In 2020, the latest available research showed that 90% of home sellers used a real estate agent to help sell their homes, and 87% of homebuyers purchased their home using a real estate agent or broker, up significantly from 69% in 2001. Why do most homebuyers and sellers use a professional real estate agent? There are a number of proven reasons why it’s easier, faster, safer, and more profitable for home sellers and homebuyers to use the services of an agent than go the for-sale-by-owner (FSBO) route.
Some home sellers who try to sell their own homes are successful. Currently and for the past few years, it’s been a seller’s market where buyers are clamoring to buy a home, bidding over asking price, making all-cash offers, and foregoing inspections and contingencies to entice sellers. These sellers believe they can use third-party data to price their homes, put a sign in the yard, and buyers will come in droves, saving them from paying the typical 5% to 6% commission they would otherwise pay to a real estate agent.
So should you try to sell your home yourself? There’s no question you can do your own research, home preparation, marketing, negotiations, and hire a closing agent. But you may not realize how much time, effort, frustration and potential liabilities you’ll experience. In other words, you don’t know what you don’t know.
According to some quick statistics from the 2020 Profile of Home Buyers and Sellers, published by the National Association of REALTORS,(NAR) the share of for-sale-by-owner sellers or FSBOs who sold their homes without the assistance of a real estate agent was only 8%. The typical FSBO home sold for $260,000 compared to $318,000 for agent-assisted home sales. This figure may seem shocking, but FSBO sellers tend to own less expensive homes than homes listed with agents.
Forty-six percent of FSBO sellers did no active marketing, and 22% only marketed to friends, family, and neighbors. Twenty-five percent stuck a sign in the yard, and 14% relied on social media sites including Twitter and Facebook. The rest used a hodge-podge of open houses, classifieds, and other means.
Real estate professionals, on the other hand, have incredible resources to find buyers, including multiple listing services, local to international associates and affiliates, and professional marketing support through their brokers, in addition to using yard signs, social media, word-of-mouth, and so on. With a high percentage of homebuyers hiring their own agents, you may be dealing with a professional agent instead of the buyer across the table.
There are other disadvantages for FSBO sellers. While you may consider yourself capable, you may not realize all the things that can go wrong with a home transaction. Investopedia.com points out a litany of risks to consider, such as attracting far fewer potential buyers, dealing with unqualified buyers, “making emotional decisions, not knowing how to negotiate properly, not having enough free time to dedicate to finding a buyer, and not having the experience or expertise to navigate all of the legal and regulatory requirements that come with selling a home.” Sellers have a duty to disclose any fact that materially affects the value or desirability of the property, including past and current major repairs, the age and condition of systems and appliances in the home, stigmas associated with the property, and knowledge of future events that may impact the value of a property as far as commercial traffic, noise, smells, etc. You don’t want to get sued because you didn’t know what was relevant to inform the buyer.
Among other questions you may want to ask yourself are:
- When can you meet with buyers and show them your home?
- Can you leave work to meet buyers whenever they call?
- How will you know that buyers are financially qualified?
- Will looky-loos waste your time or put you at risk of theft or other dangers?
- Do you know how to fill out a disclosure and sales contract without liability?
Real estate agents don’t tend to work with unrepresented or unqualified buyers. They value their time and want to make sure they’re showing homes to buyers who are willing to allow themselves to be vetted, such as having been prequalified by a lender. They show homes to buyers within their price ranges and to meet their homebuying goals in terms of the size, type and location of the home the buyer wants.
Homebuyers have access to the same information you used to price your home, including looking at listed homes online that have more detailed information than you can provide for your home. They can easily determine if your home is competitive or overpriced. They want to save money, too and may low-ball you with an offer designed to save them paying an agent’s commission, too. You’ll encounter buyers who have their own agents who will expect you to pay them out of the proceeds of the sale, so you may find that you limited the exposure for your home to a greater pool of qualified buyers and failed to save the cost of commissions after all.
There are problems for buyers who try to deal with unrepresented sellers. Sellers make buyers uncomfortable and less likely to view the home as thoroughly as they should. They tend to be emotional and touchy about their homes and overlook the shortcomings of their home, making it more likely they’ll become upset if the buyer doesn’t offer what the seller believes their home is worth. The buyer is dependent on the seller’s honesty, but what if the seller hasn’t prepared the proper paperwork such as disclosing known defects, nuisances and hazards about the home? Is the seller the actual owner of the home or a scammer who will scarper off with the buyer’s earnest money or deposit?
Professional real estate agents know that buying or selling a home is not a simple process. They know how to market homes to the greatest pool of qualified buyers possible. Marketing, showings, financings, transactions and closings all have pitfalls where something could go wrong at any point, so they know how to avoid issues that could torpedo the transaction by asking the right questions in advance and relying on their intuition and experience. They share the liabilities of buying or selling a home with their clients, including carrying errors and omissions insurance. They have proven networks of other professionals such as assistants, make-ready contractors, closing agents, home stagers, and lenders who each do their part to make sure to keep the home sells quickly and for the most money possible. They work with buyers to make sure they’re buying the best property for their budget and household needs.
They make the dream of home ownership come true.