For sale by owner: what you need to know

For many homeowners looking to sell their property, the idea of paying a real estate commission is a bit daunting. The national average rate paid to a Realtor upon sale is 5%. Therefore, on a $400,000 property, the seller would pay $20,000 from his or her profit — a significant amount of money for sure, but is it worth it? Consider the following before making your own informed decision.

Getting the price right. One of the most important aspects of putting your home on the market is getting the listing price right. Most homes fail to sell because they are priced too high. The best way to know how to price your home is to do a competitive market analysis. Taking inventory of all of the recent home sales in your area and considering homes similar to your own are good places to start. This is where real estate agents can be of tremendous help, utilizing their resources, records and contacts to give you a professional market analysis that ensures your home is priced right for your current market.

Marketing. In real estate, exposure is the name of the game. The more prospective buyers know about your home, the better chance you have to make the sale. A professional, experienced Realtor will likely have a website and access to a host of online tools to promote your property. Real estate agents can give your property access to social media marketing, print advertising and networking — all of which will be including in your commission. Without the support of a Realtor, you will have to do your own marketing via For Sale By Owner websites and other social media connections you make on your own. While it can certainly be done, it may be costly and time consuming.

Accessing buyer qualifications. Without the support of a real estate company, you will have to determine on your own whether a prospective buyer is qualified to look at your property and make you an offer. Furthermore, bidders will be aware that you will be saving commission fees and will no doubt use that as a negotiating tool when they present an offer, perhaps even discounting their offer by 5% or more.

Finally, approximately 80% of homes that are listed for sale by the owner are eventually referred to a real estate agent after failing to sell. While it can be done successfully, your chances of a quick, smooth and profitable sale are best with professional real estate representation.