Whether in the market to buy a house or choosing to sell one, you should know one thing, the housing market is on fire right now. Homes are only on the market for an average of 19 days, selling 16 days faster than a year ago. There were 728, 538 houses listed for sale, and 48.9% of homes are selling above the asking price.
These statistics tell you is that it’s a great time to put your home up for sale and a challenging time to buy one. These numbers don’t tell you how many of these homes were sold by a real estate agent and how many were for sale by owner sales.
As a seller getting ready to sell, you need to consider whether you should hire a real estate agent or go the for sale by owner route. Let’s take a closer look at what it means to sell your home with a real estate agent vs putting it up for sale by owner. Read on to learn more about the process of selling a home.
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What Does It Mean to Buy or Sell With a Real Estate Agent?
As you consider how should I sell my house, you know that it’s most common to hire a real estate agent. When you hire a real estate agent, they become the listing agent and take on certain duties to help get your home sold.
It’s their role to find potential buyers for your home through open houses and showings. Before any of that happens, they should help you identify the best listing price for your home based on the market value.
Type of Real Estate Agents
Real estate agents take on different roles depending on if they are working for the buyer of a new home or the seller of the home. Ultimately, their goal should be to bring together a buyer and seller, so a house goes from one to the other.
A buyer’s agent represents those who want to look at homes to purchase, while a seller’s agent represents the people selling a house. Could an agent be both for the same house? Yes. Could this create a potential conflict of interest for the buyer or seller? Yes. More on this later.
What Does It Mean to Buy or Sell a For Sale By Owner Property?
If you want to sell your home without using a real estate agent, you do a for sale by owner sale, commonly called FSBO and pronounced fizz-bo. This simply means as the home seller, and it’s now your duty to do all of the tasks a real estate agent might do for you. This might include establishing a fair market value sale price, marketing and showing the house, and preparing for closing.
In essence, as the homeowner, you’re responsible for all aspects of getting the home sold in place of any of the things a realtor might do for you.
Buying or Selling a House With a Real Estate Agent
Most states require real estate agents to be licensed, and most real estate professionals are members of the National Association of Realtors. If you’re ready to sell your house (or buy a new one), let’s take a closer look at the pros and cons of working with a real estate agent.
Real Estate Agent Pros
There are many positives to consider related to working with a real estate agent. First, they are professionals in the field of buying and selling homes. Because they work in the field professionally, they are likely to have a wide reach of connections.
They have access to the ways to market your home through MLS listings, online listing portals like Zillow, Craigslist, or Redfin, social media channels of their agency, and their own social media channels too.
A real estate professional also brings market expertise to the table. They understand the market in areas where they work. They will know what’s selling and what consumers are interested in buying. They also have marketing experience in knowing how to get the word out about your house and why potential buyers should look at it.
Real estate agents also have training in looking at what houses you are selling for and how different features of your home add or subtract value. They should be skilled at helping you to get to the correct listing price for your home.
If you’ve bought a house, you know there’s plenty of paperwork involved. A real estate agent understands and has easy access to the necessary paperwork for offers, disclosures, listings, contracts, and closing information.
If they don’t do the paperwork themselves, they also have connections to others in the field who can be helpful in your buying or selling process. This would include people like housing inspectors (especially important if you’re buying a fixer-upper), title companies, and mortgage brokers.
A real estate agent is also able to act as a filter to make sure only qualified buyers are actually involved in seeing your home. This prevents the neighbors who are just being nosey from coming through the house.
Don’t underestimate the subjective expertise a real agent offers. They can discuss your home without emotion and offer opinions to help you make the best possible decisions without your emotions getting in the way.
Real Estate Agent Cons
With all the expertise and experience a real estate agent offers, why would some still prefer to sell by owner than with an agent? Let’s consider the negatives of working with a licensed real estate agent.
For most people who hope to not use a real estate agent, it comes down to cost. A real estate agent makes between 4% and 6% when a home sells. In June of 2020, the median price for a home was $295,300. This means that the seller is paying the agent or agents involved in the sale of that house $17,718 in commissions at the typical rate of 6%.
When you ask a real estate agent to list your house, you enter into a contract with them. But most agents have many clients they are helping simultaneously. In a busy market, you need an agent to pay attention to you when you need it because things can happen quickly.
You also want to remember an agent has self-interest involved since their pay is based on commissions from a sale. You want to be sure you’re working with an agent who you trust and not one who is advising you just to make a sale.
Buying or Selling a House That’s For Sale by Owner
An FSBO sale means the owner of the house is responsible for doing all the things they might rely on an agent to do. Let’s take a closer look at what it means to sell a house for sale by owner.
For Sale by Owner Pros
For most people, the motivation to try to sell their homes themselves is to save money. That hefty commission stays in your pocket for doing the work yourself. Some people like the idea of being totally in control of their home sale. They don’t have another person who they have to answer to as they put the house up for sale.
When you sell for sale by owner, you also have total control of your listing price. You don’t necessarily have to take the advice of a real estate agent in regards to list price.
As an FSBO seller, you control when your house is shown. In many ways, since an FSBO seller is solely in charge of getting a sale, they might be more motivated to manage the listing.
For Sale by Owner Cons
There’s a reason real estate agents make the money that they do. It can be a whole lot of work to market and sell a house, especially if you don’t know what you’re doing.
Many homeowners end up in trouble because their emotions get in the way. They believe their house is worth more than it is and list it wrong. Many homeowners need the advice of an agent to make decisions about their home sale without emotions getting in the way of their decisions.
Selling a home can be more exhausting than most people realize. Between the marketing needed, keeping the house clean and ready for showings, and actually doing the showings, doing the work of a real estate agent is hard work.
Many buyers who are working with agents also might not see your house. A real estate agent may be reluctant to show a for sale by owner house knowing the owner is trying to handle the sale themselves.
You also lost the expertise of a real estate agent that comes with mortgages and paperwork for closings.
Options Beyond Real Estate Agents and FSBO
Are there options for a home if you don’t want to use a real estate agent or sell it yourself? You can always opt to list your home with a property manager and rent it out. There are some who either can’t buy or want to have the flexibility of renting versus buying.
Another trend in home sales is to sell to a company that buys a home for cash. The seller simply sends their address and will get an offer for cash. While they can avoid the hassles of a more drawn-out sale, often, you won’t get as much for the sale. In a hot housing market, it might not be worth it to consider a cash sale buyer.
Real Estate Agent vs For Sale by Owner, What You Should Know
If you’re ready to sell your home, there are a few more things to consider as you weigh whether to sell with a real estate agent or do a for sale by owner sale.
While you might opt for an FSBO to avoid paying commission, most FSBO sales still need to pay a commission. If a buyer with a real estate agent wants to buy an FSBO owner home, they will still expect to be paid half of the traditional 6% commission.
In the end, 28% of all sellers decide it isn’t worth the time or trouble to sell the house on their own. They decide the commission is money well-earned because of all the things an agent does.
Statistics show that a house listed for sale by owner will get less traffic and even fewer offers than a house listed with an agent. Remember, a real estate agent has a big reach in the field that a homeowner won’t have.
Many sellers will opt to try to sell a home as an FSBO thinking they will save money. The thing is that buyers know they aren’t paying a commission to a real estate agent and want the house to be priced less.
Many buyers who look at an FSBO home are expected to buy it for less than a home listed with a real estate agent. This ends up not saving the seller as much as they hoped, especially if they have to pay another agent the 3%.
Deciding Between a Real Estate Agent or Going For Sale By Owner
Buying and selling a home is a big step and requires some real planning and financial commitment. While you save money when you sell a home for sale by owner, you also lose the expertise and experience of working with a real estate agent.
Don’t forget the importance of making sure your home is properly covered by insurance. Even if your home is for sale and you have interested buyers coming and going, you want to make sure your home and possessions are protected.
To discuss all your insurance needs, we can help. Contact us today to do a full evaluation of your insurance needs.