Last month I took a look at ways to sell your home on the internet, as well as a Realtor's take on going the For Sale By Owner (FSBO) route. It was all part of my quest to make an informed decision.
After these stories ran I was contacted by ForSaleByOwner.com, one of the services I looked at in the FSBO website showdown. I was able to speak with Eric Mangan and Greg Healy to get a better understanding of a typical for-sale-by-owner transaction, as well as greater trends in the sell-your-own arena.
Since price seems to be most important in this buyer's market, I asked Greg how the commonly held idea that consumers don't know how to accurately price their homes fits into the option of going the FSBO route. Greg explained that while the issue of home valuation was a valid concern in the late 80's and even mid 90's, the Internet and open flow of data has enabled consumers to get the same pricing data a Realtor would use for determining a valuation.For example: Zillow.com allows you to not only see pricing information for your own home but sale prices of comparable homes nearby and values of your neighbors' homes. In addition to sites like Zillow, most county auditor websites now allow online access to tax and property records, which provides you with a wealth of information to determine your home's value. On top of these free services, ForSaleByOwner.com provides a valuation with many of its packages. In fact a study by the National Bureau of Economic Research found that using a broker had no significant impact on initial asking price.
The next issue we discussed was the cost of the various experts that are often needed when selling a home such as stagers or lawyers. If you are a first-time seller, you may be as surprised as I was to learn from Greg that, "99% of the time, you'll be paying for these costs whether you use an agent or sell on your own." I was always under the impression that these items were included in the fee paid to a Realtor.
Possibly one of the largest upsides to using a Realtor has been the exposure your house gains by being listed on the MLS, a service which you can only list on by contracting with an agent. Many do-it-yourself sites including ForSaleByOwner.com allow users to list on the MLS for an upfront fee and a smaller commission paid to the buyer's agent. Listing on the MLS can eat into the savings associated with going the FSBO route and may not be necessary unless you are in a hurry to move your home.
Northwestern University compared the selling price and time on the market for homes in Madison Wisc. and found that listing your home on the MLS does not translate into a higher selling price than using a FSBO website. The study did show and ForSaleByOwner.com's website also notes that using the MLS will in many cases reduce the time your home is on the market but this comes at an additional cost of 2-3% of the sale price.
ForSalebyOwner.com also recently released a study which looks at what sources buyers used to find homes over the last 10 years. The study found a pronounced shift in the number of people who find their home using the Internet; in fact it was the only category which experienced growth every year. Since more consumers are finding their new homes through the Internet rather than a buyer's agent, the need for a Realtor becomes less pronounced. Sellers should keep this trend in mind, as it means they are less likely to pay a buyer's agent commission. Personally my wife and I have been using the Internet and our local newspaper to look for homes in our price range, which isn't to say that we won't use a Realtor in the future. But if we find the house we love online, we'll be contacting the seller directly.
Throughout the process of talking with a Realtor and perusing a for-sale-by owner site, I've discovered quite a bit about the home selling process, both of which have their pros and cons. After learning about the step by step seller's workbook that ForSaleByOwner.com provides and the percentage of people who are using the Internet to find homes I can definitely see myself trying to sell my own house with an online service such as ForSaleByOwner.com.
Before you make your decision you should definitely read a Realtor's opinion of the for-sale-by owner route and make sure you educate yourself about the pros and cons of each option in order to find the selling method that is the best fit for your market, life and home!
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