Andrew Fortune is the owner and managing broker of Great Colorado Homes, a digital real estate brokerage in Colorado Springs, CO.
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Right now, many real estate markets around the country are experiencing a lack of inventory. In some cases, the supply of homes for sale simply cannot keep up with the demand from homebuyers.
For example, in Colorado where I’m based, there was a 51% decrease in available single-family homes on the market this August, compared to the same time last year. That kind of shortage can cause panic-buying and quick sales.
If you’re in a market where homes are selling within minutes, you may be asking yourself if you really need a real estate agent to sell your home. It’s a question that needs to be asked from time to time. Why can’t you put your own home online and sell it without an agent? Maybe you can.
In fact, according to the National Association of Realtors, in 2018, roughly 11% of home sales were done without a real estate agent.
What are the benefits of listing your home ‘for sale by owner’ (FSBO)?
The obvious benefit of selling your home without a real estate agent is that you do not have to pay any fees to the real estate agent. Generally speaking, real estate commissions tend to run between 4.5% to 6% of the home’s sales price.
According to Zillow, the median home value in America in June was around $252,000. If you hired a real estate agent at a 5% commission to sell your home at $252,000, you may pay over $12,600 to your agent. That’s a lot of money for most folks.
The higher your sales price, the more money you will save by not hiring a real estate agent. It’s a tempting proposition, especially for those in the higher price brackets.
What does a real estate agent do that you can’t do yourself?
When you hire an agent to list your home, their main job is to market your home in such a way that it sells for the most amount of money in the least amount of time. On top of that, their job consists of making the transaction smooth and stress-free for you, the home seller.
If you are tech-savvy and have experience in marketing, you may handle that part of the deal by yourself with no issues. With so little inventory on the market in many places around the U.S., people are likely to be interested in your home, whether you are great at marketing or not.
The unnoticeable benefit of hiring a real estate agent is in their professional experience and market knowledge. Imagine if you had already sold 100 homes. How much knowledge would you have after all of those transactions?
Real estate agents know the common pitfalls that kill deals. When sales contracts fall apart, they don’t get paid. This is excellent motivation to keep them engaged and looking for red flags.
A buyer’s financial setbacks, unsatisfactory appraisals and home inspection problems are just a few of the day-to-day issues that listing agents deal with. If you choose to sell your home without an agent, you’ll need to grasp these issues. Great marketing may bring you a buyer, but it’ll take more than that to make it to the closing table.
Who would be a good candidate to list their home FSBO?
If you are tech-savvy, great with marketing and already have experience buying and selling real estate, the FSBO route may be a great option. You’ll also need a lot of spare time, as real estate transactions tend to be time-consuming.
Lastly, you’ll need to have a calm demeanor. Selling a home can be stressful. Dealing with showings, receiving multiple offers, vetting buyer credentials and losing contracts requires tough skin.
For those who meet these requirements, selling a home without a real estate agent can be rewarding and empowering.
If you’ve read through the list above and know that you are not the person for the job, it’s best to leave it to the professionals. It takes a strong-willed individual to make it all the way through to the end.
What are some things to consider when listing a home FSBO?
The National Association of Realtors found that, in 2018, “The typical FSBO home sold for $200,000 compared to $280,000 for agent-assisted home sales.”
Many people are looking for a deal on a home for sale. Some are professionals who “flip” homes. When you advertise your home as FSBO, it has the potential to send a message that you are just looking for a deal. I’ve found that the buyers who are attracted to for-sale-by-owner listings prey on these sellers.
FSBO listings may end up making less money, yet still require all of the work that a traditional real estate agent would do. That’s the most common threat to the FSBO option. This problem is often why people choose to hire a real estate agent to sell their home.
Final Thoughts
Real estate agents and brokers tend to downplay to the effectiveness of the FSBO option, as it threatens their business models. These deals are important for the real estate industry, though. If 100% of people used an agent to sell their home, that 11% who could have done it on their own in 2018 would be have been cheated.
If you’re considering selling your home without a real estate agent, do some heavy thinking to determine whether it is the right course of action. Once you’ve taken the time to research yourself, get a second or third opinion to make sure you’re on the right path.
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I had no idea that real estate agents can help in selling a property by marketing it to the right people, who are also on the lookout for a new home. My uncle has a couple of old properties that he wants to dispose of. I’ll be sure to suggest this to him so he could get additional income for that dream retirement home of his.