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When trying to sell your home, every single dollar counts. You want to maximize the profit you make on the sale of your property. One way to do this is by eliminating everything you view as unnecessary to the process of marketing and selling the home, says Bighorn Rentals.
If you are a homeowner caught in this situation one of the things you will be looking at dispensing with is the services of a realtor. Realtors have been a fixture of the home selling process for ages and most homeowners don’t know of any other way to sell a home.
But is a realtor entirely necessary when you are trying to find a buyer for your property? Is it more profitable to list the home as FSBO (For Sale by Owner)? Or do estate agents offer benefits that can’t be had elsewhere?
To find answers, the first step is to look at the different options you have when trying to sell your home. In addition to hiring a realtor, you can use three other avenues to find a buyer. The four options for selling your home are:
- Selling to a cash buyer
- Selling to a known buyer
- Listing the home as FSBO
- Selling through a realtor
Selling to a cash buyer
This option offers the easiest route to offload your property. You can avoid many of the hassles involved in selling a house, such as home showings and open houses. If you sell the home “as is”, you don’t have to do any repairs to the building. When you sell to a cash buyer you also avoid the home inspection and sell in record time.
There are two downsides to selling your home to a cash buyer. First, you may end up selling the home at 13–15% below the home’s market value. But you could make up for some of that via the costs you avoided by not selling through a realtor. The other drawback of this method is a cash buyer limits your options; you cannot start a bidding war between potential buyers.
Selling to a known buyer
If someone you know is interested in buying the home – a friend, relative, or neighbor – you can sell it to them with the help of a real estate attorney. You should not attempt to sell your home without the help of an attorney. The attorney will help you deal with the tons of paperwork involved in the sale.
The number one pro of this option is the commission you pay is lower than what you would pay a realtor ($150-350/hour versus 3-6% of the sales price of the home). Additionally, your contract with the buyer is very detailed and if any disputes arise with the buyer, you have an experienced legal adviser by your side.
On the downside though, you may not get a good price for the home since neither you nor the attorney is an expert at negotiating the sales prices of houses. Also, selling to close relatives or friends is fraught with difficulties. You may lose a valued friend over minor disagreements.
List your home as FSBO
This is the option favored by most owners who sell their homes without the assistance of a realtor. This option gives you complete control of the selling process. FSBO homes often sell faster than homes listed by a realtor. Also, even without the help of a realtor, you can still list your home on multiple listing sites (MLS). The best part is you can avoid paying commissions to a realtor.
But listing your home as FSBO shifts the burden of marketing it from the realtor’s shoulders to yours. Typically, this means spending a lot of time talking to prospective buyers. But the biggest issue when selling your home as FSBO is negotiating a fair price for the property. The data shows that FSBO homes sell 6% lower than homes sold by realtors.
Selling through a realtor
Basically, a realtor reduces the personal and financial risks involved in selling a home. They grant you access to a network of estate agents who can help spread the word about your home. Also, since realtors don’t feel a sense of attachment to the home, they are more objective during negotiations. A realtor ensures you follow the right process in order to avoid legal liabilities.
The biggest drawback to enlisting the services of a realtor is the cost. Typically, you will be required to pay at least 6% of the total sales price of the home (not the profits) to the realtor. This can be close to the returns you make on your home after years of holding the property.
Should you use a realtor?
The right answer will be different for every homeowner. The important thing is to know that selling through a realtor is not absolutely necessary. If you are moderately confident in your marketing and negotiating abilities, there is no reason why you can’t sell the home by yourself or through a cash buyer.
But before you go ahead to list your home by yourself, here are things to keep in mind:
- You will have to work harder than you would if you had a realtor.
- You need patience since you don’t have the marketing abilities of a realtor.
- You may need to pay a broker for limited services or use the cash-buyer option.