Although most homeowners continue to sell property the same way their parents did—by listing it with a real estate agent—a sizable chunk of Americans are choosing instead to go it alone. The appeal is obvious: By cutting out the middleman, home sellers can save thousands of dollars that would otherwise end up as commission in an agent's pocket.
But can an inexperienced home seller really engineer a transaction in today's turbulent real estate market without the guidance of a professional? Yes indeed, says Greg Healy, vice president of operations at ForSaleByOwner.com, a Web-based company that markets homes for independent sellers. In an interview with U.S. News, Healy underscored the benefits of solo home selling and insisted that it's not as difficult as you might think. Excerpts:
How much money can a homeowner save by not using an agent?
If you cut out all agents—meaning post your own online ad, put out a yard sign, and sold your home on your own—you would essentially cut out on average about 6 percent of commission. On a $300,000 home, that's about $18,000 of savings. There are some markets—and I believe Maine is one of them—where commissions run even higher, I believe 7.5 to 8 percent. Why wouldn't a home seller need to use an agent?
The No. 1 reason that you don't need an agent to sell your house is the rise of the Internet. The Internet has essentially changed the face of real estate. It's essentially leveled the playing field across the market. The Internet allows sellers to easily market their homes to millions of people within minutes. Pricing information—recently sold homes, the competitive landscape of the homes that are being sold—is accessible within seconds on a search engine. Ten years ago, agents controlled all the information, and that's why you had to go to them. Today, it's a completely different ballgame. What about someone who has never sold a home before?
Again, with the Internet allowing access to information, companies like ours provide information and show sellers step-by-step instructions on how to sell your home. That information is easily readable. We provide it—and other services provide it—to bring that confidence to that person who has not done it. But what about pricing a home? Wouldn't a homeowner need a professional to help with that?
Yes and no. First, again, the accessibility of information of automated valuation tools, which we provide free of charge to our customers, provides a pricing estimate. So, independent home sellers can compile all the data that an agent would see, if not more. Other services, like Zillow.com, that do online pricing as well are always a great place to start. Second, an agent is going to give you their perspective based on what they are seeing. They have no true professional training in that aspect. So we recommend to anybody, if you need confidence in the price of your home, get an appraiser to come in for $200 to $300 to provide that professional insight. Again, the agent is not involved in that. Even if you used an agent, you would still bring in an appraiser. How about the legal aspects? Is an average homeowner qualified to take care of that?
We recommend that in every transaction a real estate attorney or a title company—depending on where you are located—represent you and sign off on the final paperwork. There is a myth out there that the agent helps you with this paperwork. They may offer direction, but they are not legally capable to provide that expertise. A lawyer or a professional from a title company—depending on where you are—is a must in any transaction. They are the ones that really help get any seller through the process. What about marketing? Clearly, an agent would help bring more exposure to a home.
Again, that comes back to the two points that we have raised already. The Internet allows you to get in front of people without an agent. Our site has nearly 2 million visitors on a monthly basis looking for homes, so that makes it easy to bypass an agent. In 1997, just 2 percent of buyers used the Internet to search for a home. Right now, it's more than 84 percent. Secondly, when it comes to marketing, agents have fliers. We offer fliers. Consumers can make their own fliers. Signs? We offer signs, or someone can buy one in the store. Agents leverage the multiple listing service (MLS) as their primary "marketing tool," and anybody can access that if they want to pay for it.