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FSBO Discount or Traditional Agent?

On Zillow because you're thinking about selling your home?  If so, you may be asking yourself what is the best way to sell my home.  Well, there is no cut and dried answer to that question, but I would like to explain to you the options that are available to you.


The first option is to attempt to sell your home "For Sale By Owner".  The obvious advantage that going "FSBO" has is that it can save you quite a bit of money.  With sites like Zillow you can now market your home to potential buyers in a way that hasn't been available before. 

If your home is in a popular area simply putting a yard sign in front of it and telling the neighbors that you are going to sell can many times bring you a buyer.  Other forms of advertising such as newspaper and cable tv can also expose your home to great numbers of potential buyers, but can end up being a considerable expense.

Another thing to consider when going FSBO is that many times the savings aren't what you anticipate don't materialize because the buyer comes with an agent attached at the hip.  Today it's not uncommon for a potential buyer to have entered into a buyer's agency agreement and be obligated to pay or have their agent paid a commission.  Even if the potential buyer doesn't have an agent, many times they will attempt to negotiate at least a share of the commission savings.

In addition to the marketing of your home, some other considerations of going FSBO are;

Security:  In order to sell your home you will have to allow complete strangers in your home.  At least with an agent you know that somebody else knows who these people are and have knowledge of the fact that they are looking at your home.

Time and Aggravation:  It's not unusual at all for a buyer to set an appointment and then not show up.  Many times if they do show up they may not be qualified to buy your home.  Most times if they are working with an agent the agent has at least pre-qualified them to at least a minimum degree.

Negotiations:  If someone makes an offer on your home you will be on your own as far as negotiations go.  This might not seem like such a big thing, especially if you have experience in negotiations, but I can tell you that I have been involved in negotiations where the buyer and the seller are just a few hundred dollars apart and one party won't budge.  Having that third party to act as a facilitator can mean the difference between selling your home and being back to square one.

Liability:  Selling your home can be a very complication procedure and the opportunity to screw up will surround you.  While a lot of the liability can be minimized by enlisting the aid of a real estate attorney and/or a good title company, having someone in your corner who has sold more than a house or two in the past decade can be a god send!

All this considered, selling your home yourself is not impossible.  It's just not the easiest thing in the world to do.  There is a reason that 90% of the homes that sell do so with the help of a real estate agent.  That said, what are your other options?

Traditional Real Estate Agency

A traditional real estate agency is in the business of selling homes.  As mentioned above, 90% of homes sold do so with the aid of a real estate agent.  A traditional agent will take care of all of the things listed above that you needed to consider in selling your home FSBO, so that you don't really have to worry about much of it.  The down side is that they generally charge between 6% to 7% of the sales price of your home.  Is it worth it?  According to the National Association of Realtors, a home that is listed generally sells for 16% more than one that is not listed.

This number is a bit subject to question because of the source, they are the national trade organization for the Realtors, but it is probably fairly accurate.  Especially when you consider that a large percentage of homes that sell without the aid of a real estate agent are sold between family and friends.  Even the homes that sell FSBO as noted above many times have what would have been the commission savings negotiated into the sales price, resulting in a lower sales price to be used for comparison. 

The biggest thing to remember when considering listing your home for sale with a traditional real estate company is that not all Realtors are created the same.  All it takes to get a real estate license is about 3 weeks of schooling and to be able to pass a test.  Most states also require that you not have been convicted of a felony, at least not recently!

Check the references of any agent that you are considering.  Talk with several agents and don't be afraid to inquire as to their experience and competence.

Recently a third option has materialized.  That is utilizing a discount real estate brokerage.

Discount Real Estate Brokerage

Discounters run the range from no-service companies that simply place your home on the local MLS to companies that offer services very similar to a traditional real estate company. 

Listing with a no-service company is better than not being on the MLS at all, but still comes with most of the pit-falls of going FSBO.

Listing with one of the companies that offer more services, many in the form of menu options  - where you can pick and choose exactly which services you wish for them to perform, is an option, but one that can end up costing you almost as much as a traditional real estate agency.

By Diane Tuman

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  • Last edited October 12 2012
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