Should You Use A Realtor® When Selling Your Home?

By MySpendingPlan.com Editorial Staff

When selling a home, the real estate agent’s commission can seem like an excessive expense, especially when housing prices are softening, cutting into your profit.  But then again, isn’t a Realtor a must when buying or selling a home?  Well, it depends.  As a home seller, you do have the option of selling your own home and not selling it through a Realtor.  But is that the right decision?  Here’s a look at the pros and cons of selling your own home versus using a Realtor.

But first, let’s clarify the terminology – it can be confusing.  Real estate agents are required to have state licenses in almost every state (and are employed by licensed real estate brokers, who are legally responsible for the actions the agents they employ – it is generally much harder to become a real estate broker than to become an agent).  Now, Realtors are licensed agents and/or brokers who are also members of the National Association of REALTORS® (NAR).  What does this mean?  Well, NAR is the industry group that subjects its members to higher levels of ethical standards and practices than just the state license.  It also means they have exclusive access to their local multi-list service (MLS).  And since over 80% of homes are sold through an MLS listing, being a member of NAR matters.

Home for Sale by Owner (FSBO)

When a home owner decides to sell their own home without the help of a Realtor, such a listing is known as For Sale By Owner (FSBO).  You can buy an inexpensive kit or use a service run by Realtors who will list your house on the local MLS, but provide very few additional services.  Here are the advantages and disadvantages of an FSBO listing:

Advantages:

• The main benefit of a home for sale by owner is the fact that you can end up saving thousands of dollars as you do not have to pay full commissions to real estate agents.
• You can choose the exact time and day for showing your home to buyers and have total say over the advertising and marketing plan.

Disadvantages and Cautions:

• According to the real estate industry statistics, a huge percentage of FSBO homes - about 80% - do not get sold by their owners and ultimately are passed on to a real estate agent.  The delay that is caused in trying to sell the home on your own can result in much lower sale prices.
• Homes that do get sold by their owners typically fetch lower prices than similar homes sold through Realtors.  This is because real estate agents are professionals in their field and know how to price your home for sale, as well as negotiate expertly with the buyers to get top dollar for your home.
• You have to set aside valuable time in showing your home to multiple buyers.
• You must handle all the paperwork and legalities on your own: disclosures, home inspections, valuation, negotiating the deal, closing, etc.  In addition to taking up a lot of your time, all this involves expert knowledge about real estate and the selling home process, which you may not necessarily have.
• An FSBO home is low down on the list of must-see homes for most top end brokers and even many home buyers.  This is because Realtors do not want to work with a home seller who is not represented by another Realtor as they will end up doing all the paperwork.  Many buyers don’t like to look at FSBO homes as they believe that dealing with home owners directly is not as professional as dealing with Realtors.

So when deciding between selling your own home and hiring real estate agents to do so, make sure that you have the ability to do all the work involved in the process and will be able to get the right price for your home.  Unless you are really well informed and have the time to spare, it makes better sense to hire a Realtor from the start to avoid costly mistakes.

Using A Realtor®

Although the commission will be higher, hiring a Realtor to sell your home can be a better bet.

Advantages:

• You can get a much better price for your home which should be enough to offset the Realtor’s commission and then some.
• Realtors have expert knowledge about the local real estate market and legalities involved in selling your home.  You can rest easy with the knowledge that you are professionally represented, your paperwork will be tight and well taken care of, and all the complexities of the home selling process will be handled by an expert.

Disadvantages and Cautions:

• The commission, of course.
• Be cautious of agents who over rely on Open Houses to sell your home - they rarely work.  Open houses also bring unscreened traffic into your home and are usually more about the agent hoping to meet new potential clients than selling your house.
• Ask the right questions before retaining a real estate agent.  It is best that they really know and operate in your local area, so they can price the house properly and efficiently schedule showings, meet deadlines, etc.