Selling a Home Without a Real Estate Agent Might Not Save Money
Selling For Sale By Owner (FSBO) has become increasingly popular in recent years, most likely because of the numerous online tools that can make selling easier. Of course it also helps that is has been a sellers market. With a online value quote, Facebook posts and a few other resources, who needs an agent?
Well, the truth of selling for sale by owner is not as rosy as it may first appear. Selling without a real estate agent may save you from paying a commission, but it won’t necessarily save you money. There are certainly pros and cons to selling for sale by owner. If you are considering such a move make sure you are educated on what lies ahead.
Selling Without an Agent – Not as Good a Deal as You Think
There are a number of reasons why selling without an agent can backfire, including:
1. You won’t make as much money on the sale.
The National Association of Realtors gathered data on the homes sold in 2016, both those sold by Realtors and those sold by owners. The average home sold be a real estate agent sold for $245,000 – while the average home sold by an owner sold for $185,000. That’s a big difference, one worth thinking about before you decide on FSBO.
So even though you are not going to be paying a commission you might actually net less than if you were using an agent. Why does this happen? When you list with a real estate agent there are thousands of eye ball on your property. It is very hard to generate the same kind of interest when you are selling as a for sale by owner.
2. Inaccurate pricing.
One of the big reasons why Realtors sell for so much more is because they know how to price a home correctly in the first place. Zillow estimates are a poor substitute for the resources, experience and insight of a Realtor currently working in your market. A good Realtor will know the importance of pricing in a way that draws a lot of offers.
Owners, on the other hand, tend to overprice their homes due to attachment or a lack of ability to effectively use comparable sales – the prices of other similar homes sold recently in your area. Price the home too high and people will stay away. Eventually you will have to lower the price substantially, because everyone will assume something is wrong with the home.
Also keep in mind that buyers are aware you aren’t paying a commission. They will expect a lower price by default. In other words they want to share in your commission savings.
3. Not enough time to do it right.
A Realtor tends to work long hours, weekends, holidays, etc. That’s because the real estate agent has to put in the time to sell homes, time that is necessary to do it right. They have to be available whenever people want to see the home. They have to hit the streets to drum up interest. They have to change strategies when the current one is not working.
Selling a home professionally is hard work. Most owners have other jobs and other commitments. These are some things to be aware of when selling a home by owner. If you don't have the time to invest into selling your home, you're more than likely going to be disappointed in the results.
4. Buyer’s agents may avoid a FSBO.
Buyers who are represented by an agent may not ever see your home, just because their agent will avoid it. These agents don’t avoid FSBO out of spite, they do it because FSBO homes are often more trouble than they are worth. They tend to be poorly staged, priced too high and difficult to view because of the busy schedule of the owner. They may also have issues with paperwork because the owner is not familiar with the do’s and don’ts of real estate transactions.
5. Professional marketing is required to get professional results.
There are three skills every real estate agent needs to perform well – the ability to price a home correctly, negotiation skills and the ability to market a home effectively. Marketing is not something you learn to do well overnight. It requires building a network, keeping your finger on the pulse of the market and regular, consistent effort. A skilled agent will work with numerous marketing channels simultaneously, including:
- Social media – Facebook, Pinterest and other sites must be used in specific ways to market a home.
- Professional photos – The Realtor will either hire a professional home photographer or take his or her own pictures to include in the listing. These pictures must look great to do their job.
- Finding buyers – An agent will get the word out to all the other Realtors in his or her network about the home.
- Advertisements – Ads can include brochures, flyers, newspaper ads, online ads and more.
- Video tours – Buyers expect interactive video tours of homes.
- Staging – The home must be staged to appeal to as many buyers as possible.
If you are going to take on all of this responsibility it is important to understand what it takes to sell a home by owner. You can use these home selling tips to increase the odds you'll have success.
6. Limiting liability.
A Realtor puts an extra layer of protection between you and the public. You want to avoid putting yourself in a position that increases your liability, which can be hard to do when you do not know the rules by heart. A good agent does, and automatically avoids statements or actions that increase risk to the seller.
Most Realtors have a strong grasp of real estate terms to know when buying or selling a home. Many of these "terms" are things you could encounter during the home sale process.
7. There are costs involved in selling.
Preparing and marketing your home is not free – at least not if you are doing it right. Experienced real estate agents already have established networks and business relationships that allow them to minimize the cost of selling. Because they do it for client after client, they can do it for cheaper. But you are doing it all on your own, which means it is going to cost you.
One of the biggest benefits a real estate agent brings to the table is the vast network of other real estate agents through the multiple listing service. Never discount how powerful this marketing channel can be!
If you remember the paperwork you signed when you bought your home, you have a good idea of just how much documentation is involved. Real estate agents have systems in place to handle all of that paperwork – to make sure it is filled out correctly, at the correct time, and filed in a way that ensures closing happens when it should.
They are there to ensure that the buyer is pre-approved for a mortgage so you don't need to worry. A good agent can decipher a mortgage letter and let you know if it is worth the paper it's written on. Over the years I have spoken to for sale by owner who didn't realize there was a difference between a pre-qualification and pre-approval letter. There, in fact, can be a big difference!
Real estate agents also tend to work with a team of people to close on a home, so there are a number of individuals, professionals, who are doing their part to accomplish a big task. But with FSBO, you do not have all that support. You must take care of all of it yourself, which can be a significant undertaking.
If you are dead set on trying to sell by owner just make sure you do your homework. Make sure your home is listed at the right price and you're available to show the home when buyers want to view it. It is highly advisable to have an attorney in your corner who can guide you on the legal jargon you will encounter.
Sometimes selling your home is just as exciting as buying it as this marks a new chapter in your life. To get that new chapter off to the best possible start, you want to be making as much for your old home as possible. Here we’ve rounded up some of our best tips for selling your home.
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