Should You Sell Your Home Yourself?
Selling your home yourself is an enormous undertaking. It’s a huge deal even when you have help. The reality is that a real estate transaction is so large and complex that not a whole lot of people are qualified to pull it off. It requires knowledge of the market, experience, and an understanding of the legalese that comes with every sale (and that’s just the bare minimum!).
In other words, it’s not a task for beginners. We have real estate agents for a reason: they have the necessary training and experience to quickly and efficiently navigate the sale process as well as juggle all the moving parts to listing a home, from marketing to staging to showing to scheduling to fielding offers to counseling on pricing and more.
Still, they provide a service, and that service comes at a cost. That service also has value. And that’s how you need to size up things in order to make your decision. If you’re thinking that you’ll save a few thousand dollars on commission by selling the home yourself, it might be technically true, but you might also lose far more on your closing price because of errors, improper pricing, or bad timing.
We’re not making this up, either. Statistically, homes sold by owners sell for considerably less than agent-assisted home sales. For example, in 2013 the average for-sale-by-owner, or FSBO, sold for $184,000 compared to $230,000 for agent-assisted sales. That’s a huge difference! Why is there such a noticeable disparity between FSBO’s and agent-assisted sales? Does this mean you’ll definitely lose the equivalent of the cost of tuition of most state colleges by selling your home yourself? Probably not, but it’s worth taking a few things into consideration here.
First of all, it’s important to remember that these are average figures; chances are, homes sold by their owners may have been lower in value and would have been priced accordingly (or might have been in rural areas), while higher-priced homes may have had sellers who could afford or generally required an agent due to time constraints. Those are averages; it’s not like we’re looking at two homes each worth $200,000 and the FSBO sold for $46,000 less than the other.
All the same, it’s also likely that the sellers of FSBO listings simply underpriced their home. That can and does happen (all the time, in fact). Coming up with an accurate list price is incredibly important and agents are really good at it, because it’s what they do for a living. All day, they’re looking at prices and closings and listings and comparable properties, so they have a good idea of what the market is like. Agents have been inside similar homes, and they have access to a multiple listing service, or MLS, to research past sales.
Access to the MLS is a good reason to use an agent even if no others come to mind. Not only will it confirm their price accuracy, but they can also list your home on it, which you yourself probably can’t do.
The process is one you’ll want an agent for if you’re not familiar with it. Even if you price your home accurately, you may not have a good understanding of when to reduce the price and by how much, or an appropriate price to accept during negotiations. Your agent’s instincts and experience will help here.
The more you can educate yourself initially, the better you’ll be prepared to handle the transaction. You might even discover through your research that you actually do need an agent. Selling a property is an extremely difficult endeavor, and one that requires time, energy, and a lot of patience. You’ll need to research the market, learn legal and financial details surrounding the transaction, advertise the property, create marketing materials for the home, schedule/show the house, negotiate contracts, and more. FSBOs tend to attract buyers that aren’t all that serious, and those appointments can soak up even more valuable time.
This means that whatever you save in terms of commission, you might still lose in terms of your own time. It’s up to you to decide how valuable your time is, but if you can go about this efficiently and competently, then you’re at a good starting point. You may want to learn to screen appointments as well.
You could also offer to contribute towards the purchaser’s closing costs and, if you’re feeling especially charitable, offer their buyer’s agent a commission since the seller is responsible for that. This would seem counterintuitive, given that you might be selling your home yourself for the purpose of saving on commission, but under normal circumstances you’d be paying the buyer’s agent’s commission anyway. The amount paid in a FSBO, by the way, is at the seller’s discretion. If you decline to do that and leave the buyer on the hook, that could hurt your prospects. This is why we suggest allocating your savings to making your listing more attractive either in terms of price or incentives. It may give you more leverage and minimize negotiation time or facilitate a quicker sale.
Some sellers are attracted to the idea of remaining in control throughout the entire transaction. You decide the price of your home, when it’s available for showings, when to put it on the market, when to take it off the market, and more. As we mentioned earlier, you can also be able to screen potential purchasers prior to showing your home. When it gets into the negotiating, you’ll be directly involved, and can set all terms/conditions.
This direct involvement comes with its own set of pitfalls, though. Not only are you heavily invested in the sale, but you have a considerable emotional investment in the home as well. An agent can mediate throughout the whole transaction. They can screen feedback, offer suggestions, play hardball during negotiations, conceal motivation, provide counsel and support, and educate you on reasonable terms and conditions. You might find that routine elements of the selling process can affect you emotionally in a big way, so you need to have a strong constitution and nerves of steel.
Don’t forget about advertising! Sure, your agent has access to the MLS, but at the same time the Digital Age has opened up a whole host of listing outlets that are just as accessible to the average buyer. And everyone begins their searches online these days. So make sure to put your home on platforms like Facebook Marketplace and Craigslist, because buyers love to browse! If you stage your home properly and take professional photos while offering a competitive deal, you may find that the phone starts ringing right away.
For more perspectives on real estate, check back with us each week as we post new blogs and be sure to sign up for our Priority Access List for advance listings and market updates. We’ll see you next week, and in the meantime, don’t forget that you can also keep up with us on Facebook and Twitter!