Some home sellers rely on the help of an agent so they don't have to deal with the hassle of a real estate transaction. However, you don't need a realtor if you're looking to sell your property and buy a new one. According to the National Association of Realtors, FSBO’s (for sale by owners) accounted for approximately 8% of home sales in 2014. While it’s not a huge percentage, it definitely proves that you don’t need representation to get a home sold. If you’re going back and forth with whether to sell a home yourself, here are a few advantages and disadvantages of a FSBO.
Advantages of a For Sale By Owner (FSBO)
1. You avoid real estate commission.
There is nothing cheap about realtor commissions. On average, you’ll pay about 6% to sell your home—split evenly between your agent and the buyer’s agent. You’ll need to factor in the realtor’s commission when determining the asking price for your property. Your sale price should be enough to pay off the remaining mortgage balance on the property, plus pay the commission. If you're selling a house for $200,000, you'll pay about $12,000 in real estate commissions. So using a realtor will require having enough equity in your home. Since realtor commissions can cut into your profit, a FSBO might be the only option if you don’t have a lot of equity in your house.
2. There are resources to help you sell the property.
Before the existence of websites such as owners.com and forsalebyowner.com, a seller representing himself had to rely on yard signs to get the word out about a property. Today, several resources are available to help you sell a home. You can find and print state-specific real estate purchase agreements from websites such as U.S. Legal Forms, Inc., and a local title company or real estate attorney can help with the legalities and answer questions, and the aforementioned websites are excellent resources for advertising your property. You can include photos of your house, as well as detailed information about the property, including the number of bedrooms, upgrades, square footage and other features.
Disadvantages of a For Sale By Owner (FSBO)
1. You can’t list your property on the MLS.
Only licensed real estate agents can list properties on the multiple listing service (MLS), which is a service that provides information on properties for sale. A buyer’s agent searches the MLS when looking for potential properties to show his clients. If your home doesn’t appear on the listing service, you could miss out on showings. But with your property listed, your realtor may frequently receive calls from other agents inquiring about your property. This single tool can drum up interest for your property, resulting in more tours and a faster sale.
2. You don’t receive professional pricing and advice.
Some for sale by owners make the mistake of choosing a sale price based on what they feel their property is worth. But in real estate, you have to play by the rules. It doesn’t matter what you think, comparable sales for the area determine the market value of your house. The upside of working with a professional is that agents have experience pricing homes. Your agent will look at recent sales of similar properties, and then recommend a sale price that’s reasonable and fair.
3. You don’t have an agent to help with the paperwork.
Selling a home is a complex process. There's a lot of back-and-forth negotiation, a ton of paperwork, and sometimes, the legalities of selling a property can be overwhelming. A realtor, however, is available to handle the transaction from start to finish, as well as look out for your best interest. Your agent can review sales offers with you, help write your counter-offer and so forth. Without your own representation, you’ll have to review sales contracts yourself (and pray you’re able to understand the lingo) or hire a real estate attorney.
4. You’re responsible for coordinating home tours.
When selling a property yourself, you're not only responsible for the marketing and negotiations, you also have to show the property to potential buyers. And unfortunately, you may not always be available when buyers are. This limits your property’s exposure and drags out the sale process. An agent can filter calls and inquiries from other real estate agents and coordinate open houses and showings for your property. Therefore, you don’t have to be glued to your phone and constantly rearrange your schedule in order to meet up with potential buyers and conduct tours of your property. Your agent will place a lockbox on your front door, allowing other agents to schedule appointments and bring their clients to your home while you’re working or out running errands.