A man posts a 'for sale by owner' sign in the front yard of a house.

A man posts a 'for sale by owner' sign in the front yard of a house. (Getty Images)

A real estate transaction can be one of the most overwhelming and stressful processes we go through in our adult life. When on the selling side, we spend countless hours preparing the house, maintaining it in its show-worthy state and worrying about what could go wrong with the appraisal and inspections – and then there’s that constant voice in our heads asking if we’ll actually sell it for a price that makes it all worth it.

So why, with all that work and worry, would someone want to take on the added burden of overseeing the entire transaction as well? Your guess is as good as mine.

With the rise of home prices and a decrease in inventory and typical number of days homes remain on the market, many potential home sellers are once again considering the option of a for-sale-by-owner deal. However, the pros are strongly outweighed by the cons not only financially, but for the sake of your time and sanity when it comes to the entire home selling process.

[See: 10 Unorthodox Ways Your Real Estate Agent May Market Your Home.]

Guidance Through the Transaction

Communication with a skilled real estate agent is key in any transaction, and not just for the homeowner who’s unfamiliar with the process. A good real estate agent will not only provide market and status updates, but he or she should impart organization and education into the experience as well. These two principals help create a clear, understandable path through the entire series of events and allow you to focus on the day-to-day tasks of maintaining your house and preparing for your move.

Understanding the Paperwork

You undoubtedly remember the number of pages involved in the sales contract from when you purchased your house. The contract alone can range from 40 to 70 pages depending on where you live – not to mention the subsequent addenda following inspections, appraisal and more.

Real estate agents spend dozens of hours learning these documents during their certification studies, as well as constantly staying up to date in the latest changes through continuing education classes. By taking on the task of drawing up and managing documents you’re unfamiliar with, it could cost you a sale if not handled properly.

While everyone certainly hopes to never do a deal with a deceitful agent, the fact remains they do exist and FSBOs are much easier targets than agent-assisted sales. The idea of someone pulling a quick one that could cost you thousands amidst the myriad of legalese in a sales contract is frightening.

But you may ask, “What if I hire a lawyer to review the contract?” The vast majority of sellers who choose to sell on their own do it to save money – if you think it’s expensive to hire an agent, just wait until you talk to a lawyer and discuss hourly fees.

[See: The Best Apps for House Hunting.]

Your Time

One reason some homeowners choose to sell without an agent is because they already have a buyer lined up. If you're one of those people, this section doesn’t apply. For those in need of a buyer, it's important to factor in the value of your time, and how much you'll be putting in to marketing your home.

Throughout the listing period and after you go under contract, you still pay the mortgage, utilities, taxes and homeowners association fees, among other regular costs. Selling your home as quickly as possible is an important goal. Are you sure there’s enough time to learn marketing strategies, negotiation skills and fully understand the contract so you can make educated decisions, all while handling your day job, packing, preparing for your new house and still trying to have some semblance of a life?

One of the most important keys to selling a house is making it desirable to the largest amount of people and getting the highest percentage of that potential clientele inside the property. Buyers are looking for a smooth transaction and a a home listed FSBO can be a red flag.

By choosing to work without an agent, it can be assumed you are more cost-conscious and less likely to negotiate. You’re also lacking guidance which is sure to make things difficult for both the buyers and their agent. These factors add up to a lower exposure rate, and very likely equating to a longer time on market.

Access to Other Pros

When you work with a real estate agent, one key component you’re hiring him for is his experience and the relationships he's formed with other industry professionals including lenders, settlement attorneys, contractors and inspectors. Undoubtedly, the agent did not strike gold with each person he met the first time around. He had the unfortunate experiences of working with less than the best, but through those times was able to recognize and identify what makes each professional great.

Sure, there are sites like Angie’s List that can help point out individuals you could use. But when it comes down to it, a referrer with first-hand experience and knowledge of your situation can provide you with a recommendation that best fits your needs. Real estate agents are judged not only by their performance, but by those they vouch for, making it that much more important they know and trust those with whom they are aligned.

[See: 10 Tips to Sell Your Home Fast.]

Higher Sale Price

According to the 2016 National Association of Realtors Profile of Home Buyers and Sellers, the median agent-assisted property sold for $245,000 in 2015, while the median FSBO sold for $185,000. Now, it’s impossible to show whether the same house would actually sell for less because there’s no way to do an exact apples-to-apples comparison. That said, you are only looking to overcome a 3 percent difference.

In an effort to be conservative, let’s assume your listing agent would charge you a 6 percent commission to be split between her and the buyer’s agent. You still need to pay the commission due to the buyer’s agent, as no buyer will want to pay the sales price, closing costs and an additional (and unplanned for) commission. Therefore, that leaves a difference of 3 percent that would make this all worth it financially.

There is a 25 percent difference between the median sales price of agent-assisted property versus FSBOs. Even if you account for various limiting factors, there’s no way the math adds up, especially considering all the previous non-monetary aspects covered before.

Tags: real estate, housing market, existing home sales, pending home sales, home prices


Ray Boss Jr. is a full-time, licensed Realtor for Re/Max Realty Group in Gaithersburg, Maryland, with over 11 years of experience working with clients ranging from first-time homebuyers to investors, sellers and renters. You can learn more about Ray by connecting with him on LinkedIn.

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