Selling a home may be one of the biggest financial transactions of your life, and one thing that can come as a shock is how much the real estate agent’s commission takes out of your sales proceeds. Selling your home without a realtor is an option that can save you thousands of dollars, but it could also turn out to be a lesson in why real estate agents earn such high commissions.
In the real estate world, FSBO means For Sale By Owner, the process by which a homeowner sells directly to a buyer. No agent is involved, which spares both parties from steep commission fees.
Sounds like a win-win, right? Not necessarily. Despite the initial cost savings (from eliminating commission fees), this DIY approach can end up being more costly overall, particularly for inexperienced sellers. As a result, it’s a consistently unpopular option.
So, before you proceed with the FSBO route, consider these pros and cons of selling for sale by owner.
Pro: Lower Commission Fees
One of the most common (and appealing) reasons for selling FSBO is the potential for cost savings. When selling a home with an agent, you can typically expect to pay 5-6% in commissions–3% to your listing agent and 3% to the buyer’s agent. But, when you sell for sale by owner, you’ll only be responsible for the buyer’s agent commission. This can significantly reduce what you owe in commissions come closing.
Pro: More Control Over the Sale
When you’re selling for sale by owner, the buck stops at you (which at times can be both a blessing and a curse). It means you’ll have final say on your home’s listing price, what improvements you make, who you show it to, and ultimately, who you sell it to. If you like the idea of maintaining control, selling FSBO may be the right choice for you. But, it also means you’re responsible for handling every part of the transaction, whether you’re prepared (or qualified) to or not. At Wasatchousepartners, our agents approach their relationship with their clients as a partnership. They actively seek your input as they guide you along the road to closing. Not only does that mean you get to have a say in your transaction, but you can rest easy at night knowing you have a trusted partner on your side to help you out.
Pro: Insider Knowledge
You know your home better than anyone else. You know first-hand what it’s like to be a resident in your neighborhood and a part of the community you live in. And you can share this insider knowledge with prospective buyers who are eager to know what it would be like to live in your home. We know that nobody knows their home better than the homeowner themselves, which is why when you partner with a Wasatchousepartners agent, we encourage you to share all that you love about your home. We want you to help us convey to buyers just how great it really is. All those details will be incorporated into the marketing copy and efforts to help get your home sold.
Pro: Full Dedication to Selling Your Home
When you’re the sole individual responsible for selling your home, you can stay 100% focused on getting it sold. Most real estate agents will be working with multiple clients and juggling their needs at the same time especially during the busy season. As a FSBO seller, you don’t need to worry about your home sale getting the time and attention it deserves.
Con: No Pricing Strategy
Pricing is never easy, but pricing your home without an agent is a totally different story–which is why it’s hardly a surprise that pricing consistently tops the list of FSBO challenges. Because public access to market data is limited, homeowners have no clear way of knowing which homes are (or aren’t) selling. And because closing prices are not required to be publicly disclosed, there’s no precise way to compare one home value to another. Although you could use an Automatic Valuation Model (AVM), every AVM relies on unique criteria and data which leads to a wide variety of estimates so you may not know which one to trust. For these reasons, it’s wise to hire a licensed, local real estate agent who can strategically price your home based on neighborhood expertise and real-time data.
Con: A Biased Opinion
Agent or not, it is absolutely essential to make sure your home is listing-ready. First impressions are everything, and you want potential buyers to see your home at its best. You might love your interior decor, but someone else might not. An unbiased agent can provide countless suggestions and quick improvements to make your home as marketable as possible.
At Wasatchousepartners.com, our agents are well-versed in the art of home staging and understand which investments pay off and which will likely go to waste. Our home estimate app offers a free sample of this expertise, as one of our agents will provide general recommendations based on the photos you submit.
Con: Inaccessibility to Marketing Channels
Your target audience contains buyers who are not only looking to buy a home in your neighborhood but are also willing and able to purchase one. It’s simple: One benefit of working with an agent is listing your home on the MLS, which helps you reach buyers who are also working with an agent. Of course, this is a great start, but you’re only reaching 34% of prospective buyers. Even still, it takes a lot more than a yard sign and an MLS listing to find the right buyers at the right time. Sellers need robust, targeted marketing strategies to maximize exposure and maintain competitive pricing (something we know a thing or two about).
Con: Lack of Real Estate Knowledge
Legal terms, acronyms and other types of jargon can be very overwhelming, especially for inexperienced sellers. Things can get shaky if you aren’t totally confident with every detail you sign off on, and we don’t recommend risking it. Agents offer expertise and guidance on things like pricing and marketing strategy, market knowledge, legal standards, and much more. They also have experience negotiating with not only buyer’s agents and buyers, but inspectors, appraisers, and sometimes lenders. If you go it alone, you can only rely on what you know and the resources you have access to. While there are plenty of free resources out there, no two transactions are ever the same and knowing the right course of action to take can prove to be difficult (and stressful).
How to sell your house without a realtor
Selling a home without help from a real estate professional involves more than just sticking a “for sale” sign on your lawn. Before you even get to that point, assess the dynamics of your local real estate market. This should give you a feel for what comparable properties have sold for recently, and how long it took them to sell. This background should be the basis of the pricing strategy for your house. If you’re fortunate to be in a hot market, you may have prospective buyers trying to buy your home before it’s on the market.
Next, decide how to market your house. Try to look at it objectively so you can spot the drawbacks that may turn off prospective buyers. It may be well worth investing the time and money to freshen up some paint, make minor repairs or upgrade some outdated equipment before you put the house on the market. When your house is ready to go on the market, take a large number of high-quality pictures showing the entire property, inside and out. If you are not a good photographer, it may be worthwhile to hire one to take attractive photos. Poorly-lit or out-of-focus photographs can make your property look dingy or out-of-date to people viewing photos online.
Finally, try a website such as Wasatchousepartners.com that specializes in walking homeowners through the process of selling their homes without a real estate agent. This includes putting together a polished presentation of information and photos and getting your home on the Multiple Listing Service which is used by real estate professionals to identify properties for sale.
Benefits Of Selling Your Own Home
So, why go through all this? Well, some of this effort entails things you would have to do anyway if you were working with a real estate agent. However, by taking the lead yourself you could save paying a hefty real estate commission. The standard commission for selling a home is 6 percent, which comes out of the sale proceeds and is split between the buyer’s and seller’s agents. Best case, if a buyer finds you directly, you could save the full 6 percent. Otherwise, you may have to pay the buyer’s agent but save 3 percent by not having a seller’s agent.
According to the National Association of Realtors (NAR) Profile of Home Buyers and Sellers, the median sales price of a property sold by the owner without an agent was $200,000. This means that savings from commissions could total $12,000 if you and the buyer find each other directly or $6,000 if the buyer uses an agent.
Drawbacks to selling your own home
According to the NAR, just 7 percent of home sellers have chosen to work without an agent in the past two years. This is the lowest level since NAR started tracking this statistic in 1981. Given the potential savings at stake, why do relatively few home sellers choose to go it alone? First of all, it is a process involving legal contracts and that can have complications. “If you don’t understand the contract you’re signing you could end up with tax issues and extra seller charges.” Besides potential complications, a trade-off you are making is that while you are potentially saving money you are doing so at the cost of your time. From researching what to list the house for to coordinating appointments to reviewing offers, selling a home is time-intensive. If you don’t already have expertise in the field, you have to ask yourself whether it is worth coming up to speed on a process you aren’t likely to have to go through very often.
Finally, there is the financial side to consider. Saving on an agent’s commission isn’t worthwhile if you don’t get full value for your home. The NAR reports that the median price of $200,000 for homes sold by their owners was significantly less than the median of $264,900 for homes sold with the assistance of an agent. That doesn’t necessarily mean that agents got $64,900 more for comparable properties than their owners could have on their own, but it does suggest that higher-value properties may be trickier to sell and therefore their owners are more likely to work with an agent.
Selling Your Own Home Checklist
The following checklist can help you decide whether to try a “for sale by owner” approach or go the traditional route with a realtor.
1. Do you feel comfortable enough with your business skills to handle this type of transaction on your own, including determining whether or not a buyer is well-qualified? It may be especially helpful if you have financial or marketing experience.
2. Are you prepared to spend the time studying your local real estate market so you can come up with a sales strategy and price your home right? This can entail reviewing the details of recent transactions and possibly visiting other properties that are for sale to see how yours compares.
3. Do you know people who may be interested in buying your house? If you and a buyer can find each other directly, it greatly simplifies the process and makes the prospect of working without an agent much more appealing.
4. Are you prepared to coordinate inquiries and viewing requests from buyers and buyer’s agents? One of the functions of a seller’s agent is to screen inquiries and coordinate scheduling; without this help, expect to spend a lot of time fielding phone calls.
5. Do you feel confident taking the lead in negotiations? Unless you are used to high-stakes financial negotiations, having an agent to act as a buffer between you and a prospective buyer may be very valuable in helping you formulate your response to an offer.
Since selling a home may be one of the biggest financial transactions of your life, the potential savings on an agent’s commission are significant, but it also means there is potential for a costly mistake if you work without professional assistance.
But Mostly, Selling FSBO is a Major Time Commitment
Selling a home is a HUGE time commitment. From repairs and improvements to inspections and approvals, the to-do lists can feel endless, and selling your home completely on your own can feel like a full-time job.
Don’t have time? You’re not alone. That’s where we come in! Our agents not only help you save time but also help you tackle each of the challenges listed above.
Sell on your terms with a trusted partner by your side. Why wait? Call us today to get a fast offer on your house in 7 days or less!