It's that time of year again when we will be seeing lots of for sale signs popping up all over the place. Many will be from traditional real estate companies, some will be from discount real estate companies, and still others will be For Sale By Owners. That sign - depending on the quality of it - may cost between $15 and $100 or more, but that's about the least expensive part of getting a home sold.
When considering the best, and most cost effective, method to sell your home, it may be a good idea to look at the most recent statistics from the annual survey conducted by the National Association of Realtors. Each year they compile data from thousands of responses, giving a comprehensive overview of what buyers and sellers are thinking. If you are in the decision making process on your upcoming real estate sale, it may be wise to understand the buyers' mentality as a whole.
So let's talk about the different options when it comes to selling your property, and let's focus on lakeshore real estate specifically, since that is probably why you are on our website in the first place. Lakeshore buyers typically come from a further distance (especially as you leave the metropolitan area), so casting a wide net for the ultimate exposure is very important in trying to attract the right one. I will revisit this at the end of the article.
You will notice that the above survey shows that only 12% of real estate transactions in 2007 were For Sale By Owner...and since 40% of those sales were closely held between family members or friends, the real number was 7%. There is not a good statistic to show how many sellers started out trying to sell the property themselves and then listed it with a real estate broker, but it's probably a fairly large number. These people most likely incurred costs in trying to create exposure for their home or cabin early on, even though they later decided to list it with an agent and pay a commission.
The article goes on to state that this 12% number for For Sale By Owners is at the lowest level since they began tracking it. In 1997, there were a record number of these sales (18%), probably due to a fairly strong real estate market and a more conventional form of advertising at the time. Besides, with many serious buyers now being represented by real estate agents, FSBOs many times end up paying a few percent of the sales price in the form of commission to those brokers to accomplish the sale.
So, in trying to sell your own lake home, you would want to consider how best to get the word out on your property. If you have a waterfront property in Brainerd or Grand Rapids, for example, there is probably over a 90% chance that your buyer will come from somewhere else. They could be from Minneapolis, or they could be from Chicago or Texas, but they are probably not looking in the local newspaper - and most likely not even the Minneapolis paper - to search for possibilities. Running ads in those places can be quite expensive, and sometimes fruitless. And if you try placing ads in the Chicago Tribune or the Denver Post hoping to get seen, be prepared to pay over $500 for a small one day ad. From what I have found, it's not a very effective marketing method!
The one thing I have noticed over the years is that For Sale By Owners tend to get more calls off of their ads than real estate agents typically do. However, that doesn't mean they get more qualified buyers. Like anything else, there are always plenty of vultures out there just looking for someone who isn't aware of the value in their property, and those people will call to find out how you react on the phone and to see if they might be able to pick up a bargain. The sad thing is...sometimes they do!
Your next option is a Discount Real Estate Company, or a minimum service company. A discount company will generally help you through the selling process, but charge you less if you sell the place yourself. You may or may not get much advertising with their services, and you may be able to choose different levels of service based on fees or commissions charged. Minimum Service Real Estate Companies are generally set up to place your property on the local Multiple Listing Service so that other real estate agents can show it and be paid a commission on a successful sale. However, it is up to you to do any advertising beyond that, and to handle the entire transaction yourself - or hire an attorney to take care of it for you. You are pretty much acting as the listing broker, so you now have their job. In 2007, about 18% of sellers used these two types of brokerages to sell their properties. However, in many waterfront markets around Minnesota and Wisconsin, these types of companies may not exist.
When you look at the possibility of using one of these lower priced companies, make sure you understand all the potential costs involved. Some so-called Discount Companies can cost as much, if not more, than Full Service Brokerages, depending on how the transaction takes place. In addition, you may incur some of your own advertising dollars in the process. A Minimum Service Company will cost you whatever you decide to offer out for compensation on the MLS, as an incentive to agents who bring you a qualified buyer...it could be 2%, 3%, 4%, 10%...or any number you choose. Plus, you will pay for any advertising you decide to do.
I know this article is getting quite long, but there is a lot to think about for a prospective lakeshore seller. The last thing I'll touch on is Full Service Real Estate Companies, which are the large majority of brokerages out there today.
The 2006 NAR Survey showed that 83% of sellers who used real estate companies chose the traditional full service model, as opposed to 81% in 2007, so that number has remained fairly strong even with all the other options these days. It's probably also due to the fact that most sellers understand the potential complexities and costs involved in marketing and selling a property. When you hire a Full Service Brokerage, it is their job to handle all the market analyses, advertising, signs, lockboxes, showing appointments, feedback calls, photos, websites, virtual tours, phone calls, paperwork...and most of the problems that arise! Pretty good peace of mind for most sellers.
Last - but not least - is the fact that with 84% of buyers using the Internet to search through available properties (that number is probably quite a bit higher for lake properties because of the distances and higher income levels involved), Full Service Brokerages are able to put their earnings back into expensive websites and a wide variety of Internet marketing techniques to get greater exposure for their listings. Anyone can run an ad in the local newspaper, but not everyone can achieve top search engine results that are needed in today's competitive real estate marketplace.
So when you start thinking about how to walk away with the most money in your pocket after the closing on your lake home or cabin, make sure you look at all the different aspects and costs involved in finding the right buyer. And take a look at a few Google searches that a buyer might use to find properties that fit their needs. Whether it's Minnesota Waterfront Real Estate, Northern Minnesota Lake Property, Minneapolis Lake Property, Duluth Waterfront Real Estate, Brainerd Lakefront, Western Wisconsin Lake Property, Alexandria Lake Property...and hundreds of other water-related searches around Minnesota and Wisconsin, you will probably find Lakehomes.com and our other waterfront websites among the top results. We've already spent the money to get there...so that you won't have to!
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