FSBO or Selling With A Realtor

Recently a friend reached out to ask questions about selling a home. She wanted to know what the difference is between selling a home privately, or selling it on the market with a realtor. Many people are focused on fees, but there are many differences and factors to consider. Few people outside of real estate understand the complexities of a home sale. Here are 10 points to help you understand the difference between “for sale by owner” and selling with a real estate professional.

1. Cost

• FSBO: Most sellers assume there are no commission fees to a real estate agent, potentially saving 5-6% of the sale price. However, most serious buyers are already working with a real estate agent and have signed a contract outlining their compensation. Even with a private sale, you will most likely cover the buyer broker compensation. You will also need an attorney to handle all of the paperwork for the transaction and all marketing costs are out-of-pocket.
• Realtor: Historically, sellers have covered the commission and compensation for their home sale (this could be 5-6% of the sale price, is negotiable, and is split between the seller’s and buyer’s agents). The seller’s agent pays for all marketing, such as professional photos and videography, mailers, online posts, and so on. The seller’s agent provides and handles all required documents, provides the seller’s estimated net proceeds, vets potential buyers, works with the lender and title company for any necessary information, and takes care of any problems during the transaction.

2. Expertise and Experience

• FSBO: When selling a home on your own, you as the seller manage all aspects of the sale from taking photos, to listing it, to taking phone calls, to setting up showings, to vetting the buyers, to setting market price, to negotiating repairs, and so on. An attorney can provide the contract, but is not involved in any of the listing process. This requires a large time commitment for the seller, knowledge of pricing and negotiation, and understanding buyer financing.
• Realtor: A real estate professional has the expertise and market knowledge to get a home sold with the best outcome. She is skilled in handling complex paperwork and all of the marketing, gives guidance on correctly pricing the home, vets the buyers, and coordinates the many details and parties involved in the transaction. Her experience and guidance keeps you in compliance with real estate laws and standard of practice.

3. Pricing the Home

• FSBO: As the owner, you determine the price, which may lead to overpricing (fewer buyers) or underpricing (lost profit). You may be able to look at homes in your area that sold, but you will not have the experience or understanding of how market value is set. This could result in losing money, or having an appraisal cut because the price is too high. 
• Realtor: Realtors use Comparative Market Analysis (CMA) to set a competitive and accurate price. Using comparable properties that have sold recently and data from the MLS, a realtor can compare home features, size, condition, and style to provide an accurate market value range for your home. She will help you determine the best list price for your home.

4. Time and Effort

• FSBO: Selling a home is an involved process! When selling on your own, you as the seller handle marketing, which means taking photos and listing the home online. You will then need to take all incoming communication for questions and set up showings. As offers come in, you will need to review the terms to try to figure out which is the best offer. If there are inspections, you will need to handle all negotiations. The home selling process is time-consuming.
• Realtor: Realtors take care of the listing process from the first consultation to the final closing when you hand the keys over. They advise you on preparing your home, connect you with venders you may need, hire a professional photographer and videographer, prepare marketing materials, post your listing on the MLS (which is syndicated to over 50 sites), review the terms of all offers, vet buyers, negotiate terms, and handle all hiccups during the transaction. Using a realtor saves the seller significant time.

5. Marketing

• FSBO: When selling a home yourself, you have limited marketing tools. You can post to a FSBO site, put your home for sale on your social media page, and put a sign in your yard. Most buyers look for and find homes with online searches across various platforms. If a buyer is working with a realtor, the buyer will receive listings from the MLS search their realtor set up, which could mean they never see your home for sale. 
• Realtor: A realtor has access to Multiple Listing Services (MLS). Once a listing is posted in the MLS, it is syndicated out to over 50 other sites, such as Realtor.com, Redfin, Trulia, Zillow, and more. Most buyers are searching these sites for homes. A buyer working with an agent will receive listings from the MLS search their agent set up. A realtor may also spread the word about your home through her professional networks, social media followings, and employ other advertising strategies.

6. Exposure to Buyers

• FSBO: As a for sale by owner, there is a chance you will attract fewer buyers to your home. First, without the MLS exposure, you will have limited reach to some buyers looking at online websites. Remember, once a listing is in the MLS, it is syndicated to over 50 sites. Second, some buyers steer away from FSBO properties, concerned about how the transaction will be handled with the owner.
• Realtor: When working with a realtor, your property is listed in the MLS and feeds out across 50+ home search websites. Realtors also have access to professional networks and marketing tools to attract serious buyers. When professionally listed, buyers also know the correct paperwork and protocol will be followed, and may feel more secure in buying your home. 

7. Negotiations

• FSBO: When selling your home on your own, you the seller will have to negotiate directly with the buyers or their agents. This can be challenging when you do not have the experience with and knowledge about buying and selling real estate. Negotiations can become emotionally charged when parties can’t agree and cause the transaction to fall apart. 
• Realtor: Your realtor acts as an intermediary, handling negotiations professionally, coming up with solutions, and keeping communication open with the buyer’s agent. Having a “third party” handling the negotiations helps to keep emotions down. Your realtor can also advise you on countering terms, reasonable repairs to inspections requests, and so on.

8. Legal and Administrative Work

• FSBO: As the owner, you still must ensure compliance with contracts, disclosures, and local laws, which can be overwhelming. You will need to provide property disclosures to potential buyers, provide township H&O/transfer certifications, order resale certifications and HOA documents if applicable, and follow any other requirements. There are many required documents throughout the entire transaction.
• Realtor: When working with a realtor, your realtor will manage all of the standard legal documents, provided to her through the Pennsylvania and National Association of Realtors. She will check with the township to order any certifications required to sell your property. She will provide you with any required property disclosures. Throughout the process, she will handle all addendums and additional documentation needed for selling your home.

9. Risk of Errors

• FSBO: Selling your own home could put you at greater potential for making mistakes, which could increase your risk of legal issues. Without the knowledge and expertise of buying and selling real estate, errors in paperwork, disclosures, and local requirements could cause a disruption in your transaction, cause your contract to fall through, or even end up in legal issues.
• Realtor: Realtors are trained to follow the laws with buying and selling real estate. They have access to standard contracts written by attorneys for their profession. They know how to avoid pitfalls and errors in a real estate transaction. Their contracts are also reviewed by their broker’s office for proper compliance. 

10. Sale Price

• FSBO: When you sell your own home, you may avoid professional fees, but most FSBO homes sell for less. Because of limited exposure and inexperienced negotiation, an owner handling his own transaction will most likely lose money on the sale. Buyers also know the seller has no professional representation and may believe they can get a bargain on the home. 
• Realtor: When using a realtor, homes generally sell for a higher price due to professional marketing, more exposure to buyers, and expert negotiations. An experienced realtor is worth hiring. Not only will you make more money, but you will save time and hassle.

For sale by owner saves money on commission fees, but places challenging demands on the seller’s time, knowledge, and effort, with potential risks of undervaluation or legal mistakes. Using a realtor offers convenience, professional expertise, and higher sale potential, but the service comes with a commission fee. Make your choice based on your priorities, confidence, and willingness to invest time or money.