Should I Sell My Home by Myself or Hire a Real Estate Agent?

Selling your home is a big decision. Whether you're selling to upgrade, to cash out, move towns/states, or change of job, deciding on how and when to sell your home can mean risking leaving money on the table. Two routes to sell are selling for-sale-by-owner (FSBO) or selling with a real estate agent. While it may seem like selling on your own could save you money, statistically speaking you may actually lose more than you will save while possibly also facing more challenges in the process.

THE TOP MOST DIFFICULT TASKS FOR FSBO SELLERS

• #1 Preparing the home for sale

Preparing your home can be such a daunting task. Where do you start? How much should you do? How much CAN you do? Do you have enough money and patience for any repairs? I know it can be overwhelming but preparing the home for sale is crucial. A good realtor will be able to provide guidance. I suggest to declutter the home as much as you can. Deep clean the whole home and make sure to keep it clean for showings and photos. Touch up the walls or get them repainted if needed (neutral colors sell best!). Maintain the lawn and landscaping since curb appeal plays a large role in a buyer's first impression. Also if possible, make any repairs that will deter a buyer and decrease the value of the home. The list goes on.

• #2 Understanding and executing paperwork

There's a legality concern for sellers who may not understand the contract and/or offers they accept. This can lead to a variety of issues at closing time. Do you understand any of the contingencies in a buyer's offer? Do you understand the circumstances in which a buyer can back out of a contract with or without consequences? If you plan to take some of the appliances and fixtures with you, do you know how to exclude those items from the contract? Are you worried about accepting an offer without fully understanding the terms you are agreeing to?

• #3 Pricing the home correctly

Unfortunately this is where many FSBO sellers fail. Many FSBO sellers are notorious for overpricing their home because they either want a certain high profit from the sale or they are not knowledgable in analyzing the comparable sales in their neighborhood. When a home is overpriced, it will sit for a long time which can hinder the ability to sell if you are wanting to sell in a specified time frame. What you think your home is worth and how much you wish to profit from the sale are not legitimate factors that play into pricing the home correctly (I wish it was). A realtor will run a comparative market analysis (CMA) and help price the home correctly for the current market you are selling in. A home priced right will sell in a reasonable amount of time. If you don't use a realtor but wish to price the home right, it will be wise to get it officially appraised. It's a small expense that can save you time.

• #4 Selling within a specific timeframe

As mentioned above, if a FSBO seller can't sell their home on time, it's likely due to overpricing the home. The other issue is that many non-realtors don't have the marketing skills and tools that a professional realtor can provide which can help bring more buyers and sell the home faster.

FSBO SUCCESS

About 36% of home sellers try out selling by themselves but only 11% succeed. The many that don't succeed end up taking their homes off the market or selling with a realtor.

Not only do many FSBO sellers not succeed but the median home sale for FSBOs in 2020 was $217,900 compared to $295,000 sold by agents. This is a difference of $77,000 or 26%. The most common reason FSBOs choose to sell on their own is to save money but statistics show that FSBOs lose, on average, 26% of home sale earnings to save 5-6% in real estate agent commissions. In 2021, the difference was 22% but of course the market was an unusual one.

MARKETING

Once a home is (hopefully) market ready, it's time to market the home. The first step to getting a buyer is to make it known that the property is for sale. There are many ways to market a home for sale but surprisingly enough, about a third (34%) of all FSBOs do not even bother with the task!

For those that do market the home, the most common methods used are yard sign (26%), word of mouth to friends and family (23%), and third party websites like Zillow and Realtor.com. Unfortunately the main 2 methods are outdated. When it comes to how buyers find properties to buy, only 6% found a property to buy from a yard sign and 7% from a friend, family member, or co-worker. The most common ways for buyers to find properties to purchase are the internet (37%) and their real estate agents (34%). So do buyers find FSBO properties to purchase easily? Clearly not.

When it comes to marketing strategies, realtors have a large network of people and tools behind them that help them sell a home quickly and more efficiently than non-realtors. Below are some marketing methods that FSBOs typically can and can not perform compared to realtors.

As you can see, FSBO sellers are limited in the most common marketing strategies because they don't have access to the MLS and the business tools a brokerage provides.

FSBO FACTS

Here are some miscellaneous statistics not already mentioned above about FSBOS that I find interesting:

• 85% of FSBO sellers offer no buyer incentives

In comparison, 65% agent-assisted sellers do not offer buyer incentives. In today's market (late 2022), we are seeing more and more seller concessions to help buy down buyers' interest rates.

• 73% of buyers believe they can out-negotiate FSBOs

Buyers believe they and their agents can out-negotiate FSBO sellers because they are not represented by a professional. Unless you have strong negotiation skills and experience, it might be wiser to hire a professional realtor. As stated earlier in the article, FSBOs sell for 26% less on average than agent-assisted homes.

• 41% of FSBOs want to save money

It's no secret that the main reason FSBOs attempt to sell on their own is because they want to save money but their plan to save money typically backfires and they lose more than they save in the long run.

• 19% of buyers don't know how to find FSBO properties

FSBOs mostly do not market their properties and when they do, the majority use ineffective and outdated methods like yard signs and word of mouth. It's no surprise that it would be difficult for buyers to find these properties. Even third party websites like Zillow will make it difficult for users to find the FSBO properties on their site.

CONCLUSION

Hopefully this blog post has given you enough information to make a decision on whether to sell your property on your home or use an agent. The decision to sell your home is an important one so it's best to get it done in the way that meets your needs and wants best.