The Disadvantages and Benefits of For Sale by Owner
In 2020, the sales of existing homes for the highest they have been in 14 years. With the coronavirus pandemic catalyzing historically low-interest rates and low inventory, home prices were also record-setting.
When you sell a home with a real estate agent, you typically have to shell out somewhere between 4 and 6% of the sale price to the real estate agents involved. This reality often makes people consider whether they should sell their home without the help of a realtor.
Is for sale by owner a good idea, or are there other options that might better suit you?
Let's take a look at everything you need to know about the disadvantages and benefits of for sale by owner.
How Hard Is For Sale By Owner?
When selling a home for sale by owner, you are taking on all of the responsibilities that a real estate agent would typically do for you. That means that going this route can be incredibly stressful and time-consuming.
In order to be successful in selling a house on your own, you will basically need to learn everything that a real estate professional already knows. It is not as simple as just listing your home on the MLS.
While people typically love to give real estate agents a hard time, their jobs are not as easy as you might think. They typically take care of pricing, staging, marketing, negotiating, and so much more when it comes to a home sale. On top of that, you will have to deal with a lot of complicated paperwork on your own if you choose to sell for sale by owner.
LIt is certainly possible to sell a house on your own without the help of a real estate professional. However, there are other ways that you can sell a house without a realtor that will save you time, energy, and stress.
Benefits of For Sale By Owner
While selling for sale by owner is difficult and time-consuming to do, there are some benefits to going this way.
You're in Control
First, you are in control of the process. You are the sole decision-maker when it comes to picking the price, who you show the house to and when, and who you sell your house to. It also removes the potential element of ending up with a real estate agent that you don't trust to do a good job selling your home.
You Know Your Home
Another benefit is that you are the biggest expert in your own home out of anyone. You will therefore be able to help any potential buyers understand the benefits of your home from the perspective of an owner.
You Can Use Existing Skills
Avoid Real Estate Agent Commissions and Influence
Speaking of which, one of the reasons many people sell for sale by owner is because there is no commission fee. If you are able to successfully sell your house this way, it can end up meaning that more money stays in your pocket.
You also won't be pressured by a real estate agent to lower your asking price to sell your home more quickly. Perhaps you want to get a certain price for your house and you aren't in any particular rush to sell it. In this instance, selling for sale by owner might make sense if you are willing to take on all of the responsibilities it entails.
You Have Access to the MLS
Another benefit is that you can pay to list your house on the MLS so that your home is listed with all of the other homes on the open market. There are also plenty of resources online to help you learn how to sell your house on your own.
During a time when there is limited inventory, you might have better luck selling for sale by owner. Buyers will be more willing to make an offer on a home even if it is not being marketed and represented by a real estate agent. If your house is the only house in the neighborhood for sale, you will have a better chance of selling your house on your own than if there is a lot of competition.
Disadvantages of For Sale By Owner
On the other hand, there also a lot of disadvantages of for sale by owner.
It Can Be Hard to Stay Objective
One of the major cons of selling a house on your own is that it can be difficult to maintain objectivity. This is totally understandable because your home likely is the location where countless memories were created. You love your home, and for this reason, it might be difficult for you to impartially price your house in a way that makes it competitive in the market.
Similarly, a real estate agent can buffer you from the criticisms of a potential buyer. Along the way, you will typically hear complaints or criticisms about your house. It can be difficult to remain impartial and objective when this happens, and it has certainly occurred that a home seller has gotten so offended that they cancel the deal and essentially sabotage themselves.
You Might Not Profit As Much As You Thought
While many people who sell for sale by owner are doing so in order to keep more of the profit for themselves, this sometimes backfires. Real estate agents are experts in their local market and know how to price and sell houses so that they sell for a good price and in a reasonable amount of time. For this reason, you could end up making more money when you sell with a real estate agent even factoring in their commission than you would be selling on your own.
You'll Need to Spend the Evenings Studying
Additionally, you will have to learn a lot about marketing, negotiation, and legal documents in order to do this successfully. This means that it is going to be a major time commitment. Before listing your house for sale by owner, you'll want to think about how much your time is worth to you and whether or not it is actually a good deal to go it on your own.
Remember, negotiations don't just occur with the buyer's real estate agent. You also have to negotiate with inspectors, appraisers, and maybe even the bank. Driving the whole process forward will be entirely up to you and this can be a lot of pressure and very difficult for someone without experience.
Similarly, you will need to remember that during the negotiations with the buyer's real estate agent, you will be negotiating with someone who has been through this process a lot. Unless you are a skilled negotiator yourself, you could end up getting talked down way more than you intended to. This can end up making the whole point of trying to make more profit backfire, where you sold your house for less than you could have if a professional had been acting on your behalf.
Did we mention that there were a lot of legal documents involved? The laws, rules, and regulations are going to vary from state to state, meaning that you're going to spend a lot of late nights researching the right way to fill out the big pile of documents in front of you. It's important to get this part right, as making a mistake could mean financial or legal issues for you down the road.
It Might Be Harder to Find a Buyer
Another issue is that buyer's real estate agents might discourage their clients from making offers on houses that are being sold by the owners. It is not uncommon for agents to have bad experiences with FSBO sellers, who can price their homes too high, be way too emotionally attached to their homes, and who honestly don't always know what they're doing.
You also won't be able to tap into the network that real estate agents have built over the years. This means that you might not have as much access to qualified buyers as you would if you listed traditionally.
Your House Probably Won't Sell As Fast
Selling your house on your own will also likely result in a slower sale. Having a real estate agent can help to keep the process moving forward, even if it does tend to be kind of a slow process in general. Because of the learning curve, even if you are investing a lot of time into it, it will probably take you longer to sell your house from start to finish on your own.
It's a Huge Time Investment
Probably the most important drawback to understand before you choose to go this route is how much of a time suck selling a house is. Being a real estate agent is a full-time job for a reason. There are a lot of responsibilities that come along with selling a house, including document preparation, marketing, answering questions, ranging towards, negotiating, and so much more.
There is no getting around just how much time you will end up putting into the process if you list the house on the open market without a real estate agent. That doesn't mean that hiring a real estate agent is your only option, though. As we will discuss later, selling your house to an iBuyer is a way that you can sell your house quickly without hiring a real estate agent that is straightforward, fast, and basically stress-free.
Is For Sale By Owner a Good Idea?
While for sale by owner might be a good idea for some people, in general, selling a house in your own is not as easy as one might assume. Unless you are a real estate agent yourself or you happen to be incredibly knowledgeable about the process of buying and selling homes, it is typically not a good idea to sell for sale by owner.
However, that doesn't mean that you need to hire a real estate agent. There are other options.
One way that you can sell your home without accruing real estate agent commissions is by selling to an iBuyer. These are real estate investors who will make a cash offer on your home.
There are countless benefits to going down this path if you are simply looking for the least stressful way to sell your home.
The first advantage is that you can sell your house really fast when you sell to an iBuyer. You won't have to wait for days, weeks, or months to get an offer on your home, and you can avoid the lengthy mortgaging process that typically takes a couple of months.
Wondering how long it takes to sell a house? You can learn more here.
Instead, iBuyers can give you a cash offer in as little as 24 hours. If you choose to accept the offer, the closing can happen in as soon as seven days. There's also a lot of flexibility here, where the scheduling of the closing revolves around your needs.
This way you can avoid real estate fees without having to basically become a real estate agent yourself.
Another benefit is that you won't have to make any repairs or upgrades to try and make your house appealing to the average house hunter. Instead, you can sell your home as-is. On top of that, you won't even be required to have your home inspected.
You also won't have to worry about the costs of staging your home, having your life turned upside down for showings and open houses, or deal with keeping your house perfectly clean for the showing stage of the process.
Selling to an iBuyer Offers a Hassle-Free and Fast Way to Sell Your House
As you can see, there are a lot of drawbacks and benefits of for sale by owner. Whether or not it's the right thing for you really depends on your own particular circumstance. However, for the average homeowner, selling their house for sale by owner is often a much bigger project than anticipated.
Are you interested in selling your house fast without a real estate agent but you don't want to take on the responsibilities of selling for sale by owner? If so, click here to enter your address and get a free cash offer on your home in as little as 24 hours.