Note: This is a chapter in my new ebook called The Ultimate Guide to Buying (and then Selling) Your First Home. I will post a chapter a week. If you like what you read, you can pick up a copy here for the price of a candy bar! Buy a candy bar or be a real estate guru! This chapter goes over whether you should try to sell the home yourself. The last chapter to be shared on this blog you can find here.
After what I thought was a substantial pause, I coughed to cover myself. I had been asked this before by clients I didn’t know, but never by a client who I had helped in the past. Of course, it had been seven years since I last worked with Steve and Sally, but it was still surprising to get the question. After collecting myself, I told Steve three reasons why selling your house yourself was not a good idea.
1.More profit– Yes. “You heard that right, Steve,” I told Steve after I heard him laugh at this suggestion. I continued with my reasoning. “You can actually make more money selling your home through an agent than you can yourself. There is data to support this claim. The National Association of Realtors did a Survey of Home Buyers and Sellers and found out that For Sale by Owner property owners generally sold their homes for 13 percent less than the home buyers who used an agent. I have spoken to many owners selling their homes themselves. Many of them end up marking down their properties several times until they find someone who is willing to buy it.” Steve expressed doubt this was true. I replied. “For example, I spoke with one FSBO that had begun the sale process at $120,000. He reduced it down to $105,000 after three weeks. Three months into the process, he called me and asked if he thought he could sell it for $90,000. I told him that I would keep it at $105,000 and I could list it in the Multiple Listing Service, which goes out to 100,000 agents across the area, and still net him more than $90,000 would bring him.” I paused for effect. “Let’s do the math. If he sold it for $90,000. He would pocket nearly the entire amount minus closing expenses. If he sold it through me for $105,000, paid me a 6% commission of $6,300, he would pocket $98,700 minus any associated costs of 5% (survey, closing costs, title policy, etc.), which comes to $93,500. “I told Steve that most often than not, most FSBOs end up selling it marked much lower than when they first offered it for sale.
2. Quicker Sale – Steve balked at this idea as well. He told me that he had studied up on the process and felt sure he could sell it within two weeks of putting it on the market. I replied “FSBO properties tend to stay on the market longer. Some studies indicate that FSBOs tend take three weeks longer to sell. There are two reasons for this: marketing and incentives. The NAR study found that half of FSBOs did nothing to market their homes and nearly two-thirds offered nothing to buyers as incentives. When you list with a real estate professional, you will get your home on the Multiple Listing Service, which then syndicates it to all the big portal websites like Zillow and Truilia. With a realtor, a listing is introduced to millions of potential buyers. This fact is worth the sales commission alone.” Steve agreed that this was valuable. I continued. “As far as incentives, did you know that the listing agent will offer half or more of the sales commission to any buyer’s agent that brings a customer to you. Without this incentive, many agents will bypass a property which is why most do not work with FSBOs.” Steve said he had forgotten that aspect of the sale. He said that he would just offer the same 3%, which I responded asking, “how will agents know this fact if he doesn’t advertise it as widely as I could.” Steve admitted I had a point.
3. It really is a hassle – I told Steve that when I sell my home, I plan to hire an agent. Steve seemed shocked and wanted to know why would I do this. I responded with one word: hassle. I didn’t want to have deal with the hassle of selling my own home when I was busy selling other properties. FSBO sometimes do not realize the amount of work an agent puts into the process behind the scenes. “Some studies show that 70% of FSBO owners face unforeseen issues that caused them stress. Real estate agents can handle the legal paperwork of the transactions for you. When your house goes on the market, they handle the scheduling and interactions with the buyers and buyers’ agents. Realtors will negotiate on your behalf with their market knowledge and handle many other bumps in the road along the way. Selling your home is a hassle. It only makes sense for you to hire a professional to do it. “
Steve said he remembered all the steps involved when they bought their first home through me. He said he often thought about how lucky they were not to have to deal with the many steps while holding down full-time jobs. I could tell he was leaning away from selling it himself and when Sally joined us, she told Steve to stop being silly and just let me handle the sale of their home. They both had full time jobs, two kids and a thousand other life things going on that paying the money to me was well worth it. Steve grudgingly agreed.