Is Selling Your Own Home Worth It?

What's your take on the "hire a real estate agent to sell your home" versus "sell your home yourself" debate? A few thoughts from US News:

While the potential savings are large, so is the task of selling one's home in today's downtrodden market. "It's much more complicated than just putting an ad in the paper and showing your house and having someone buy it," says Judy Moore of Re/Max Landmark Realtors in Lexington, Mass. "The value that a Realtor brings to the transaction is that they are able to provide services on so many different levels—things that sellers can't even anticipate in many cases—because they have that kind of professional experience."

To be sure, there is nothing a real estate agent does—setting the asking price, marketing the home, arranging open houses, enlisting a real estate attorney to handle legal documents, negotiating with buyers, and so on—that self-starting home sellers couldn't do for themselves. But since the process is filled with time-consuming and tedious hassles, independent home sellers have to earn every penny they save by cutting out agents.

Here's my take -- if I have an agent beating the bushes AND I'm beating the bushes too -- plus if we price our house correctly when we decide to sell -- then we may be able to get it sold in a decent amount of time. Otherwise, it could be on the market for a good, long time.

Comments

[Andrew]

I love how the realtor wasn't even able to articulate any specific value she adds, even with that softball question teed up for her. It's astonishing how little correlation there is between the value realtors add, the work they perform and the compensation they receive. I'd rather just pay them $50 or $100 bucks an hour. Considering their actual skills and qualifications (ability to use a telephone being #1, apparently), even that is far more than they're worth. Yet somehow they get paid tens of thousands of dollars for doing very little work for me because I have to subsidize the time they wasted on deals they didn't get done.

[kitty]

It depends I guess on the market, the property and if the owner has time to show.

I bought my last two condos by owner and I sold one condo by owner. But... I sold my condo during the hot sellers market when the offers run at or above asking price and there were bidding wars. I think I should've asked for more given that I got a full asking price offer within a week, but probably not by the sufficient amount to justify commissions. Of the two properties I bought "by owner", the first was during declining buyer's market in early 90s, the second - when the market just started to pick up in late 90s. The market during the second purchase was more of a seller's than the buyer's, but it wasn't yet hot: you could get the price down a bit, but the offers had to be reasonable since the prices started to rise.

One interesting thing I found out about agents is that they routinely look at the ads and call people who sell by owner and ask if they can bring their clients. When I was selling, an agent called me and asked if she could bring her clients to see my place. I asked how much it would cost me and she told me 3%. I said "OK, then any offer your clients give me should be at least 3% higher than what I can get on my own". Their offer was ridiculous given the market (I only considered offers at or above asking price), but for me to even consider their offer it would have had to be at least 3% above what I got from somebody who called me directly.

Similarly, when I was buying, I had some properties shown to me by an agent, but I was also looking at ads. At one point the agent called me and described the property that I had seen myself and didn't like - it was listed by owner. I told her, that I can read the Pennysaver too, so not to bother. In both cases I eventually found what I was looking for by owner and for better price. I think the buyers who rely completely on the agent and ignore properties listed by owner are missing out on some good deals. If the owner doesn't have to pay commissions, he/she is willing to go down more.

[Julia]

I've purchased two houses. Both were cases where I did not shop around for a house, but a house I liked went up for sale. One was sold by owner, and the other owner already had a sellers agent. The sellers agent insisted that I have a realtor, so I went through ZipRealty and used an agent that would refund some of that 3%.

I had always figured that using an agent would make things easier, since the first time I bought without one. You know what? The annoyances were really the same and having two realtors as middlemen didn't help all that much. In fact, it made things slower, and some of the stress higher. I wish the seller had at least tried putting up a for sale by owner sign. I would have bit. (and the realtor initially didn't want me putting in an offer since there was already a contract and a backup offer. Funny, in the end it was me who bought it. The same realtor who poo-pooed me got money despite that. What the heck kind of system is this to reward such behavior????)

I don't think we really need to be paying agents 6% to sell our house. That can be a ridiculously high amount of money. Hire your own people to market, fix up, and photograph your house, and you'll probably do a better job than a lot of sellers agents. Even if you don't want to bother with all that, just dropping the price by up to 6% could get you a lot of people interested pretty quickly.

[Joe]

Anyone can do the selling of a house. A lawyer can do the legal legwork for you on a fee only basis, if necessary.

The problem is the realtors have a monopoly on the listing system. I'd be happy to list my property in the realtor system myself and do the "selling" and I'd be willing to pay a buying agent 3%, if they covered that legal legwork I'd have to cover myself. With what houses cost now (hundreds of thousands of dollars, or even $100,000) realtors are getting paid WAY too much. Based on how much houses have risen in price over the last 30 years, their raises have been way out of line. And really, does it take any more to sell a $100,000 house than it does a $300,000 house? If not, then why should it cost the seller more? I hate the whole system.

[MetaMommy]

Devils Advocate: I think if the property is of high value, a realtor brings something more to the table, if only the image. People in Los Angeles, for example, have a pre-conceived notion that FSBO properties are unimpressive and overpriced by deluded owners. They may be completely wrong, but that doesn't matter if it makes the property harder to sell. Those properties seem to sit on the market a lot longer, especially these days. Speaking of days on the market, in a market where it's not unusual to have a property sitting on the MLS for 100...200...more days, the realtor probably has to work harder and longer to get deals through.
One thing worth considering is interviewing a realtor. If all she can say is "my commission covers things like the increases in the cost of stamps and gas for my car," well, you're wasting your time. Someone actually said that on 60 Minutes, BTW.
http://www.cbsnews.com/stories/2007/05/11/60minutes/main2790865.shtml