For Sale By Owner: Who Needs a Realtor, Anyway?

Jacqui Kenyon
Posted

You’ve probably invested a lot of money—not to mention time and effort—into your home. So when it comes time to sell, you likely want as big a profit as possible.

However, with broker commissions hovering at 5% to 6% of the final sale price of a home, sellers can stand to lose thousands when the transaction is finalized. On an average home sale of $200,000, that’s $10,000 to $12,000 down the drain.

To save on commission fees, a growing number of homeowners looking to sell are bucking the convention of enlisting professional help. Instead, they’re listing their homes online, on sites like Zillow and ForSaleByOwner—the latter of which has seen a 14% spike in listings over the past year.

Sites like these offer several benefits: They provide a wealth of data about other neighborhood homes, which allows sellers to price their homes better, and by posting images and information online, they can reach a much wider audience than with more traditional marketing methods.

RELATED: Is It the Right Time to Buy a Home? A Look at the Real Estate Market

There are economic factors at play, as well. Donald Van Dyne, developer of iGOfsbo, a website that connects sellers with buyers and their agents, told CNN Money, “Historically, for sale by owner [deals] ebb and flow with the economy. People use it when there’s a hot market, when it’s easier to sell their homes.”

Home-sellers who go it alone may end up with more cash in their pockets due to more than just a lack of commission fees: a Stanford University study found that homes sold using brokers sold for 5.9% to 7.7% less than those sold without the use of a broker (though the National Association of Realtors claims that homes listed by agents sell for more). This may be because brokers are willing to accept a lower sale price in return for a quick sale.

Though a professional broker could make your life easier when it comes to selling your home, if you’re willing to put even more time and research into the sale, you could come out on top.

  • MH

    The risk is simply not worth it! Realtors pay for a special type of insurance that covers the agent and the homeowner in the event of a lawsuit resulting from the transaction. If a homeowner were to sell it on their own, make a mistake on the paperwork (which is more likely because they haven’t been trained to understand or fill out those contracts correctly), they could be liable for as much as 3 times the cost of the home in my state for damages. I wouldn’t sell my own home due to this, and I am an agent (our E&O insurance won’t cover the sale if we list our own property).
    Not to mention, Realtors are required to have licenses, training, and continuing education for a reason. They can also have those licenses revoked for negligence or unethical practices, so this protects the public. No such oversight covers individual sellers or buyers that are working alone.
    Realtors know the laws, they know the contracts, and more importantly, they know the market. Websites like Zillow and Trulia pull from public information. In many states, sales prices are considered confidential and would not be posted. Listing prices, tax records, and mortgage liens aren’t the best indicators of true value. That means the prices listed on those websites in those states are inaccurate. I’ve found this is quite often the case. How will the owner ensure that the property appraises for their price if they haven’t used reliable information to price it?
    Realtors have the best interests of their clients in mind. We’re not going to accept a lower price for a faster sale unless that’s what our client wants. Our goal is to get the best price the market will allow and sell the home in the timeframe that the client wants or needs, and ensure that everything is done the right and ethical way to avoid trouble for our clients.

  • Raven

    We have bought and sold 10 houses – 2 without realtors that went very smoothly and the other 8 with realtors that all had issues. They involved mistakes made on paperwork to sewer problems being covered up intentionally to a termite inspection being tampered with. Next time, we will hire an attorney for $400 to handle paperwork and stay away from realtors.

  • Robin

    There is a lot glossed over the fact that realtors can bring a larger market to the table. I don’t doubt that you can get more for your home if you sell it by yourself, but only if you have 5-10 years to keep paying taxes on the property until you do, losing what money you would “make”. My family (though not me) has been in the real estate business for a long time. I have seen people turn down deals only taking a few thousand off their asking price, running off to do a sell-by-owner thinking it will make more money, and end up having to low ball themselves by the 10s of thousands just to get interest. Don’t be that guy. When dealing with selling property, a realtor is the way to go.