I don’t shop at Walmart. I don’t mean to sound uppity about it or anything, but I just don’t enjoy the experience. The lines are long, the cashiers are slow and over-whelmed and there seem to be more children than adults. Everything in the joint is cheap. The facilities are sparse, ugly and usually in disrepair- the only thing that matters to them is price.
I remember buying my son a bike from Walmart one year. I was a single-parent living in the San Francisco area and the cost of living was high for me. I hadn’t yet been promoted to managing broker so I was only making about $50,000/year, which is not much in the Bay area. For Christmas, I found that for the price of a new bike at the bike shop I could get him a bike, some toys and some clothes at Walmart. He loved getting his new bike and liked his toys and clothes, too. He proudly rode his bike around the condo complex we lived in until about a week later when he went over a speed bump and the front wheel came off, causing him to go head-over-handles and into the street face-first. He came home crying with blood covering his clothes and road-rash all over his body.
This was another lesson for me in the difference between price and value. Walmart would not refund my money, but would only give me an in-store credit. Lame. As soon as I could I went to the bike shop and bought him another bike. But this bike was built well and the salesperson showed us how to use it’s features and all about safety and it came with a great warranty and service plan. After riding the new bike for a few days my son told me how much better it rode than the other bike. It didn’t make the same noise when he put on the brakes and it handles bumps so much smoother. And the wheels didn’t fall off and it rode well for years until he outgrew it.
So how much did I actually save buying his bike at Walmart for the lower cost? Nothing- I lost money, and that’s the point. I’d rather shop at places where I enjoy the experience and buy quality items and services. I would rather pay more at Nordstrom and have excellent service and the comfort and knowledge that I am buying quality.
A good friend of mine decided to “save” money by installing his own swimming pool last year so he called a guy that helps people do this and my friend coordinated having the hole dug and the pool shaped and the concrete poured and the liners installed and did most of the work himself, along with me and other friends. Took about 45 days to complete and he finished the entire job for under $25,000. Not bad compared to the $45,000 estimate he received from pool companies. He had us all over for a pool party after it was all completed and was so proud of the fact that he put in some extra effort and saved $20,000. Until the pool sank. The corner of the pool began sinking within the first few months and by the end of the year the entire pool was cracking and coming apart and the sinking corner was about a foot lower than the rest and the water was running out of it. He had bids to raise it back up, re-enforce it and repair the damage, and now he’s spending an extra $25,000 re-doing the ruined pool. It should be done in about 45 days and who knows if it will ever be as good of quality as if he had simply had the experts do it from the beginning.
So how much did my friend actually save installing the pool on his own?
90% of all FSBO properties, where the seller does not already know the buyer, end up listing their house with a professional. 6% sell and 4% take the home off the market and don’t sell. Why is it that only 6% of FSBO homes sell? And more importantly, do they actually save any money? There are surely some homes that happen to be in excellent, high-demand areas, are in great condition, show very well, and sell for top dollar without a real estate agent, simply by having a yard sign or newspaper ad. But what about the rest of these money-savers?
If a home could sell for $465,000 given the right touch-ups, marketing, and salesmanship, but is sold as a For Sale By Owner for $420,000 does the seller really “save” anything by not using a Realtor? Of course many times FSBO homes are priced way more than they are worth because the sellers have no idea what it’s worth or have an inflated sense of worth when it comes to their home. But regardless of where the the home sellers think they should price their home, NAR says that the average FSBO sells their home for 12% less than listed homes.
Here’s the thing about pricing- there’s a difference between value and saleability. Value is quantifiable on paper (neighborhood, square feet, number of bedrooms, etc.), saleability is more of a feel- condition, floor plan, room size, view from the windows, carpet color, etc. Some things add value, some add saleability- and you need to be able to find the highest price a home will actually sell for, and then deal with the appraisers and inspections to get the deal done. And many times making a few minor changes to a home can add tons of profit for the seller because it increases the home’s saleability. This is one reason it’s not just important to hire a real estate agent, but to hire one of the best Realtors in your area.
The irony is that many times FSBO sellers are so caught up in “saving” the commission that they lose thousands of dollars. They’re stepping over a quarter to pick up a dime and then think they’ve come out ahead. And they had to do all the work themselves to get to that loss. And they’ve hurt the values of all the surrounding homes by selling for less than the home was worth. If they sold a home for $420,000 when it could have sold for $460,000- all the surrounding homes now have been hurt by that comparable sale. Instead of helping all the neighbors, the seller hurt them all.
Are the 94% of people who sell their homes with Realtors just dumb? Do they want to waste money? Or could it be that they, like I, have discovered that hiring a good professional Realtor is a smart investment that will save them thousands of dollars, help the neighbors, and give them a much more enjoyable experience along the way?
I’ve heard there are more lawsuits with damages awarded from the 6% of homes that sell without representation than from the 94% of homes that do. If you sell your home and get sued for thousands of dollars and have to spend time in court defending yourself- is that worth it? There have been sellers who have had to buy back properties months after they sold them and moved on. There are people who have lost everything because they tried to “save” money and didn’t know what they doing. And using a good professional can make you more money anyway.
That’s why people would rather pay 30% of the winning judgement to a good attorney to represent them when they’ve been injured in an accident than try to go it on their own and keep all of the money they may win. Because 70% of something is better than 100% of nothing.
And when it comes to selling your own home- if you “save” a 6% commission by selling for 8-10% less than you could have (or not sell at all)- how much have you actually saved?
Now, money isn’t everything– there is certainly an element of satisfaction one can obtain by doing a good job yourself, and that’s something I understand well. I am simply talking to the business side of the transaction, where supply and demand play into the fold.
Most buyers are working with agents, and why not- it doesn’t cost them anything and they get a lot of help. And buyers working with agents don’t usually see homes that are FSBO because agents use the very efficient MLS to search for the 90% of homes that are listed and most of the consumers are looking online, where the websites get their feeds directly from that same MLS. So if every buyer will see your home if it’s listed, but only a fraction will see it not being listed, it makes the buyer pool smaller, and therefore more difficult to sell for top dollar, or at all.
You don’t have to have a professional help you in real estate, law, or landscaping for that matter, but there is a difference when you employ the right help. There are some FSBO sellers who have had bad experiences with agents. I’ve had bad experiences with agents, but I’ve had bad experiences dating and that didn’t stop me from meeting my wife. I’m not saying get an agent- I’m saying get one of the best agents.
I suggest you call a good professional who doesn’t cut corners. Have good help that will do it the right way and get you the most money possible and help eliminate the stresses and anxiety that can come from trying to navigate the process on your own.
You’ll be glad you did.