You need to sell your home so that you can embrace a new opportunity but the idea of forking out tens of thousands in commission to a real estate agent hurts. Then again, there’s a lot of details in selling a home and making decisions without knowledge or context just seems foolish. What should you do?
Choosing to sell your home by yourself — known as For Sale by Owner (FSBO) — or going through the traditional route and using a real estate agent is a tough decision.
To help you make that decision here’s a rundown of the pros and cons of each option.
Pros of Listing Your Home with a Real Estate Agent
- MLS: Your agent has instant access to listing your home on the MLS (Multiple Listing Service) and knows what terms and descriptions work best.
- The Right Price: Real estate agents have intensive knowledge of the local market and will price your home to sell. This is really critical since the price you set is one of the most crucial components of your marketing strategy.
- Showing Your Home: Buyers are often hesitant to tour homes with the sellers present. But an impartial real estate agent isn’t awkward or intimidating.
- Pre-qualified Buyers: An agent knows what clauses and terms to pay attention to ensures you don’t waste your time with buyers who aren’t that serious.
- Assistance with Paperwork: From dealing with disclosure documents to accepting offers, there’s a lot of legal paperwork involved in the process. Mess this up and it could mean big trouble. Agents can guide you through the process and provide insight into what to expect and when.
- Expert Negotiation: Realtors encounter negotiations regularly and are experts in this area of sales! A good negotiator will help you avoid leaving cash on the table.
Cons of Listing Your Home with a Real Estate Agent
- Commission Fees: Commission fees paid to the real estate agent come directly out of the profit earned on the sale of your home. Fees you’ll pay vary from one area to another but average around 5% in Canada. Have a frank discussion of this before you sign a listing agreement.
- Other Clients: Successful realtors have multiple clients they are representing at once. Your home might not be their “top listing” or the property with the highest profit potential. This pitfall could mean slower communication when the Realtor is engaged with other sellers.
For Sale By Owner
On the other hand, perhaps you prefer to do the work yourself. In this case, you can skip using an agent and go the For Sale By Owner (FSBO) route. Here are both the pros and cons of this strategy.
Pros of For Sale By Owner (FSBO)
- Higher Profits: You’ll save thousands of dollars in commission fees, freeing up cash to invest.
- Scheduling Showings: When working with an agent, you’ll be told to leave your house when buyers schedule visits. Working for yourself you can choose to leave or to stay. Because you’re in charge you can dictate the times that are convenient for your family. Plus, you can decline those pesky last-minute requests (although, there are loads of reasons why this isn’t a good idea).
- Complete Attention to the Process: Nobody cares more about selling your home at a profit than you. You’ll be diligent in responding to inquiries, scheduling showings, and all the other details.
- Knowledge of Local Marketing Practices: You can invest in the advertising strategy that works best in your area and pay a flat rate fee to list on MLS. You can also create a buzz around the neighbourhood by setting up signs and holding an open house.
Cons of For Sale by Owner
- Pricing Pitfalls: Homeowners tend to add an emotional “upcharge” to the financial price tag on their home. This creates a listing that’s overpriced and won’t attract buyers.
- Personal Safety: You are welcoming buyers into your home who could be unqualified buyers. Worse yet, you don’t know who is in your house and this could lead to safety concerns.
- Time-Consuming: You are responsible for marketing, filing paperwork, scheduling showings, and giving tours of your home. You will also need to research the market, compare properties in your area, do a follow-up after each open house, and figure out selling strategies.
Which Option is Right for You?
Only you can answer the question as to whether or not you should sell your home using an agent or go it alone.
In many cases, the right decision for you will come down to time and money. For example, if you must relocate immediately to accept a job promotion, opting to go FSBO may not be the best option. However, if you’re not rushing to sell and you have no problem researching and learning about the housing market then perhaps FSBO might be worth the try. Remember, you can always change your mind and hire a Realtor if it doesn’t work.
Since each person and each transaction is unique only you can decide which strategy suits you and your family best.