Whether you live in a sellers' market or not, you may be tempted
to sell your home without the help of a listing agent in order to
avoid paying their
. However, many real estate experts warn sellers that selling on
your own could lead to financial mistakes that could cost you more
than you're trying to save.
If you choose not to work with a Realtor, you can market your
home entirely on your own or choose a flat-fee service to at least
get your property listed on a For-Sale-by-Owner (FSBO) website.
According to the National Association of Realtors' 2012 Profile
of Home Buyers and Sellers, just 9 percent of all home sales last
year were FSBO. One-third of FSBO sales were by sellers who already
before the transaction.
"If you're very well educated about the real estate business and
experienced, a FSBO sale might be OK, but for the vast majority of
homeowners, you lose a lot by not having a professional represent
you," says Steve Israel, president of the Buyer's Edge in Bethesda,
According to the NAR, the primary reason homeowners choose the
FSBO method is to save on the commission payment. While commissions
are negotiable, typically sellers pay 6 percent of the sales price,
split equally between the buyers' agent and the listing agent. FSBO
sellers must still pay a commission to the buyer's agent, typically
3 percent or, for example, $6,000 on a $200,000 sale.
Pros of FSBO
The biggest benefit of a FSBO sale is the ability to keep as much
money as possible from the sale, says Debbie Kent, owner of
GoToFSBO.com in Vienna, Va., which offers a range of services to
try to sell on their own with just a yard sign and some flyers, but
they'll usually sell faster if they pay a small fee to be listed on
the Multiple Listing Service (MLS), says Kent. Her company charges
$275 to be listed on the MLS, Realtor.com, multiple FSBO websites,
Zillow.com and Trulia.com. She says few sellers opt for her $175
package, which lists the property only on FSBO sites.
Kent says another benefit of FSBO is being able to negotiate
directly with buyers when they, for example, request
or a specific move-in date rather than passing messages back and
forth between a listing agent.
In the Virginia housing markets where she does business, Kent
says FSBO sales prices and the time it takes to go under contract
are similar to sales with a Realtor.
Cons of FSBO
Lower sales price.
Despite Kent's experience, the NAR says the average FSBO sales
price in 2012 was $174,900, while the average price for a home
represented by an agent was $215,000.
"One reason for the price discrepancy is that many buyers'
agents shy away from FSBOs," says Israel. "Buyers' agents end up
with more liability in the transaction since there isn't another
Legal and financial troubles.
Israel says sellers can end up in legal trouble if they "wing it"
and opt out of using an agent who understands the local market, the
legal and the negotiation process. He says the real estate sales
contract in Montgomery County, Md., for example, is 52 pages long,
which leaves a lot of room for mistakes.
"If you don't understand the contract you're signing you could
end up with tax issues and extra seller charges," says Glenn Bill,
a Realtor with Century 21 Scheetz in Indianapolis. "The countless
things that could go wrong without professional assistance can
cause undue stress on your family as well as financial hardship.
For instance, the deal could fall through and you could end up
owning two houses."
Time and effort.
Bill says that another drawback to FSBOs is the time factor.
"For most people, it's difficult to set up showings and to
handle all the phone calls, much less find out if the buyer is
really qualified," he says. "You also need to think about the
security issue of letting strangers into your home without the
assistance of a Realtor."
While saving 3 percent of your sales price is appealing, make
sure you recognize all the risk that you might encounter without