If you decide to sell your home yourself, without the assistance of a real estate agent, you can avoid having to pay the commission (or half of it, at least). However, you'll want to make sure you know what you're getting into first, or the net savings could be zilch.
Learn about what the process entails, whether it's a good idea for your situation, and where to get help if you do decide to go it alone. Above all, get to know the market well enough that you don't end up selling the home for less than it's worth.
The standard commission a seller pays to a real estate agent is 5% to 6% of the home's selling price. So if homes are particularly pricey in your area, you could, in theory, save tens of thousands of dollars; with two caveats.
First, multiple studies show that FSBO sellers aren't necessarily able to command as high a price for a house as an agent can, with all their marketing resources and negotiation experience. Even if you know how much your house is worth, buyers might expect to pay less for it, because of the savings they know you'll incur as a result of selling FSBO.
Second, if a buyer comes in with his or her own real estate agent, as most savvy buyers will want to do, that agent will hope or expect that you will pay up to a half commission in return. (The real estate term is that you will "cooperate.") If you won't, and the buyer isn't willing to separately pay an agent or to go it alone, the deal could fall through.
No law requires you to hire a real estate agent when you sell a house or property. As a practical matter, however, real estate agents might have access to resources that you do not, such as the full scope of the Multiple Listing Service (MLS). (It has information sections that the public cannot see.)
Some states do, however, require a real estate attorney to handle the real estate transfer documents and closing, particularly in the eastern part of the United States. Check with your state department of real estate to find out whether an attorney is required in the state where your home is located.
The closer you look, the more little tasks are revealed as crucial in preparing, marketing, and successfully selling your home. The most important tasks that a real estate agent will normally perform for you include:
Sound like a lot? Indeed, it can be a full-time, nights and weekends job in the days and weeks while your house is on the market.
And as any agent will tell you, it's not all glamorous. Some have been known to get out a mop and give a house a last scrubbing before the open house (but don't count on this!) or drag their own furniture over if it will make the house look better.
Selling a house without an agent is called a FSBO (pronounced "fizzbo"), or For Sale By Owner. As you might have guessed, people who try it usually develop some appreciation for how agents earn their commission. If you want to go it alone, be sure you have the time, energy, and skills to handle all the details described on the above list of what an agent does.
Before you dive in, you should also evaluate the market and your schedule. FSBOs are usually more feasible in sellers' markets where there's more competition for homes, or when you're not in a hurry to sell.
To sell your house by yourself, you must learn the legal rules that govern real estate transfers in your state, such as what forms you'll need to fill out, who must sign the papers, who can conduct the actual transaction, and what to do if and when encumbrances on your property title are discovered that slow down the transfer of ownership.
Try searching for information online, talking to friends with relevant expertise (unless you already happen to be a lawyer or similarly informed professional), or hiring a lawyer for a few hours' consultation.
You also must find out whether your state mandates that you make disclosures as to the physical condition of your house and related issues such as environmental hazards or legal troubles. (See Required Disclosures When Selling Real Estate.)
Also, if you might end up owing capital gains tax on your home sale, you'll want to familiarize yourself with which costs associated with selling FSBO can be used to offset the amount you owe.
To make sure buyers learn that your home is for sale, you'll want to:
To save on commissions without getting in over your head, you could consider doing most of the work yourself—such as showing the house to prospective buyers—and using a real estate agent to help with such crucial tasks as:
If you take this approach, you might be able to pay by the hour or at a flat rate, or negotiate a reduction off of the typical 5% to 6% commission agents charge Or, you might find a company offering discounted real estate services, perhaps in return for you handling part of the work.
For advice on hiring a real estate agent and all other aspects of selling your home, see Selling Your House: Nolo's Essential Guide, by Ilona Bray.