How to sell your house without a realtor
Have you ever considered selling your house on your own? A growing trend is For Sale By Owner (FSBO). That’s when you sell your house without a realtor. We recently talked about the process as they relate to condos, but there are some differences with stand-alone homes.
Selling (or buying) your home is most likely the single largest financial transaction of your lifetime. If you make a costly mistake like listing your home for too much, it can cost you big bucks. The biggest incentive for homeowners to use FSBO is to save on realtor commission. Is it worth the savings or is it a case of penny wise, pound foolish? Let’s take a closer look at FSBO.
The Birth of FSBO
FSBO is a relatively new way to sell your home. Sure, you could previously sell your home by private sale, but it wasn’t until 2010 when the game changed. That’s when MLS (Multiple Listing Service) was forced to allow FSBO companies into the real estate market.
Selling your house with a FSBO company is a lot different than selling your house the traditional way with a realtor. If the thought of selling your house on your own intimates you, there’s no need to worry. FSBO companies are flexible. You can get as much or as little help as you’d like selling your house. Many FSBO companies offer different home selling packages to suit your needs, charging a flat fee or lower commission than realtors.
Under a traditional housing transaction, the buying and selling agents would split a five percent commission (2.5 percent per realtor). When you decide to sell your house without a realtor, you can save big bucks on the commission you’d normally be paying to your realtor (the selling agent).
Why You Should Consider FSBO
The biggest incentive to sell your home on your own is the savings in commission. Under the typical real estate deal, if you’re selling a home for $500,000, you’d pay $25,000 (five percent) in real estate commission to the buying and selling agents. By using a FSBO company, you can save considerably on the commission you’d normally pay your agent (it’s still advisable that you offer the buying agent commission, otherwise your home probably won’t get very many showings). The more work you’re willing to take on when you sell your house without a realtor, the more you can save in commission.
Why You Might Think Twice About FSBO
The decision to sell your house without a realtor isn’t something to be taken lightly. Think long and hard before you commit to this decision. Selling your house on your own requires a big investment of time. You’ll have to field calls from interested buyers, schedule showings and be there in person to show off your place. If you live a busy life and you’re already struggling to keep up with your weekly schedule, FSBO is probably not for you.
Selling your home on your own can indeed be a case of penny wise, pound foolish. Although you may save on commission, your house may receive fewer showings and ultimately sell for less. In the earlier example, you may save $12,500 in commission, but if you house sells for $50,000 less, is it really worth it?
You could also end up shelling out more in other closing costs. For example, real estate lawyers typically charge more for FSBO deals. You may also have to jump through more hoops to get a mortgage approval.