Why do you need a licensed real estate agent?
Many people see the current market as just setting a price and waiting for the offers to roll in. Because of this, there are more sellers trying to sell their own home or believing that this is really easy. Perhaps they are looking for a deeply discounted agent to simply do the paperwork. In fact, good agents will tell you that they are spending far more time on each transaction now than ever before. The knowledge required to sell and CLOSE a home in this market is much more than the normal market of two years ago. We’ll explore how a licensed real estate agent can more the process go smoothly when selling your home.
Pricing a home
Typically, sale prices are based upon closed sales that are comparable in size, location, and features. Those comparables help determine the amount that you can expect to be borrowed. Today, comparables often only reflect what we can expect an appraisal to look like but not necessarily a purchase price. When you hear homes are selling “above listing price,” it is not that the agent or seller did not know the proper price, but rather listed it at what they expected it might appraise for.
Until we catch up with actual closings on homes, there truly are two prices:
- what the home will appraise for
- what the home will sell for
Does it make a difference?
Buyers not properly represented may offer whatever they think it takes to get their offer accepted. They believe they can still borrow based upon sales price or believe that they can talk the seller into reducing the price if the appraisal is less than the purchase price. As a seller, it is important that you know if your buyer is capable of closing the purchase even with a lower than hoped-for appraised value. The question becomes, can it close?
If not, you took your home off the market for 30-45 days just to find out you have to go through everything to sell it again. Worse yet, you now know what it appraised for and therefore exactly what other buyers can get in maximum loan value. That means fewer qualified buyers.
So how else does an agent help?
In this market, they have to prepare to coordinate a multitude of showings in a relatively short period of time. With more Realtors® than homes for sale, every agent with a prospect that can afford your home (and many who really can’t) is going to try to be first to see and first to offer.
Your agent must then receive any and all offers and transmit them to you. Each offer should be analyzed for:
- loan to value ratio
- type of loan
- likely appraised value, and
- the likelihood the buyer can close.
Oftentimes, the highest price is not the best price.
Your agent may have to juggle all these offers to request from each agent submitting an offer to resubmit with their “highest and best.” Then the process of analysis starts anew. For buyers, we talk about losing home offers here.
When Your Offer is Accepted
Once you accept an offer, the fun really starts. Agents have to verify that Earnest Money was received and escrow (title) was opened. There are time limits to provide paperwork to the buyer and to negotiate on whether repairs will be made. Next, there is coordinating the inspection, analyzing the inspection recommendations and the buyer’s requests.
After that, there is tracking the loan officer of the buyer. It is important to make certain that there are no surprises in timing. Has that appraisal been ordered? Will it get to the lender on time to close? Did the closing disclosure get out timely to assure a timely closing? We haven’t even discussed getting the inspectors and appraisers in and out of the home.
Now, how about the title commitment? Anything to worry about there? Does the escrow/title officer have everything they need to close? Will they get paperwork soon enough that your agent can review your closing statement before you go down to sign?
Then, there is the fact that many states only allow the contracts to be put together by the regulatory people to be used by agents licensed through them. Will a seller know what has to be covered and where they will get the contract? Will you know what all the elements of this agreement mean to you?
The Bottom Line: You Need a Licensed Real Estate Agent
More than ever, this market requires an experienced, knowledgeable, and educated team of agents to assist sellers in maximizing their bottom line. You need licensed real estate agents to guide you through this challenging and detailed process. Going at it alone could result in the sale resulting in significantly more time, stress, and fewer dollars to take home.