When Scott and Angela decided to put their home up for sale in a suburban Southern California neighborhood, they had a dilemma: Do it themselves (FSBO) or hire a Realtor.
Scott was a full time teacher, but Angela was a stay-at-home mom, so she could tend to the job of selling easily they thought.
After deliberating a few days, they decided to try their luck and sell their 3- bedroom Ranch style home on their own. In the end, it worked out well for them, but it isn’t a job for everyone.
However, more and more homeowners are opting out when it comes to hiring a Realtor and going FSBO – For Sale by Owner – thanks to new technology and business models to help novices.
Old Ways of Selling
If you have ever owned, bought or rented a home, you know the traditional real estate transaction: In exchange for help of an agent or broker — who shows you homes or markets yours, does the negotiations and paperwork and completes the transaction — you pay a certain commission.
The commission can vary, depending on whether you’re selling, buying or renting. But, a typical commission fee on a $500,000 home sale will be around 6 percent, or about $30,000. For some, this is a hefty amount of money to hand off to someone else.
Even if the real estate agent is superb, knows real state inside and out, that commission could be tough for some to home sellers to swallow.
These issues are part of the reason why the market for FSBO has gained more steam recently. However, in the days before technology, a homeowner struggled to sell his or her own home. One main reason was lack of access to the same tools an agent has, namely the MLS listing service. Instead, owners had to rely on placing a newspaper ad and planting a sign in the yard.
But these days, thanks to new companies and a different style of property-listing platform, the idea to be your agent is catching on for those considering selling a house.
For example, Beycome.com, is a site dedicated to commission-free sales and rentals by owners. The site helps and provides homeowners with such tools as legal contracts to close a selling.
In this day and age, and armed with the information they need, buyers can now feel confident about working directly with sellers and removing real estate agents and brokers from the picture.
Research sources such as The National Association of Realtors 2015 Profile of Home Buyers and Sellers report some FSBO sellers surveyed were hitting their home-pricing targets more consistently than homeowners using licensed agents. In fact, FSBO sellers surveyed reduced their sale prices, on average, only one time or less, 91 percent of the time, before they closed the sale.
With real estate agents, this picture occurred less — occurring 78 percent of the time for homeowners surveyed. A study from Stanford University reported FSBO homes sell for more money, an average 4 percent to 7 percent higher, than sales by agents.
And when the absence of agent commissions is figured into the mix, the percentage increase in sales price, compared to that for traditional home sales is even higher.
In the end, this makes DIY or FSBO real estate a more profitable scene for sellers, given the additional money they receive that they otherwise would have paid out to a real estate agent.
Weighing the Advantages and Challenges
Of course, there are challenges in DIY/FSBO real estate, including possibly having to deal with a difficult transaction, but the benefits seem to outweigh these issues.
Many of the newer platforms out there offer support and counseling, thanks to online experts.
If you think you have what it takes to sell your own home like Scott and Angela, why not give it a try!