OK... it's time to clear up this massive misconception. Just because your friend's ex-girlfriend's sister's boyfriend's brother sold his modular home by himself, doesn't mean you are going to save money by selling real estate without an agent. This holds true for BOTH sides of the deal.
Let us start with the buyer, because that is the most basic concept...
You will not save any money (and will most likely spend MORE money) by buying a home without the representation of a Realtor.
Allow me to elaborate...
I will start by making the legal disclaimer that ALL commissions are negotiable and none are set in stone. So, a listing agent signs an agreement with a seller. In this agreement there are several key points. Two of which, are the following: 1. That the agent owes the seller "fiduciary duties" (meaning, he MUST look out for the sellers best interests, and work to achieve maximum profits for the seller). 2. That the agent will work for X% commission. Now, in marketing the home, the agent states that he will pay a portion of the X% to any Realtor who brings a buyer. The rest of the X% he walks away with. When a buyer comes along to purchase the home with out representation of a Realtor, the Listing agent switches to what is called a "Transaction Broker" (which was intended to be a "neutral party" in the mix) however despite his neutrality on paper, HIS AFFILIATION IS STILL WITH THE SELLER. Not to mention when the deal is done the X% commission is still paid, the only difference is, he doesn't pay a portion of it, and walks away with the whole amount. By doing this, not only did you not lower any commissions involved, but you limited the extent to which you could negotiate prices and terms. Should you have gone in with representation, the commission would have stayed the same, but you would have had a better chance at lowering the purchase price because you are using someone who is trained and practiced at negotiations, and who owes YOU fiduciary duties, and has to look out for YOUR best interests!
This brings me to the seller... For Sale By Owner, FSBO'S (pronounced Fiz-bows) as we in the industry like to call them.
Place a FSBO sign in your yard... or a target on your forehead... what's the difference? really?
Opting to sell your home yourself? I behoove you to reconsider! For several reasons:
1. You will be hounded by Realtors trying to convince you to list with them (they are just trying to put food on the table, don't get mad at them).
2. You will need to price your home correctly (don't tell me you went off of Zillow, or an appraiser... one bases its opinion off of tax assessments, and the other off of what a bank would lend on the property). Pricing too high and adjusting later doesn't work either, because it creates a stigmatization of the property because of the amount of time it will spend on the market.
3. You will still need to offer a commission to the buyer's agent.
4. Given the Buyer's agent's expenses, the price to market the property, the lack of experience in pricing, and the other agent's best attempts at working you over to get the price lower, and what you will lose by eventually having to lower the price... you are going to spend well over what you would have spent by hiring an agent.
Look, I'm not trying to be rude, don't feel bad if you thought you could save some money by doing it this way. Part of my job is to save you money.
You have a need, I am licensed and trained to meet that need... And frankly, I'm pretty dang good at it too
Don't be reckless, do your due diligence, and use a Realtor.
-Brendan Winans
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