For Sale by Owner (often referred to as a FSBO sale) versus using a real estate agent is a decision that as a homeowner you should not take lightly. With the rise of the internet with available home sale sites, do-it-yourself home sales have become more prominent. This decision can back-fire and cause you potentially more problems than it could be worth as laid out below.
The Cost Perception
The first and most important reason why homeowners want to sell their home without the use of an agent is simply that they feel they will save money. This definitely can be true. If you look at the cost of selling your home in North America, with real estate agents standard commission weighing in at a hefty 6% of the home value. The median home price in the US in 2014 was almost $190,000 which would equal $11,400 in commission to the real estate agent. Many sellers feel for the value of simply bringing sellers to their doors, this amount seems exorbitant when websites like Zillow are considerably cheaper.
Of course, as with any service industry, the seller needs to conduct research into their preferred agent of choice. The services provided by real estate agents can differ greatly, so the perceived value also differs greatly. Also, what many sellers forget is that even if you list your home for sale on a website like Zillow, the buyer may still be represented by an agent. This agent will still expect a 3% commission for bringing you a buyer. If you advertise the listing without any commissions you can effectively cut off a larger portion of potential buyers that use agents for purchasing. In this case your savings would only be 3%.
You will have to fully explore the services your agent provides and decide for yourself if they warrant the extra cost in selling your home. The basic services you will need to do yourself and any extra services you will need to decide if selling your home warrants or needs these extra services.
The Job of a Real Estate Agent
Great real estate agents can often provide value over and above what you may expect and actually provide a service that nets you more in the sale of your home than the cost of their service. According to the most recent report from the National Association of Realtors, prices of homes sold by real estate agents were $40,000 more than the typical FSBO sale.
This difference in housing prices is due to a number of factors that may support hiring an agent to sell your home. First and foremost a good agent will provide extensive background information and research on homes in your area to provide a comprehensive tool for pricing your home. This ensures that with the advice of the agent that the price of your home is in line with other similar homes in your area. This process ensures that you do not underprice or overprice your home.
Secondly, the agent can provide advice and consultation on the best ways to improve your home to maximize profits during the sale. Often a DIY will focus on repairing or renovating different areas of the house that may make sense, but are in fact poor net decisions. Although it sounds logical to renovate a kitchen or bathroom because they are major deciding factors for buyers, it may be a better value to simply re-face kitchen cabinets or other minor renovations. These helpful tips often come from great agents.
Lastly, buying and selling is a passionate and psychological process. There are some that are experts and others that are not. Being able to work for you as a seller and bring in the right clients can be the difference between your home selling within the first 4 weeks of listing or being on the market for over 3 months and settling on a lower price just to get it sold.
The decision to sell your home is a very personal, however the decision to use a real estate agent or sell it yourself, should be a very conscientious business decision. Can you do all the things an agent does, do you have the time, and can you do it in a manner that will not result in possible litigation, all for cheaper than an agent.