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When deciding to sell their house, many people decide to try and save money on the commission of a real estate agent and sell the house themselves. This is what is referred to as a for sale by owner or a FSBO (fizz-bo). For some, selling their own house is seen as a fun challenge while others are just trying to save money. Whatever the motivation, the fact is that most, after a short period of trying this experiment, give up and list with an agent anyway. It takes dedication and a head for business to follow through with selling your own home.
So what are the benefits and disadvantages of doing it yourself or listing with an agent? Maybe we can help by giving you the pros and cons so that you can decide if the price of the commission is worth your time and effort.
Do you have the time? To sell your own home, you will need to have plenty of time. Time to study things like current legality issues about disclosures and the market that will help you set a price for your home. Just because you sold your first home, twenty years ago or two states over, does not mean that you have all of the information needed in today s real estate market. You will need to research things that might have changed or things that might be true here that weren t where you lived before. Time to show your house and talk on the phone to potential buyers.
Are you too emotionally involved? You will also need to be able to control your emotional responses. When you are setting the price, after researching the current market, can you objectively view your house in relationship with other houses to establish price. If you are offered a price that is far below your expectations can you objectively consider, by analyzing the data you have collected, whether this might be a better price than the one you had wanted? When a potential buyer criticizes your house s floor plan or you have been led to the brink of a purchase agreement by a buyer only to be jilted at the last minute, you need to be able to back away emotionally. What should you fix? What can be left as it is? Things that you might have put up with for years, or maybe never even noticed, might need to be repaired before the house can shown.
Do you have any experience with business matters? Do you understand the monetary side of the process, like closing costs and other business matters that will be required of you? Remember that finding a buyer is only a small part of what is necessary before a house will sell. There are contracts and other various paperwork requirements before you even make it to closing.
Do you have a lawyer well versed in real estate that can help you? Because of all this legal paperwork, you will most likely need to hire a lawyer who specializes in the field of real estate to read and approve of anything you are required to sign. Consider what his time is worth and how much it will cost you. If you are willing to carry a loan yourself, you will need to have access to a credit bureau to get a credit check on the buyer.
Will quizzing people on their financial status cause you uneasiness? You will need to be able to quiz prospective buyers on their financial status, including their credit and income to find out if they really are a potential buyer. You will need to handle all the negotiations yourself.
Do you have what it takes? Most of all, you will need lots and lots of patience.
Knowledge. First of all a realtor brings a wealth of current and local knowledge to the equation. Setting the price of your house is the first major hurdle he can help you jump. He has access to current and recently expired listings that will be useful in the price-setting process. He knows the market and can be persuasive about the price when dealing with buyers because he has seen many other comparable houses sell. The realtor knows the legal pitfalls that you need to avoid and can help you decide what (and when) to disclose. This expertise can be comforting to the buyer and can help clench a deal. The realtor can also adequately judge the prospects that come to the house to ascertain if they are, indeed, actually a potential buyer.
Emotional Neutrality. A realtor is not emotionally connected to the process of selling your home and so they can be objective. When it comes to showing your house, you can expect to leave the house and not have to deal with the potential buyers looking around. Their comments about the house can be screened by the realtor to filter productive comments: things that, if taken care of, might be a great help in selling; ands unproductive comments.
They can act as a firewall for stress and tension and can also avoid many of the problems that you might have encountered because of past experience. When it comes to disclosure or repairs, realtors can help you, based on past experiences, fix the things that will make the house sit languishing on the market, or leave and disclose the things that potential buyers might not think a big deal.
Accessibility. Remember also that the realtor expects to be accessible to the seller and potential buyers. If they themselves are not available, they should at least have some sort of provision in place for information to be obtained on a 24-hour basis. However, the agent will be available most of the time, and if they aren t they will usually have a substitute ready.
MLS Exposure. When it comes to advertising, the realtor has a definite upper hand. The MLS. This is a listing of all houses that are currently listed with various agents. Any would-be buyer that goes to any agent to find a house can see yours, if it satisfies their criteria for amenities, such as location, number of bedroom etc. This kind of exposure is not possible for the FSBO, who mainly relies on things like the newspaper, open houses and yard signage.
Pool of Buyers. Remember that the realtor is able to pull from a wide variety of potential buyers, whom they might also represent. Most of the time, even though some people do try to sell their own home, buyers use agents when looking for a home, as there is nothing financially gained by omitting a realtor during this process. This means that people who may know they are moving to town, but may not be there (to see your sign or read the newspaper), may be searching the internet for prospective homes.
Negotiations. When it comes to negotiations, the realtor is very helpful, as, most of the time, the buyers and sellers have never even met at this point, and the negotiations conducted through a third party can be completely objective. A realtor can give you advice during this process regarding acceptable pricing or possible motivations on the buyers side that might give you some insight into what you should or should not be willing to offer or accept.
Legal Advice. A realtor can help you deal with the trickier side of the process, from purchase agreements to closing costs. Purchase agreements can be disastrous, if not worded correctly or if the contingencies give the buyer too much latitude when making the final decision to buy or not to buy your house. Realtors can also help you know what you should be willing to give on, like which closing costs you should be willing to pay.
Of course, it is up to you to decide if you want to list your house with an agent or try to sell it yourself, but the decision should be proceeded with much thought and consideration. If you do decide to go with a realtor, keep the qualifications of a good realtor in mind and make sure that you find a quality agent to list with. A bad realtor can be worse than doing it yourself.