Is Listing Without an Agent Right For You?

For Sale By Owner

When most families decide to sell their home, their first step in the process is contacting an agent. However, very few of them do this without first giving at least a modicum of thought to listing without one. In 2016, for-sale-by-owners (FSBO’s) accounted for 8% of home sales (source: 2017 National Association of REALTORS Profile of Home Buyers and Sellers). I’ll acknowledge that I understand the decision to list your home without an agent. There are a myriad of reasons to go this route, and for me to dismiss them as without merit (as many agents tend to do) would be both condescending and, frankly, wrong. However, I’d like to address a few of them specifically.

Reason #1: Listing without an agent can save you thousands of dollars. A listing agent typically charges a commission of 6%, with 3% of this commission going to the buyer’s agent. Even by listing without an agent, the buyer’s agent commission is unavoidable, so listing as an FSBO can only save you, realistically, 3% overall. On a $200,000 home, this comes to $6,000! If you are rolling the funds from the sell of your home into the purchase of your next home, you can expect to pay that $6,000 off over the next 30 years, which lands closer to $10,000 at typical interest rates. This is an amount that no fiscally conscientious seller can afford to scoff at, obviously. But are these saving actually realized?

In 2016, For-Sale-By-Owner’s (FSBO’s) accounted for 8% of sales, with a average sale price of $190,000. Meanwhile agent-assisted home sales had an average sale price of $249,000 (source: 2017 National Association of REALTORS Profile of Home Buyers and Sellers). That’s a 31% difference, completely eclipsing the 3% commission many FSBO’s set out to avoid. Returning to our previous example of a $200,000 home, we’re talking about a difference of around $60,000. Over 30 years, with a typical interest rate of 3.95%, this comes to a total of $100,000. In the initial quest to save $10,000, $90,000 has been left on the table.

Stats on FSBO vs Agent Sales

But this is based on “average”, or typical, sales, and yours is anything but typical, you might say. And honestly, most agents would agree: there is no such thing as a “typical” real estate transaction. Perhaps you have a special case… perhaps you really can come out ahead without using an agent, you think, even if it’s only slightly ahead. Well, this brings us right in to the next reason most home-owners decide to list without an agent.

Reason #2: What do listing agents even do? What, exactly, bring to the table? How and where do they add value? These are fair, often asked question. Most clients contact a listing agent, fill out some paperwork, maybe vacate the property a couple times for a showing, and don’t really involve themselves again until it’s time to accept an offer. In the current market, homes can sell so quickly that clients might often wonder, “was there even time for them to do anything?” For the most part, clients don’t get the chance to look behind the curtains and see the great and mighty Oz in action. Some skepticism is natural; as with many professions, your best work will often make it appear as if you’ve barely done anything at all.

Here is a quick rundown of some of the tasks a listing agent manages throughout the sell a property:

  • The agent accurately determines the value of your property: This is more difficult that it often seems. Zillow, along with other auto-valuation models, are simply inaccurate, and this is well known. Appraisers perform a similar function, but they often fail to account for market trends. Ultimately, the value of a property is what a rational consumer is willing to purchase it for, and no other entity is going to be better suited to determine this value than an experienced, licensed agent.
  • The agent markets your property: One of the key functions of a listing agent is to garner interest in your property. This task encompasses a cornucopia of different skill sets—acquiring good photos, highlighting the best aspects, helping the seller best prepare the property for a showing—and can take a variety of routes, each one specific to the particular agent performing the task. At our office, we focus on Facebook marketing, online advertisements, unique print media, and—our biggest asset—the introduction of your available property into a vast network of potential buyers, built over years of selling real estate.
  • The agent manages Paperwork/Contracts: A sellers will deal with all of the paperwork surrounding the sale of your home. Seller’s disclosures, buyer’s agreements, contract amendments, etc: all of these documents are long, dry, complicated reading filled with often-confusing legalese that focuses more on circumstantial inclusiveness than layman coherence. Complete, timely comprehension of these numerous documents, without a law degree, simply requires the experience of an agent.
  • The agent engages with potential buyers: though it may sound simple, the task of engaging with and responding to potential buyers can be one of the most demanding in the experience of selling your home. As this is often the most important purchase a person may make throughout their lives, questions abound. “What are the average utility bills?” “Is the basement fully or only partially finished?” “Has there ever been flood damage?” Would you be willing to accept an offer $50,000 below asking price, if I offered it to you today?” Answering these questions is a simple task, certainly, but requires constant engagement.

Acknowledging the amount of work involved in the selling process hearkens back to reason #1—saving money. Performing all of the above tasks isn’t free. In economics this is referred to as opportunity cost, but in laymen’s terms we often refer in terms of much more practical currencies we all have a finite amount of and spend daily: time and stress. On average, an FSBO can expect to spend approximately 10-15 hrs per week performing the variety of difficult tasks involved with the sale of their home (many of them outlined above), and these tasks come at a very real cost.

Reason #3: The seller wants to sell their home they way they want to sell their home. I get it, some sellers want to sell their home their way. They want to be involved in the process, whether it be how their property is marketed, the initial asking price, the negotiations with the buyer, etc. Perhaps they simply want to learn the process, or they want peace of mind. This is entirely relatable; choosing when to sell, at what price, and under what conditions are decisions that can affect you, positively or negatively, for years to come. While I can not speak for other agencies, at our office we both understand and welcome this involvement. The idea that no one can better look after an individual’s economic well-being than the individual themselves is a principle that is the basis of many of the high ideals that this great country was founded upon. To negate this idea, in our opinion, would be simply un-American.

Reason #4: Listing without an agent may allow you to avoid disclosing certain negative aspects of your property. This isn’t a popular reason for listing FSBO, but it is one I’ve encountered more than once when representing buyers. I won’t delve deeply into it as I truly believe most people—my own clients especially—would never go this route. However, I must say this much: I would not recommend it. It’s dishonest, unethical, and—worst of all—immoral. And even ignoring the morality, it’s still a bad idea, as it's simply not likely to succeed. A homeowner is selling something that a buyer is going to literally live in; they will become extremely intimate with the details of this property after they purchase it and very little will go unnoticed. If negative attributes of the property go undisclosed, especially through negligence, the seller will likely be sued (and probably lose). If it becomes apparent that the seller has done so knowingly, they may be charged with a crime. Diligent buyers, and their agents, typically leave no stone unturned, so it’s best not to hide anything under them.

If you’re thinking about listing as a FSBO, please give me a call. I’d be happy to sit down with you and discuss the details of your property, answer any questions you may have, and profess what I believe I could bring to the table as your agent. I try to add a value to every transaction I’m a part of, and I truly believe that I succeed in this. However, even if you do decide not to list with my office, I will still consider a conversation between us a success and I would love to simply be an advisor you can call, free of charge, anytime you need assistance or advice throughout the sale of your home.

Why would I do this? As I said earlier, my biggest asset is my network. I would be glad to help you, knowing that if I provide excellent guidance you may one day refer me to a friend, or decide to list with me the next time you sell your home.

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