In most home sales, people hire a real estate agent to help them sell. However, nothing requires anyone to use a real estate agent to sell their home. Selling your home without a real estate agent means you are selling it yourself. As such, your home will be designated as “for sale by owner” (“FSBO”). The primary reason people choose to put their home on the market as FSBO is they believe they will save money on the real estate agent’s commission.
Often, however, they underestimate what is involved in selling a home. There are significant reasons why it makes sense to work with a real estate agent, meaning that a real estate agent can save you money and headaches in the long run. Working with a real estate agent instead of doing FSBO is more efficient and professional, and it yields better results.
Here are just a few important pros and pitfalls (and there are many) to consider before you list your house FSBO.
Pros of For Sale By Owner
Real estate agents are paid on average 6% of the sales price as their commission. If your home sells for $300,000, the real estate agent will get $18,000. That leaves $282,000 to pay off the loan balance, cover other closing costs, fees and outstanding taxes. Without an agent, the seller will be able to pocket more of whatever is left.
Control Over the Listing Price
Without a real estate agent, you will have complete freedom to set your asking price at whatever point you like.
Control Over the Scheduling
Selling your home can be a major disruption to your schedule. Agents sometimes give you very little notice when they are in the area with an interested client. If you are not home, they will simply let themselves in to look around. Without an agent, you will have more flexibility when it comes to when people can come in to look at your house.
Cons of For Sale By Owner
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A local real estate agent knows the market. The agent can make solid recommendations on a sales price that is likely to bring in reasonable offers. Without that expertise, you won’t know if your listing price is too high or too low. If the price is too low, you may have been better off working with an agent and paying the commission. If the price is too high, you may not have many interested buyers bothering to look at it. In many cases, homeowners are more likely to base your price on their “feelings” of what the price should be and not what the market can bear.
You Will Not Have the Resources to Screen Potential Buyers
Before an agent shows your home to a potential buyer, the potential buyer has been screened to ensure that the buyer has been prequalified for the loan needed to buy the home and has the ability to pay. You may waste a lot of your time with people who are not in a position to buy your home. Also, homes that are for sale by owner are stigmatized – they rightly or wrongly are viewed as having a problem, otherwise they would be listed with a reputable agent.
You Could Leave Money on the Table by Handling the Contract Negotiations Yourself
When someone is interested in your home, their real estate agent helps them come up with an offer. The offer is relayed to your real estate agent, who then helps you decide whether to accept it or make a counteroffer. This back and forth is the negotiation process. The real estate agents have extensive training in these negotiations. They know how closing costs, points, and other elements involved in a sale can be negotiated to make a sale happen at a reasonable price point. Without an agent, this important aspect of the sale will fall on your shoulders.
If the interested buyers do not have an agent either, neither of you will benefit from the expertise an agent can offer. This is a situation that can result in disappointment and even disputes that can be costly to all sides. In such cases, the parties should work with the help of a lawyer, which can end up costing you as much as the real estate commissions you were trying to avoid.
You Have to Be Ready for Closing
Once you have a ratified sales contract with an agreed upon sales price and terms, you will have to get ready for closing. The contract may require the seller to make certain repairs to the home and pass inspections. The real estate agent is instrumental in coordinating all of that. The buyer will have to get an appraisal. If the appraisal does not show a value that meets the requirements for the buyer’s financing, the buyer will have to put more money down out of their pocket. If they cannot do that, the sale will not close, and the whole process must start over again.
Contact Katie Zarpas Group For More Information
Before you list your home for sale by owner, consult with the experts at Katie Zarpas Group. They are happy to discuss selling your home FSBO in detail. If you choose to work with an agent and avoid the pitfalls of the FSBO process, our licensed Virginia Beach real estate agent, Katie Zarpas, is standing by and ready to help you.