Pros and Cons of Selling Your Home on Your Own
December 5th, 2013
December 5th, 2013
When selling their home, many homeowners choose to work with a real estate agent. However, about 9% of homeowners opted to sell their home themselves in 2012, according to the National Association of Realtors. The biggest reason for placing their home for sale by owner (FSBO) was to avoid paying the agent’s commission.
But selling your home without an agent can be a long and complex process, filled with many risks. Therefore, it’s important to understand the pros and cons before you decide to sell your home on your own.
Saving money. The biggest reason why homeowners decide to sell their home by themselves is to avoid paying commission fees of 6% of the sales price. (Commission fees are split equally between the listing agent and the buyer’s agent) These fees can equate to a pretty big chunk of money you can save. However, what many sellers don’t realize is, they still must pay a 3% commission fee to the buyer’s agent, if the buyer is represented by an agent.
Complete control of the process. The FSBO method enables you to stay in control of the whole process and allows you to negotiate directly with the buyers. You won’t have to communicate through agents.
Lack of real estate experience. Unless you’re a real estate agent, you won’t be knowledgeable in all of the basic elements of selling a home. When you sell a home, you must price your property correctly, qualify your buyers, advertise your home, understand real estate regulations and contracts, and coordinate all the details involved in a closing.
Sales price issues. Many owners overprice their homes when they put them on the market. This can result in the house staying on the market far longer than it would have if it had been accurately priced by an agent. And, often, statistics show that FSBO homes sell for almost 15% less than homes sold by a real estate agent.
Legal and financial risks. When you sell your home on your own, you need to be educated in binding business contracts, buyer contingencies, seller disclosure laws, financing options, title and deed requirements, fair housing laws, inspections and the handling of the buyer’s earnest money. If you’re not knowledgeable in these areas, the sale could fall through, or you could end up having legal or financial problems, especially if you make a mistake while closing the sale. Therefore, if you decide to pursue a FSBO option, it’s recommended that you hire a real estate attorney to help you with all agreements and contracts as well as managing the sale proceedings and closing.
Marketing costs. You can’t just stick a sign in your yard and hope your home sells on its own. You have to develop a marketing plan to attract buyers. If you’re not skilled in marketing, your home could sit unsold for months. Plus, the costs for your marketing efforts (for example, signs, ads, flyers, Multiple Listing Service, FSBO website listings) come out of your pocket.
Time and effort. Selling your home is a 7-days-a-week job. You need to advertise your home, handle phone calls, schedule appointments and be available to take buyers through your home. And if you already have a full-time job, you could miss opportunities to sell your home if you’re not available.
Safety and security concerns. You need to qualify all of your potential buyers before you allow them in your home. Otherwise, you may be inviting in criminals. Many unrepresented sellers have been robbed, assaulted, raped or worse.
After reviewing the negative issues and adding up all of the fees (attorney, marketing, advertising, inspectors, etc.) associated with selling your home on your own, you may find you’re better off just paying the real estate agent’s fee. All of the time, effort and stress with a FSBO option may not be worth the money you might save.
If you’re selling your home in order to purchase a new home, and you’re looking for a home mortgage, contact Grandview Lending. We offer a variety of loan options. Plus, our senior mortgage specialists are skilled at finding the right loan based on your situation.
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