How to Sell Your Home Without a Real Estate Agent
Reader question: "We are planning to sell our house this summer, and we are trying to net more money by handling the process on our own. Do you think it's possible to sell a home without a real estate agent in this economy? Is there anything we need to be concerned with?"
It's always possible to sell a house without an agent. But if you want to succeed, you'll need to perform all of the tasks the listing agent would normally handle for you. Pricing is the most important of these tasks. How you present and promote the home will also determine your success. We will discuss all three of these things in more detail below.
Pros and Cons of FSBO
I'll explain how to sell your home without a real estate agent in a moment. But first, I want to offer some points of consideration for other homeowners who might still be on the fence. It sounds like you've already made up your mind about flying solo. For everyone else, I offer the following pros and cons.
Pros -- When you sell your house on your own, without using an agent, you will save money. You can expect to pay a listing agent up to 3 percent of the sale price. Actually, the standard listing fee is 6 percent. But the seller's agent will usually split this with the buyer's agent. If you sell it by yourself but still offer 3 percent to a buyer's agent (a good practice), you'll end up saving 3 percent of the sale price.
Cons -- You'll have to do a lot more work. You'll have to research comparable sales to determine your asking price. You'll have to take pictures for the property listing. You'll have to write up the details for the listing. You'll have to review all of the offers and negotiate with buyers. Some buyers' agents may be reluctant to show your house if it's an FSBO listing, (since they'll have to do more work).
What's Your Real Estate Market Like?
We also need to talk about the key differences between a buyer's market and a seller's market. Selling your home without an agent will be a lot easier in a seller's market. This is when there are plenty of qualified buyers, but not enough properties to go around. In this scenario, a seller can get away with more mistakes.
In 2011, however, most cities in the U.S. are experiencing a buyer's market. This kind of scenario is marked by high inventory levels and buyer shortages. In other words, there are too many houses on the market. You'll have to work much harder and make fewer mistakes in this scenario.
Before you decide to sell the home on your own, you need to understand your local market conditions. It ties into every part of the process, from pricing to negotiating.
What a Listing Agent Does
If you want to know how to sell your home without a real estate agent, you need to think about the duties of a listing agent. After all, you'll be doing these things by yourself if you go the FSBO route.
- The listing agent will view your home and make suggestions for repairs, touch-ups, staging and overall presentation. He or she may give you a list of items that need to be addressed, before the home can be listed.
- The listing agent will review recent sales in the area, in order to determine a reasonable asking price for your house. Real estate folks refer to these as comps, which is short for comparable sales.
- When your home is ready, your listing agent will list it for sale on the Multiple Listing Service (MLS). If he or she is a licensed Realtor, your home will also be listed on Realtor.com. Other sites worth considering include Trulia.com and Zillow.com.
- Your listing agent may or may not coordinate the showings. This will depend on whether or not you're staying in the home while it's listed. If you label your listing with "by appointment only," somebody will have to coordinate visitation times with the buyers' agents.
- Your listing agent will probably put a lockbox on your door, so other real estate professionals can let their buyers into the house.
- The listing agent will review all offers submitted by buyers. Most purchase offers are only valid for 48 hours. So you need to review them in a timely manner, and then respond to the buyer in some way (i.e., acceptance, rejection or counter-offer).
- The listing agent will negotiate with the buyers through their real estate representative. The negotiations may include the purchase price, the desired closing date, as well as any contingencies the buyer's have made.
- When you finally accept an offer, the listing agent will finalize the contract by ensuring both parties have signed it. The buyers would then take this contract back to their mortgage lender, for final approval and underwriting.
- After this, you would move on to the home inspection, the lender's appraisal and ultimately the closing. The seller's agent doesn't have much to do as this stage, aside from keeping the line of communication open.
This is what you pay for when you decide to work with a Realtor. This is how they earn their commissions. But if you're planning to sell the home without a real estate agent, you need to make sure you're comfortable handling these things. Are you willing to perform all of the duties listed above? Do you have the time, knowledge and resources to do these things? If not, you should hire an agent. If you're okay with it, you can continue reading below...
The 3 P's of Selling Without an Agent
Still with me? If so, you must be serious about selling the house on your own. In that case, you need to know about the 3 P's of home selling. I touched on them earlier when describing the duties of a listing agent. But now they have a catchy name -- the 3 P's.
1. Preparation -- Before you list the home for sale, you need to make sure it "shows well." This is real estate speak for a house that is ready for viewing in every way. It needs to be in a good state of repair, from top to bottom. It needs to be free of clutter. It needs to be sparkling clean inside and out. It needs to be staged well, so that it appeals to the largest possible audience.
2. Pricing -- If you overprice the home, you're going to be on the market for a long, long time. I can promise you that much. Buyers and their agents will use comparable sales to validate your asking price. If you are priced above comps, they will want to know why. It's one thing if you can justify the higher price (maybe because your house has certain features the comps don't have). But if you can't justify the premium price tag, you're not going to entice any offers from buyers. Think about it from the buyer's perspective.
3. Promotion -- If you want to sell your home without a real estate agent, you must handle all of the marketing yourself. For starters, you need to put the home on the Multiple Listing Service. There are FSBO services that can do this for you. You should also put it on Realtor.com, to maximize your exposure. While you're at it, create a flyer that lists all of the great features your home has to offer. Place these flyers near the front door, so buyers can pick them up. And, of course, there's the yard sign.
Note: This is a multi-part tutorial. For more tips on selling your own home, check out the FSBO Matrix above. You can also do a keyword search at the top of this page. We have dozens of articles and tutorials for sellers. Good luck.