You want to sell your home. The real estate market isn't quite as booming as it was a few years ago. And you're tempted to save money by selling on your own, without the help of a real estate agent. Should you?
I recently offering reasons to consider sticking with an agent. For example, a good agent might fetch you a better price than you'd get on your own, more than making up for his or her fee.
Not surprisingly, I then heard from people on the other side of the fence, such as the folks at ForSaleByOwner.com. They pointed out a recent study of the Madison, Wis., area, which found that people who went the for-sale-by-owner (or FSBO) route got prices that were pretty much in line with prices achieved through the help of agents using the Multiple Listing Service (MLS).
There was one small difference, though -- FSBO homes took longer to sell. And in The Providence Journal, Christine Dunn drew attention to some of the study's caveats: "The authors have cautioned that the results from Madison may not necessarily apply to the country as a whole, especially in places, including Rhode Island, that do not have their own local, popular for-sale-by-owner Web site. The study also focused on a 'boom' period in real estate [1998-2004], when it was easier for all sellers, professional or novice, to sell property."
The FSBO system does offer advantages. You'll have more control over the process, since you can schedule viewings at your convenience. You may be a better salesperson for your home, since you know the building and the neighborhood much better than any agent could. You'll always be able to meet the people interested in buying your home. And you can indeed bypass the typical 6% commission entirely.
Still, there can be some meaningful drawbacks. Sometimes, FSBO sellers end up paying half of that typical 6% fee to the agent who brings in the winning buyer. Personality and temperament matter, too. You need to be somewhat objective when showing off your home. Not everyone will think that a certain room is ideal for a gym, for example. Let a prospective buyer imagine the room fitting his or her needs.
Selling on your own also takes time and energy. You'll want to be available on short notice to show off your home, and you may need to be able to take time off from your job to do so. The FSBO route also takes some research, if you want to do it right. If you price your home too low, you'll end up short-changing yourself, but if you price it too high, it might not sell. Some businesses, such as Move (Nasdaq: MOVE), IAC/InterActiveCorp (Nasdaq: IACI), HouseValues (Nasdaq: SOLD), and ZipRealty (Nasdaq: ZIPR), have tried to make it easier to do that research, but it still takes time to do it right.
You'll also need to advertise, so that buyers are made aware of your home. You'll probably need to employ an appraiser, and a real estate lawyer, to prepare the paperwork.
Yes, you can save thousands by opting to go FSBO. But remember that the additional work you put into the sale has value, too. Make sure the tradeoff is worth it to you.
Whom to believe?
Meanwhile, if you sense that there's a bit of a battle being waged on this front, you're right. The National Association of Realtors (NAR) takes an unsurprising anti-FSBO stance. It cites a 2005 study finding that houses sold through the MLS system got roughly a 16% higher price than those sold in other ways. This new study from Wisconsin, of course, casts doubt on the NAR's findings.
The Inman News Blog recently mused on the smackdown between the two sides:
FSBO data is hard to come by. According to NAR, the number of FSBOs has been declining over the years, but FSBO site operators say their user base has grown. In general, there's not a lot of detailed data about these transactions.
In short, you should look into the FSBO strategy very deeply before you commit to it. Make sure it makes sense for you.
If you're interested in buying and selling issues relating to your home, visit our Home Center, which features lots of money-saving tips on mortgages and other issues. You might also want to check out these articles, especially if you'll soon be buying a new home:
Longtime Fool contributor Selena Maranjian owns shares of IAC/InterActiveCorp. For more about Selena, view her bio and her profile. She was recently relieved to learn that turkeys are not so dumb that they'll gaze upward at falling rain until they drown. Try any one of our investing services free for 30 days. The Motley Fool isFools writing for Fools.