Selling a home is a complicated process, and it’s a process that can quickly become a full-time job for anyone who isn’t familiar with the real estate industry. There are so many real estate agents in the industry today because their services are essential to facilitating real estate transactions. However, the commission costs aren’t justified for some house owners.
If you’re considering selling your home without a realtor, this article has essential information to help you understand the home selling process and options.
Selling to a cash buyer
As the name implies, cash buyers are individuals or businesses that outright purchase properties in full with cash instead of taking out a loan from a lender. The most common examples of cash buyers are house-buying companies (who buy homes to flip or rent out) and iBuyers (companies that use computer algorithms to calculate home offers in minutes).
The benefits of selling to a cash buyer are that you can sometimes avoid inspection delays, you don’t have to worry about the hassle of hosting an open house, and there’s no need to renovate and make the home look great.
While getting a quick sale might be tempting, the fundamental tradeoff is that you’ll likely get less for your home. For example, iBuyer fees can cost up to 15% of the home’s sale price, whereas traditional real estate agent commissions typically max out at 6%. Home-buying companies often will put in lower offer amounts than conventional buyers because they’re looking for higher margins to profit from their purchase.
Selling to a known buyer
If you know someone interested in buying your home, you could hire a real estate attorney to help you close the sale. Real estate attorneys can draft and review the troves of paperwork associated with selling a home. Depending on your state, you may need a real estate attorney present at closing, regardless of whether you’re selling a home with or without a real estate agent.
The most frequent transactions in this category include selling the home to a family member. If you choose to sell to a known buyer, it’s important to remember that selling the property below market value can have significant tax implications.
While this approach may be cheaper than working with a real estate agent, real estate attorneys won’t get you top dollar for your home. More importantly, you may lose a friend if the transaction goes wrong.
Going the for sale by owner route
The final approach to selling a home we’ll discuss in this article is the for sale by owner (FSBO) approach. As the name implies, this is when the homeowner handles the entire real estate transaction. The main advantages of this approach are saving on fees and the fact that FSBO transactions typically close in under two weeks.
Despite these benefits, FSBO sales typically are less profitable, even after accounting for the savings of not involving an agent. The main reasons agent-involved sales are more beneficial are typical because buyer agents will out-negotiate the homeowner, the homeowner isn’t as experienced in choosing a starting price, and a home inspection could uncover issues the seller has trouble addressing.