Do you need a real estate agent?

How much impact does working with an agent have concerning buying and selling a home? What are the risks of not using an agent? Is saving the commissions worth doing it yourself?

When my wife, Christina and I decided to sell our home several years ago, we entered into the discussion about it and why we needed a real estate agent. I am a guy who never reads instructions. When I get a new toy, I open it and start going. Why not do it myself rather than follow someone else? Moreover, if I had to pay for the instruction, like with the sale of our home, forget it! I wanted to save the money and handle it on my own. Besides, I am a good businessman and what could I possibly mess up? I tried to avoid the middleman and save the dough - I would list our New Albany home and come out a hero. I wanted to be a For Sale By Owner (FSBO)!

My wife, Christina played an excellent advocate for the devil and cautioned me the time I would spend avoiding an agent would far outweigh any savings in commissions. "You pay someone to cut your hair, repair your car and work on your teeth, why should this be different"? She questioned. Would I save money and still execute the transaction without a professional involved? Possibly, but let us look at the statistics first:

• 87% of buyers purchased their home through a real estate agent or broker—a share that has steadily increased from 69 percent in 2001. I thought this was interesting. With the increasing amount of new homes found via the web (it was 51% in 2016) I would have guessed people are using agents less to house hunt. Not true.

• 89% of sellers were assisted by a real estate agent when selling their home. Again, I figured posting my house online was easy and cheap, and since 51% of buyers found their home on the web, this seems like an easy solution. However, the vast majority of sellers partnered with an agent for the transaction.

So we know that nearly 90% of buyer and sellers worked with an agent. However, just how successful are FSBO's marketing their homes?

• 35% of FSBOs used yard signs to market their home as the primary method. We all see those signs so they must work…. right? In reality, only 7% of buyers found their home via a yard sign so while it is a cheap way to market a home it is not very useful.

• 28% of FSBOs did not actively market home. How do you sell your home without telling anyone or advertising? Marketing your home for the best chance of success is not easy, so it's no surprise many of the FSBO's never execute a solid sales strategy.

• 24% of FSBOs network with friends and neighbors to sell their homes. This is a reliable, inexpensive way to get the word out but it is only one part of a sales strategy.

• 5% use Print newspaper advertisement, but only 1% of buyers found their home from newspaper ads. FSBO's still beat this dead horse despite the low ROI.

Maybe Christina was on to something….. but I argued "So far all the stats I read are about marketing and I was born to be a salesman. The "normal" situations do not apply to me. I can find a buyer, and at a price we want."

"How about the legal and contractual side of the process?", asked Christina. "We have to pack everything, find a new place to live and move. How in the world are you going to handle the details?" She was right. Even though we had bought and sold homes in the past, I naturally discounted the amount of work that goes on behind-the-scenes. Not surprisingly, FSBOs face challenges beyond marketing the home including:

• Problems getting the right price. This is pretty important. Why avoid the commission if you can't get the right price? FSBO properties sold for 31% less than using an agent. A pricing strategy is paramount to a successful transaction. Enter the market too high, and you're likely to end up with a stale listing and the race to a lower selling price.

• Problems with the paperwork. Nobody likes paperwork, and if you are learning as you go, this aspect can be a nightmare.

• Too long on the market. If your pricing and sales strategy is not well positioned, you risk your house sitting on the market longer than it should have.

• Finding time to devote to the process. A home sale or purchase is an involved transaction, and with all the daily responsibilities in life, it's hard to stop everything and learn about real estate contracts, appraisals, funding, inspections and closing documents. On top of that, you still have to pack and move to a new home!

There were valid points to using an agent. Generally, houses sell for more $ and with less headache, but the commission % I would pay out of my end still had me in a fit. I was stuck but had to make a decision.

Stay tuned for the rest of the story…