For home sellers, two basic options exist. They can sell their home on their own as a for sale by owner (FSBO) property, or they can sell with the assistance of an agent. Many sellers think that working with an agent is the more costly option, and thus try to sell their home on their own without assistance. Here are 5 reasons why this may not be the best idea.
1. Lower Sale Price
Most sellers choose to go the FSBO route because want to save money. They think, “If I’m not paying a real estate agent, then I get more profit from the sale of my home.” Unfortunately, any additional profits they’re hoping for end up counteracted by an often lower selling price.
According to the National Association of REALTORS, FSBO homes have a median sales price of $185,000 in. This is compared to a median price of $245,000for agent-assisted homes. A typical agent’s fee of 6% on a home price of $245,000 is just $14,700, compared to the $60,000 difference in the prices. So, even with paying an agent, the seller using an agent still makes more money on the sale of the home.
2. Slower Sale
Sellers who tackle the prospect on their own often don’t have the marketing expertise to do it right. This means that the home may sit on the market longer, because fewer buyers see it. Since almost 90% of buyers search online for a home, an online presence is critical, and many FSBO sellers don’t know how to generate a good one or don’t have the tools to keep it up to date and in the sight of potential buyers.
3. More Difficult Transaction
The amount of paperwork necessary to legally sell a home has increased dramatically. All of the inspections, disclosures and other regulations which are mandatory are quite overwhelming, and once the property’s ready to sell the process of the contract adds another layer of complexity. When someone tries to sell a home as a FSBO property, they aren’t exempt from these regulations, so they must tackle the learning curve on their own. That’s one of the reasons the number of FSBO properties has dramatically dropped in recent years.
When selling with a Realtor, sellers get the benefit of working with someone who has extensive experience in this. Agents have to study the regulations and paperwork before getting their licenses, and experienced agents have closed multiple sales to experience the process again and again. This prevents delays and frustration for the seller.
4. Too Many Negotiations
The home selling process can involve a number of negotiations, and most homeowners are not skilled negotiators. Not only are they going to need to negotiate with the buyer, who of course is looking for a deal, but they’ll also need to negotiate with the buyer’s agent. Some buyers have attorneys as well, and that represents another negotiation. The home inspector, who always finds something wrong with the house, is another place where negotiation has to happen. Without experience in negotiation, this can be incredibly stressful for the seller. An agent comes alongside and guides these negotiations, knowing what is worth fighting for and what is worth conceding.
5. Insufficient Exposure to Buyers
One of the reasons successful real estate agents are successful is because they have a large reach to find prospective buyers for their homes. This starts on the internet, where the majority of buyers start their search. An agent is able to post in all online venues, including those linked to the MLS. In addition, agents know the most effective offline advertisement venues, so sellers don’t waste their time posting in newspapers that no one reads. Finally, agents have buyers they’re working with as well, and they’re motivated to sell to their own buyers to increase their income, so they’re going to show buyers the seller’s property. When selling on their own, sellers must figure out all of the different venues, post the listing themselves and then hope for the best.
Sellers considering selling on their own have an uphill battle to face. It’s always better to partner with an experienced Realtor, as doing so makes the process ahead much smoother and less stressful.