Are you thinking about selling your home by yourself? Before you do, let me give you a few pros and cons of going solo vs hiring an agent, so you can make a better decision.
Above all, weigh your options! Don’t just wing it, because you’re dealing with a lot of money.
Let’s first talk about a few reasons why some people want to go FSBO (for sale by owner, pronounced as ‘fizzbo’).
First, and probably most important, is a realtor commission, which is a chunk of change that can look like a huge bite out of the proceeds from the sale of your largest asset.
A typical realtor commission is 6%, so if you’re selling a $500,000 home, it’s $30 grand into someone else’s pocket. Well, of course, your listing agent isn’t keeping the entire 6% for themselves; about half of it goes to the buyer’s agent. Then there is the broker’s share. Also, marketing expenses, licensing costs, and soon.
Still, without a realtor, you could potentially save 3% of the sale price. Potentially. If you know what you’re doing. For some people, who know the industry, it may actually be well worth it.
Second, you may feel like real estate agents get paid for barely doing any work. It seems like the easiest job!
You may be thinking “What does an agent do to earn a commission? They show up once for the listing appointment, and then they call occasionally to shoo me out of my house so they can show it to people that I don’t even get to see or decide if I want them in my house!”
Well, in actuality, there is a lot of work going on behind the scenes that sellers are often totally unaware of. I explain this below.
Also, it’s not just the straight-up time that goes into the compensation but also the years of training and expertise. We don’t question doctors who charge $20,000 for a 30-minute surgery, do we?
Anyway, I’ll still explain below the kind of work realtors have to do to close on a home, so you can decide if you can pull it off by yourself.
The third reason may be that you’ve just had a bad experience with an agent in the recent past, and you no longer trust real estate agents in general, especially when they keep calling you, always at the worst time, asking you to list your home with them, when you haven’t even seen them and have no idea what they are like.
I mean, yeah, not all agents are great.
You should choose those who represent you carefully. If a surgeon is dealing with your life and health, a realtor is dealing with the next most important thing: your largest asset. Interview a few realtors, don’t just go for the first one, even if they were recommended by your best friend. And when you find one, have a good, friendly relationship with the person, or persons, who are handling a great deal of your money. You’re nice to your doctors, right?
By the way, if you don’t research your doctors or surgeons, you definitely should.
So why in the world would you want to hire an agent to sell your home?
Let me give you 6 reasons why recruiting the help of a professional may be in your interest.
1. You Can Actually Net More with an Agent, even after paying their commission.
According to NAR (National Association of Realtors) statistics, agent-assisted listings on average sell for 18% more than FSBOs. Even if you don’t believe this 18% (which honestly, seems kind of high), even half of this amount, 9%, is already well above the 6% commission. And, you let them do all the heavy lifting.
Also, keep in mind, as FSBO you’re going to attract bargain hunters with frustrating, lowball offers going after your commission saving.
2. Marketing Isn’t As Easy As You Think
Do you have a lot of free time? How about extra cash for marketing?
In today’s informed, computer-savvy homebuyer age, simply putting up a “For Sale” sign in front of your house won’t get you the traffic streaming to your home. As a FSBO seller you may have to spend a lot of money on advertising.
The trouble is that most of your target audience will still be out of reach if your home is not posted on the multiple listing service (MLS), and you’re going to need an agent for that OR you’d have to pay an outside agency a flat fee of a few hundred dollars to get your home listed.
The MLS provides massive exposure to potential buyers, which explains why more than 80% of buyers find their home through the MLS. Also, the listings that appear on the MLS are automatically syndicated over to such sites as Zillow, Trulia, Realtor.com and so on, so your home can get a wider exposure.
Besides the MLS, agents have access to a vast network of realtors, have the tools (MLS, CRM, developed social media and web presence, YouTube channels, etc.) to gain a wide, yet very targeted market exposure, and have a superior knowledge of the market trends and local neighborhood specifics. Speaking of YouTube, check out our channel.
3. Hidden Costs Can Add Up Quickly
You may not know this but many realtors bear much of the burden of expenses related to getting your home marketed and sold. A list of expenses can include
- professional photography, which can be costly
- membership access to the MLS (also not cheap)
- targeted social media campaigns
- web, YouTube, TikTok, Instagram and Pinterest video posts
- signage and print advertising (not much of a thing anymore, except with older agents)
- and of course, the opportunity cost of the time spent on the long and complex process of selling your home.
We, for example, routinely spend hundreds of dollars to market each of our listings. These expenses come out from the agent’s uncertain future commission, and sellers with representation are often blissfully unaware of these costs. In fact, agents do all the work and pay marketing costs without getting paid for weeks or months (sometimes never, if there is no closing).
4. Agents Are Better at Pricing (some agents, anyway)
It doesn’t matter how uniquely beautiful your house is (and how much you love it and how much work you’ve put into it). Sorry to break it to you but it won’t sell if you’ve priced it too high. Yeah, you may get really lucky if you come across a buyer to whom your house is a ‘love at first sight’ and who also has the money to back it up.
But chances are, you just can’t beat the market (ask anyone in finance). Not by much anyway. Yes, sure, it’s possible to get a bit of a premium, with a carefully planned approach and masterful marketing. We do it for our clients all the time. But you still have to be smart about pricing your home.
If you overprice your home beyond what the market can bear, you risk letting your house sit on the market too long, making it look stale and undesirable. People are going to start wondering what’s wrong with the house. Also, buyers won’t feel the urgency to put in an offer.
An accurate pricing strategy isn’t easy. You have to have a PhD in economics for that! 😄
Well, every house is different, and good pricing requires deep knowledge of factors that affect house values, as well as the current local housing market trends, neighborhood specifics, and the economy overall.
5. Save Yourself from Drowning in the Paperwork
Unless you love dealing with contracts, counteroffers, riders, addenda, disclosures, inspection reports, appraisals, HOA approvals, contractor permits… I think you get the drift. The stack of papers you’d have to deal with can be thicker than your thigh. Literally.
6. Showings Can Be Draining
Buyers can’t buy if they can’t see your house, so you would need to make it available often, at various times of the day, and on a short notice. Are you prepared to make quick changes to your schedule or plans? Can you call in sick every time a buyer wants to see your home?
Also consider this, most buyers’ agents as well as buyers are uncomfortable when the owner is present during a showing.
As a final note: according to a blog on LinkedIn, “91% of FSBO sellers eventually hire an agent, but usually not without first spending considerable time and energy.”
In summary, selling your home is a big decision. You may still want to do it yourself (if you do, read these 7 tips). Maybe you have the knowledge, confidence, and free time to do it. Or maybe you’re thinking, oh my God, I didn’t know how much is involved in this. I’m better off hiring a professional. Whatever you decide, be informed.
And if you’re buying or selling a house anywhere between West Palm and Hobe Sound, let us know. We’d be happy to help.