Thinking about selling your house without a Realtor®? We’ll break down the pros and cons behind your home sale options. —-
Thinking about selling your home without a Realtor®? You’re taking the path less traveled, my friend. According to the National Association of Realtors, in 2020, only 8% of sellers sold their home For Sale By Owner, and less than 2% of sellers sold their home to a home buying company or iBuyer.
Still, if you’re gung-ho about selling your home without a Realtor® — you’ve got options. We consulted two real estate attorneys and a top agent for insight on how sellers pull off an agent-free home sale. While this is a huge feat, it’s not impossible.
To help you navigate your options, we’ll break down the pros and cons of three routes you can take:
- Sell to a cash buyer
- Hire a real estate attorney to facilitate a sale to a known buyer
- Fly solo via For Sale By Owner (FSBO)
Option #1: Sell your house to a cash buyer
If you’re looking for a fast sale, consider selling your house for cash. Cash buyers — including iBuyers and house buying companies — are individuals or entities that purchase your home outright, without the need for lender financing. Cash buyers offer sellers convenience and certainty, often at the cost of a higher transaction fee.
You can sometimes avoid home inspection delays
Inspection issues account for 16% of closing delays, according to the National Association of Realtors. If you sell your home as-is to a cash buyer, they may not require you to complete repairs the home inspection deems necessary. Some cash buyers may not require a home inspection at all.
You don’t need to deal with the stress of an open house and home showings
Put away the cleaning supplies because nobody is coming for a showing at a moment’s notice. Imagine how much time you’ll save on your already busy weeknights and weekends without wrangling your kids and pets to disappear for an hour!
You can skip the home makeover
Again, because this is an as-is situation, you won’t need to climb up on the roof or repaint the rooms or hire contractors to visit and price out a job. You can also skip cosmetic upgrades normally needed to increase your home’s marketability and attract buyers either. So, you can skip decluttering, staging, painting, and updating hardware and fixtures.
The sale price is often lower than you want
As we hinted at earlier, convenience comes with a cost. The cash buyer’s strategy is to use a seller’s desire for convenience to leverage a lower price. For example, a study by Collateral Analytics reveals that iBuyer fees cost sellers about 13% to 15% of a home’s sale price; these fees are significantly higher than real estate agent commission which ranges between 3% and 6%. So, if your home sells for $300,000, you’ll leave $30,000 on the table.
Because many cash buyers are flippers or investors, they don’t want to pay more than necessary to close the deal. They’ll need to spend money on your home after they purchase it so they can flip it and earn the best profit possible. Plus, they know that some sellers are willing to sacrifice money in exchange for speed and convenience.
If you want the highest sale price possible, you’re better off selling to a family who plans to live in and love your home, not view it with dollar-signs.
There’s no chance of sparking a bidding war
In a hot seller’s market, buyers often compete to purchase a home in what’s known in real estate as a bidding war. When this occurs, a seller can win a sale price well above the initial listing price. If you’re selling your home to a cash buyer, on the other hand, you miss out on the opportunity to spark a bidding war.
Since cash buyers purchase homes by the dozens, they’re only interested in buying your home if it’s a deal. If a competing buyer offers you more, they’ll typically let your home go than raise their price and consequently lower their future profit.
If you want to sell your house for cash, ensure you’re selling your home for the most money possible with HomeLight’s Simple Sale platform. Fill out basic information about your home and location, and introduce you to the highest bidder from our network of pre-approved buyers.
Simple Sale will provide you with a side-by-side comparison of what you’d make selling your house on the open market with the help of a top agent so you can make an informed decision.
Option #2: Sell your house to someone you know with the help of a real estate attorney
If you’re lucky enough to have a buyer waiting in the wings, you might consider selling your house without a Realtor®. Instead, hire a real estate attorney to help you close the sale.
“Money and blood don’t mix. The relationship gets killed because they didn’t have something in writing,” says Rajeh A Saadeh, a real estate attorney in New Jersey. So, as much as you may love your BFF or believe your brother-in-law is a good guy, it’s best to involve an attorney to help you navigate the deal.
Attorneys specialized in real estate transactions can help you draft and interpret the endless stack of closing paperwork, including contracts and legal documents. Depending on your state, you may even be required to have a real estate attorney present at closing, regardless of if you’re selling your home with a real estate agent or not.
A real estate attorney can craft an air-tight contract
Your attorney will draw up contracts that include deadlines for inspections and appraisals, any conditions, caveats and contingencies, and the details of the sale price and closing dates.
You have a legal advisor to resolve disputes
“Having an attorney help you with the process can be valuable, especially if problems develop because they can step in to help resolve disputes or prevent them from even occurring,” shares Safa Ashrafi, a licensed attorney with Gross McGinley in Allentown, PA.
Common disputes include failure to disclose property defects and the inability to agree on a moving date.
You still save money compared to working with a real estate agent
It’s not cheap to hire an attorney, but it’s less than what you’d pay in commission working with a real estate agent (typically 5.8% of the sale price). Average hourly fees for real estate attorneys range between $150 and $350 per hour. For example, if you’re selling a $250,000 home, $15,000 (or 6%) will go to the agent.
An attorney won’t get you the best deal possible on your home sale
An attorney will help you close your home sale without running into legal issues, but they won’t help you sell your home for the best price possible. For that, you need a top real estate agent.
“Attorneys, unlike agents, will not showcase or advertise a seller’s house, which draws a large pool of potential buyers,” comments Ashrafi. “Agents also may know the market and help sellers with determining a sales price.”
Agents are also experts in crafting effective pricing strategies and helping you negotiate to secure the best price possible for your home. If you go without an agent, you could undersell your home — especially if it’s to someone you know, where personal feelings are in the mix.
You might lose a friend
There are definite dos and don’ts when selling a house to a friend. You’re not just planning happy-hour cocktails or throwing a bridal shower — there are thousands to hundreds of thousands of dollars on the line. You’ll need to remain professional through the process and stay level headed during price negotiations to close a sale that satisfies both parties and keeps the relationship intact.
3. Sell your home on the open market without a real estate agent (FSBO)
Sellers are often drawn to FSBO because they want to save on agent commission and control the entire process. However, with added control comes responsibility. You’ll need to advertise and market the listing, price it accordingly, and host walk-throughs and open houses.
Few homeowners are willing to take on these tasks and risk selling their homes for less. In 2018, the National Association of Realtors shared that FSBO sales accounted for only 8% of home sales, the lowest percentage ever since data collection began in 1981. But if you’re savvy at marketing, home design, networking, and negotiating, you may just pull it off.
You save on real estate agent commission fees
You can pocket the 3% commission fee that normally goes to the listing agent’s commission. However, note that you may still need to cover your buyer’s agent commission fees, typically 3% of the home sale.
You can still list your home on the MLS
You can advertise your home listing on a website (which costs around $200 and then $50 per month thereafter) or on your personal Facebook page. But to reach the widest audience possible, you’ll want to list your home on the MLS, where 9 in 10 sellers listed their homes. Go through a flat-fee MLS listing service to access the MLS $50 to $500.
Statistically, you’re likely to sell your house for less money than if you hired a Realtor®
Real estate agents sell homes for 6% more than FSBO sellers do, according to Collateral Analytics. And according to the National Association of Realtors, the typical FSBO home sold for $217,900 compared to the $295,000 that agent-assisted homes sold for in 2018.
There are many reasons why FSBO homes usually sell for less:
- Buyer’s agents out-negotiate FSBO sellers.
- FSBO sellers often miss the mark in setting a competitive listing price. When they price their homes too low, they lose money. When they price their homes too high, their home sits on the market, leading to lower offers over time.
- A home inspection report could reveal issues that the seller struggles to address efficiently. They may concede to too many repairs and lose money in their home sale. Or they may push back too hard and influence the buyer to leave the deal.
FSBO is time-consuming: You’re in charge of marketing and communications
If you’re planning to act as your own agent, get ready for it to feel like a part-time job. The seller must market their home with social media, flyers, and open houses. Top agent Joanne Owens of Sarasota, FL, advises sellers to use a service like Vistaprint, where 500 4” x 6” postcards cost $40 to help advertise their home. Ordering is the easiest part. You’ll be designing it yourself. Don’t forget to tack on a $.35 stamp to mail each postcard.
As a seller without an agent, you also must be available days, nights, and weekends to promptly respond to inquiries. If they fail to return an email or phone call quickly, they might lose the buyer who finds another home in the meantime.
Photos and staging are your responsibility
You can easily hire a professional photographer to take shots of your home’s interior and exterior for an average cost between $110 and $300. But professional photos won’t compensate for a home that’s cluttered or poorly staged.
“You’re looking at [your home] through your filter,” says Owens. “I had one seller with a plush-toy collection that was cute but wasn’t in the best intentions of the buyer.”
Your personal safety may be at risk
Owens recently met with an older woman convinced by a family member to FSBO and felt concerned for her safety when hearing about some recent home showings. “Are they just casing the joint or do they plan to purchase it?” she wondered. An agent will not only host walk-throughs but also vet potential buyers to keep you and your home safe.
Owens also warns FSBO sellers to watch out for wire fraud and online-phishing scams. “A lot of people that are older have been fooled,” she comments.
Understand the trade-offs before selling your house without a Realtor®
If you plan on selling your home without a Realtor®, you need to have a solid understanding of what your responsibilities will include and what you might sacrifice in the process. Remember, every home sale route has its trade-offs. Choose the best route for you based on your skill set, time, and personal selling goals.
Header Image Source: (David Suarez / Unsplash)
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