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Selling House By Owner: Smart Move or Serious Mistake?

By Edited Nov 13, 2013 0 0

DIY or Hire An Agent?

Selling house by owner or hiring a real estate professional? This is a tough decision homeowners must make before putting a house on the market.  After all, if you get a fast, clean sale that closes quickly, you may (or may not) save a tremendous amount of money by not paying a sales commission to an agent.  

This can be a tempting thought for any seller but especially for the motivated seller who thinks, “I need to sell my house fast!” However, before you decide to go it alone and stick a For Sale sign outside your house, do your due diligence and consider all the value added services a real estate professional brings to the table.


Should You Try DIY Sales or Hire a Pro?
Credit: The truth about by CC-BY-2.0 via Wikimedia Commons, http://commons.wikimedia.org/wiki/File:House_for_sale.jpeg

1. Professional Network of Resources

By the time any real estate agent has been in the business for a while and closed some real estate transactions, he or she has established some invaluable professional contacts. However, the real estate professional who has made a career in the industry and survived the long haul has a deep and wide network of resources that will be hard for the for sale by owner (FSBO) seller to match.

A good agent has contacts in these industries:

  • Advertising
  • Appraising
  • Banking
  • Governmental entities such as real estate tax offices
  • Health departments
  • Home inspections
  • Legal services
  • Mortgages
  • Pest Control
  • Surveying
  • Utilities

In addition, most real estate professionals network and exchange tips and tricks with their peers so they are always learning and improving their skills.

While this does not cover all the professionals an agent may know or interact with, it does cover a large part of the areas of ability you will need to sell your house on your own. If you do not hire an agent to work on your behalf, you must do all the duties related to these areas that an agent normally handles.


2. Eliminates Risks of Errors and Omissions

Real estate professionals carry errors and omissions insurance for a very good reason – humans make mistakes. If your agent makes a mistake or fails to disclose to a buyer, the onus is on the agent. As a FSBO seller, you assume all the risk if anything goes wrong on the purchase transaction or afterward.


3. Larger Pool of Qualifed Buyers

Going it alone on your house sale may cause you to have a smaller pool of potential buyers from which to work. Agents may not be excited about showing your FSBO property, and if it is not listed in the MLS, they may not even know that it is on the market. The reason an agent might not bring a prospective purchaser to a FSBO is because a seller may not have enough cushion in the sale price to cover the agent's commission.

Real estate agents usually have a larger advertising budget than the FSBO seller may, or they may qualify for discounted advertising rates because of their larger volume of business. They maximize their advertising dollars by bundling ads, which means their advertising creates a synergy that provides exposure and access to a wider group of potential buyers.

In addition, many buyers—especially first time home buyers—prefer to work with real estate agents so they can be guided through the process  of buying a home. They may not even consider a FSBO home if their perception is that they will end up paying their agent’s commission.


4. Efficient Use of Time?

The time, effort and cost of marketing and selling your house yourself may not balance with the cost of time lost by not working in your occupation. According to the Bureau of Labor Statistics “Occupational Employment and Wages News Release” for May, 2011, the average mean per hour wage for all occupations in the U.S. was $21.74.

This may be considerably more or less than you make, but let us use that number for the purposes of illustration. Every hour that you spend on trying to sell your own home costs you $21.74. If your typical work week is a 40-hour week, that adds up to $869.60. We could continue to extrapolate the numbers out, but you get the point. 

While there are no hard and fast answers to how long it might take to sell a home as there are so many variables that come into play, a good question to ask yourself is whether you can afford to spend the time on the tasks. If the numbers do not work out, you might be better off hiring a real estate agent.


5. Education and Experience

Any licensed real estate agent in any state has invested time and work into obtaining that license. While licensing regulations vary from state to state, each has guidelines for the least amount of education an individual requires to be licensed as well as standards for the amount and the frequency of continuing education required to keep up a license.

Many agents go beyond the minimum requirements to get special certifications such as Graduate Realtors ® Institute (GRI), Certified Residential Specialist (CRS) or Realtor ®. Others may continue their education and obtain an associate broker's or broker's license.

When you combine that level of education with experience in the field working with clients and closing real estate transactions, it is difficult for most FSBO sellers to compete as it simply is not a level playing field.

This statement is not intended to denigrate any person or any profession. However, just because someone is a bestselling author or world-class athlete does not mean that he or she would automatically be an exceptional real estate sales person. Those experts rose to the top of their professions based on their skills and experience in their industries; the same is true of the real estate professional.

After all, you don't have to hold a class A contractor's license to build a bird house, but if you plan to do brain surgery, you definitely want to have the proper training and credentials.


6. It Works - FSBO Executive Hires Real Estate Agent

What did Colby Sambrotto do when for-sale-by-owner tactics failed to sell his property? According to a report in the Mail Online, the founder of the “For Sale By Owner” website resorted to a traditional method of selling his property; he hired a real estate agent and paid a commission.

The article goes on to describe how the agent secured a sale at a much higher asking price. Also mentioned is the fact that Mr. Sambrotto tried for six months without success to sell his home.

Which would you rather do - pay the commission for a closed sale or absorb the cost of the lost income and still be saddled with a property you need to sell?

Selling house by owner - can you sell your house yourself? Absolutely, if you think that is what is best for your circumstances and if you understand what is involved. If you decide it is not worth the time and effort, you may want to consider hiring a pro to do the job for you.

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Bibliography

  1. Gardner, David "For Sale By Owner founder sells his houseā€¦using a real estate agent." Mail Online. 05/08/2011. 24/04/2012 <Web >
  2. Undisclosed "Occupational Employment and Wages News Release." Bureau of Labor Statistics. 27/03/2012. 24/04/2012 <Web >

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