Here in Southern California, like the majority of the U.S., real estate agents typically take 6% of the price of the home (split between the buyer’s agent and seller’sagent), which many homeowners view as unjustifiably large. The agent puts none of their own money into the home and comparatively little of their time. Yet, if they find a buyer offering $800,000, a whopping $48,000 – enough money to buy a 2010 Porsche Boxster -- would go toward the agents’ commissions. If the homeowner decides to forgo the assistance of an agent, he or she can pocket that $48,000 by marketing their San Diego property and negotiating the sale themselves.
There are also psychological reasons why homeowners choose to sell their homes themselves. Some people enjoy the feeling of being in control of the transaction and unencumbered by the potential mistakes or ulterior motives of professionals. The agent might just accept a low offer because they’re in a hurry to sell the home, get their commission and move on, even if the seller is in no rush and wants to proceed at their own pace. Moreover, the amount of the commission will be affected little by a change in the final sale price, leaving the agent with little incentive to dicker over a few thousand dollars.
Of course, many sellers will gladly pay a real estate agent a hefty commission, especially in buyers' markets, when the seller can’t garner sufficient attention to sell the house on their own. Also, the idea of a property transaction – perhaps the most important financial move of someone’s life – without a professional may be unsettling to both the buyer and the seller. Agents know what agreements need to be signed and which laws must be observed (such as disclosure requirements), saving a lot of hassle for the buyer and seller. Perhaps the best reason to hire a real estate agent is that they know how to price a home, and, without their assistance, the seller may waste months trying unsuccessfully to sell an overpriced home, or, worse, sell the house for too little. When selling a home without an agent, owners will be responsible not only for paying the fees charged by various professionals (real estate agents typically absorb these fees), but they will also be responsible for finding these professionals in the first place. A competent real estate agent will know to not skimp on the home inspection, for instance, by exclusively hiring InterNACHI inspectors.
Sellers can save thousands of dollars by avoiding the services of a real estate agent, but to do this well, they are going to have to earn that money. The following tips are a good start for FSBO home sellers:
- Don't skimp on house preparation. Your house will be in competition with houses listed by agents who coach their clients on how to prepare their house for showings.
- Learn about legal requirements for disclosures in your area. If you do not disclose certain information to the buyer, they might be able attack you later in court.
- Familiarize yourself with the paperwork and contracts required by a real estate transaction. It often pays to hire a lawyer to review the contract.
- Research advertising and marketing tools available to you on the Internet. There are some sites that will even help you develop a video tour of your home.
- Hone your negotiating skills and be prepared to turn down some offers. Real estate agents are expert negotiators, and the buyer’s agent might try to take advantage of your inexperience.
- Hire an InterNACHI inspector to perform a Move In Certified inspection.
