The "For Sale By Owner" Myth
The “For Sale By Owner” (or FSBO) approach where a Seller goes it alone and doesn’t use a Realtor as an agent to save some money. It usually isn’t as simple - or as cheap - as you might think.
Lets start with money. Costs usually picked up by the agent will instead have to be paid by you. That includes things like: listing in the MLS (the homes-for-sale database that requires you pay an agent for that purpose alone), a professional photographer, a staging expert, brochures describing your home, signs for your yard, a service to schedule viewing appointments, and any newspaper or magazine ads. All that comes off your bottom line.
Then there’s your time. Since it isn’t what you do all the time you’ll probably spend at least twice the time a professional agent would dealing with things like taking calls from prospective buyers and their agents, showing the home, arranging for required inspections, dealing with HOAs, holding open houses, and negotiating the price and terms – including renegotiations if inspections turn up anything or other contingencies fall through. This can happen at any time, day or night, weekday or weekend. Taking off half days from work on an hour’s notice to show your home to someone will add up after awhile.
There’s also the time you’ll need to get “up to speed” on things an agent already knows. For instance, do you know where to get a radon inspection or when it is required? The legal forms for contracts and filings? How about pricing the home based on comparable sales, and what actually is and isn’t comparable? Your legal obligations if there is an inspection problem, or what happens if the home doesn’t appraise for the sales price? There actually is a lot more to selling a house than finding a Buyer, and what you don’t know can hurt you legally and financially.
Speaking of finances, what of the Buyer’s agent? By going it alone you may save paying your own agent, but what you may not know is the Buyer’s agent is still going to require you pay her or his percentage. Plus, Buyer agents may be hesitant to show your home because they know that with a FSBO they will have to help you out, doing more work than usual if their Buyer likes the home.
What you also lose out on is access to information and advice that only an agent can bring. Such as feedback on how other home sales are doing in real-time. Or how to price the home at the outset (high with later cuts, or on target for a quick sale?). And don’t discount an agent’s objectivity about your home. Homeowners frequently value things highly that Buyers may not (that custom shelving you put up, the unique paint you found), emphasize the wrong things, fail to see problems, and either under- and over-value the home as a result. An objective voice telling you why your home isn’t selling can mean the difference between a sale and sitting on the market for months on end.
Finally, and something that really hits your bottom line, is that Buyers often see FSBO homes as a “deal”. So they take the fact that you aren’t paying your agent (remember, you are paying theirs) as meaning you can accept a reduction in the offer price since “you don’t have the costs other sellers do”. This alone can wash away the financial reasons you may have for going it alone.
In the end selling a home is a lot like building a home. Sure, you could build it yourself – but it would take a lot of time, effort, costs, and education to do it. And you’d likely have some major and expensive hiccups along the way. Same thing with selling one, which is why so many people rely on professional real estate agents like Yvonne to help them with one of the most important financial and legal transactions in a person’s life.