Is it cheaper to sell a home without hiring a real estate agent?

Real Estate, Real Profits Podcast, Season 1, Episode 1 Featuring Your Host, Michael Solovay

This episode of the Real Estate, Real Profits podcast is all about helping home sellers understand their options.

A few of the questions homeowners ask most frequently are,

• “Can I save money by selling my house on my own?”
• “Do I really need a broker or real estate agent to help me?”
• And, “Isn’t it cheaper to sell it myself without having to pay an agent’s commissions?”

If you’d like answers to these questions, including real-world examples, statistics and data, you’re invited to download this episode and listen up.

Transcript and Show Notes for Today’s Episode of the Real Estate, Real Profits Podcast:

Hey everyone! Today’s episode of the Real Estate, Real Profits podcast is all about helping home sellers understand their options. A few of the questions homeowners ask most frequently is, “Can I save money by selling my house on my own? Do I really need a broker or real estate agent to help me? And, isn’t it cheaper to sell it myself without having to pay an agent’s commissions?”

I’m Mike Solovay, your host at the Real Estate, Real Profits podcast. Aside from being a REALTOR and real estate investor, I’m also a tech startup founder; I founded the 4BIZapp platform for real estate professionals. I started this podcast because I want to connect with home sellers, home buyers, and other like-minded real estate professionals, investors and entrepreneurs.

Thanks for listening! So let’s talk about whether it is cheaper to sell a home without hiring a real estate agent.
The answer to that question is, “It depends.”

The truth is, you can do most of the things that an expert local real estate agent does. But you must also be aware that there is a very long checklist of things that must be done to successfully sell a house.

So the real question isn’t “can you do this?” You probably can.

The real question is, can you do it well enough to make a profit at it? Or will you make one or more mistakes that cost you money?

In other words, do you have the knowledge, skill and connections to a better job at each one of the checklist items than an expert local real estate agent would do for you? Because if you mess up ANY of the items on the checklist, you’ll cost yourself tens of thousands of dollars.

Maybe you’re thinking, “Well, that doesn’t sound so hard, Mike. If it’s as simple as doing all the things on a checklist, maybe I’ll take my chances and give it a try. How hard can it be? Even if I have 50 things to do on my list, I will just run through all of them and check them off one by one.”

But this is flawed thinking. What you really need to understand is that, for each one of those items on your checklist, a multitude of situations can arise, that can each affect the outcomes on some or all of the other items on your checklist.

So when you hit one of these frequently-occurring snags, without real experience, you’ll have trouble navigating and negotiating your way through the resulting mess.

And if you mess up at any point along the way, you’ll probably end up costing yourself many tens of thousands of dollars.

So, you can do a lot of the same things that an agent will do for you. But, just because you can do the same things, doesn’t mean you can do them better.

And the only way to really save money at this is to do each of the things that an agent will do for you as well as, or better than, an agent would do them for you.

Let’s look at one example. I had a neighbor in southern Utah who wanted to sell his own condo without using a local real estate agent.

His mom was a real estate agent, but she didn’t know much about the local market in the area in which her son was selling the condo. Her Multiple Listing Service (MLS) was located in Las Vegas, Nevada where she was licensed; she had zero experience selling condos in the small Utah mountain resort town where her son’s condo was located.

Nevertheless, she persuaded her son that she could do a better job at listing her son’s condo for sale than a local agent could do.
To save more money, she had her son take photos on his cell phone, that turned out blurry, out-of-focus and small in size and listed the property for sale from her multiple listing services in Las Vegas, so it didn’t show up in the local southern Utah MLS boards. On the bright side, the property did show up on Zillow.

Many people think that you’ll be able to sell a home as long as it shows up on Zillow because nowadays, prospective buyers do a lot of their own legwork to find the properties they want to buy.

On one hand, there is some truth in this. But on the other hand, it would be a mistake to believe that this is THE ONE AND ONLY WAY THAT PEOPLE FIND PROPERTIES TO BUY.

According to the latest research from the National Association of Realtors, 48% of home buyers found their recent home purchases through a real estate agent.

Zillow is simply one powerful marketing tool. But it would be foolish to rely on Zillow alone, because you’ll miss out on that extra 48% of home buyer traffic that REALTORS would bring to your property. And in this case, that was the huge mistake this seller made.

This seller failed to take into consideration the power of the MLS and the real estate agents who use the MLS system to connect their lists of property buyers and investors with properties to consider.

Since the seller’s mom wasn’t a licensed real estate agent in Utah, the deal was listed as an FSBO (For sale by owner) deal. Besides getting the property on her local MLS board that fed to Zillow, she didn’t really do anything else to market the property.

This limited the number of buyers she was able to bring to the table for her son’s property, because the condo got no traffic from other real estate agents and their buyers in the area.

At the time, property values in our small southern Utah town were rising rapidly because there was more demand than supply for property in the area. I was working with multiple buyers wanting to move into the neighborhood who brought cash to the table and weren’t concerned about getting a loan. My neighbor’s mom, not knowing the local market, had no way to understand this.

I was showing similar condos in the neighborhood to prospective buyers with 1031 exchanges who had money in hand and were willing and able to pay above-market prices just to be assured that they actually ended up with a property.

So this seller’s mom significantly underpriced the property, and they sold the property to the first buyer, who made a lowball offer.
If they’d listed with a local agent, they would have been able to bring in multiple offers on this highly desirable property.

They sold the condo for $40,000 less than a comparable property I had just closed right before they sold theirs at a fire sale price. Total commission costs for them would have been $9,600. They would have come out $30,000 richer, but instead they foolishly lost out on an extra $30,000 because they wanted to save the costs of paying a local real estate agent’s commissions.

Additionally I would have likely sold their condo even faster than they could have, because I was already working with multiple buyers who were interested in buying that type of property.

So this is just one example I personally experienced of how to lose money by listing your home for sale on your own.

You might be tempted to think that this example is out of the ordinary, but this isn’t an isolated incident. According to data shared by the National Association of Realtors (NAR), scenarios like this are sadly quite commonplace.

The NAR reports results from a survey of 1,000 home buyers in 2022 and 2023 that Clever Research conducted. Based on the survey results, they arrived at the following conclusions:

• 43% of those FSBO sellers said that Buyers distrusted them because they didn’t have an agent.
• 40% admitted that they struggled to understand their contract.
• 36% said that they made legal mistakes because they didn’t work with an agent.
• And, the main takeaway from the Clever Real Estate survey was that sellers who used an agent to sell their homes earned, on average, $46,603 more in profits than those who sold without an agent in 2022 and 2023.

So if you do not already have a list of prospects who are interested in buying your property, I encourage you to stop thinking about how much you could save if you didn’t have to pay real estate commissions. Instead start thinking about how much more you could make by finding the right agent. Because real estate professionals are not all created equal, and some have more expertise than others.

Homeowners who sold without a real estate agent are three times more likely to lose money when they sell their homes FSBO (for sale by owner). According to the Clever Real Estate Survey I already mentioned, about half of unrepresented sellers expressed regrets about their home’s listing price and wished that they had set a different asking price. And, in hindsight, about half of them think their home could have sold for a better price if they had listed it for sale with an agent.

It also takes longer to sell a home without an agent. According to the same survey, the researchers found that it took 3 months to sell a home without an agent during the time period of interest (2022 – 2023). In contrast, at the time, it only took a month on average for agents to sell homes. This trend has now shifted, and these days, it’ll generally take longer than either of these time frames to sell a home, but the same principal still holds true: It’ll generally take less time to sell a home with an agent than it will to sell FSBO.

And, selling without an agent can be extremely stressful, because in the course of each real estate deal, many situations can arise that can jeopardize the sale. According to the NAR, about half of unrepresented home sellers admitted to crying during their home-selling process. Fifty-two percent of home sellers who did not use an agent said they felt overwhelmed by the process.

Again, you might not think these stressful situations are very common. But I’m here to tell you that they are not only common; in my experiences, completely smooth transactions only happen every once in awhile, and transactions that require a lot of extra work are the norm. So if you decide to go it on your own, be prepared to spend a lot of time handling unexpected situations that can derail your sale.

Let me tell you a few more true stories that have really happened to myself and my colleagues.

YOU probably still have the original door openers for your garage door, don’t you? Along with all the documentation for how to use the garage door openers.

Well, on a property I once sold, the seller I was working with didn’t have the garage door openers for the property’s garage doors, which were 10+ years old. Furthermore, my seller wasn’t willing to pay for new a garage door opener.

I’d found an interested buyer for the property, but the deal was in jeopardy because the buyer insisted on having functioning garage door openers as part of the deal.

If this happened to your property, how would you handle it?

I’ll tell you how I handled it. I tracked down garage door openers my client needed from a source on the secondary market, and I had to re-program them to make them work with my client’s garage doors. There wasn’t any documentation available, so reprogramming them wasn’t an easy task. It took me hours to figure out how to do it. But I have the skills to do this, so I was able to get it done.
Do you have these skills?

My friend Kelly is a real estate agent in southern Utah, and I gotta hand it to her, she should win some sort of award for the agent who calmly and professionally dealt with the weirdest situation I’ve yet seen happen in our local real estate market. One day, right before closing, somehow a dead cow appeared on the property that was in escrow, and the buyer and seller all of a sudden were arguing over whose responsibility it was to get rid of the carcass.

It seemed that neither party was willing to budge on the cow issue, and the deal could easily have fallen apart at that point. Except that Kelly stepped in to handle the situation.

How would you handle that if it happened to your FSBO property? Would you be prepared to go out and get rid of a dead cow? Maybe you would. Maybe you wouldn’t. But in a situation like that, if you’re not willing to get rid of the dead cow, and you aren’t working with an agent who’s willing to help you handle it, your deal will fall apart.

I had a high-end luxury cabin sale almost fall apart because the seller and buyer were fighting over who would get to keep some decor that was not expensive, but was impossible to replace. It had sentimental value to the seller, even though the raw cost was probably less than a $100. The buyer insisted she had to have it. To her, it was a key ingredient she fell in love with that contributed to making the cabin appear so special that she wanted to buy it.

I handled this situation for my seller by convincing the buyer that my preferred interior designer had a set of on-trend paintings by an up-and-coming artist that would be perfect to fill the vacant wall space in the cabin. I told her that I’d arrange a private showing of the paintings, and that if she liked them, I would present them to her as a gift upon closing. This was agreeable to my buyer.

So I ask you: If you landed in this situation, would you give up items with sentimental value in order to sell your property? And if not, would you be able to think of, and successfully propose a solution to diffuse the situation? Because if you’re selling FSBO, there is no other mediator involved who’ll sort out a dispute like that. You only have 3 choices: You’re either going to give in and let the buyer bully you, or you’ll let the deal fall apart, or you’ll be your own mediator and find a workable solution.

So these are a few things to think about before you decide whether to sell your home on your own or contract an agent to do it for you.

If you’re hoping to sell your home soon, and you decide you’d like to have help from an experienced real estate agent to do it, I invite you to give me a call. I can help you find exactly the right agent for your situation. I’ve cultivated an extensive network of the USA’s best real estate sales professionals. So, get in touch with me if you need help with finding a truly reliable agent that you can trust with your home sale.

That’s it for today’s Real Estate, Real Profits podcast! Thanks for listening! I really appreciate your interest.

References and Further Reading

If you want more information about the issues I discussed in this episode, you’ll want to check out the following links:

• At the National Association of REALTORS website: Why FSBOs Say They Regret Not Using a Real Estate Agent