Deciding whether or not to sell your home using a real estate agent can be the right choice for one person and not the right choice for another. Furthermore, there is no correct and wrong sales technique and no definite superior sales technique. Using an agent or selling yourself has both advantages and disadvantages. Consider the pros and cons, or each, before deciding on what will work best for you.
Advantages of Selling Without An Agents
1. No Commissions
This is the biggest advantage, in dollar terms, of selling your house without an agent. Listing agents rarely take commissions of less than 2 per cent; this is $2,000 for every $100,000 in sales value.
Sellers still have to pay the commission of the buyer’s agent for Sale By Owner if the buyer has a professional representation, as is usually the case. But 2 to 3 percent of the final selling price is less than 4 to 6 percent of the final selling price, which you would be paying if you both had agents.
2. Control The Process
FSBOs have total control over the sale, for better or for worse. This is also ostensibly true for sellers with professional representation, but anyone who has been working with a real estate agent knows that they will inevitably influence the process – however subtle or benign.
Even a well-meaning agent in no hurry to close can push you to take an offer that you might not be comfortable with or that you would like to negotiate further – because they truly believe it’s the best deal you’ll get. Less scrupulous agents can push clients to close more quickly and accept lower offers to log commissions or meet sales quotas before the end of a given month or quarter. They might even tip buyers to the fact that you’re motivated to sell, in clear contradiction with your financial interests.
3. Agent Compatibility
You don’t need to worry about clashing personalities, aesthetic preferences or negotiating styles when you act as your agent. You may still have to wrestle with your conflicting wishes or make compromises with your spouse or partner, but that is different; you know your spouse or partner much better than a random real estate agent.
Conflicts between agent sellers are manifesting in many ways. I often think back to my wife’s experience, and I had buyers as well. Our agent, who had been working from a far-flung suburban office, was critical of the urban working-class neighbourhood we wanted to buy-in. He steered us relentlessly to “nicer” – and more expensive – parts of the city, and making derogatory comments on poorly maintained houses, shabby cars and seemingly idle locals on the way to shows.
We ignored his “advice,” and bought a great neighbourhood starter house we wanted. Years later, our choice is still pleasing to us. But just as we were having problems with our real estate agent as buyers, when you sell your house you could have problems with an agent.
4. You Know Your Home Best
Professional sell house privately on realestate com au agents are, well, experts. They know how to put the best foot forward on a home, highlighting its top-selling points while minimising its shortcomings. But even the most savvy professional agent knows your home as well as you do. Although it is never wise to let emotion interfere with expediency or your best financial interests (see below), at open houses and shows your affection for your home is a great advantage. I’ve always found FSBO shows more interesting and informative than shows made by agents. I had a lengthy conversation with the FSBO seller about the central vacuum of the home in one particularly memorable open house, an implement I had never seen before.
5. You’re Not Alone
Forgoing full-service representation by a professional agent does not necessarily mean going completely alone. If you’re genuinely committed to selling DIY, use social media to find successful FSBO sellers in your area; they’ll have valuable advice for sure. With resources such as Craigslist and FSBO.com, you can put reasonable effort into listing and advertising your home on multiple sites. And if you decide that you need more assistance than you thought, flat-fee brokerage services still cost far less than full-service agent representation.
Disadvantages of Selling Without an Agent
Here’s why you might want to think twice about an FSBO sale.
1. You’re Not As Knowledgable As An Agent
FSBO sellers have less experience than seasoned real estate agents or brokers, whose credentials demand years of study and practise. Sure, you may be working in sales or knowing your way around a legal contract, but it is unlikely that you will have the full range of knowledge, skills and methods to match a real pro.
Despite the NBER study’s conclusion that both FSBOs and agent assisted sellers did, your lack of experience could hurt you at the negotiating table or lead to a rookie error that increases your legal or financial liability down the road.
2. You Likely Lack Local Market Expertise
No matter how long you’ve lived in the area, your local real estate market, as well as a professional agent who’s been doing business there for years, are unlikely to know. Full-time agents participate in dozens of sales per annum; dozens or hundreds more associated with larger brokerages. They can sniff out clues and trends that are not readily apparent from quantitative market analyses and turn those nuggets into actionable strategies that pay off for sellers say, by advising a customer to price his home lower than the market can bear and triggering a bidding war between buyers eager to capitalise on the opportunity to add value.
3. It Will Take More Of Your Time
Before committing to go it alone, figure out how much your time is worth and how much you stand to save without an agent, bearing in mind that your home may end up selling for less as an FSBO than a sale assisted by an agent. If that premium isn’t worth the many hours you’re going to spend preparing and showing your home, maybe FSBO isn’t for you.
4. You Negotiate Yourself
Not all for sale or rent by owner sellers are born negotiators, but naturally, those who are comfortable with the deal-making give-and take have a leg up on those who are averse to confrontation.
If you’re willing to pay someone to negotiate on your behalf, especially if you suspect they’ll do a better job than you, it may be worth your time working with a professional agent. Keep in mind as you weigh your options that the selling price is not the only marker of successful negotiation. If you’re motivated to sell but feel that your emotional attachment to your home or inability to recognise a quality offer hinders your ability to close the deal, a professional might help you and your buyer gets to “yes” more quickly.
5. Buyers’ Agents May Resist
Real estate agents are, understandably, protecting their guild. Some are actively steering their clients off the FSBOs. Others like to negotiate with amateurs but worry about the legal risks associated with dealing with inexperienced sellers. Moreover, most agents don’t check FSBO listing sites regularly unless their clients specifically request it – another reason you should increase the market visibility of your home by listing on the MLS.
The potential financial benefit of selling without an agent correlates directly with the price of sale. In more expensive housing markets such as large coastal cities like San Francisco and New York or highly desirable vacation communities with limited housing supply agent commissions are higher than in rural areas and smaller towns. But the costly housing markets tend to be more competitive for both buyers and sellers. That increases the utility of agents on both sides of the transaction and raises the chances for sellers to pay for the services of listing agents themselves.
It is up to you at the end of the day to determine if FSBO makes sense for your home, market and goals. That determination can flow from a simple calculation of dollars and cents, or something more complex and subjective, such as your willingness to take the time to market your property or to endure the tedium of direct interactions with prospective buyers.