Wyatt Yates Host 00:00 Money doesn't have to be complicated. You can achieve financial independence. This podcast gets to the truth behind the money mess you hear from your grandma, your broke uncle, the latest social media influencers and the so-called money experts. Welcome to Money Myths with your host, wyatt Yates. This week's myth is not using a realtor to sell my house will put more money in my pocket. 00:31 Now you've probably heard somebody talk about wanting to sell their home without a realtor, or know somebody who tried to sell their home without a realtor and maybe they went well for them or most likely didn't. Or when you realize what a realtor commission is in the sale and you put that in terms of dollar amounts and it just makes your eyes get big and you think that man, that's a lot of money. Maybe if I sell it myself I won't have to pay that. So I can see where people think this. And it is true, realtor's charge a commission to sell your home. So if you sell it yourself, you avoid paying some of that commission and save some money. In theory, the typical real estate commission for realtors on the residential side is going to be 5% 6% of the sales price, typically split between the seller's agent and the buyer's agent. So you think on the surface, well, if I could say 5%, 6% of the sales price of my home when I go to sell my home, that's going to put a lot more money in my pocket. 01:48 But generally speaking, there's a lot of issues with the for sale by owner, or what you'll hear. People in the real estate industry may refer to it as FISBO. So FSBO they pronounce it FISBO, for sale by owner. So that's what we're talking here when you're looking at not using a realtor to try to sell your house. So let's look at five points on why this is false or, in most instances, it's a bad idea to try to sell your house without a realtor. It really is. Now, in some rural markets you may be able to get away with it or, depending on the house type like maybe it's a manufactured home or a home that's a lower value, or it's a vacant piece of land but in general, most of the time, it's going to be a bad idea to try to sell your home without a realtor. Let's look at why. Point number one FISBO homes sold for a median price that was 11% less than those that sold using a real estate agent in the year 2020. Now that data is from the National Association of Realtors, so take it for what it's worth. But that is a very common theme that you'll see year in and year out, whether it's from National Association of Realtors or other real estate organizations and associations that put those data together. They typically sell for less than what a home sells with a real estate agent. So, right there, if there is really no bias in the National Association of Realtors data, which Might be hard to believe, but 11% difference is a lot more than the 5 to 6% of the sales price your real estate agents gonna charge you. 03:46 The second reason why this is a bad idea can't be emphasized enough you limit your potential buyers. When you do a fizzbo, when you try to sell your home yourself, you're limiting your potential buyers, which is going to decrease your chances of getting maximum value on your home. Now you may think well, I can still. There's still ways for me to get my home listed on MLS, which is the major listing site that all homes for that are for sale that real estate agents put homes on are Listed. Or I'll put it on the internet, on Zillow, or I'll advertise on social media, but the fact is, most buyers are gonna have a realtor. The majority of buyers have realtors. So the buyers agent is gonna be looking for homes for their clients. 04:38 And guess what? They don't like dealing with fizzbo sellers because they want somebody that knows what they're doing. They want to deal with a professional. People that sell their homes themselves, that aren't experienced in real estate, don't have a clue what you're doing. Now you may think, well, I bought a home or a couple homes or sold some homes, but if you're not doing this day in and day out, you really don't have a clue. But the other big thing that they don't like is your unrealistic and unreasonable and difficult sellers. That's what they've coined fizzbo sellers, real estate agents. So chances are they might not even show their client your home because they want to deal with a professional. They don't want to deal with somebody who's unrealistic, unreasonable, emotionally tied to the home and they're just gonna avoid you. If they have other options in the market, they will show those homes first. So you're really limiting who's gonna see your home when you're doing this, which Reduces the chances that you're gonna get maximum value when you go to sell. 05:48 So even if you listed on MLS on Zillow, share it on social media, Put it in the local paper. Whatever you do, you're still not gonna get it in front of as many people as a seller's agent will get it, because the other thing you're paying your realtor for is not just to be put it on MLS, take pictures and Handle all the legal stuff that goes with selling your home. They have access to large networks and email lists that are maybe buyers sitting on the sidelines or so they have access to that data, and that data is what you're also paying them for is their large networks and their email list that you would don't have access to and you're not gonna get unless you use them. The third point You're still probably gonna have to pay a buyer's agent commission anywhere from two to three percent, or that buyer's agent isn't gonna deal with you. So and you may try to play hardball and tell the buyer that they're gonna pay that commission, but guess what? They're just gonna lower what they're gonna offer you. You're paying it regardless. The seller always pays the commission regardless. Either it's in a lower price or they actually are paying it. So you're really only saving two to three percent of your home's price, sales price when you try to do this fizzbo. So for two to three percent. Trying to do it yourself is a what you're saving in theory with this myth. 07:32 The fourth point is buying or selling a home is typically, for most people, the largest transaction that they're ever gonna deal with, and it is very infrequent. Do you really think you have the expertise in such a transaction to get maximum value? Most people don't. Now, maybe if you're a real tour, that's completely different or somebody with a lot of real estate experience, that's different, but you will make costly mistakes trying to do it yourself. You're not gonna know what you don't know. You don't know what you don't know, and that will cost you money. You probably aren't gonna be good at price negotiation or weeding out unqualified buyers, and there's a lot of legal paperwork that is involved in a home sale and it needs to be completed correctly by an expert, which most likely isn't you, and you're gonna expose yourself to unnecessary legal risk by doing a FISBO. 08:43 The fifth point and last point why this is can be a bad idea for most people is FISBO is a lot of work. Do you really have the time to dedicate full time to selling your home without a realtor? If you have a job, most likely you don't, so that's another reason you're doing realtor. Your time is better spent elsewhere, where you can add value, where you are an expert. Don't try doing something that is most likely your largest transaction that you've dealt with by yourself. Get an expert. 09:24 So let's back up, review this and then kind of get to maybe some tips on when you're looking at a real estate agent for you. So typically, a real estate commission on a sales price a residential home is gonna be five to 6% of your home's sales price, which can be a lot of money. So a FISBO can, on its surface, seem attractive, but chances are if you're gonna leave one of your largest transactions of your lifetime up to your inexperienced self, you will walk away with even less money than if you paid for the expertise of a real estate agent, unless you're an agent yourself, you should always seek expert counsel on large transactions or legal agreements that you enter into. If the commission amount concerns, you, try negotiating with your seller's agent when you're looking to find your realtor. I mean just to put this in context on how strong I believe in this is. I've personally have done well over nine figures in real estate deals and underwritten billions of dollars in commercial real estate and every time I've either sold my home or bought a home, I've used a residential realtor because I've done some residential real estate, underwritten residential real estate but I'm not doing it every day and you need expert counsel. I don't even do it myself, so I'm never going to advise you to do something that I don't do, and this is a prime example. I've done, like I said, well over nine figures in commercial real estate, underwritten billions of dollars in commercial real estate, and I still use a realtor. 11:19 So let's look at the action steps here. So if you're looking to sell your home, you do need to find a good real estate agent that's going to help you with the process. You need to vet them, check their references and feel free to negotiate their commission. So, especially right now, the market's so hot and for realtor signs up a seller I mean they know that home's most likely going to sell in pretty quickly, so it's going to be less work. They're going to be willing to negotiate their commission, especially because they're having a hard time with their buyers that they're trying to find homes for. So they'll probably have some flexibility in that commission. So feel free to negotiate it. You might be able to knock off half a percent or shoot maybe even a percent if you get them to be your agent on the buy side as well. So feel free to negotiate that and you can even have the option. 12:16 There are some. I personally have never used them. I've known people that have used them and had good experience with them. But there are some fixed fee sellers, agents, out there, so where they'll just charge you a flat fee, not a percentage of your sales price. Where you can, maybe it's $2,500 or $3,500 is what they'll charge you to sell your house, regardless sales price. Now you can wonder are they going to try to get maximum value because they're getting paid the same no matter what? So there is some nice pluses with the commission tied to the sales price and that agent wanting to get a higher sales price. 12:57 But when you find that real estate agent that you want to go with, follow their expert advice because they're going to tell you how to get maximum value for your home. They're not emotionally tied to your house. They're going to tell you how to show it stuff you need to improve or clean up and they're going to give you an honest estimate of the value of your home. Because guess what Zillow is not accurate. Okay, a prime example right here in my little area, between my house and my neighbor's house, they have my neighbor's house valued at 30% more than what my house is, even though our house is much larger, and it's just based off of the fact that it's a new build. So there's examples of that all over the place. With Zillow, it's not going to give you what your home's really worth in most instances. Now you can get good access to sales data there to give you a better idea. But your realtor is going to be able to give you a better estimate of value than what Zillow is. So follow their advice and do what they say. They know what they're doing. 14:13 So that wraps up our July series on home ownership. So we covered wins at good to rent versus buy, the fact that your home is not an investment. You need to view it as a liability and not an asset or investment. And then we talked about what you should look for and how much you should be budgeting for a home to when you sell a home. And then in our Friday tip email that's coming out this Friday, we're going to talk about how you can get best pricing on insurance. So we really covered kind of the whole gamut of home ownership in month of July. 14:54 Next month we're going to be going into money and marriage, so in families. So it's back to school. It's August, back to school. We're talking money and marriage next month. So stay tuned for that, between our Friday financial tip emails that go out and our monthly blog posts and our Monday money myth podcast. So we'll be covering a wide range of different topics on money and marriage, which is personally something I've screwed up and figured out the hard way. So I got some good tips on things that worked for myself and my wife with our marriage and money. So stay tuned for that. 15:42 Thanks for listening. Want to achieve financial independence? Go to ruggedfinancialcom where you can download my free PDF of the 12 things to do to win with money, and you can also sign up for my weekly money tips emails where I cover the same tips and tricks and advice I walk all my clients through so you can begin your journey to financial independence. Thank you for watching and listening to this episode of the money myths podcast. Please do me a favor and, if you found this episode interesting, subscribe to the podcast so you can make sure you get all the future episodes. Also, leave a rating and review so you can help us grow this podcast, so we can leave more people to financial independence. And, lastly, please take a screenshot of the episode, share it on your social media channels and tag us using at ruggedfinancial. We will see you later.