One day I plan on owning a home, although that day has yet to come. But even though I don’t own a house yet, being in my late twenties, I have a lot of friends who are buying and selling property right now.
Recently, someone asked me whether it’s a good idea to sell her house herself (known as For Sale By Owner, or FSBO), which would avoid the 10-20% commission that a realtor makes when she sells your house for you. I had no idea what the answer was, so I went to where I always go to investigate: Google.
Stats from the National Association of Realtors
I found some interesting statistics from the National Association of Realtors. In 2013, 88% of people used a realtor, and only 9% were sold FSBO (I’m not sure what the other 3% did, but hey, I’m just reporting stats here). A typical house sold by a realtor went for $230,000, while an FBSO house sold for $184,000. Reportedly, the hardest part of the FSBO process for sellers was completing the paperwork and getting the price right.
After learning these statistics, I dug deeper and found some information regarding when it’s best to go FSBO and when it’s best to use a realtor. I found several characteristics that work best for selling with a realtor and for FSBO. Here’s what I found – you’ll have to decide yourself which fits best for you!
Consider Selling With A Realtor If:
Selling your home using a realtor gives you access to more buyers, professional expertise, and makes the process go faster. Here’s a closer look at how a realtor can help you.
1. You want access to broader pools of buyers
You’ll be in the Multiple Listing Service (MLS) for real estate agents, which gives you the broadest visibility to the market. Real estate is a market game, so visibility is critical. You can get on the MLS yourself, but it costs several hundred dollars and you have to pay a buyer’s commission.
2. You want the expertise of a professional
Realtors have years of experience, selling several houses every week. They know the ins and outs of the selling process.
3. You don’t have experience or a lot of time
If you don’t have experience selling houses and you don’t have the time or energy to learn how to do it, a realtor will do it for you. You still need to do your due diligence in hiring a realtor, but after that, you the realtor can take over and sell your house for you.
Consider For Sale By Owner If:
Where houses are selling fast, FSBO is a good option because you may not need the broader network that a realtor provides. But FSBO takes time and money. Business skills like negotiating and researching are important, too. Here’s a closer look at how each other these plays a role in selling your house FSBO.
1. Your house is in a high-demand location
You may already know whether you live in a buyer’s market. If your neighbors’ houses are on the market for a very short time, this may also be an indicator that the area you’re in is in high demand. If you know you don’t need the market exposure and visibility that a realtor provides, FSBO may be for you.
2. You’re business-savvy and knowledgeable
You need to be comfortable making business decisions, including talking about money and negotiating directly, if you’re going to sell your house yourself. You also need to have market knowledge or at least be willing to learn fast (you’ll need to research comparables, go through the appraisal process, set a selling price, and determine whether a buyer is really qualified).
3. You have time and some money
Every part of the selling process takes time. From getting the appraisal, to taking photos, to uploading them onto websites, and then to showing your house – it all takes a lot of time. If you have free weekends and the time to do it right, then FSBO may be a good option.
Along with time, you need some money. The appraisal will cost money. Access to databases costs money. And even without a realtor, you’ll need a real estate attorney to help you with the forms, filing, and closing.
Selling with a realtor
If you decide to go the realtor route, Dave Ramsey’s 10 questions to ask a real estate agent before hiring her, is a place to start. You definitely want an experienced, qualified agent who has a stellar reputation. Research pays off in this department! Don’t hire the person with the biggest ad (that’s just good advice for anything, really 🙂 ).
For sale by owner
If you choose to sell your house yourself, check out the home-selling tips from For Sale By Owner to get started.
A Final Note!
So, what would you do – realtor or FSBO?
What have you done in the past?
photo by Stuart Miles via freedigitalphotosnet