Did you know that you can start losing money right now? It turns out that it’s much easier than you ever imagined, and you can do it from the comfort of your own home. One key way that you can have significantly less money is by selling your home without a real estate agent. The Close reports that For-Sale-By-Owner homes sold for 35% less in 2022 than homes sold through an agent. Additionally, a Zillow study found that 69% of owners who try to sell their homes without an agent fail to do so, and end up hiring an agent. This figure does not take into account sellers who take their property off the market because they can’t find a buyer, so the number of sellers who couldn’t sell without an agent may in fact be higher. Both of these statistics are reminders that selling a home is not the fresh summer breeze it may appear to be.
We’re taught that making money involves working hard, but it doesn’t have to be that way; it turns out that you can lose money while still working hard. The statistics we’ve just covered suggest that selling your home without an agent is hard work, but results in a 35% reduction in sale price. This will cost you dramatically more than just paying commission to an agent. Now, it’s important to note that this extreme difference between For-Sale-By-Owner sales and agent-assisted sales is a bit more complicated than it seems. About half of all For-Sale-By-Owner sales involve an owner and a buyer who already know each other, and in these cases, it’s possible that making a large profit was not as much of a factor in selling as making sure the property went to a friend, family member, or neighbor. However, given Zillow’s determination that 69% of properties listed without an agent failed to sell until an agent was hired, it seems likely that the lack of an agent was a major factor in the lower sale prices of owner-sold homes.
To be fair, there are many people who are capable of selling their homes on their own, and getting a good price. However, Zillow’s statistics suggest that most owners who think they can sell on their own seem to overestimate their ability to do so. I can understand this mentality; owners have put a lot of money and work into their homes, and deserve to make as much as they can when they sell; why would they want to pay an agent’s commission? It’s easy to think “people just do their house shopping online anyway, so if I just put my home online, buyers will show up.” However, marketing a home involves understanding what types of people buy homes in your area, what they’re looking for, how to negotiate with them, how your home compares to nearby sales objectively, what needs to be cleaned and staged, what quick improvements could be made to boost perceived value, and many other factors.
When I was looking for a condo, one of the first I toured was a For-Sale-By-Owner property. The owner did not have a key box; he said he would post his cell number at the building and we could call to be let in. When we arrived, his number was nowhere to be found, and we were finally let into the lobby by a random tenant. We discovered that the owner had posted his phone number inside of the lobby, so the only method of getting into the building was to already be in the building. We almost left, since he said he’d be over in half an hour. When he arrived, he was very nice, and seemed like an honest person. However, he followed me around the entire time I was touring the home, which was not staged, so I never felt like I was able to fully relax and imagine the home as my own; it just felt like I was in someone else’s house with the owner breathing down my neck. Other condos I toured were staged and the owners were not there (owners should never be there with potential buyers), so I was allowed to experience the condos by myself (with my agent) and freely discuss my thoughts and feelings. These properties were also priced lower than the For-Sale-By-Owner condo, which is common; HomeBay.com says that owners tend to overestimate their property values by about 5%. Overall, I felt uncomfortable with the For-Sale-By-Owner property, and it was more expensive, so I bought a different condominium.
It’s difficult to quantify all of the factors involved in why someone likes or doesn’t like a property. However, it’s important to eliminate any barriers to a buyer feeling comfortable in the home. My advice to the owner I met would be to think carefully about creating a relaxing and comfortable touring experience for the buyer. This involves an understanding of every step of the tour, from ease of access to making sure the owner is not present. If there’s odd furniture, the house isn’t clean, and the owner is following you around, you might tend to view the house’s minor imperfections more negatively. I would have also recommended that he have the house staged with very generic furniture; the staging is meant to create an almost-blank slate to spark the buyer’s imagination, and avoid getting in the way of the buyer envisioning the home as theirs. This is why staging and interior design are almost completely different; interior design is about making a space personal to a specific owner, while staging is meant to say as little as possible that is specific.
Again, there are plenty of people who are able to sell their own homes effectively. However, if you’ve never done it before, your home may come off as less professionally presented, less inviting, and overpriced, so you may get buyers super excited to avoid making an offer on your home. By the time you decide to list with an agent, your property may have been on the market for a long time with a lot of price cuts, which can make it harder to sell. By that time, you might be desperate to just get rid of it.
Though hiring an agent is a highly effective way to sell a property, it’s important to note that an agent should never tell a buyer that their services will get the seller more money, since this can easily be interpreted as a guarantee. The National Association of REALTORS® Code of Ethics says that a REALTOR® “shall not mislead buyers or tenants as to savings or other benefits that might be realized through use of the REALTOR®’s services” (Standard of Practice 1-4).