Do you need a listing agent to sell your home?
Before answering this question, what is a listing agent? In a nutshell, a listing agent, assuming an experienced one (who mostly works full time) is an agent who represents homeowners to sell their home.
So do you really need one to help you sell your own home? It depends.
You can always sell your own home, as a For Sale By Owner, skipping the listing agent, and potentially save thousands of dollars in fees. And that’s the main reason, savings fees, that some sellers decide to do the listing themselves.
This thinking has been helped by the advent of websites like Zillow, Trulia, ForSaleByOwner.com, HelpUSell, etc. These websites may falsely give the consumers confidence that they could become “experts” in real estate.
However, before attempting the task of selling the house yourself, you must be aware of several risks associated with the sales process.
Do you know the value of your home today?
It’s a very common mistake almost home sellers make is that they rely on Zillow’s estimate – called Zestimate. This estimate is based on Zillow’s proprietary algorithm, where it takes all the available data about the property and all the ones around it and comes up with an estimate that could very different from the true value of the property.
Pricing a property is both an art and science. How much is your home worth? It’s not an easy task to accurately estimate a value of your home. There are no two homes alike, even they are in the same subdivision, or only a couple homes apart.
And the stakes of wrongly estimating the value are high: price it too low, you lose out a lot of money; price it too high, the house would sit on the market forever (this is the main reason that sellers finally decide to enlist a listing agent’s help after trying their luck, using Zillow’s Zestimate value of their home.)
Overpricing your home may have an irreversible consequence – the longer it sits on market, the harder for the seller to find buyers, since buyers would surely wonder if something is wrong with your home and depress the value further. Most FSBO’s ended up selling their home much lower than its true market value.
An experienced listing agent, on the other hand, have access to the most up-to-date information about recent sales of comparable houses and listings in the area and websites and experience to help sellers determine appropriate price to get the house sold quickly. The listing agent will collect all these sales, and analyze their sales prices and features that will contribute to the value differences. It’s the agent’s chief task to set the right price from the very beginning; otherwise the house will not sell.
Do you know how to market your house properly?
Most FSBO’s usually underestimate the amount of work required to market their house. Again websites like Zillow gives them a false sense of confidence. These sellers think they just take a bunch of pictures and throw them on the Internet and the buyers would call them. Nothing is further from the truth.
Besides pricing the house properly, the second hardest task for a listing agent is to find a buyer – an experienced listing knows that s/he needs only one buyer for the house. But to find the right buyer, the agent has to do many crucial steps a) taking the most professional-quality and attractive photos of the property, b) writing effective sales description, showcasing its strengths while downplaying its weaknesses – sometimes the agent needs to pay a copywriter to craft the most enticing description, c) having several marketing strategies go find the right buyer – placing the property on local MLS is just a one in many approaches used by an experienced agent, s/he may need to combine several methods like direct mail, online/offline publishing, networking, and/or placing it on classified real estate websites.
Do you know how to work with buyers or buyer’s agent and navigate paperwork?
Selling a house has increasingly become a complicated process, especially when all the federal and state laws governing the sales keep updating.
Do you know you are supposed to disclose all material facts about the house you are selling? Do you know you could potentially be liable for tens of thousands of dollars or more if you neglect to disclose “minor” items like a small foundation crack or roof leak?
Besides disclosure, as a FSBO seller, you need to understand and interpret other legal documents used in the sales process like purchase contract or prequalification form from the buyer. Some buyers (usually the sophisticated ones) want to buy directly from the FSBO seller, but most buyers have an agent to represent their interests. Do you have the knowledge and expertise to protect your own interests when dealing with buyers or agents?
An experienced listing agent would do all the heavy lifting work for you by coordinating appointments, showing your listing with buyer’s agent, screening the buyers (yes, there are more non-serious, time-wasting buyers than you think), negotiating, etc. An experienced and ethical agent is your trusted friend and advisor in real estate. S/he knows how to maximize the value of your house without losing the potential buyer.
It happens very often during the sales process that the seller and buyer could get emotional about … anything to finally see the deal fall apart, just because they can’t agree on minor repairs or a couple hundred dollars difference in price. Agents of both sides (FSBO sellers are more likely to feel they are taken advantaged of in all the deals) are really needed to smooth things out.
A true experienced listing agent are a professional who knows how to keep emotion in check and helps take the stress out of your life during the sales process.
How much does a listing agent get paid? Listing agents don’t receive anything unless your house gets sold. When it does, the seller usually pays both agents a commission based on the sale price of the house. A typical commission is 6% of the sales price (which is usually split between your listing agent and the buyer’s agent). The commission may seem substantial to sellers, but research shows for very hour an agent spends with client, s/he would spend an average of nine hours behind the scenes working hard on your behalf to earn that commission.
But if you want to go the FSBO route and be your own representation?
As discussed above, if you are willing to assume the risks, there are ways to help you sell your own house. Zillow, Trulia, ForSaleByOwner.com, HelpUSell are those helpers.
As a FSBO seller, you may not totally be free from paying commission. Remember, unless a buyer decides to represent himself or herself during the transaction, a buyer’s agent is the one you deal with and his or her fee is usually 3%. More likely than not, you are asked to offer the buyer’s agent 3%. Otherwise, there is no incentive for the agent to bring his buyer to you. Therefore, you may potentially save only 3%, instead of 6%.