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I recently had to replace the lock on my mailbox. What does a locksmith even charge, I asked myself? The estimates I received were between $100 and $175 to have my mailbox re-keyed.
Wow I thought, $150 just to replace lock on my mailbox?
So, I decided to do it myself. I went on Youtube and figured it all out. I did my research, I bought and examined the replacement lock, and figured out how everything worked.
Then it hit me, of course! Replacing this lock is just like selling real estate. Well it's not “exactly like” selling real estate, but the same principles apply. They are both services where you do not really “have to” hire someone. You actually choose to, or choose not to hire someone.
I did end up hiring a locksmith. In fact, I figured out that changing that lock was not for me.
I enjoyed researching how to do it, examining the replacement lock, getting all my tools ready. However, when tried to open my closed mailbox, I realized I might accidentally break the mailbox which would have caused an even bigger problem. I told myself, you know what, that’s enough, let me get someone who knows what they are doing.
Now, I know what you might be thinking at the moment, “Yes, but you don’t understand, real estate is different, the commissions are much more expensive."
Or you might be thinking, “Yes but you don’t get it, selling real estate is a lot simpler, I’m sure I can get it done.”
And of course you would be right.
So where am I going with this?
Yes I probably could figure out how to change a lock, or change my own car oil, or cut my own hair. There will just be a learning curve with everything I do.
Nothing that we do, is so difficult that it's impossible to figure out.
Instead the blind spot I see with many owners is they don't see the learning curve that comes with selling real estate.
Real estate is much like a two sided coin. On one side, everything is easy. Just take some photos, pick a price, and wait for the phone to ring. Your job is done! That’s the easy side of real estate.
Most people have this “Simplicty Bias.” Which means that when a simple way of thinking favors them, they distort what is happening. There are countless examples of the "simplicity bias," in real estate and in life.
“I’ll just put it on zillow because that’s where all the buyers search.” Actually 90% of all sales result from buyers working with real estate agents and online searches (which include many different websites including zillow).
“No one can sell my home for more or less money.” Actually, home values are never fixed and there are multiple times in a sale, when price and terms can be negotiated.
“The internet is getting rid of real estate agents.” Actually there are currently 1.4 million members of the National Association or Realtors, historically membership is at an all time high. The internet is changing our industry, it’s just not getting rid of Realtors.
If the story you have already told yourself is simple and in your favor, there is no need to really examine what's happening.
Having said that, simplicity biases are known to cause problems down the road.
Attorneys, title reports, contracts, inspections, appraisals and much more.
Real estate transaction normally have two attorneys write and revise a sales contract, then you have a title company run a title report on the property, the buyer and seller so that they can issue title insurance. If the buyer is getting a mortgage, your going to need an appraiser to inspect and evaluate the value of the home, and a processor and an underwriter to give approval for the money borrowed. All of this takes months to complete, with 10 or more professionals (buyer attorney, seller attorney, loan officer, home inspector, appraiser, processor, underwriter, bank attorney, insurance agent, and title closer), that need to work together complete a sale.
And yet the most difficult part about completing a real estate transaction, is not the process itself, or how long it takes or how many people are involved. Attorneys are capable enough to write contracts and resolve title report issues. The real challenge has always been that you are selling your home to a stranger who you do not really know too well. Many times when a deal goes bad it is usually because you have people are just difficult to deal with.
You see when my locksmith replaced my lock he was dealing with his tools, and a metal lock, all of which he knew how to operate. When you sell your home to a stranger, you are far less familiar with how that person will behave throughout the transaction. And if things get difficult or stressful, things can then get really hectic.
Now I’m not saying all real estate transactions are difficult, most go smoothly. But there are plenty of deals that get stuck, cause stress and then fall apart. So, when there are hundreds of thousands of dollars on the line, do you really want to take that chance?
Even highly experienced professional agents cannot completely eliminate all deals that fall apart, it's part of the business. But we do know how to avoid many of the ones that will end up giving us problems.
I’m not saying that you have to hire an agent, instead I just want to bring awareness to the other side of that real estate coin. That side that most of us don’t think about until it’s too late.
Just because you don’t think about it, doesn’t make that part of the transaction disappear. There will be attorneys, and title reports, and lien searches, and possibly difficult people to deal with along the way.
Preparation, fact finding, experience, and common sense are all tools that can help us get through a difficult real estate transaction.
Yes you can sell your home without an agent, but ask yourself, with some much money on the line, is that really what you want to do?