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Real estate brokers exist for a reason, but sometimes owners decide they would like to sell their property without one
Real estate is one of the most reliable assets to invest in. It is tangible and, in the case of the land, non-renewable. Real estate’s value often appreciates, making it an asset that can sell itself. This often leads to some property owners asking: why is it necessary to hire a real estate broker when selling their homes and property in the Philippines? In this edition of Lamudi Q&A, we provide perspective regarding this frequently asked question.
Q: What is the Difference Between a Broker, Real Estate Agent, and Realtor?
A: These three real estate titles are sometimes used interchangeably. However, they are different in meaning, responsibilities, and job descriptions.
Real estate brokers are PRC duly registered and licensed professionals. They earn professional fees or commissions from the sale, purchase, exchange, mortgage, lease, or joint venture of real estate transactions. Brokers can also act as agents in a real estate deal. They can practice their profession without an agent and do not need to become realtors.
Meanwhile, real estate agents or salespersons are duly accredited to perform service for and on behalf of a licensed real estate broker. They are not required to take the PRC exam but are issued a PRC Accreditation ID to practice real estate service under the real estate broker’s PRC license. They are under the direct supervision and accountability of a broker.
Realtors are either brokers or accredited agents who are active members of the National Association of Realtors (NAR USA) or the Chamber of Real Estate & Builders’ Association, Inc. (CREBA). REALTOR is a trademark owned by its members.
Q: Can I Sell My Property Without Hiring a Broker?
A: If you are wondering if you can sell your property without hiring a broker, the answer is yes. However, the real question you should be asking is if it is efficient. Listing a property as “for sale by owner” (FSBO) is sometimes considered an effective way to save a significant amount of money from a sale, based on the rationale that more profit is earned by not paying commissions. This is a considerable saving because real estate brokers in the Philippines usually charge commissions ranging from 2.5 to 3 percent of a property’s selling price.
Like direct buyers-only (DBO) transactions, FSBO transactions are done to cut commission fees from a third party, the real estate agent. This is the standard argument of property owners who have had a negative experience with an agent.
There are no laws stopping property owners from selling their homes on their own, and each person is encouraged to practice their right to sell their properties without the aid of real estate professionals. However, you must keep in mind that doing so may not be as ideal as it seems.
According to Jake Loria, licensed real estate broker and founder of Calonge-Loria Investments: “When owners sell on their own, they don’t save money, as a matter of fact, they’re losing it, and even wasting time.” While some owners successfully complete sales of FSBOs, most actually tend to do so at a cost as a result of inexperience. Keep in mind that the procedure for selling property in the Philippines is rather long-winded, further complicating matters.
Agents are there to make a property sale go as smoothly as possible. Agents may guarantee that the seller’s properties are effectively marketed and connected to the right leads and ensure that the buying process runs smoothly. Agents can assist in making sure that homes are priced fairly.
Sellers who decide against using an agency risk wasting their time and money. An agent’s job is to evaluate each possible buyer and confirm the legitimacy of each offer to purchase. To complete this requires time and effort. It is more beneficial for a seller to hire a real estate agent’s services unless he has plenty of time.
Q: How Can I Avoid Making Unnecessary Expenses?
A: As shared by Loria, the intricacies of the selling process often escape FSBO sellers who do not sell properties for a living. “Most owner-sellers will exhaust their finances on ineffective marketing campaigns and unnecessarily expensive renovations. Those who sell their properties without hiring a broker also tend to purchase extravagant yet pointless furniture in an attempt to impress potential buyers. Precious electricity will also be wasted when showing their properties to many unqualified buyers.”
Q: How Can I Avoid Wasting Time and Energy When Selling Property?
A: Speaking of qualified buyers, another skill of a duly licensed real estate broker is knowing how to qualify prospects, differentiating real leads with adequate buying potential from those merely window shopping. Being a broker is a full-time job, and not hiring one means FSBO sellers with jobs of their own have to cut into their own schedules to make time to conduct property viewings themselves.
Selling a property in the Philippines is time-consuming, and it becomes a lost cause when the clients who toured the house are apparently not even real prospective buyers. “People have to understand: the main goal of brokers and agents is to make the lives of property sellers easy and convenient. Going FSBO is doing the opposite of it.”
Q: How Do I Avoid Incurring More Expenses or Potentially Delaying the Home’s Sale?
A: Another common mistake from an FSBO seller’s inexperience is underpricing or overpricing the home for sale. “Underpriced properties will leave sellers with no profit and more expenses,” shares Loria. “Overpricing, on the other hand, makes properties unattractive, leaving them lingering in the market for an extended period. As a home stagnates, associated taxes pile up and maintenance expenses of the property compound.”
Loria concludes that owners are well within their rights to sell their home as FSBO, and that “as long as they know what they’re doing, then by all means, they should do it, but the success of such ventures is highly questionable.”
“For all the headaches and heartbreaks sellers surely encounter by going FSBO, these could simply be avoided by working with a licensed real estate broker or agent. Duly licensed, they are trained to accomplish real estate processes efficiently, are familiar with the real estate laws, and have the experience to sell any type of property effectively.”
“A commission of 3 percent won’t seem like much if an agent can sell the property at 5 to 10 percent higher than the average listing price. To top it off, brokers shoulder marketing expenses, pre-qualify potential buyers, so no time is wasted, and complete all the paperwork once the sales have been made.”
Q: How do I sell a house without a realtor, broker, or agent?
A: To sell your property without the help of real estate professionals, follow these steps:
- Set the right price. Research the price of properties in your area to determine the right price for your home.
- Ready your home. Make your home attractive to potential buyers by staging it and making repairs if needed.
- Take quality real estate photos. Capture great property photos with a smartphone or a professional camera. Depending on your budget, you can also hire a professional photographer.
- Write a catchy but truthful description. To make your listing appealing to seekers, highlight its special features when listing it on real estate property platforms such as Lamudi. Refer to this best grammar and spelling checker to help you when you write your listing description.
- Market your home. Tell your friends that you are selling your property. You can also post it on social media to get the word out.
- Schedule house showing. When you have interested buyers, show them your house.
- Review offers and negotiate. Compare the offers coming from potential buyers. If possible, you can negotiate the price. Once you have found the right one, prepare a closing schedule and other contingencies.
- Prepare legal documents. You can refer to this list of documents when buying or selling a house.
- Close the sale.
Discover the perfect property for you by checking out different properties for sale on the Lamudi platform.
Learn more about the real estate industry in the Philippines by reading other articles on the Lamudi journal.
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