The decision to take on this responsibility depends on the health of your local housing market
Going the DIY route when it comes to selling a home can be a risky (and time-consuming) proposition, but in some markets that risk pays off.
Only 6.2% of listings are currently for sale by owner (FSBO), according to a report released Thursday by real-estate website Trulia. Tulsa, Okla. has the most FSBO listings (12.7%), while Honolulu has the fewest (1.3%). And for-sale-by-owner properties are have become even rarer in recent years: The National Association of Realtors reported last year that homes FSBO accounted for the lowest share of home sales since the organization started collecting data in 1981.
But home owners who list their own properties could have an advantage over those who go with a real-estate agent, Trulia found. In Charleston, S.C., homes sold by their owners spent on average 51 fewer days on the market than homes sold by agents. Other metropolitan areas where FSBO properties sold far more quickly include Los Angeles (43 fewer days on the market), Houston (42 fewer days) and Atlanta (36 fewer days).
What’s more, in Pittsburgh, FSBO properties were listed at a 12.9% premium to an agent-listed home, the highest difference in listing price in the country. Nationally, properties sold by their owners were put on the market at a 2% premium — indicating optimism on the part of the seller. And with home prices reaching all-time highs in many markets, this premium could represent a major windfall for sellers.
While it can be advantageous to list a home yourself, the success an owner has in doing so ultimately comes down to the market, said David Weidner, managing editor for Trulia’s Housing Economics Research Team. In some markets, laws are more flexible and make it easier to complete a real estate without an agent. “In other places, it’s difficult not to use an agent,” Weidner said.
In many markets, FSBO properties sit on the market far longer than agent-listed houses. In Detroit, FSBO homes were on the market for 36 days longer on average, the highest of any metro area in Trulia’s study. Other cities where by-owner listings are on the market for more than three weeks longer include Rochester, N.Y., and Baton Rouge, La. (Trulia cautioned that these figures were not evaluated for statistical significance, so the FSBO status alone may not be the only deciding factor.)
And in other places, FSBO properties are often listed at a discount relative to agent-listed properties. That’s especially the case in Philadelphia where the median listing price for FSBOs was 14% lower than agent-listed properties.
In hotter housing markets where inventory is low and prices are rising, sellers may theoretically find less reason to employ a real-estate agent and pay a commission on the sale of their home. But the speed of the sale and potential premium a home owner could get are just some of the considerations sellers need to make before deciding to go the FSBO route. Besides knowing the market’s dynamics, people selling their own homes will need to understand tricks of the real-estate trade, plus the laws and regulations guiding real estate sales.
For instance, they will have to study up on how to pre-qualify buyers, as the most common roadblock for real estate transactions are buyers who can’t actually afford the property. And while home owners who sell their properties without an agent will avoid having to pay commission, they will still be responsible for hiring an attorney, title company and a surveyor.
There’s also an emotional component to the sale. Home owners may have difficulty facing criticism about their home or knowing how to describe it well in marketing materials, according to personal-finance site Bankrate. “If you’re someone who’s not a real-estate professional and making a decision of this size, that’s a very dangerous place to be,” said Weidner.