Question: We’re considering selling our home ourselves without using a real estate agent. Is that legal?
Answer: Yes, it’s perfectly legal to sell your own home. But there are many reasons why you are better off using a professional. Sellers who choose to sell their home on their own – the industry term for “for sale by owners” is FSBOs, pronounced fiz-bows – may experience seller’s regret when they see how much less they get for their properties. According to the National Association of Realtors, FSBOs earn an average of $60,000 to $90,000 less on the sale of their home than sellers who work with a real estate agent. Here’s the breakdown using 2017 sales data:
- All agent-assisted homes: $250,000 (median selling price)
- All FSBO homes: $190,000
- FSBO homes when buyer knew seller: $160,300
So why would a seller choose to go it alone? Some may want to avoid paying an agent’s commission. But even factoring that in, FSBOs still stand to make less on their home sale. Let’s assume that you use an agent and your sales contract calls for 3 percent to the selling agent and 3 percent to the listing agent. Do the math. The closing price for the agent-assisted seller is likely going to be way above a FSBO.
Here are five more reasons it makes good sense to use a real estate agent to sell your home:
- Your next-door neighbors told you what their home just sold for. That’s a start. But do you know what all the sales have been for the past six months in a one-mile radius of your home? Or the ratio of list price to sold price? The average price per square foot? Average days on the market? Realtors regularly identify comparable sales, or “comps,” in order to price your home to make you the most money.
- You may love your lime-green kitchen, but it’s possible most buyers will not. An experienced agent will guide you to getting your house in tiptop condition and making it as attractive as possible to potential buyers. This may include painting, removing tchotchkes, worn rugs and excess furniture, cleaning ceiling fixtures and AC vents, and replacing dead shrubs in the front yard. (We offer more ideas on curb appeal and dressing up bathrooms on our blog.)
- Real estate agents filter out the many, many inquiries that can lead to nothing. They know other realtors who have clients looking in your area and price range, and they network extensively with these people. They will bring you better-qualified buyers.
- Buying and selling a family home can be an emotional rollercoaster. An agent can speak and act for you in a clear-eyed manner. He or she is experienced in negotiating, and realtors are trained to keep their clients’ information confidential from competing interest.
- Purchase agreements are complicated and often require several disclosures and addenda from the seller in order to protect you and the buyer. One small mistake or omission could cost you plenty or land you in court.
Last year only 8 percent of sellers – an all-time low – chose to sell their home themselves, according to NAR’s 2017 Profile of Home Buyers and Sellers. That figure has been falling since 2004, when 14 percent of homeowners sold their own homes.