Selling your home by yourself, also known as “for sale by owner” (FSBO) method seems a great way to save thousands of dollars when you sell your home. After all, the standard real-estate agent’s commission is 6%—that’s $15,000 on a $250,000 home. Given the size of this fee, you may think that you could save it and sell your own house,
Reason 1: Hiring an agent will save you money
As per data from According to the National Association of Realtors’ (NAR) in 2019, homes sold by their owners (FSBOs) “typically sell for less than the selling price of other homes”. But you must be wondering, how much less, after all, if I hire an agent, I will be paying 6% in commission, well, think again.
Looking at the data from the National Association of Realtors’ (NAR), FSBO sellers sold for a national average of $200,000, while agent sellers sold for an average of $280,000. So this shows that if you hire an agent, you can be putting 10’s of thousands of dollars in your pocket, and in fact if you hire an agent, you would be one of the 89% of sellers in 2019 chose to list their homes with an agent.
if you do the math, the 6% that you would pay in commissions to the seller and buyer, is much less than the additional money that you can get if you hired an agent.
So what is your real estate agent real commission
A common misconception is that that if you hire an agent, then the agent will take 6% in commission, while if you sell it yourself, you can save that 6%. Actually, the 6% commission is split between the seller agent, that is the agent you will hire, and the buyer agent, which is the agent that will bring you a buyer.
When an agent brings a buyer to your house, that buyer agent’s commission will need to be added to the deal, typically at 3% that you will have to pay
So, by not hiring an agent, the seller is only saving a 3% commission — which amounts to $6,000 on that average $200,000 FSBO home sale.
Other Costs to worry about
Sellers who try to sell their house directly without an agent also underestimate the amount of time and effort they will have to spend in order to sell their home.
Real estate agents do a lot of work to earn their money and end up covering substantial costs from them until they get their commission. When selling a house solo, you will need to prepare it and make it ready for showing, you will need to have professional photos taken, list it in multiple websites, ideally create an online advertisement campaign, arrange and market an open house, attend viewings, negotiate offers, select an offer, enter into negotiations, defend issues that could come up in an inspection, orchestrate all of that with your loan officer, watch and manage contingencies in the buyer offer, plan for closing and finally arrange for a final walk-through.
In essence, a real estate agent serves as an almost 24-7 sales representative for your home — a representative able to do things that an solo seller can’t or won’t know how to do.
Focusing on the right buyers
Agent are trained to quickly find out whether someone who wants to view your house is really a qualified buyer or just someone who is looking around houses. It is after all a lot of work and a major interruption to you daily life to be able to put your life in hold; prepare the housing for viewing, hide all the messes, gather the kids and the pets, and put them in a car to drive around for an hour. You will need to limit such hassle to showings that are most likely result in a sale.
Also, it is awkward for buyers to have the seller present, and it also can be very awkward to you as a seller as well. Research tells us that having the seller present during a viewing makes the buyers very uncomfortable, and most buyers will rush through the viewing instead of taking their time to picture themselves living the house. Also, as a direct seller, you will need to deal directly with rejections and comments from buyers and their agent, and it be quite upsetting hearing some of the comments that buyers may say about your beloved home.
There are three types of buyers…….
For Sale By Owner, 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. As per the law, each seller of real estate has a duty to disclose any fact that materially affects the value of the property. The seller can be held liable for fraud, negligence, or breach of contract if he or she does not disclose properly.
Having an agent who knows about disclosure laws, can help you avoid severe mistakes that could find you in a legal case.
The Bottom Line
You might be tempted to avoid a real estate agent, save the commission, and just sell your home yourself, aka offer a “for sale by owner” (FSBO).
While tempting, the risks of going it alone likely outweigh the benefits, in most cases.
Risks include having few potential buyers—let alone qualified buyers, making emotional decisions, not knowing how to negotiate properly, and not having enough time free to dedicate to finding a buyer.
One of the biggest risks of selling is not having the experience or expertise to navigate all the legal and regulatory requirements that come with selling a home.