For Sale by Owner vs. Selling With an Agent
Selling a home is a lot of work, whether you have an agent on your team or not. Most people contact an agent early on in the real estate process and depend on their guidance to help them through the process. There are some people, though, who prefer to do things themselves, and don’t mind all the work. If you are thinking of selling your home without the help of an agent, here are some things to keep in mind.
List of things a seller’s agent will do for you:
- Price your Home Correctly
- List your Home
- Choose a Qualified Buyer
- Negotiate and Settle All Legal Claims
- Coordinate the Close
Let’s review these items individually.
Price Your Home Correctly
Correctly pricing your home is one of the hardest things for any homeowner to do. The strong emotional connection with your home means that the stakes are high when it comes to pricing, and because of this, most home sellers overinflate the price of their homes. Then the home sits on the market for a good deal of time, making it appear suspicious to qualified buyers.
If you are going to sell your home without an agent, then you are going to have to have some intimate knowledge of the market you are selling in. Additionally, it is a good idea to hire a licensed appraiser to evaluate the price for home as an appraiser will give you your home’s true value.
Do not base your asking price on your tax assessment, because tax assessments and market values are very different. And do not compare your home to another home’s asking price, because if another homeowner has inflated the price, then it won’t do you any good. If you do use comparables, be sure to look at selling price, which can be wildly different than asking price, and if you can, go lower. Remember: you want your home to move.
List Your Home
One of the advantages an agent brings to the table is their access to a Multiple Listing Service (MLS). Many areas sell access to the MLS for a flat fee of around a couple hundred dollars. Having your home on an MLS means that it will reach many more potential buyers. If you’re not interested in using an MLS, there are many options for advertising your home online, and of course, there is always the tried and true yard-sign method.
Choose a Qualified Buyer
Without an agent, you will have to figure out which buyers are serious and which are not. Many people out there are looking to take advantage of what they assume are distressed sellers. Determining the financial fitness of the offers that come your way means you are going to have to ask for pre-approval letters and verify loan statuses with the mortgage company.
Also, just because you decided not to hire an agent, doesn’t mean that the buyer didn’t hire one. As a seller on your own, working with buyers who have hired their own agent might be a safer road to take – one that shows you the buyer is serious and is financially fit. But if you do deal with a buyer’s agent, then the buyers are likely expecting you to pay their agent’s commission. For the buyer, paying the buyer’s fee (what’s sometimes called the true buyer’s agent) is rare, but it does happen.
Negotiate and Settle All Legal Claims
It’s possible in the traditional real estate agency home sale that the buyer and seller never meet. As an unrepresented seller, meeting your buyer face to face is highly likely. This is one of the biggest attractions for people who want to sell their homes on their own. They really want to know who their home is going to. But this is also one of the biggest problem points.
The negotiation between buyer and seller will involve the buyer pointing out problems with the home, which are typically viewed as reasons to lower the asking price. Home sellers can easily get emotional about their home, and ruin the negotiation process. In selling your home, remember to be detached in the negotiation process and to stick to what is truly a fair price.
On the other hand, when you are representing yourself, there’s no possibility of an agent misrepresenting you. It is rare in the industry, but it does happen. Some agents rush the negotiation process and arrive at the seller’s absolute selling limit without exploring all the price points in-between.
If you are an unrepresented seller, you are going to have to hire an attorney to preside over the finalization of the contract. Having a good attorney for this process is crucial, and there is no way around hiring one. Making sure you follow all federal, state, and local real estate laws will make the sale valid.
Coordinate the Close
You are going to have to do some research to find qualified inspectors, escrow companies, and title representatives. Make sure your legal and financial liabilities are clear. Review disclosure laws and the seller’s responsibilities. Know your local lead-based paint and asbestos laws. The terms of the contract should cover the transfer of utilities, possession, possible rent in the case of delayed possession, and earnest money.
Back to: How to Build Your Real Estate Team