On the surface, selling your own home seems like a good idea. After all, who knows your home better than you?
This is known in the real estate industry as FSBO, or For Sale By Owner.
Advantages of selling your own home
The biggest advantage of selling your home yourself is that you won’t pay a commission to a REALTOR®. You also have complete control of the transaction. You don’t have to rely on anyone else. You schedule the showings, do the marketing, answer inquiries, etc.
Why it’s better to work with a REALTOR®
First and foremost is experience. Most buyers choose to work with a buyers’ agent whose job it is to get a home at the best possible price for the client. As a rule, they are good at negotiation. The possibility exists that you could sell your home for less money, and you could leave yourself open to potential legal problems. If you do choose to go the FSBO route, have an experienced real estate attorney examine the contract.
Loss on the price
If you sell your home, you may end up selling it for less than you should. Real estate agents hire appraisers whose job it is to find things wrong with your home. You don’t have access to all of the data that real estate agents do – including sale prices of comparable homes, the prices other homes in the area are listing for, etc.
You will have to pay for marketing, listings, signage, printing, and advertising (for which you’ll pay more, because you won’t get an agency’s volume discount.)
Although it seems like you’ll pocket what you would pay in commission – which is a tremendous savings – if you do sell your home, the buyer knows that you’re saving commission, so they will probably negotiate for you to pay the buyer’s commission, so expect to pay around 3% of the purchase price to the buyer’s agent. And don’t forget that you’ll have to pay for a lawyer to review the contract.
Selling a home takes time, and because you’ll be learning everything about the process on the fly, you can expect it to take longer.
Because selling a home is so involved, with many steps, government agencies and procedures that have to be accomplished before the sale can be finalized, there are things that will fall through the cracks.
Shrinking the pool of buyers
Because you may not be able to advertise as effectively as a real estate agent, you’re going to miss some potential buyers. Also, some buyers may decide the best way to avoid any of the potential problems is to work with an agent and will avoid homes listed FSBO.
It’s not that it can’t be done, but FSBO is a tricky, time-consuming and somewhat costly endeavor. Make sure to weigh the pros and cons before making the decision.