There are no rules requiring you to sell your home with a real estate agent. In fact, in 2019 around 11% of people chose to sell their property outside of the multiple listing service (MLS), listing it for sale by owner (FSBO). But is selling a property on your own worth the potential cost savings? Learn why you may want to sell your home without a real estate agent and how to sell your home by owner.
Why sell your home without an agent?
Real estate agents earn a commission (around 3% to 6%) from the sale of your property. So selling your home without a real estate agent can save you thousands to tens of thousands of dollars, depending on your property's sale price.
Additionally, homes sold FSBO often sell faster than agent-assisted homes. According to the National Association of Realtors 2019 Profile of Home Buyers & Sellers, 58% of FSBO homes sold in less than two weeks. Many times, homes sold by owner are sold to personal acquaintances, such as family, friends, work colleagues, neighbors, or possibly even real estate investors, and these deals can often close much quicker than a traditional sale would.
The downside to selling your home without an agent
While you may save money by avoiding a commission, you may be selling for less. In 2019, homes that were sold FSBO sold at a median home price of $200,000, which is signiﬁcantly lower than the $280,000 median home price of properties sold with an agent.
Another downside to selling without an agent is that you are responsible for marketing the property for sale, coordinating showings, staging the property so it's "show ready," negotiating price and terms, and getting the property through closing. Real estate agents typically do this work for you, so eliminating them from the equation puts all of that work on your plate.
How to sell your home without a real estate agent
Accurately determine your home's worth
First and foremost, you need to know your property's as-is value. It's fairly common for an FSBO home to either sell quickly because the asking price is below market value or sit on the market for a long time because the asking price is too high.
Some real estate industry websites will have automated valuations estimating your property's value; however, those can be inaccurate, sometimes being off by several thousand dollars. It may be worthwhile to ask for an appraisal or get a Realtor's opinion of value.
Prep your home for sale
Another important step when preparing your home for sale is getting the property fixed up and "show ready." Declutter your home -- less is more when you're trying to sell a property. Complete any unfinished projects and repairs. While your home may feel perfect to you, homebuyers may not appreciate a purple bathroom or three different types of floors. Keeping your home as neutral and updated as possible, with limited personal photos or decor, will increase your odds of getting an offer.
Market the property for sale
Before you market your property, make sure you have at least one high-quality photo of every room, although two to three pictures are suggested. It may be worthwhile to hire a professional photographer. Also, draft a well-written summary to market the property. Look at other listings in your neighborhood, and see what you like about those property descriptions. Once you have both, you can begin marketing.
There are several ways to market the property for sale, one of the best being online. Several websites like Zillow (NASDAQ: ZG), Facebook (NASDAQ: FB) Marketplace, Trulia, or Redfin (NASDAQ: RDFN) let you market your property for free.
Additionally, depending on the state your home is located in, certain websites will allow you to pay a small flat rate fee to list the property for sale in the MLS. This gets you far more exposure than listing on each individual website for free.
Since there is no seller's agent, you save money by paying no selling commission; however, if a prospective buyer is brought to you through an agent, you may have to pay the buyer's agent's commission.
If your property is distressed or in need of repair, or if you simply don't want to deal with the hassle of listing and showing it, you can contact a local real estate investor or iBuying company. Most will buy the property as-is, sometimes even sight unseen, closing in as little as two to four weeks.
It's also a good idea to put a for-sale sign in your yard, with flyers if possible. The more information you can provide, the less you will have to field calls -- although you will likely receive a large number of calls from real estate agents trying to get you to list with them.
Negotiate and close
The real estate agent is typically in charge of negotiating and getting the property through closing. It's helpful to brush up on your negotiating skills to ensure you're getting the best possible price or terms. Once agreed, enter into a formal contract and have money placed in escrow with a title company of your choice. Communicate with the title company frequently to ensure the necessary items like a property inspection, appraisal, and title insurance are happening in a timely manner.
Selling your home without a real estate agent can be done, and for many it is an easy and cheaper option. But it's not without extra work, and it does come with the risk of getting less money for your home. If you choose to sell your home without an agent, make sure you are valuing your property accurately and continue to educate yourself on what homebuyers are looking for.