When you sell your home yourself—also known as "for sale by owner” (FSBO)—it may seem like agreat way to save thousands of dollars. After all, the standard real estate agent’s commission is 5% to 6%—that’s $12,500 to $15,000 on a $250,000 home. Given the size of this fee, you may think that acting as your own seller’s agent will surely be worth the savings. Here are eight reasons why you may want to reconsider.
Key Takeaways
- You might be tempted to avoid a real estate agent, save the commission, and just sell your home yourself—also known as “for sale by owner” (FSBO).
- While tempting, in most cases the risks of going it alone likely outweigh the benefits.
- Risks include having few potential buyers (let alone qualified buyers), making emotional decisions, not knowing how to negotiate properly, and not having enough free time to dedicate to finding a buyer.
- One of the biggest risks of FSBO is not having the experience or expertise to navigate all of the legal and regulatory requirements that come with selling a home.
1. Realtors May Not Show a "For Sale By Owner" Home
In an FSBO deal, the buyer’s agent knows there won’t be a professional colleague on the other end of the transaction. Even if a client insists on seeing your home, the agent might discourage making an offer, citing the hassles and risks of trying to close the deal without a professional representing the seller—and without a guaranteed commission.
“There are only two reasons why I show an FSBO: There is no other inventory available or the price is ridiculously low,” says Bruce Ailion, a realtor with RE/MAX Town & Country in Alpharetta, Ga., near Atlanta. Experienced brokers have generally been burned by anFSBO transaction in which the seller did not pay the full agreed commission—or any commission at all—to the agent who brought the buyer, says Ailion. “FSBO sellers are viewed as unrealistic, unreasonable, and difficult sellers whom professional realtors have rejected,” he says.
Still, there are buyers’ agents who will show your property under the right conditions. That may mean signing an agreement with the agent that states the percentage fee that you, as the seller, will pay the agent. (The agent mayspecify a6% commission, trying to nab both the buyer’s and seller’s side. Instead, negotiate the total commission to a more reasonable 2% to 3%.) An agreement should also clarify that the agent is only working on behalf of the buyer. It may also state that as the buyer’s agent, the real estate agent has a duty to disclose to the client all the information the seller provides to them, such as the need to sell by a certain date.
If you want to be taken seriously by sellers’ agents, get the best price, and make sure you don’t miss any key steps in the process—or risk a lawsuit—it’s better to use a real estate agent than to try to sell your home yourself.
2. Agents Avoid Emotional Sales
Selling your home is typically an emotional process. Having an agent keeps you one step removed and makes you less likely to make stupid mistakes, such as overpricing your home, refusing to counter a low offer because you’re offended, or giving in too easily when you have a deadline for selling. “A realtor can follow up without communicating a sense of eagerness or desperation; following up is their job,” says Ailion. “When a seller repeatedly checks, it signals, rightly or wrongly, the willingness to accept a lower price.”
If you forgo an agent, you’ll also have to deal directly with rejection every time a buyer’s agent tells you that the client isn’t interested. “As the homeowner, it can be quite upsetting hearing some of the comments that are made by buyers and, oftentimes, their agents,” says David Kean, a realtor with Beverly & Co. in Beverly Hills, Calif.
An agent can take the sting out of the rejection and put a positive spin on any negative feedback.“It is more difficult for [the seller] to keep their emotions out of the sale, because there’s no third party to bounce anything off of,” says real estate broker Jesse Gonzalez, president and founder of North Bay Capital in Santa Rosa, Calif. “For instance, if the property sits on the market, the homeowner doesn’t know the reason the home is not selling."
“The emotions will always be there for the seller,” Gonzalez adds,“but constructive criticism can be easier to digest for the seller when it comes from a broker who is on their side, trying to get the best for them.”
3. Real Estate Is a Full-Time Job
Can you rush home from work every time someone wants to see your home? Can you excuse yourself from a meeting every time your phone rings with a potential buyer? At the end of a long workday, do you have the energy to take advantage of every possible opportunity to market your home? Are you an expert in marketing homes?
Do you have any experience doing so? Your answer to all of these questions is probably “no.” An agent’s answer to all of these questions is “yes.” In addition, by going through an agent, you’ll get a lockbox for your front door that allows agents to show your home even when you aren’t available.
4. Agents Access Large Networks
Yes, you can list your home yourself on Zillow,Redfin, Craigslist,and even the multiple listing service (MLS) that agents use. But will that be enough? Even if you have a large personal or professional network, those people will likely have little interest in spreading the word that your house is for sale. You don’t have relationships with clients, other agents, or a real estate agency to bring the largest pool of potential buyers to your home. A smaller pool of potential buyers means less demand for your property, which can translate into waiting longer to sell your home and possibly not getting as much money as your house is worth.
“A good real estate agent should have a Rolodex of names and contact information, so they can quickly spread the word about the property they just listed,” says real estate broker Pej Barlavi, owner and CEO of Barlavi Realty in New York City. “I have a distribution list of over 3,500 contacts that get an email blast from me within 48 hours that we list a property. Then I start to market the property in every available website, MLS, and site for real estate to keep the momentum and [to keep] showing consistently.”
5. Weeding Out Unqualified Buyers
An agent can find out whether someone who wants to view your house is really a qualified buyer or just a dreamer or curious neighbor. It’s a lot of work and a major interruption every time you have to put your life on hold, make your house look perfect, and show your home. You want to limit those hassles to the showings most likely to result in a sale.
“Realtors are trained to ask qualifying questions to determine the seriousness, qualification, and motivation of a prospect,” says Ailion. Realtors are also trained to ask closing questions about how long buyers havebeen looking, whether they’ve seen any other homes that would work for their needs, if they are paying cash or have been prequalified, what schools they are looking for, and so on. They can move a qualified and motivated person to the point of purchase. FSBO sellers lack this training and skill set, he says.
It’s also awkward for buyers to have the seller present, rather than the seller’s agent, when they’re touring the home. “When showing a house, the owner should never be present,” says Kean. “Nothing makes a potential buyer more uncomfortable than the current owner being in the house. When a seller is present, most buyers will rush through a house and won’t notice or remember much about what they saw.”
6. Price Negotiations Take Skill
Even if you have sales experience, you don’t have specialized experience negotiating a home sale. The buyer’s agent does, so they are more likely to succeed in the negotiation, meaning less money in your pocket. “An experienced selling agent may have negotiated hundreds of home purchases,” says Kean. “We know all the games, the warning signs of a nervous or disingenuous buyer.”
Not only are you inexperienced; you’re also likely to be emotional about the process, and—without your own agent to point out when you’re being irrational—you’re more likely to make poor decisions. According to Kean, instead of an offended seller making an emotionally charged, inappropriate response to a buyer, an agent will say something more professional, such as, “The seller has declined your initial request but has made the following counteroffer.”
Sellers who go solo also typically aren’t familiar with local customs or market conditions. “Agents know the pulse of the market and what’s driving demand, which gives them an advantage by knowing what terms are worth negotiating for and which are worth letting the other party win,” says Rob McGarty, owner and designated broker with Bushwick Real Estate in Seattle.
Furthermore, says Gonzalez, agents know the local customs for selling a home, such as whether the buyer or the seller typically pays fees such as transfer taxes and closing costs.
7. You Ignore Your Home’s Flaws
Agents are experts in what makes homes sell. They can walk through your home with you and point out changes you need to make to attract buyers and get the best offers. They can see flaws you’re oblivious to because you see them every day—or because you simply don’t view them as flaws. They can also help you determine which feedback from potential buyers you should act on after you put your home on the market to improve its chances of selling.
“Anyone who’s determined to sell their own home should hire an interior designer or property stager to assess the current condition and market appeal of the home,” Kean says. “All sellers need to hire a professional cleaning service to give a home a deep cleaning before putting it on the market. A good cleaning will help remove any distinct odors, such as pets, that the inhabitants can’t smell, since they live with them every day.”
8. Exposure to Legal Risks
A lot of legal paperwork is involved in a home sale, and it needs to be completed correctly by an expert. One of the most important items is the seller’s disclosures. “A seller of real estate has an affirmative duty to disclose any fact that materially affects the value or desirability of the property,” says attorney Matthew Ryan Reischer, founder and CEO of LegalAdvice.com. A seller can be held liable for fraud, negligence, or breach of contract if they do not disclose properly. “The issue of whether a fact is material or not is generally established in the case law of the state in which you live,” says Reischer.
Unless you’re a real estate attorney, your agent probably knows more about disclosure laws than you do. If you fail to disclose a hazard, nuisance, or defect—and the buyer comes back to you after having moved in and found a problem—the buyer could sue you. Agents can make mistakes, too, but they have professional errors and omissions insurance to protect themselves and give the buyer recourse, so the buyer may not need to pursue the seller for damages.
The Bottom Line
It’s a tall task to learn how to sell your house without a realtor—and selling your home will likely be one of the biggest transactions of your life. You can try to do it alone to save money, but hiring an agent has many advantages. Agents can get broader exposure for your property, help you negotiate a better deal, dedicate more time to your sale, and prevent your emotions from sabotaging it. An agent brings expertise, which few FSBO sellers have, to a complex transaction with many potential financial and legal pitfalls.
FAQs
Why you should use a local realtor? ›
Pricing Expertise
The best way to sell your home fast and get the best value for it, is to price it properly. Local agents know the market in the surrounding area. They know what other properties have sold that are comparable to yours, and they know what they've sold for, so they can help you price your home right.
- Your income. "Agents only need to know how much you are qualified to borrow. ...
- How much you have in the bank. "This is for your lender to know, not your real estate agent," he adds.
- Your personal and professional relationships.
The more experience they have, the better they are at negotiating prices. Since they're not emotionally tied in the sale, they negotiate objectively and based on the value of a home, which is a huge help when buying or selling properties.
How do you pick a realtor? ›- Be prepared. ...
- Ask friends and family for recommendations. ...
- Find someone who is active and experienced in your area. ...
- Find someone who meets your needs and fits your personality. ...
- Know what you're giving and getting.
If the buyer and seller agree to something without adding an addendum to the contract, it is not binding in any way. Verbal agreements are technically legal, but they aren't enforceable. If you agree to something in conversation and one party doesn't follow through, there is no legal recourse.
Can a real estate agent represent both buyer and seller? ›In other words, an agent cannot represent both buyer and seller, or both tenant and landlord in the same property transaction.
Is it a good idea to use the same Realtor as the seller? ›Buyers can catch a break on Realtor commissions if both sides are using the same agent. The biggest advantage may not be saving money, but the possibility of having a leg up on other buyers by having the seller's agent know what the other offers are and helping you make the best offer.
Why do estate agents lie? ›Although they shouldn't, estate agents can and do lie about offers to make it look to you as a seller that they're creating lots of interest in your property. An estate agent may also lie about offers so they can push you in the direction of a specific REAL offer, so they can get their hands on their commission ASAP.
Should you tell real estate agents your budget? ›The number one thing you should never tell a real estate agent is your budget, or the highest you'll go. If a property is advertised as $660,000 but you have a $700,000 budget and make this information known to the agent, they'll know you have an extra $40,000 to work with.
What makes a real estate agent stand out? ›One of the most important things you can do to make yourself stand out is to utilize the effect of “perceived value.” Potential clients need to see that you are giving away a ton of valuable information and expecting nothing in return. This is how the best agents create clients for life.
How many houses do I need to sell to make 100k? ›
How many houses does an agent have to sell to make $100,000 a year? If you are selling $100,000 houses and paying 40 percent of your commission to your broker you would have to sell over 50 houses a year to gross $100,000 a year.
What makes a good listing? ›The relevancy of the content is a vital factor in rankings. The better it matches, the higher up on the list you'll see them! Creative titles and keyword-rich descriptions are important for getting your listing to rank high – but make sure they're engaging too.
How do I tell my Realtor I chose someone else? ›During your scheduled call, tell your real estate agent you've chosen to work with someone else and thank them for their time. They may ask if you've signed an exclusivity agreement with someone else. You don't need to disclose any other information if you don't want to.
How do you tell a Realtor you are no longer interested? ›For these reasons, the best way to go about canceling a contract with a Realtor is to simply call the broker and explain your desire to end the contract with their agent. Many reputable brokers who wish to stay in your good graces (and with the community's) will let you out of the contract.
What questions are asked in a real estate interview? ›Tell Me About a Time You Had Difficulty Forming a Good Relationship With a Client. What Technologies Do You Use to Market Homes and Attracts Clients? How Do You Stay Organized? How Many Homes Did You List and Sell in the Last 12 Months?
Why buyers and sellers should not meet? ›Risks homebuyers face when they meet sellers
Communication between buyers and sellers can sometimes leave plenty of room for misunderstandings that can ultimately harm the negotiations. “One side could unintentionally say something to offend the other,” Armstrong warns.
The Realtor Code of Ethics states that agents must disclose offers on the property to any other broker seeking cooperation. Realtors cannot lie to or hide information from another broker who is requesting information in an attempt to cooperate on the sale.
Can you approach a house seller directly? ›Is it illegal to approach a home-seller directly? Just in case you're wondering, there's no legal restriction that stops buyers from approaching a home-seller directly, and asking them about selling their home directly, by-passing an auction or estate agent. The home-seller is not breaking any laws, either.
Do you pay a real estate agent if you are the buyer? ›There's good news for you as a home buyer: Both the agent representing the seller and the agent representing you, the buyer, will be paid out of the seller's proceeds at closing. Although you pay the seller for the house, you don't need to add anything in for the agents' pay.
What is a common contingency clause? ›Contingency clauses provide a way for one or both parties to back out of a real estate contract if certain specified conditions are not met. In other words, the sale is contingent upon these conditions.
Who benefits most from dual agency? ›
The seller typically pays both agents' commissions, so the seller is the one who can directly save money in this situation. But when the seller's costs are lower, they may be willing to accept a lower price from the buyer. The seller, buyer and agent could all benefit from the arrangement.
What is the hardest part of being a Realtor? ›“The hardest part of being in real estate for new agents is financial and technical,” she says. “It is financially challenging because most people are used to salaried positions. They are accustomed to getting a paycheck every two weeks after putting in a certain amount of work.
Why do most real estate agents fail in their first year? ›Most real estate agents fail in their first year, according to research. Three common mistakes that agents make is inadequate prospecting, failing to market properties in ways that lead to fast sales, and not following up with clients.
Why is being a realtor hard? ›Working as a real estate agent or broker can be fulfilling and financially rewarding, but it's not easy. A career in real estate requires drumming up business, promoting yourself, tracking leads, handling complex paperwork, providing customer service, and much, much more.
Why do realtors quit? ›Most new real estate agents quit their first year because of the emotional toll of “fear of failure” and rejection. Nobody likes to feel rejected. Rejection is part of the job but remember that people are not rejecting you. They are rejecting the notion of buying or selling at that time.
How much does real estate agents make? ›How Much Do Real Estate Agents Make At Most? According to the Bureau of Labor Statistics, U.S. real estate agents will earn a median income of $56,000 per year in 2020. It cost about $49,000 according to the figures.
Why is real estate stressful? ›The report noted: “Real estate agents and brokers work long, erratic hours, spending much of their time showing properties to clients. They must be extremely independent, and able to handle sales quotas and deadline pressures.”
How do you stand out in real estate? ›- Find Your Niche. In a small town, you'll be selling a little bit of everything. ...
- Develop a Strong Online Presence. ...
- Use Social Media to Expand Your Presence. ...
- Be Client-Oriented. ...
- Sponsor a Community Event. ...
- Be a Standout Real Estate Agent.
Real estate isn't a dying career. In fact, there are more real estate agents in 2021 than perhaps ever before. However, the field is changing dramatically, with the advent of online marketing, VR and virtual tours, and easy online paperwork. To compete in this new world, it's up to real estate agents to innovate.
Why do real estate agents make so much money? ›They charge a lot because it takes work and money to market, it is hard to get licensed and become a real estate agent, they have to pay for dues and insurance and real estate agents usually have to split their commissions with their broker. The biggest reason real estate agents make so much money is they are worth it!
How hard is it to break into real estate? ›
It takes hard work, dedication, and perseverance to become a successful real estate agent. To become an agent, you must take classes, pass a test, and find a broker to work for. Once you get your license, the work is not over. You must learn to sell houses, which they do not teach in real estate school.
How long does it take to be successful in real estate? ›The time it takes to train and get you up-to-speed before becoming a fully independent agent depends on the brokerage you choose, but you'll want to plan on spending at least six months to a year in a training program. So, how long does it take to become a real estate agent? Likely at least one to three years.
How long does it take to make money as a real estate agent? ›It can take about six months to start making money as a real estate agent. Everyone is different, but six months is around the time many agents make their first sale. To start making consistent money, you should plan for about a year. To make a profit, you should plan for up to 18 months.
When should I give up my real estate agent? ›The real estate agent is in the middle of what may be an emotional transaction involving many moving parts. You need to learn coping mechanisms and skills to calm and soothe the parties involved. If you're a bundle of nerves, and your health is suffering, it's time to quit.
Why is everyone getting into real estate? ›High earning potential, work autonomy, and time flexibility are key selling points for agents new to the industry. It's no wonder why the top job-related search on Google in 2021 was “how to become a real estate agent.” Getting started in the profession is relatively simple.
Are Realtors happy? ›According to a study from Market Leader, 60% of real estate agents are more likely to be happy with life relative to workers in other industries. In fact, the study says that 53% of agents are very happy with life compared to only 33% of Americans who could make the same claim.