How Do You Sell Your Home Without A Real Estate Agent?

​Selling your home yourself by cutting out the middleman, you could walk away with tens of thousands of dollars more in your pocket or tens of thousands of less. It all depends on distribution channels.

What are the distribution channels in Real Estate? The biggest and most effective marketing is through MLS (Multiple Listing Service). If you are not hiring an agent, you cannot use the MLS. If you use the MLS through a fee-based Realtor, then you usually offer a commission percentage to the buyers' agent. if you are not offering it, there is absolutely no point to be in MLS. ​

​Two real estate agents usually involve in most transactions, Listing Agent and Selling Agent. Listing Agent gets into a contract to sell your house at a commission about 5 to 6 percent. Listing Agency enters the property into MLS and offers Selling Agency portion of the commission you agreed with him/her, usually half of it about 2.5 to 3 percent. 

​All of a sudden you hired thousands of agents through your listing agent. They are now all working for you and competing with other agents to sell your home. Why would they do that? What is their motivation? You know the answer, it is nothing but money. If you are not using the MLS, you are not marketing your home effectively, PERIOD. You are not exposing your home to more buyers and investors. Buyers agents do not have any incentive to bring you their buyers. This fact alone is going to cost you more than what you intended to save.

​Another scenario is that you already have a buyer. A friend or a friend of another friend wants to buy your home. All you need is to do the paperwork, right? Sure, that is easy. Any Realtor or a lawyer would do that for you including me for a small fee without representing either side. 

​You are just missing the opportunity cost in this scenario especially in a hot market as we have now where irrational exuberance is rampant. I recently represented a buyer in an Oakland Hills home. We successfully bid high enough to buy this beautiful Eichler Home. Identical Eichler Model with same floor plan and same condition with same bay view on the same block came in the market while we were in the process of closing. To my and my buyers' surprise, it sold $200,000 higher than our purchase price. I am certain. It did not appraise for that price since there was absolutely no comparable sale at that price. 

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​Now, think of it, $200,000 is not a small change. If that property was your and was not in MLS, I do not believe that it would have been sold with that much of a significant margin. As a matter a fact, you would have sold that home to your friend or a friend of a friend without knowing how much more you could have gotten for it. You sure demonstrate your loyalty to your buddies, but that loyalty came in at a cost;  substantial your financial loss.

​If you still want to save money, seek a full-time real estate broker or agent with reduced commissions like me in your market. As a Berkeley Real Estate Broker, I offer 3.5% commission to sell my clients home in the Greater Bay Area and share 2.5% of it with Buyers' agents. I am unique in a sense that I do full service without reducing my service levels and it may be hard to find someone like me in your market. My clients just pay less but receive superb service. 

​The other face of it some buyers think they can save more or buy a home much less than asking price if they do not have an agent represent them.  

​In my open houses, some buyers approach me telling me that they do not have an agent so that they can get a lower purchase price and think that they are in an advantageous position somehow. First of all, what they do not know is, most realtors do not as buyers represent themselves because of increased liability. Secondly, As a listing agent, I would rather work with a fellow real estate agent where they mitigate the risk of liability. Finally, I as a listing agent, I would not share my commission with the buyer as I am with another agent. So there is a myth that buyers think they will save by not being represented by an agent. They can also hire a lawyer to mitigate that risk for the listing agency, but again, it is unlikely, listing agency shares the entire commission with them. If they do, it would be a smaller amount which in reality benefits the seller not the buyer. 

​What is The Downside?

Pay attention to these potential disadvantages before you make a commitment to sell your home yourself. Take a piece of paper and pencil and answer questions. 

Homeowners who are listing with Real Estate Agents are exposing their homes to a wider audience of potential buyers, I believe and have experienced that agents usually can obtain a higher sales price for your home, which will offset some or all of their commission.

You are adding additional commitment to show your home. How about the time you take away from your work, family, and other projects that matter to you. We can do whatever we put our minds into doing it but at what cost; Is it worthed? Time? Energy?, Lost Productivity? You answer those questions. 

How do you know who is coming in to see your home? Are they buyers? If so How do you make sure? Are you comfortable exposing your home to strangers you do not know? Realtors have bonafide buyers who are vetted through lenders, intention, and relationships

Do you know how to handle all the paperwork? Do you understand legally binding contracts?  Do you know what local disclosure ordinances are? Do you know what to disclose to mitigate your liability and potentially be sued for not properly disclosing material facts? How do you make sure your buyer is qualified to buy your home? Do you know how to position yourself to receive multiple offers? If you receive multiple offers, how do you choose the right one? Can you afford to carry two mortgages if you cannot sell within the time frame you intended to sell? 

Despite the potential disadvantages, a small number of homeowners saved a lot in real estate commissions by selling it themselves.  If you can afford to wait for a buyer and prepared to market your home efficiently and aren’t intimidated to do the work required and comfortable of doing it yourself, Go for it.  

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​Here are some statistics

For Sale By Owner (FSBO) Statistics nationwide by NAR (National Association of Realtors)

8% of home sales in 2015 was by For Sale By Owners. Numbers are getting smaller than previous years.
The typical FSBO home sold for $185,000 compared to $240,000 for agent-assisted home sales.
FSBO methods used to market home:
41% did not actively market their property
33% used a yard sign
21% through relatives, friends or neighbors 
10% utilized online classifieds 
21% Open House
7% employed For-sale-by-owner websites
9% used social networking sites likeFacebook, Twitter, etc. 
13% used Multiple Listing Service (MLS), paid a commission to buyers' agent and a small fee to the listing agent. 
3% used print newspaper advertisement: 
2% utilized Direct mail, flyers, postcards, etc.
1% employed video

In addition

18% did not get the right price to list
13% had the hard time to prepare and fix up home for sale: 
12% had problems understanding and performing paperwork: 
3% Sold their homes within the planned length of time: 
39% Did not have enough time to devote to all aspects of the sale: ​

​In summary, You can still save money on Real Estate Commissions by either negotiating with your agent or seeking a realtor who is already offering the reduced fee, discounted listing fee type of business model. You still need to be careful and not choose an agent simply on fees otherwise you may end up with the mediocre skillset and mediocre service resulting in mediocre results. 

My 1% listing fee is a niche product where I provide superb service, fast sales and get top dollars for my clients; they just pay less. It is a business model I subscribe. There are more and more ous us subscribing to this type of business model; you may find them in your local market as well.