Have you ever seen the movie Cast Away? You know, where Tom Hanks extracts an infected tooth by hitting it with an ice skate? Well, selling your house yourself is a little like that. Yes, you CAN sell your house yourself in the same way that you CAN extract an infected tooth by yourself. Trust me–I’ve thought about extracting my own teeth before. I seem to suffer a dental apocalypse every other year, and my dental bills add up. While it’s tempting to just take an ice skate to my mouth to save some money, I don’t. Why? Because it’ll be painful, I don’t know what I’m doing, and the likelihood that I’ll screw something else up in the process is high. If I go with someone who is actually certified and educated in the medical art of tooth extraction and who has successfully extracted many teeth before, chances are that I won’t end up with more problems than when I started. I’ll be out the door and on with my life, as planned, rather than spending more time, agony, and money on other problems I unintentionally created.
I’m sure it’s tempting in this do-it-yourself era to just try to snake your way through the internet and “figure things out.” And the alluring idea that you’re saving money by doing it yourself can be hard to overcome. But there are a number of things that eager DIYers probably don’t know about when they embark on the adventure to sell their own house. I’d have to write a book to cover all the things, but I’ll try to distill them here:
1) The chance of saving money is slim to none. In fact, you may actually lose money. Here’s why:
a) Many people think that they’ll save money mainly by paying less commission because they didn’t hire a listing agent. What they don’t often realize is that they still will have to pay a buyer’s agent’s commission, which whittles away the savings. On top of that, they probably don’t realize that the buyer’s agent will ask to be compensated for a percentage or two (or three!) more than what is offered to cover for the double work that they’ll likely have to do since the owners don’t know what they’re doing.
b) I think a lot of people don’t realize that agents both actively and passively avoid looking at FSBOs (For Sale By Owner properties). They passively avoid through no fault of their own–FSBOs are not as visible as regular listings, and so they just don’t pop into our feeds like other properties. But they actively avoid them because they can be difficult to work (more on that in a minute) and deals have a higher chance of falling through. The cost/benefit analysis might be subconscious, but I think it drives agent avoidance of FSBOs. What this translates into for people trying to sell on their own is far less traffic and fewer potential buyers, which in turn leads to longer days on market and an eventual lower sales price. Not good.
c) There are many, many factors to consider when pricing a house (I take into account over 13 separate pricing variables and employ a handful of strategies!). It’s very likely that unlicensed people looking to sell on their own don’t know how to price their house, and they don’t have pricing strategy in their toolkit. Even if owners are a little savvy in that regard, if they’re not full time agents they don’t have the everyday field experience of actually seeing the market and knowing through lived experience how house pricing works. This knowledge can’t be procured by browsing the web.
2) Selling real estate requires an understanding of the real estate laws, rules, and regulations that govern transactions. In other words, this is one of those DIY projects that, unlike many DIY projects, can actually land you in the pokey if you don’t know what you’re doing. If you hire an agent to sell your property, that agent will know the laws, rules, and regulations (and if they don’t, they’ll go to jail, not you). In short, selling on your own is a great legal liability, for both sellers and the people looking to buy these homes.
3) Selling real estate is more work than some people think it is. I think some people think you can sell a house by just signing a few documents and putting out a For Sale sign. But often, problems and scenarios arise that even seasoned agents could never dream of. In fact, the crazy roller-coaster ride of real estate is why some people are drawn to the profession. But I digress. These problems are wide-ranging, as they can relate to dealing with emotionally-charged buyers, or unusual structural issues, or state and county jurisdiction regulations, or HOA bylaws and neighborhood covenants. A problem from any one of those categories can add up to a part-time job, but dealing directly with buyers and/or their agent is work enough. This is because…
4) In a FSBO scenario, there is either uneven or no representation, increasing the likelihood that deals will fall apart. If the owners have decided to work with buyers who are unrepresented (i.e., there is no agent present), then both parties are essentially banking on each other to act with basic human decency throughout the entire process. If there’s anything I’ve learned about real estate, it’s that buying and selling houses often brings out the worst in people. It’s a naturally stressful journey, and it’s common for people to have meltdowns at some point. Usually, agents receive the brunt of the meltdown and the deal is kept intact. But in a FSBO scenario, it’s quite possible that tensions get high between owners and buyers and because there’s no cushion between them, the deal falls apart. Then the seller is back to square one after expending all that effort, and their property is stigmatized because prospective buyers wonder what was wrong with the property to make the deal fall apart.
Another risk of the seller not being represented is that they can be taken advantage of by buyers if they don’t know what standard expectations and behaviors are during transactions. A good agent protects against such misuse.
In short, can you sell your own house? Yes. Should you? Not unless you’re really ok with the possibility of losing money, being tied up at court, having the process take a lot longer than you expected, or making this your part-time or full-time job. The only scenario in which a FSBO could conceivably go well is if you have a rich friend to sell your house to who doesn’t care about legal liabilities or the value of your house. Even then, you’d have to ask yourself: do you want to STAY friends with this person? If the answer is yes, for your own sake, get an agent!