With real estate prices skyrocketing to price points never before seen in many hot markets around the country, more and more sellers are asking whether a real estate agent is really worth the 6% commission that they charge to list and manage the sale of a property. Selling your property in a "for sale by owner" ("FSBO") arrangement can save tens of thousands of dollars, but it also means a lot of extra work for sellers. Is a deal right for you?
Determining Fair Market Value
Realtors bring certain skills to the table when you're buying a property. They typically are intimately familiar with your local market's price trends and can assign a proper value to your home. A great price means you'll maximize your sale price and minimize the time you spend on market. In a FSBO transaction, you're stuck guessing at the fair market value of your property and run the risk of misjudging just what your home is worth. Guess wrong and you may end up owning the house for months longer than necessary or may be leaving some serious dollars on the table.
Working with Buyer's Agents
Real estate companies also can efficiently work with buyer's agents. Agents know that a FSBO sign typically means more work for them. They know that they will end up handling most of the paperwork, correcting mistakes that you may have made in the contract or while handling the offer, and will need to help guide you through industry standard practices. Because FSBO transactions tend to mean more work for Realtors, many simply direct their clients to other properties. A smaller buyer's market is a real challenge for FSBO sellers.
Attracting the Right Buyers
A final nail in the coffin for most FSBO transactions comes from the nature of the deal itself. Buyers attracted to FSBO deals tend to be bargain shoppers. They know that you are saving money on agent fees and tend to want more than their fair share of the savings. Whether this comes in the form of lower asking prices, requests that you bear a greater portion of closing costs or inspection fees, or put up with other requests, FSBO buyers tend to prioritize cost savings over everything else.
If you're still on the fence about using a Realtor, consider using one of the many online FSBO services. Companies like Redfin offer heavily discounted Realtor services and have enormous web footprints to help your house get visibility and sell quickly. If you have a buyer and price in mind, that's when you can use an attorney to go over the paperwork and ensure the contract and deeds are handled appropriately. Attorneys will work on an hourly or fixed rate basis and that will generally be a fraction of the Realtor fee.