Robert Irwin, author of more than 35 books on real estate including Tips & Traps for Negotiating Real Estate. Based in Los Angeles, he has been a real estate broker and investor for more than 25 years.
Selling a home on your own without a real estate agent can seem like a major money saver. Real estate agents typically claim a 6% commission—that’s $21,000 on a $350,000 home, enough to pay for your move or even buy a new car. But selling a home without an agent won’t save you money if you make mistakes that undermine the sale price—a real possibility for novices trying to navigate the confusing world of real estate transactions.
So what is the verdict on going it alone?
“For Sale by Owner” (FSBO for short) is a reasonable option if you are willing to invest time in learning about the local real estate market and process…the home is in a hot real estate market where buyers abound…and at least several other similar homes have sold in the neighborhood in the past month or so, making it easier to determine an appropriate asking price. But be careful to avoid these mistakes…
Mistake: Pricing at the high end of the market. Most FSBO sellers are aware that the asking price should be based on asking prices of similar homes on the market in the same general neighborhood (or homes that have recently sold)—data that is available on real estate websites.
Unfortunately, sellers often set asking prices near the top end of this range for two flawed reasons…
First, many sellers believe that their homes are better than the other homes in their neighborhood. They have made improvements and design choices that they like, so for them, their homes truly are better—but shoppers likely have different priorities and preferences.
Second, sellers sometimes assume that there’s no harm in setting a high price initially and lowering it later if they don’t get any bites. In reality, their high initial asking price will keep many potential buyers from even considering the property. And once a house has been on the market for more than 30 days, buyers and their agents tend to consider it “stale” and assume that either the home has major problems or that the seller is not very serious about selling. Once a listing goes stale, sellers must drop their asking prices way below those of similar homes to attract buyers.
Better: Set your asking price slightly below the average asking price for homes similar to yours in your neighborhood. Aiming a little low is better than aiming a little high because the low price might attract multiple would-be buyers you can play off one another.
Mistake: Scaring away buyer’s agents. Most buyers work with agents—and those agents dislike deals involving FSBO sellers. FSBO transactions will take more of their time and are more likely to fall through because FSBO sellers tend not to understand all the ins and outs of the real estate transaction process and sometimes are not fully committed to selling. An even bigger concern for agents—some FSBO sellers do not understand that the buyer’s agent traditionally expects a 3% commission (half the total commission), which would shrink your savings from going it alone.
Better: Include the phrase “buyer’s agents protected” when you list your home online or in newspapers…and in any other printed marketing materials. This reassures buyer’s agents that they will get their 3% commission if they work with you.
This also might help address another challenge. Selling a house entails providing buyers with disclosures about many things, including lead, asbestos and any defects in the property, as well as filling out a binding sales contract and arranging for escrow and title insurance for the buyer. Those can be very difficult tasks for a novice to handle. That may not be a problem in parts of the country—mostly on the East Coast—where real estate transactions typically include a real estate attorney.
But in many parts of the country, especially the West Coast, a real estate agent usually handles these tasks. So if you go it alone, you might end up relying on the buyer’s agent to handle them, although that may require paying a little more than the standard 3% commission.
Mistake: Selling before you are emotionally prepared to do so. For the best chance to be successful, FSBO sellers must see their homes not as special places where they raised families and lived lives, but as assets like any other. Those who cannot view their properties objectively often fail to see and fix flaws that could scare off potential buyers…and/or they become offended and react in counterproductive ways when potential buyers or their agents point out problems with the home or make counteroffers.
Mistake: Failing to “depersonalize” the property. Most sellers know that they need to clean and declutter the home before listing it for sale, but some don’t realize that they also should put away distinctive personal touches. The goal is for potential buyers to imagine themselves living their lives in this home. Anything that reminds them that this currently is someone else’s home will only stand in the way.
Better: Before your home is listed, strive to make it a blank canvas on which potential buyers can project their own lives and decorating ideas. Pack away your family photos…quirky art and furniture…and/or religious items. Repaint dark walls in lighter, neutral colors such as white or light tan, which are universally inoffensive. Visit some homes in your area that are being offered by experienced agents, and then strive to present your home in a similar way. Better yet, pay a professional “home stager” $100 to $300 for a walk-and-talk consultation…or more to take charge of presenting the home in a way that will appeal to buyers. Search for an experienced home stager in your area on the websites of the Real Estate Staging Association (RealEstateStagingAssociation.com)…or the International Association of Home Staging Professionals (IAHSP.com).
Mistake: Using DIY photos in online listings. It’s a false savings—these photos play a major role in convincing buyers which homes are worth seeing in person. When photos are not up to par, it makes the home itself seem not up to par.
Better: Hire a professional photographer with plenty of experience in real estate photos. A professional understands which elements of your home to highlight…and which to hide. One place to find these pros is at RealEstatePhotographers.org. Expect to pay anywhere from a few hundred dollars to $1,000, depending on what part of the country you’re in and the size of your home. If listings for similar homes in your area include video tours, 3-D images or other visual materials, your listing should feature these, too.
Mistake: Insisting that potential buyers view your home on your schedule. Buyers who need to close on a home quickly are among the very best buyers to attract. They are unlikely to play hardball on price or to change their minds and back out of a deal. But these hurried buyers also tend to be unwilling to wait to see a home, and FSBO sellers who won’t accommodate their tight schedules usually lose out on these very promising opportunities.
Better: Keep your house in ready-to-be-shown condition at all times when it is on the market. Be prepared to give potential buyers and their agents access at a moment’s notice.