If you are considering selling a house without a Real Estate agent, there is much to consider. While you could save money on commission, there are also many downsides.
Before selling your house without a Realtor, you must know the pros and cons. We will examine some of the things you should know before deciding.
Why Some Sellers Choose FSBO
The most significant attraction of For Sale by Owner (FSBO) is avoiding paying a real estate commission. Typically, a real estate agent's combined commission is around 5% of the sale price, though the seller might still have to pay the buyer’s agent.
Even if you aren’t using an agent, the buyer might be, so you could still pay 2.5%.
If you are familiar with selling a house, you might feel confident in your ability to do the things necessary to sell your home. But if you aren’t experienced in real estate sales, you might be surprised at the work required to sell a home.
The Pros and Cons of Selling a Home For Sale by Owner
As well as potentially saving on real estate commissions, you might not get as much for your home as you expect.
Choosing FSBO isn’t a choice you should take lightly, with many thousands of dollars on the line.
Don't Pay a Commission
The commission you pay to real estate agents can be considerable. If you sell your home for $300,000, a 5% commission will mean you pay $15,000 to real estate agents. If you do the work yourself, you can avoid this cost.
Since you live in the neighborhood, you should know more about it than a real estate agent will. This might mean an advantage over a Realtor who doesn’t understand your area as well as you do.
You will know the good and bad schools, something many buyers want to know. This information and more could benefit buyers out of the area and help you sell your home.
Knowing Your Home
When you know everything about your home, you can answer questions an agent might not be able to on the spot. This could help give answers to buyers that will help sell the home.
Freedom to do as You Please
When dealing with the sale yourself, you can schedule showings or open houses at your convenience. If you have more free time at weekends, you can limit showings to then.
Lack of Marketing
How will you find a buyer for your home? Without a real estate agent, it can be difficult. A Realtor will list your home in the Mulitple Listing Services and generate leads for your home. Without this, selling your home might take longer than you hope.
For sale by owner websites are not nearly as good as where most home buyers try to find a home to purchase.
Pricing Your Home Properly
Setting the right price isn’t easy. If the price is too high, you won’t attract buyers; if it is too low, you could lose thousands of dollars.
If you hire a Realtor, they will use their knowledge of the local market and use comparable home sales in a comparative market analysis, to help you find the right selling price.
Pricing accurately is one of the most significant mistakes many owners make without using the services of a Realtor.
A real estate agent will know the laws to be followed when selling a home. You could encounter issues during the transaction if you don't know the proper procedures. You could increase your chances of being sued by an angry customer.
Showings Can Be Daunting
Showing your home to potential buyers can be daunting, and holding an open house can create many problems. Finding a buyer will be challenging if you don’t know how to deal with these situations.
You don't have the luxury of telling the buyer to look at the property on your schedule. You could easily miss out on potential buyers if you don't accommodate their schedule.
You will also need to negotiate with buyers to close the deal successfully. Without experience in this process, you will likely be better off hiring someone who knows what they are doing.
Learning to Sell Your Home
When you choose FSBO, there is a lot to learn. You will have to understand marketing, the legal requirements, be able to negotiate, and more to save some money on commission.
Even if you think you’ve got the basics, there is a greater chance of getting something wrong. This could lose you a buyer, but it could be worse.
No Chance For a Bidding War
The most significant drawback of selling a home without a real estate agent in a seller's market is losing the chance at a bidding war.
Over the last few years, most homes have had bad bidding wars. Buyers are paying over the asking price and giving sellers other favorable terms.
When you don't have an agent, the chances of that happening are slim. You could lose tens of thousands of dollars and other attractive terms like not having a home inspection or a cash sale.
With bidding wars, many buyers will waive common contingencies to increase their odds of landing the house.
Should You Sell Your Home For Sale by Owner?
While there is the prospect of saving money on commission, selling your home can be difficult. The learning curve will be steep if you don’t know the steps involved.
Even if you know the process, things can go wrong, and it will mean a lot of work that could be stressful. And in the end, you might wish you had left the sale to the experts.
You are likely to net more money even considering paying a commission.