Do You Really Need a Realtor?

Selling your home is one of the most important financial transactions you will ever encounter. It goes without saying there are many decisions throughout this process, but your first is whether to hire a Realtor or do it yourself. When people sell homes without using a Realtor, it is commonly referred to as For Sale By Owner.

The internet has literally brought the world to our fingertips, including websites offering homeowners ways to sell without using Realtors. But is it really as easy as they propose? Let’s take a look at the pros and cons.

Pro: Safer to Hire the Expert
Real estate agents have the expertise and experience that you lack when it comes to selling your home. After all, this is what they do for a living. They are trained and licensed, not to mention they can navigate the complications of a sale and all the corresponding paperwork. They have detailed comparisons (comps) and historical neighborhood information to arrive at an appropriate selling price for your home.

Then there is the Multiple Listing Service (MLS), which is an exclusive database that lists your home for the world to see, including other Realtors. Safety is another factor to consider, since without a Realtor you will be meeting complete strangers in your home, alone.

A full-service agent will help you prepare your home, hold open houses, offer nice marketing materials, post a yard sign and may even hire a photographer to take pictures of your home.

Con: Money!
Money, after all, is what this is all about. Realtor fees usually average six percent of the selling price. On a $250,000 sales price, that is $15,000. It can be quite a bit if you are trying to get the most money from your sale. Keep in mind that your agent typically splits this percentage with the buyer’s agent, so each would net $7,500.

Pro: Agents Get More Money
In some cases, you will earn more with an agent than without one. According to the National Association of Realtors, Realtors net sellers almost 22 percent more than FSBO listings. Since agents have more information and pricing statistics, they may go for a higher asking price than you would. And this would directly offset their fees and get you the same amount you could get on your own.

Another point to remember: if you list by owner, you may still have a buyer’s agent approach you with an offer. It’s customary to pay that agent three percent for bringing you that buyer.

And finally, if you sell your home by yourself, you may always wonder if you accepted too low a price.

Con: You Care More
Despite being your representative, your agent may not be working in your best interest. Oftentimes Realtors will set a higher asking price than the market will bear and have to reduce it a month later. Since the first month of a home’s listing is the most crucial, you may lose interested buyers who will not return when the price is lowered. The agent doesn’t have that much to lose in commission since she is most likely splitting it with the buyer’s agent, but your net profit could be sorely affected. Say your agent lists your home for $200,000 and a month later, reduces it to $180,000. That’s only $600 less in commission for your agent, but a whopping $20,000 to you.

Pro: Agents Beget Agents
If a buyer’s agent has a choice to show a house represented by an agent or a FSBO house, an agent may favor the one with an agent. This is understandable if you’re an agent. Why deal with a novice when you can work with a like-minded professional? Real estate professionals network just like everyone else. They host caravans, where groups of agents are scheduled to tour your home, and regular open houses are more likely to attract agents if one of their colleagues hosts it.

Con: Buyers Abound
Nowadays, buyers scrounge the internet, newspapers and everywhere they can to find their dream home, and they’re relying less on agents to do the search. If you are considering selling by owner, there are alternatives to a full-service agent.
A discount service may charge a two or three percent commission and list your house on the MLS. Other services are offered as well, such as pre-screening for qualified buyers, but you will have to show and sell your home. Many owners opt for this route to save money by picking the level of service they need.

Not everyone saves money when they sell their home without a Realtor. If you believe you have what it takes to sell your own home, be sure to do your homework. If not, it always pays to have a professional on your side. HLM

Sources: homebuying.about.com and home.howstuffworks.com.