Selling Your Home: By Owner or With an Agent? By James J. Saccacio, RealtyTrac Chief Executive Officer
So, you’re finally ready to sell your home. Should you work with an agent to manage the sale, or go it alone? This is a question that all sellers face. With the record real estate prices in recent years, a growing number of sellers have opted to try to sell their homes on their own, and avoid paying hefty agent commissions. Additionally, the growing number of list-it-yourself websites that display properties to millions of viewers allows sellers to market their home more easily without the help of an agent.
But for many people, working with a real estate agent is the most prudent decision. Enlisting the help of a seller’s agent takes the bulk of the work off your shoulders and helps ensure that all the necessary steps are taken. Though there are certainly agents who make selling a home look easy, you need to keep in mind that these are trained professionals who possess market savvy as well as a thorough understanding of the sometimes confusing laws and regulations associated with real estate.
According to San Bernadino, Calif.-based Realtor® Cheryl Salzmann, the cost of commission paid to an agent is worth every penny if you are really serious about selling your home. “Unlike some professions, realtors do not get paid unless they perform per their written contract to market and/or sell and close while coordinating multiple deadlines efficiently,” she said. Sellers can find Cheryl and other prescreened agents nationwide through RealtyTrac’s Agent Network.
However, for people looking to sell their homes without having to pay commissions, For Sale By Owner (FSBO) can be an attractive option. Some may consider this option too much work. Still, others are intrigued by the idea of saving some money, regardless what it takes.Whether or not to sell through an agent or by yourself depends largely on your timeframe and how much confidence you have in your ability to manage the job appropriately.Understanding the variations between these two options and how they affect the selling process should be a key factor in making your decision on how to sell. Following are some of the key differences between selling though an agent or by yourself
Establishing a Price
Deciding the asking price of your home is one of the most difficult aspects of the sales process. Setting too high a price might eliminate many potential buyers and make the process longer and more difficult. Subsequent reductions to the asking price could send signals of a home seller who “needs” to move the property and thus drive the price down even further. Setting too low a price, on the other hand, means that you haven’t maximized your profit, or realized the full return on your real estate investment.
There are ways to determine the sales price of your home by yourself. As a place to start, you can take advantage of free online services that will give you an estimated home value. These values will typically provide an estimated value range, which should give you a rough idea of the high and low end of your market. Next, you should check recent sales of comparable properties in the neighborhood. Thanks to online services like RealtyTrac, you can now order comparable sales reports online. You can also check market comparisons by looking for homes for sale in your area with similar attributes to your own home. This can be accomplished either via online searches or by simply driving around your neighborhood pulling flyers for home sales. If you have checked the comparable sales and homes for sale and are still having a hard time pricing your home, a professional appraiser can help you calculate a more accurate value for your home.
On the other hand, agents have ready access to much of this pricing information and can offer sound advice about how to price your home, citing market comparisons and their own experience, which can be invaluable if they have a number of recent sales in your area under their belt to use as examples. An agent who specializes in your neighborhood can certainly give you a clear picture of what homes are going for at the time you wish to sell.
Keep in mind that pricing your own home can be a difficult task, as it’s hard to put a price on the place you’ve lived in for some time and the memories your family has shared living there. You need to remember that selling your home is about business, not emotions. FSBO properties are often priced too high, simply because their owners have overvalued their homes by allowing personal values that are irrelevant to buyers to enter into the equation. On the other hand, FSBO homes can sometimes be undervalued by owners who aren’t in tune with the local market conditions.
Preparing Your Home For Sale
Many agents have a knack for “staging” a home for sale — presenting the property in the best possible light to entice prospective buyers to make attractive offers. Since many Realtors® spend so much time in homes for sale, they have an opportunity to see what sells quickly and what doesn’t; what buyers assign high value to, and what they don’t; what features to highlight, and which to downplay. Besides this fact, an agent doesn’t have the same attachment you have to your home or personal things displayed in it. They can offer you a truly unbiased opinion on whether you really need to put away that pool table your mother-in-law swears is an eyesore.
While an agent can provide impartial advice about what needs to be done to sell your home, you need to work a bit harder to be as objective if you’re selling on your own. You can do this by first considering what prospective buyers will be looking for. While you can’t anticipate every unique need or desire, you can’t go wrong considering the things every buyer wants in a home: clean and bright, open and spacious, clutter-free and depersonalized, and ultimately, ready to move in with everything in working order. Curb appeal is also a factor—and a well-maintained lawn and fresh coat of paint can work wonders on almost any property.
Marketing and Showing Your Home
Appropriately, one of the biggest responsibilities of a seller’s agent is the marketing of a home for sale. This includes getting the word out about the property for sale as well as showing it to prospective buyers. If this sounds like a lot of work, that’s because it usually is. In most cases, this is where you get your money’s worth on the commission you pay an agent.
If you plan to sell your home on your own, you need to keep in mind that you will be competing with agents working to sell other homes in the area. So you’ll need to do a bit of effective marketing on your own. As with anything for sale, the key to reaching interested buyers is maximum exposure. The bigger and stronger the net, the more fish you catch! Similarly, the more people who know your home is for sale, the better your chances are for selling it quickly, and the more likely you’ll be to command a price that works for you.
There are a variety of ways you can market your own property. You can post it online on FSBO sites through services like RealtyTrac, which will soon allow sellers to post properties and photos, and highlight key information about their homes. Over 70 percent of all home sales today start with online searches, so this can be an effective part of your marketing strategy. Another effective (and inexpensive) way to garner exposure is by posting street signs around your neighborhood, directing potential buyers to your home.
Flyers, a tool used widely by agents, are another important element in any real estate marketing campaign. While an actual visit to the home and tour of the property gives buyers the best sense of what you’re selling, brochures and flyers complete with price, pictures and detailed descriptions of features are a close second. If you are preparing a flyer on your own, be sure to make it look as professional as possible. This is not the place to try saving money by cutting corners.
Obviously, classified ads in the local newspaper are another marketing tactic that needs to be considered. The Sunday real estate classified section is often one of the biggest sections of local newspapers and a place where homebuyers often go to locate potential purchases. Spend some time reviewing ads in your paper to see what types of features are promoted and the type of language used to describe them.
Those who have seen an ad for your home, or have driven by it and are interested in it, will want a chance to take a tour of the inside as well. While an agent assumes the duty of scheduling visits to your home, if you’re acting as your own agent, you will be responsible for fielding phone calls from interested parties and arranging these visits.
Regardless of whether you go through an agent or are a FSBO seller, you need to realize that motivated buyers can move on to other properties very quickly. So it’s imperative that you make your home available for viewing as soon as possible when someone calls to schedule an appointment. This means you need to keep the home “staged” as noted above pretty much around the clock, so that it’s ready to show at a moment’s notice. And you need to be available on short notice to get home and conduct the tour. This can be particularly difficult for busy professionals, couples who both have full-time jobs, and especially around special occasions or during the holiday season, so keep this in mind when deciding when you want to put your home up for sale. The ability to show it in optimal condition to as many interested parties as possible will certainly increase your chances for a sale.
One of the tools traditionally used by Realtors® to market homes is the Multiple Listing Service (MLS). Agents list properties for sale on the MLS to alert other agents of the availability of properties. This essentially multiplies your sales force, as agents representing homebuyers will now know that your property is on the market and can recommend it to their clients. In some areas, it is now possible for homeowners to list properties on a local MLS by themselves, but the process can be complicated, and the cost can run from a few hundred dollars to over $1,000, depending on the service.
The Question of the Open House
Open house events are part of the standard package provided by real estate agents, but, ironically, they can sometimes be more to the benefit of the agent than to the seller. This is because open houses offer agents an ideal venue to market all homes they have on the market to a targeted audience of buyers ripe for the picking and to meet potential home sellers who might want the services of an agent.
If you are acting as your own agent, an open house is strictly an opportunity to meet people who might be interested in buying your house. But some buyers may shy away from open houses where the seller is present because they feel uncomfortable to freely walk through and comment on a home owned and, in many cases, lived in by the person present. At a FSBO open house, this could be a deterrent for buyers interested in viewing the home. It’s important to be considerate of this and give open house visitors a chance to move through the home at their own pace, unaccompanied by the seller unless there are questions to be answered. In some cases, it even makes sense for the seller to step outside while buyers are looking around and keep conversation to the welcome greeting and request for any questions to be answered before the prospective buyers leave.
It should be noted that, in many cases, an open house event can amount to a lot of prep work and a lot of time spent sitting around awaiting visitors. However, if you’re up for the challenge, there is a possibility you can connect with a prospective buyer or two. If you choose to host an open house, consider which dates are the best to do so. Most open houses are in the early afternoon on weekends, since these tend to be the times most people are available to look at homes. Having other open houses in the area scheduled at the same time can also be helpful, since strategically placed signage can draw people going from another open house to your own event.
Negotiating Offers on Your Home
Aside from the work associated with effectively marketing a home for sale, another huge consideration when deciding whether to sell through an agent or by yourself is the negotiating process. Negotiations are, in fact, one of the most important aspects of the experience of selling a home. Therefore, it’s not surprising that this is also the most intense and sometimes most uncomfortable part of the process for sellers.
The comfort of having a seller’s agent to act as a liaison throughout negotiations can be enough incentive for some people to hire one. Having someone who is adept at negotiating the best price and well-versed in real estate law and procedures can certainly help you feel more confident.
“When selling a home, the stakes and stress levels can be very high, which is disconcerting because people don’t tend to make the wisest choices during times of stress,” advises Salzmann. “There are mountains of details involved in buying and selling real estate, and good Realtors® understand that people’s perceptions of money and time during stressful situations are unreliable. Choosing a Realtor® to guide you through the process can ultimately help protect your investment.”
FSBO sellers negotiate face-to-face with either the buyer or the buyer’s agent. For those who decide to sell their home on their own, it’s important to understand the negotiating and closing processes well and to work out a strategy for dealing with both early on. Read up on the process in your state, so that you are confident that all appropriate measures are taken.
.Even if you feel confident in your ability to negotiate on your own, it may be a good idea to hire a lawyer who specializes in real estate. This person can be an asset to you when making the actual sales transaction, evaluating offers and mortgages and preparing and reviewing the contract. They can even act as your escrow agent.
Which Way Is Right for You?
These are some of the major differences you’ll need to consider when deciding whether to sell through an agent or on your own. In most cases, people who decide to sell their home by themselves do so with the intention of saving money on the transaction. And, as home prices continue to rise, saving 6 percent commission on a $500,000 house can represent significant savings. The trade-off, of course, is the value of the home seller’s time. Someone will need to do the research necessary to set the asking price; market the property; obtain all the necessary inspections and appraisals; negotiate terms; open escrow; and file the paperwork. Without the involvement of an agent, these tasks all fall to the homeowner.
For homeowners with the time and expertise to manage these activities and who are confident in their ability to set and negotiate the best possible price for their home, there have never been more tools and services available to support the FSBO sale. For others, working with an experienced real estate professional is well worth the money involved, which comes out of the sale, and not directly out of the pocket of the seller. And as the real estate market continues to evolve, new services are coming online, such as real estate brokers offering discounted services, and businesses set up to provide specific areas of support (such as marketing or closing services) to FSBO sellers … but that’s a topic for another column.
Click here to search for bargain properties