FSBO or a Real Estate Agent?
If you sell your home yourself, without the assistance of a real estate agent, you can save a bundle on commissions. However, make sure you know what you're getting into first. Learn about what the process entails, whether it's a good idea for your situation, and where to get help if you do decide to go it alone. Above all, get to know the market well enough that you don't end up selling the home for less than it's worth.
Are Real Estate Agents Required?
No law requires you to hire a real estate agent when you sell a house. Some states, however, particularly in the eastern half of the country, require a real estate attorney to handle the transfer documents and closing. Check with your state department of real estate to find out whether an attorney is required in your state.
What Tasks Are Involved in Selling a Home?
The closer you look, the more little tasks are revealed as crucial in preparing, marketing, and successfully selling your home. The most important tasks that a real estate agent will normally perform for you include:
- evaluating the local market and comparable home values
- suggesting an appropriate listing price
- advising you on how best to present your home, including providing referrals to painters, repair persons, and more
- helping coordinate preparation of disclosure and other needed forms and documents
- creating advertising materials and arranging for photographs (interior and exterior, hopefully done by a professional) and possibly an exterior drawing of your home
- placing ads on the Multiple Listing Service (MLS) and in other media, and sending out postcards to potentially interested buyers on the agent's mailing list
- arranging for individual visits to the property if you're no longer living there, most likely by providing a lockbox for use by other realtors, and meeting with individuals who don't yet have their own agent
- answering questions and providing documents such as disclosure packets to potentially interested buyers and their agents
- holding one or more open houses, possibly including weekday open houses for other real estate brokers to visit and weekend open houses for the public (which itself involves many tasks, such as arranging for and putting out signs in advance, and providing food for the broker's open houses, as is traditional in some areas)
- receiving offers to buy your house, whether via email/mail or in person if other agents wish to formally present their offers
- helping you evaluate the strength of each offer and strategize on issues like whether to accept or reject an offer outright or make a counteroffer, and whether to also look for or arrange a backup offer.
- negotiate with the buyer's agent until the purchase contract is complete (although this task may fall more to an attorney in states where legal help is required)
- coordinate with the buyer's agent throughout the escrow period, helping to make the house available for inspections and appraisals and make sure you're doing your part to close the deal
- help you strategize over requests made while in escrow, such as for a reduction in purchase price due to repair issues revealed in the inspection, and negotiating such issues with the buyer's agent (unless any attorneys are still involved), and
- attend the closing.
Sound like a lot? Indeed, it can be a full-time, nights and weekends job in the days and weeks while your house is on the market. And, as any agent will tell you, it's not all glamorous. Some have been known to get out a mop and give a house a last scrubbing before the open house (but don't count on this!) or drag their own furniture over if it will make the house look better.
For Sale By Owner
Selling a house without an agent is called a FSBO (pronounced "fizzbo") For Sale By Owner. As you might have already guessed, people who try it usually develop some appreciation for how agents earn their commission. If you want to go it alone, be sure you have the time, energy, and ability to handle all the details.
Before you dive in, you should also evaluate the market and your schedule. FSBOs are usually more feasible in sellers' markets where there's more competition for homes, or when you're not in a hurry to sell.
What FSBO Sellers Need to Know About Real Estate Rules and Regulations
To sell your house by yourself, you must learn the legal rules that govern real estate transfers in your state, such as who must sign the papers, who can conduct the actual transaction, and what to do if and when encumbrances are discovered that slow down the transfer of ownership. Try searching for information online, talking to friends with expertise (unless you already happen to be a lawyer or similarly informed professional), or hiring a lawyer for a few hours' consultation.
You also must find out if there are any state-mandated disclosures as to the physical condition of your house. (For information on disclosures, see Required Disclosures When Selling Real Estate.)
How to List Your Home for Sale
Get help from FSBO websites. If you're interested in going it on your own, check out sites such as www.owners.com or www.fsboguide.com.
List your home on the MLS. For maximum exposure, you can list your house on the MLS, which many real estate agents use to advertise available properties. There are several options for getting your house listed on the MLS:
- do it for a monthly flat fee at www.iggyshouse.com
- pay a low fee through some FSBO sites, or
- pay a real estate agent to do it for you.
The Middle Ground Approach
To save on commissions without getting in over your head, you might consider doing most of the work yourself such as showing the house and using a real estate agent to help with such crucial tasks as:
- setting the price of your house
- advertising your home in the MLS, or
- handling some of the more complicated paperwork when the house deal closes.
Negotiate a lower commission. If so, you may be able to negotiate a reduction off of the typical 5% to 6% commission agents charge, or you may be able to find a real estate agent who charges by the hour for specified services, such as reviewing the sales contract.
Use a discount broker. Discount real estate services are available from franchise operations such as ZipRealty (http://www.ziprealty.com/), Help-U-Sell (www.helpusell.com), as well as other independent real estate companies and individual brokers.
Hiring a Real Estate Agent
If you decide you don't want to sell on your own or use a real estate agent for limited services, you can hire one to provide the traditional services, including listing your home for sale, showing it to prospective buyers, and negotiating on your behalf. Keep in mind that you don't have to decide this right away. If you have time, you can try selling on your own first, then choose an agent if that doesn't seem to be working.
For advice on hiring a real estate agent and all other aspects of selling your home during tough times, see Selling Your House in a Tough Market, by Ilona Bray and Alayna Schroeder (Nolo).