Although most homeowners continue to sell property the same way their parents did—by listing it with a real estate agent—a sizable chunk of Americans are choosing instead to go it alone. The appeal is obvious: By cutting out the middleman, home sellers can save thousands of dollars that would otherwise end up as commission in an agent’s pocket.
But can an inexperienced home seller really engineer a transaction in today’s turbulent real estate market without the guidance of a professional? Yes indeed, says Greg Healy, vice president of operations at ForSaleByOwner.com, a Web-based company that markets homes for independent sellers. In an interview with U.S. News, Healy underscored the benefits of solo home selling and insisted that it’s not as difficult as you might think. Excerpts:
How much money can a homeowner save by not using an agent?
If you cut out all agents—meaning post your own online ad, put out a yard sign, and sold your home on your own—you would essentially cut out on average about 6 percent of commission. On a $300,000 home, that’s about $18,000 of savings. There are some markets—and I believe Maine is one of them—where commissions run even higher, I believe 7.5 to 8 percent.
Why wouldn’t a home seller need to use an agent?
The No. 1 reason that you don’t need an agent to sell your house is the rise of the Internet. The Internet has essentially changed the face of real estate. It’s essentially leveled the playing field across the market. The Internet allows sellers to easily market their homes to millions of people within minutes. Pricing information—recently sold homes, the competitive landscape of the homes that are being sold—is accessible within seconds on a search engine. Ten years ago, agents controlled all the information, and that’s why you had to go to them. Today, it’s a completely different ballgame.
What about someone who has never sold a home before?
Again, with the Internet allowing access to information, companies like ours provide information and show sellers step-by-step instructions on how to sell your home. That information is easily readable. We provide it—and other services provide it—to bring that confidence to that person who has not done it.
But what about pricing a home? Wouldn’t a homeowner need a professional to help with that?
Yes and no. First, again, the accessibility of information of automated valuation tools, which we provide free of charge to our customers, provides a pricing estimate. So, independent home sellers can compile all the data that an agent would see, if not more. Other services, like Zillow.com, that do online pricing as well are always a great place to start. Second, an agent is going to give you their perspective based on what they are seeing. They have no true professional training in that aspect. So we recommend to anybody, if you need confidence in the price of your home, get an appraiser to come in for $200 to $300 to provide that professional insight. Again, the agent is not involved in that. Even if you used an agent, you would still bring in an appraiser.
How about the legal aspects? Is an average homeowner qualified to take care of that?
We recommend that in every transaction a real estate attorney or a title company—depending on where you are located—represent you and sign off on the final paperwork. There is a myth out there that the agent helps you with this paperwork. They may offer direction, but they are not legally capable to provide that expertise. A lawyer or a professional from a title company—depending on where you are—is a must in any transaction. They are the ones that really help get any seller through the process.
What about marketing? Clearly, an agent would help bring more exposure to a home.
Again, that comes back to the two points that we have raised already. The Internet allows you to get in front of people without an agent. Our site has nearly 2 million visitors on a monthly basis looking for homes, so that makes it easy to bypass an agent. In 1997, just 2 percent of buyers used the Internet to search for a home. Right now, it’s more than 84 percent. Secondly, when it comes to marketing, agents have fliers. We offer fliers. Consumers can make their own fliers. Signs? We offer signs, or someone can buy one in the store. Agents leverage the multiple listing service (MLS) as their primary “marketing tool,” and anybody can access that if they want to pay for it.
It sounds to me that you’re saying a real estate agent’s job is not all that difficult.
That’s true, and remember that a real estate agent license takes under two weeks to get. So after those two weeks, that person can be in charge of the selling or buying of a person’s home, which is one of the largest financial assets in a person’s life.
Are there times when the interests of the agent and the seller are skewed?
Agents are willing to drop the price of the seller’s home more and faster than perhaps a seller may want. That’s where representing their interests may break apart. And second, they don’t want to wait. They want to get the commission. Timing and interest: That’s where you might have conflicts. The only other point I would put out there is that the person who owns the home is going to know the home the best. We hear it from customers all the time, “I stopped using an agent because they called me 30 times to ask me questions about my house.” You know, “When was the last time you cut the grass?” The sellers are obviously going to be able to answer those questions and save time and hopefully sell your home quicker.
So what value do real estate agents bring to this process?
There was an independent study done last summer by two professors from Northwestern University. They compared the prices of homes sold “for sale by owner” versus homes sold by agents. And their two conclusions were, one, FSBO sellers can get the same price, if not slightly more, when they sell their homes. Their second conclusion is that you are essentially paying these agents for the convenience of having someone do the work for you. So for that 6 percent commission, they’ll do the work—bring the real estate attorney, do the showings, field calls for you, be at your house if someone wants to see it.
But these are all services that homeowners could do for themselves?