There are many decisions involved in selling your home. When should you start the process? What renovations should you make before listing? What should be your starting price?
There are so many choices to make, it’s easy to become confused and overwhelmed.
One of the most important decisions, and usually the first one you need to make, is whether you will hire a seller’s agent or do a “for-sale-by-owner,” often called an “FSBO.”
Brief Overview: What is FSBO?
“FSBO” basically means that you are not using a real estate agent, but will instead do all the listing, visits, negotiations, scheduling, and paperwork on your own. It saves money, but there are strong reasons why most people avoid FSBO and instead hire an agent.
So should you do an FSBO? To find out, let’s look at the benefits, as well as the drawbacks, of selling the home on your own.
Pros of FSBO
The most common motivation for selling without an agent is to avoid the sales commission. The commission is simply a fee that is paid to agents based on the final price of the home, averaging about 4% to 6% in most cases. For perspective, that’s about $4,000 to $6,000 for every $100,000 in sales price. Got a $500,000 home? Then you’re looking at $20,000 to $30,00 in commission, which may be split between the seller’s agent and the buyer’s agent.
As the seller, you are motivated to sell for top dollar. Most agents will work to sell for the highest possible price, but they may urge you to sell for lower in order to move the process forward, which means they get paid faster. Without an agent, you enjoy greater control and flexibility over the schedule, and can decide, without outside influence, on the listing price.
Cons of FSBO
Most people hire a selling agent. This is no coincidence, as agents bring many advantages you don’t get without them. Most of all, they understand the real-estate sales process. They are trained and experienced in sales, and know how to find high-quality buyers while marketing your home for the best possible price. They know how to generate market exposure, and can take an honest, informed look at how much your home should be sold for. They know negotiations and paperwork, bringing a high level of efficiency and expertise to the sales process.
When you go FSBO on your sale, you lose these advantages. You have to list the home, market the house to generate interest, and work through all the complex paperwork and negotiations on your own. Yes, agents can be expensive, but their service can result in a faster sale for a better price. This is why so many people choose to hire an agent instead of selling FSBO.
You Should Consider FSBO If…
You Have a Strong Understanding of the Market
A real estate agent’s knowledge of the market can be a priceless asset when you are selling a home. They know what sells, what motivates buyers, and why certain aspects of a home are more attractive than others.
They also know the area. They know what neighborhoods have the best schools, the most value, the top parks, and the most attractive amenities. Using this knowledge, they can help sellers establish the perfect price for a property, a price that moves the home while still bringing top dollar. When you sell your own home on your own, you get to set the price, but you won’t have the experience and input from a real professional.
But if you have a strong understanding of how the market will respond, and you know how to price the home just right, you may consider selling the house on your own.
You Enjoy People…Lots of People
It will be hard to sell the house on your own if you don’t enjoy working with people. You don’t have to be an overflowing well of excitement every time someone walks in the room (in fact, that might hurt!), but you do need a comfort level for working with people, communicating, answering questions, and providing access to your home at a buyer’s request.
Part of a real estate agent’s job is to answer calls and setup meetings; if you choose to sell the house on your own, you’ll have to fill this time-consuming and (sometimes) frustrating role.
You Know the Rules for Selling a Home
There is a lot of paperwork that goes into transferring a house from one person to another. If you are going to sell the house without an agent, it becomes your responsibility to ensure all the details are handled properly, with no errors or omissions in the documents. Without a trained and experienced agent, you may want to at least hire a real estate attorney to oversee the documentation. This service can cost as much as $3,000, chewing into potential savings from selling the home on your own.
You Can Sell the Home Without Emotions
An agent is not emotionally attached to a property. This means they can provide honest feedback on the sales potential and market value of the property. Be honest with yourself, can you manage your opinions about the home? Can you ignore the fact that this has been your home for years, possibly decades, and not be personally offended by “low” offers on a house where your children were raised. If so, then you may be able to proceed with an FSBO sale.
We don’t want to scare you off from selling on your own. For many people, FSBO is a great option. But it’s hard, it’s time consuming, and it can be frustrating. Just be prepared for this fact when making your final choice.
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