When you sell your home yourself— also known as "for sale by owner” or FSBO— it may seem like a great way to save thousands of dollars.
Since the standard real estate agent’s commission is 5% to 6%—that’s $12,500 to $15,000 on a $250,000 home.
You may think that acting as your own seller’s agent will surely be worth the savings but there are some very real reasons why you may want to reconsider.
You will almost certainly still have to pay a buyer's agent.
Buyers' agents are almost always still paid out of the proceeds from the sale in an FSBO transaction. Agents will usually include their commission of 2% to 3% in their initial purchase offer. If a seller refuses to pay Realtor commissions, many buyers agents won't show the FSBO listing to their clients.
Legal fees may still apply.
In an FSBO transaction, purchase contracts can be drawn up in several ways. Some individuals use fillable PDF contracts they have found on the Internet or ones that have been legally reviewed on a site like ForSaleByOwner.com. In each of those cases, you as the seller assume the legal risk. That is why, in many cases even with the contract mentioned above, the buyer and seller will find a local real estate attorney to write up and review these contracts. Attorneys typically charge a flat rate of $1,200 or more depending on the market and how much work they are doing in the deal. In most transactions for which a home is FSBO, the buyers' agent is the one who ends up drawing up most of the contracts.
Legal Risks
Selling a home via FSBO will pose legal risks if the sale's legal documents are not drawn up properly or if the home has issues that aren't adequately disclosed. Sellers with little knowledge of real estate transactions can find the situation stressful and very costly and may be better off working with a qualified real estate agent.
Are you getting the most out of the sale?
If the seller is unfamiliar with the home buying and selling process, any mistake can be quite costly. If the seller sets the listing price too high, for example, fewer buyers will consider the home. Likewise, too low an asking price means the seller could leave money on the table—potentially more than was saved by selling FSBO. Stats show that the typical agent-assisted listing sold for $39,000 more than a FSBO, but FSBO who look to skip commission forget about paying the buyer’s agent.
Marketing
A Realtor will help you stage your home for potential buyers, take pictures, and list the home on the Multi Listing Service, a real-estate-agents-only website where thousands of people will see the home. You won’t have to pay the hefty fee that goes along with that listing if you work with a Realtor.
Your agent comes with a rolodex.
Real estate agents have a laundry list of skilled and trusted professionals at your disposal - carpenters, plumbers, electricians, exterminators, interior designers, movers, and the list goes on. Many of these professionals have great working relationships with your agent and are more likely to respond in a quick and professional manner to solve your challenge.
Time. This is perhaps the biggest reason of them all.
Selling a home is a full-time job. As a FSBO, you will invest much more time in the listing and sale rather than if you hired a professional agent.
Determine the asking price on your own
Stage the home with no professional advice
Legal documents are on you, here are a few:
Sales Contract, residential property disclosure form, mineral and oil rights form, occupancy agreement, lead based paint disclosure, property tax documents, HOA forms, title work, warranty, notarization, witnesses…Scary isn't it?
Showing the home - You will have to make all of the appointments and show the home yourself. In many cases working around the potential buyers schedule. This could mean time away for work or family, trips back and forth to the home and the expense of that time and travel.
Sellers who think they can save a buck by listing for sale by owner are often not fully considering the countless advantages of using a licensed agent. Ultimately, the monetary benefit of not using a real estate agent is arguably non-existent.