When you sell your home on your own—also referred to as "“For sale by owner” (FSBO) can seem like an easy way to save thousands of dollars. After all, the average real estate agent's commission is 5% to 6%, or $17,500 to $21,000 on a $350,000 home.
With this in mind, you might think that working as your own seller's agent is unquestionably worthwhile. Here are some compelling reasons why you may want to rethink selling on your own.
Although it may be enticing, the dangers of going it alone outweigh the benefits in most situations.
You might be tempted to not hire a real estate agent, save the fee, and sell your home yourself (also known as "for sale by owner") (FSBO).
Risks include having a lack of potential buyers (or qualified buyers), making decisions based on emotion, not negotiating properly, and not having enough free time to devote to seeking a buyer.
One of the most significant risks of FSBO is a lack of knowledge or competence in navigating all of the legal and regulatory standards associated with selling a property.
With a "For Sale By Owner" listing, the buyer's agent is aware that there will be no expert professional on the other end of the transaction. The agent might discourage making an offer, even if the client is really interested in seeing your home, explaining the hassles and risks of attempting to close the deal without the representation of a professional—and without guaranteed commission.
Typically, realtors only show FSBO listings when the price is significantly low or there isn't much else on the market. In fact, many experienced brokers have usually been burned by FSBO transactions in which the seller did not pay the full commission previously agreed on—or any commission at all—to the agent who brought the buyer.
Even so, there are buyers' agents who will show your property if the conditions are met. This could include signing an agreement with the agent outlining the percentage fee you, as the seller, would pay the agent. An agreement should also state that the agent is only acting on the buyer's behalf. It can also state that the real estate agent, as the buyer's agent, has an obligation to reveal to the customer all details provided by the seller, such as the need to sell by a certain date.
If you want to be taken seriously by sellers' agents, get the best price, and avoid missing any crucial steps in the process, it's easier to use a real estate agent than sell your home yourself.
Selling a house is usually an emotional experience. Using an agent takes you one step back and makes you less likely to make inexperienced mistakes like overpricing your house, refusing to counter a low bid because you are insulted, or giving in too quickly when you have a deadline to sell.
A realtor can be a big help with following up with potential buyers. This eliminates a sense of eagerness on the seller's side. If you don't use an agent, you'll have to deal with rejection any time a buyer's agent informs you that the client isn't interested.
An agent will take the sting out of rejection and transform negative feedback into positive feedback. Additionally, when constructive criticism comes from the seller's agent, it is a lot less insulting. This makes the whole process less emotional and prone to mistakes.
Will you excuse yourself from a meeting every time a potential buyer's phone calls? Do you have the time to run home from work any time someone asks to see your house? Are you an expert in marketing homes?
Do you have any real estate experience? Your answers to these questions are most likely “no.” All of these questions are answered affirmatively by an agent. Furthermore, by using an agent, you can receive a lockbox for your front door, allowing agents to show your home even when you are not present.
You can list your home onRedfin, Zillow, Craigslist, and the multiple listing service (MLS) used by agents. But will it do the job? Even if you have a huge personal or professional network, they are unlikely to be interested in spreading the news that your house is for sale. You don't have partnerships with customers, other brokers, or a real estate firm to pull in the most potential buyers. A smaller pool of potential buyers means less demand for your land, which can result in you having to wait longer to sell your home and potentially not receiving as much money as it is worth.
An agent will determine whether a person who wants to see your home is a qualified buyer or just a nosy neighbor. Any time you have to put your life on hold to make your house look beautiful for a showing, it is a lot of work and can be a huge disruption to everyday life. You want to restrict the number of showings to those that are most likely to result in a sale.
Realtors are often trained to ask closing questions such as how long buyers have been looking, if they've seen any other homes that would fit their needs, whether they're paying cash or have been prequalified, what schools they want, and so on. They have the ability to drive a trained and driven individual to the point of purchase. FSBO sellers simply do not have this type of training or mentality.
It's also awkward for buyers to visit a home with the seller present rather than the seller's representative. Many buyers will hurry through a house while the seller is present and will not notice or remember much about what they see.
Even if you have sales experience, you do not have advanced experience negotiating a home sale. Since the buyer's agent knows this, they are more likely to succeed in the deal, which means less money in your pocket. Agents are aware of the games and warning signs of an anxious or difficult buyer.
You're not only inexperienced, but you're more likely to be emotional about the process, and without your own agent to point out when you're being irrational, you're more likely to make bad decisions. Instead of an irritated seller responding to a buyer in an emotionally charged, inappropriate manner, an agent would say something more polite, such as, “The seller has rejected your original request but has made the following counteroffer.”
Sellers who go it alone are therefore unlikely to be familiar with local customs or business conditions. Agents understand what drives demand in their particular area and this gives them a huge advantage in the deal.
Additionally, agents are familiar with local customs for selling a property, such as whether the buyer or seller is usually responsible for fees such as transfer taxes and closing costs.
Agents are experts in the factors that influence the sale of a house. They will accompany you on a walkthrough of your home and point out improvements you can make to attract buyers and get the best deals. They can spot weaknesses you aren't aware of because you see them every day—or just don't see them as flaws. They will also advise you on which suggestions from prospective buyers you should act on after you put your house on the market in order to increase its chances of selling.
You should always have a professional home stager or interior designer to stage your home to make it more attractive to buyers. And, of course, a thorough cleaning should be done to remove any distinct smells, such as pet odors, that the residents cannot detect because they deal with them every day.
Selling a home involves a significant amount of legal documentation, which must be done correctly by an expert. The seller's disclosures are one of the most critical things. The seller has an obligation to disclose any evidence that materially affects the value or desirability of the property. If a seller fails to report correctly, they can be held liable for fraud, negligence, or breach of contract.
Unless you're a real estate attorney, your agent is likely to be more knowledgeable about disclosure laws than you are. If you fail to disclose a threat, nuisance, or defect and the buyer returns to you after moving in and discovers a problem, the buyer will sue you. Agents may make mistakes as well, but they have professional errors and omissions insurance to cover themselves and provide recourse to the customer, so the buyer does not need to sue the seller for damages.
Learning how to sell your house without a realtor is a difficult process, and selling your home would most likely be one of the most important transactions of your life. You can try to do it yourself to save money, but there are numerous benefits to hiring an agent. Agents will help you get more publicity for your land, negotiate a better price, devote more time to your selling, and keep your emotions from derailing it. An agent brings experience to a dynamic transaction with several possible financial and legal pitfalls that few FSBO sellers have.