Through the Lens
When you sell your home yourself— also known as "for sale by owner” (FSBO)— it may seem like a great way to save thousands of dollars. After all, the standard real estate agent’s commission is 5% to 6%—that’s $12,500 to $15,000 on a $250,000 home. Given the size of this fee, you may think that acting as your own seller’s agent will surely be worth the savings. Here are eight reasons why you may want to reconsider.
1. Realtors May Not Show a FSBO Home
Without a professional representing the seller and without guaranteed commission, an agent might discourage making an offer, citing the hassles and risks of trying to close the deal. Experienced brokers have generally been burned by FSBO transactions where the seller did not pay the full agreed upon commission, or any commission at all. Some realtors consider FSBO sellers are seen as unrealistic, unreasonable, and difficult sellers, whom professional realtors have dismissed. However, there are buyers’ agents who will show your property under the right conditions. This might be an agreement signed with the agent, that states the percentage fee that you, as the seller, will pay the agent. This agreement should also clarify that the agent is only working on the behalf of the buyer.
2. Agents Avoid Emotional Sales
Selling your home can be a very emotional process. Having a realtor or agent helps you avoid making stupid mistakes, such as overpricing, refusing a counter offer, or giving in too easily. The agent can follow up on your behalf without sounding eager or desperate. They can also take the sting out of the rejection and put a positive spin on any negative feedback. Constructive criticism can be easier to handle for the seller, when it comes from the broker, who is on their side trying to get the best for them.
3. Real Estate Is a Full-Time Job
Can you rush home from work every time someone wants to see your home? Can you excuse yourself from a meeting every time your phone rings with a potential buyer? At the end of a long workday, do you have the energy to take advantage of every possible opportunity to market your home? Are you an expert in marketing homes? Do you have any experience doing so? Your answer to all these questions is probably “no.” An agent’s answer to all of these questions is “YES.” In addition, by going through an agent, you’ll get a lockbox for your front door that allows agents to show your home even when you aren’t available.
4. Agents Access Large Networks
Yes, you can list your home yourself on Zillow, Redfin, Craigslist, and even the multiple listing service (MLS) that agents use. But will that be enough? Even if you have a large personal or professional network, those people will likely have little interest in spreading the word that your house is for sale. You don’t have relationships with clients, other agents, or a real estate agency to bring the largest pool of potential buyers to your home. A smaller pool of potential buyers means less demand for your property, which can translate into waiting longer to sell your home and possibly not getting as much money as your house is worth.
5. Weeding Out Unqualified Buyers
An agent can find out whether someone who wants to view your house is really a qualified buyer or just a dreamer or curious neighbor. It’s a lot of work and a major interruption every time you have to put your life on hold, make your house look perfect, and show your home. You want to limit those hassles to the showings most likely to result in a sale.
Realtors are trained to ask qualifying questions to determine the seriousness, qualification, and motivation of a prospect.
Furthermore, it’s awkward for buyers to have the seller present, rather than the seller’s agent, when they’re touring the home. When showing a house, the owner should never be present. Nothing makes a potential buyer more uncomfortable than the current owner being in the house. When a seller is present, most buyers will rush through a house and won’t notice or remember much about what they saw. Most likely, they will dismiss this home as a potential choice.
6. Price Negotiations Take Skill
Not only are you inexperienced; you’re also 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 poor decisions.
Instead of an offended seller, making an emotionally charged, inappropriate response to a buyer, an agent will say something more professional, such as, “The seller has declined your initial request but has made the following counteroffer.”
FSBO are not familiar with the customs and current market conditions. Fortunately, agents know the pulse of the market and what’s driving demand, which gives them an advantage by knowing what terms are worth negotiating for and which are worth letting the other party win.
7. You Ignore Your Home’s Flaws
Agents are experts in what can help sell your home. They can walk through your home with you and point out changes you need to make to attract buyers and get the best offers. They can see flaws you’re oblivious to because you see them every day—or because you simply don’t view them as flaws. They can also help you determine which feedback from potential buyers you should act on after you put your home on the market to improve its chances of selling.
Anyone who’s determined to sell their own home should hire an interior designer or property stager to assess the current condition and market appeal of the home. All sellers should hire a professional cleaning service to give a home a deep cleaning before putting it on the market. A good cleaning will help remove any distinct odors, such as pets, that the inhabitants can’t smell, since they live with them every day.
8. Exposure to Legal Risks
A lot of legal paperwork is involved in a home sale, and it needs to be completed correctly by an expert. One of the most important items is the seller’s disclosures. “A seller of real estate has an affirmative duty to disclose any fact that materially affects the value or desirability of the property,” says attorney Matthew Ryan Reischer, founder and CEO of LegalAdvice.com. A seller can be held liable for fraud, negligence, or breach of contract if they do not disclose properly. “The issue of whether a fact is material or not is generally established in the case law of the state in which you live,” says Reischer.
Unless you’re a real estate attorney, your agent probably knows more about disclosure laws than you do. If you fail to disclose a hazard, nuisance, or defect—and the buyer comes back to you after having moved in and found a problem—the buyer could sue you. Agents can make mistakes, too, but they have professional errors and omissions insurance to protect themselves and give the buyer recourse, so the buyer may not need to pursue the seller for damages.
The Bottom Line
It’s a tall task to learn how to sell your house without a realtor—and selling your home will likely be one of the biggest transactions of your life. You can try to do it alone to save money, but hiring an agent has many advantages. Agents can get broader exposure for your property, help you negotiate a better deal, dedicate more time to your sale, and prevent your emotions from sabotaging it. An agent brings expertise, which few FSBO sellers have, to a complex transaction with many potential financial and legal pitfalls.