In this Millionacres debate, Aly Yale and Marc Rapport lay out the pros and cons of selling a home yourself versus the for-sale-by-owner route.
Thinking of selling your house? If you go the traditional route, you’d interview a few local real estate agents, choose one, and they’d put your home on the MLS, market it, and handle the marketing and negotiations.
They’d also take a hefty commission for doing so.
But if you’re the nontraditional type -- or just looking to save a little cash and take home some more of those profits -- then there’s another option: Choose FSBO.
An FSBO -- or For Sale By Owner -- is exactly what it sounds like. You handle the sale of the property, getting it up on Zillow and other platforms, opening the home up to showings, and handling the negotiations and contracts -- all on your own.
It’s a lot more work, sure, but in the end, it can save you on that 6 to 7% commission. (On a $200,000 home, that’s anywhere from $12,000 to $14,000!)
Of course, there are drawbacks there, too. Not sure which route you should take? Just need help deciding? Our experts have both sides of the coin covered.
The case for using a real estate agent
Aly Yale: Hiring an agent is the norm. According to the National Association of Realtors, only about 8% of home sales were FSBOs last year.
It’s a very small share -- and for good reason, too. FSBOs are hard work. Considering most sellers are also buyers, most aren’t too keen on adding more tasks to their to-do list. (Buying a home and applying for a mortgage are difficult enough.)
There are also other reasons using an agent is generally preferred:
- You usually get more money. Agents know the market. They know what comparable homes are worth and what buyers might be willing to pay for yours. More than this? They’re also motivated to sell your home for as high a price as possible (higher price = more commission). All together, this typically results in a higher sales price on closing day. (NAR shows the price difference at around $77,000, though that’s clearly a biased source.)
- The home will likely sell faster. There are a few reasons agent-listed homes typically sell quicker than FSBOs. First, the agent has the marketing tools and experience to increase its exposure. They know how to get the word out, they’re connected to other agents and buyers in the area, and they can give your listing traction almost immediately. On top of this? It’s also their full-time job. Unless you’re taking time off work to really market and promote your listing, an agent is probably going to have more bandwidth to put toward the sale.
- You get expert help along the way. Finally, you have expert knowledge and guidance on your side. With an agent helping you, there’s someone to help negotiate on your behalf and someone to bounce offers off of. There’s someone to tell you which inspection issues are a sticking point and what concessions you should make (or not make) to help your deal go through. All in all? You’re just a more informed seller.
The case for FSBO
Marc Rapport: If you sell your home yourself, you don’t pay a commission to an agent. That bottom line is the bottom line for why so many people take on the process themselves, at least at first. Zillow says its research shows that 36% of sellers try it themselves at first but only 11% end up selling without an agent.
Those that succeed don’t have to share the proceeds, at least with an agent. You still may have to pay for appraisals, negotiated closing costs, etc., but you can also navigate and negotiate those waters, too, especially if you’re experienced in these matters.
Whether to go FSBO depends on your level of experience and your situation. I had precious little experience the only time I sold a house via FSBO, but it worked like a charm. Our house was situated on a quiet cul-de-sac a short walk from downtown Fort Mill, South Carolina, a small town on the state line that was quickly becoming a suburb of booming Charlotte, North Carolina.
The house was in good shape. We had it inspected so there wouldn’t be any surprises. We put a reasonable price on it (for comps, we simply looked at the asking prices on other houses around us), and we nailed a "For Sale by Owner" sign on a tree by the driveway. It was under contract in three days.
I know one argument is that the agent will vet the calls and schedule and do showings, etc., but we were perfectly capable of letting calls go to the answering machine. (This was in 1994, before caller ID on smartphones made that even easier, and this was a three-bedroom, two-bath house of about 1,200 square feet, so not a particularly involved showing.)
We also had retained a well-connected local lawyer for the close who advised us on a couple issues that popped up along the way, and it closed in a couple weeks.
This was a $71,000 property, and we saved about $4,000 doing it that way.
The information you need to effectively take on this process yourself is far from deep-state secrets. Here’s just one example from our own (frequently updated) archives: "The Comprehensive Guide to Preparing a House for Sale." Along with that roundup of major points, you can drill down more in pieces like this: "9 Cheap Landscaping Ideas to Boost Your Curb Appeal."
These ideas work whether you’re selling a home you bought as an investment or the place you live, or both. And they are also effective whether you’re using a Realtor or going the FSBO route. I’ve always used an agent to buy but would definitely consider selling on our own again, in the right situation.
And "right" is in the eyes of the beholder, or mortgage holder in this case.
The Millionacres bottom line
There are very good arguments to be made for either selling your home yourself or using a real estate agent. Just like the old cliché about location, location, location, what’s best for you depends on where you’re at right now with all those many factors that go into marketing, negotiating, selling, and closing a deal.
Either way, the right price on the right deal in the right neighborhood is still going to be the spoonful of sugar that makes the medicine go down while giving up ownership on a nice piece of real estate.