in 2019, Massachusetts Real Estate News owner, Bill Gassett, suggested it will be decent but not quite as strong as in years past.
It seems that sellers are prepared to weather that storm as well, especially if it means they can get a higher price. About 65% of survey respondents said they would be willing to wait longer for a better price on their home, rather than sell quickly.
The data also suggests that sellers aren’t just spouting off here — in fact, they have realistic expectations about how long they may have to wait in order to get the right offer for their circumstances.
According to Zillow, it takes approximately one month on average to accept an offer on a home. Clever’s survey found that about 62% of home sellers believe it will take at least one month to sell their home, while 32% think it will take longer than three months.
Closing and Closing Costs
Home sellers seem to be a little more familiar with closing and closing costs, but they’re not comfortable handling it on their own. Typically, closing costs fall on the buyer, so they’re not in the purview of the home seller. However, some buyers might request closing cost credits or ask the seller to pay a portion of closing costs, which can be 2-5% of the home’s sale price.
This area of negotiation is where home sellers feel least comfortable. They need a real estate agent to negotiate on their behalf, as almost half don’t feel ready to settle on their own.
Likewise, 62% of all home sellers said they wouldn’t be comfortable obtaining and executing all necessary real estate paperwork when selling their home. This data indicates many sellers aren’t prepared to deal with the minutiae of home selling and need the assistance of a professional.
For Sale By Owner (FSBO) is Not the Right Choice
While new real estate services like flat-fee MLS services and AI-driven home listing and referral sites are disrupting the industry, there’s nothing that can completely replace a traditional real estate agent. There are vital parts of the home-selling process that most people don’t trust to complete themselves. However, some sellers think they can do it own their own.
Many home sellers are unaware of how complicated the home listing process can be and how much work goes typically into it. In 2017, only 7% of home sales were classified as FSBO.
Many home sellers start out thinking they can go it alone, but as they discover how difficult and involved selling a home actually is, they end up partnering with an agent to get the job done.
What’s more, that decision usually pays off: according to recent data from the National Association of Realtors, the average FSBO home sold for $200,000, compared to $265,000 for agent-assisted sales.
So, how do FSBO sellers feel about negotiating without an agent? 53% are still uncomfortable going it alone. 46% of these sellers also wouldn’t be comfortable completing the necessary paperwork to sell their home. Even though they’ve chosen initially to list without a Realtor, almost half will need one in the end to complete the transaction.
What is the Role of the Realtor in 2019?
There’s no question about the role of the real estate agent being still vital in 2019. With home seller knowledge about critical aspects of real estate transactions low, Realtors are there to step in and provide the necessary information and guidance to help sellers list their homes.
Clever’s study indicates the importance of working with real estate agents to optimally sell a home, as many home sellers are unaware of the real challenges of selling their homes. With a quality agent who explains the process in detail, home sellers will be more prepared to sell their homes in the future.
Additional Helpful Real Estate Articles Worth a Look
- How to make sure your home appraises – see some excellent tips on what you should be doing to make sure your home appraises for the contract price.
- Tips for selecting a lender when purchasing a home – see helpful guidance at RIS Media on how to choose a lender.
- Signs your home price should come down – See how to know that your house is overpriced.
- The worst home buying advice to avoid – learn what you should not do as a home buyer.
- First-time home buyer mistakes not to make – see what you shouldn’t do as a first timer in this helpful post from Growth Rapidly.
Use these useful home buying and selling resources to make excellent decisions. You’ll find guidance from real estate and mortgage professionals who have been in the trenches for years practicing their craft.
About the author: The above article on home sellers look to Real Estate agents for market guidance was written by Reuven Shechter. Reuven Shechter is a Marketing Analyst at Clever Real Estate, focusing on creating fantastic content that educates home buyers, sellers, and investors. Reuven has seven years of professional writing experience with his current focus in commercial and residential real estate. He’s currently based in St. Louis, MO.