Selling Your Home Without a Realtor
If the idea of a DIY home sale appeals to you like it does for approximately 7% of homeowners, I’m going help you weigh the benefits and risks to determine if this is the right path for you. Selling your own home comes with pros and cons to consider and, if after reading this article you have a question or concern not covered here, please reach out via the link at the bottom of the page.
Motives
There are many scenarios in which a homeowner will try their hand at “for sale by owner” (FSBO), but the most common thing I’ve heard over the years is that they feel they can do the job as well as a realtor. I’ve been told “the MLS/internet basically does all the work, so why should I pay someone to do for me what I can do for myself?”. Fair enough, I certainly can’t blame someone for wanting to net as much money as possible. This obviously isn’t the only reason to go FSBO; some folks lack sufficient equity to cover traditional selling expenses, some don’t know where or how to start a conversation with a professional, and some sellers may already have a buyer lined up.
Let’s Talk Marketing
Representing yourself will reduce or eliminate commission costs but some costs are unavoidable, such as title and escrow fees (covered later). A prepared FSBO will consider and prepare for other costs, such as:
Photography
Videography
“For Sale” yard sign with flier box
Fliers and handouts
Staging consultation
Staging fees
Paid social media marketing
Inspections
Posting to popular FSBO sites
Exposure
When it comes to getting maximum exposure for your home, there are no shortage of sites to post your personal listing, Zillow probably being the most popular and effective. You can post your home for free on many of them but you have to wonder about visibility, as most buyers tend to rely on email updates from their preferred source and aren’t necessarily scouring the web for FSBO’s. These “preferred sources” I mentioned earlier are a vast assortment of platforms like Zillow, Redfin, Trulia, Realtor.com, or direct from their realtor’s MLS portal, none of which are highlighting your property as a new listing. This really is a huge obstacle, in my opinion. I have tried for years to convince my buyers that it would be more efficient to use my property search portal but they inevitably continue sending me links from everywhere else, so think how difficult it might be to get all these people to look where you, the FSBO, want them to look. A FSBO listing can’t be in all places at all times, whereas a listing placed in the MLS is immediately sent to thousands of websites and instantly delivered to buyers with matching criteria. Finding a new FSBO listing can be like finding a needle in a haystack, unfortunately.
Paid Social Media ads
If you want to avoid having random people from the public going to your personal profile to speak with you about your home, you would be wise to create a page for your home, then try to drive traffic to it with paid ads, but you will want to read facebook’s policies for selling real estate. If you don’t already have one, you might be best served by setting up a business account with facebook, then learn how to build paid ads, which is more effective than “boosting” a post. You could even build a website for your home like “1234MainStreet.com” where you can upload your marketing photos and property details, facebook ads can be used to drive traffic to the site as well as the page you created.
MLS is still an option for FSBO
There are services available to place your listing in the MLS, which can start pretty inexpensively. Basically, a realtor/broker will upload your pictures and property description to the MLS for you and leave the rest for you.
Your home is posted all over the place, so now what?
Tasks and responsibilities
Once you have completed your preparation and marketing projects, you’ll want to have a plan for a number of things:
You will be inundated with realtor calls wanting you to list with them
Will you hold an open house or two? How will you promote them?
How will you structure the conversation and what questions will you ask when a potential buyer calls?
Will you pre-screen buyers before letting them into your home? Are they pre-qualified with a lender, are they investors, are they serious or just looky-loos?
How will you obtain buyer info so you know exactly who is entering your home?
Will you show buyers around the property personally or give them space to look on their own while you wait outside?
If a buyer wants to make an offer, what forms will you use? Have you identified and collected all of the state and local disclosures required by law?
Which title company will you use?
Title and Escrow Fees
Title companies play a valuable role in the home-selling process by ensuring that each party fulfills their end of the deal, keeping track of paperwork and money as an impartial third party. You will pay fees for their products and services, including: title insurance policies, escrow services, notary services, overnight mail, courier fees, county recording fees, and more. I feel that a safe range for estimating title and escrow fees is between 0.5-1.0%. If you are using a title company without a realtor, they almost certainly won’t tell you which forms you’re missing, as they are unable to give you legal advice or recommendations.
Attorney Fees
Instead of (or in addition to) a title company, you can hire an attorney to prepare all of the necessary documents for you. Many attorney’s use a flat-fee pricing structure, such as Kristina M. Reed in Sacramento. Per her website, Ms. Reed charges $1,895 to represent a seller or buyer, or $3,600 for both. This, to me, seems like a safe route for a seller who can locate a buyer and reach an agreement on price and terms on their own.
Are you prepared to pay a commission to a realtor who brings you a buyer?
Let’s say you do a great job nailing the preparation and early marketing work, your home is getting great traffic and visibility, at which point a realtor reaches out with an interested buyer…are you prepared to compensate them? Your goal was to save on commissions but refusing to pay the realtor raises concerns that a loyal buyer will disappear along with the realtor. This is definitely something a FSBO will want to think about in advance.
Let’s do some math!
Now that we’ve explored a number of ways for a FSBO to give their best efforts, let’s examine how much it’s all going to cost, shall we? These are rough estimates I put together for illustrative purposes, you can play with your own numbers to see what it would look like for your situation. I compare using a realtor in both situations
In “scenario 1” I assumed a realtor would bring a buyer and the FSBO would have a lawyer assist them.
In “scenario 2”, I have the seller bringing their own buyer and having an attorney assist both parties.
Conclusion
A valid question is “how confident is the seller that they can execute the plan with the level of quality and effectiveness when compared to a realtor?”. The plan I outlined above is easier said than done, it’s reported that nearly 70% of FSBO's inevitably hire a realtor to sell their home due to the level of difficulty in finding their own buyer. How much time and up-front money can you spare?
This is not an afternoon’s worth of work, marketing a home is time-consuming and expensive. It is challenging to locate quality vendors, to learn how to build a website and build social media ads, to hold an open house, to have strategic conversations with actual qualified buyers who you trust to enter your home, etc. Realtors have an established network and team of individuals who are ready to serve you immediately. Most of the costs mentioned above are fronted by the agent and recouped through their commission at the close of escrow.
If you would like additional info on selling costs, check out my blog on the subject here