How to Sell Real Estate Without a Broker

If you'll research your local real estate market you'll find that persons who sell their homes without using a Realtor get lower prices for their homes and probably have more legal disputes than persons who use a Realtor. In Texas, where I live, there is no resource for finding sale-comp information other than the MLS (multiple listing service) which only Agents & Brokers have access to. Zillow.com and other web-based real estate sites use tax appraisal records to produce their data...but in Texas sales data is not reported to the taxing entities...

Bottom line is you shouldn't undertake a process as complicated as selling your home (probably the most valuable asset you own...and probably the biggest personal business transaction you'll ever do) without using a professional Realtor...you'll save time, money, and energy!
Ciao.....scott

Most listing brokers that I have worked with have been a mostly a waste of time except for putting the home on the MLS and Realtor.com, and putting a sign in the front yard. I tried selling my South Orange County home with three different brokers at were supposed to be reasonable prices, and they brought no buyers, most of the home showings did involve my broker, and they just talked a lot. No sale! From now on, I am getting the assistance of a minimum service broker who for a small charge, will put the home on the MLS and Realtor.com. The broker that should be paid is the one that brings in the buyer! Pay that broker and forget the listing broker unless you have little knowledge about real estate. Even then, you are better off spending 10 hours learning the basics, and saving the commission. And you might be fortunate enough to have a buyer come in on there own, in which case you can pay a full service broker $5 - $10k to write up a contract. On a million dollar home, you can save up to $50,000 of after tax money! Think about that before calling Coldwell Banker.

Of course there are individuals who can sell their own home just as there are individuals who can fix their own cars, write their own wills, build an addition onto their house, etc. However, most people don't have the time, or the knowledge, market expertise, marketing tools like the MLS, negotiating and a host of other skills to navigate through to a successful sale. There is a reason most people use a mechanic to fix their car and a reason most people use a REALTOR to sell the most important asset they own - peace of mind.

Of course you CAN sell your home on your own but you will be at a disadvantage for many reasons, the main one in my eyes being, that a buyer can ask you all kinds of personal questions!

First off, I will say that I am a licensed real estate broker in the state of California. My opinions reflect my knowledge of real estate transactions in California- states vary from one another in transaction process.

I do not necessarily agree with the first sentence in the body of the question- I do not think that brokers will tell you that you cannot sell your own house but they will probably tell you that you are going to get a less than desirable result.

This question has many facets to it because of the various methods a For Sale By Owner (FSBO) may chose to sell their own property. I personally believe virtually anyone CAN sell their house. Would I recommend it for the masses? No I would not. The legal ramifications for an average person handling a contract revolving around the biggest assest/investment in their life is probably better left to professionals. At the minimum, a FSBO should buy a kit with all the proper forms (or get the forms from an escrow company depending on their state) and have an attorney review all of the contracts before escrow is closed.

Here is my main argument against selling your own house based on my experience. Typically a FSBO attempts to sell their own house because they want the highest possible net price for their property. Most often, FSBOs overprice their properties from day one, putting them at a disadvantage in the market. The reality (in my opinion) is that a home's final sale's price is the value of the home plus the value of the marketing by a real estate agent that went into selling the property. The first thing an experienced investor, such a lawyer or real estate broker, will do when approaching a FSBO is to take 6% (commission number given by typical FSBO that they are trying to save) off the price because of the fact that their is no marketing or advertising being down by a brokerage. Would you pay for a service that is not being provided?

Experienced investors are like sharks and FSBO's are the ideal prey that they desire in their hunt. The investors will go in and low-ball the FBSO because little to no marketing has been done on the property, meaning the investor is the only one that showed up at the auction. With typically no other potential buyers due to lack of exposure to the market place (which makes for lack of demand), the FSBO does not stand on great legs to negotiate a high sales price.

And what about negotiating abilities? If you are handling your first, second or even third real estate transaction ever do you want to have someone across the table from you that may have done 3 transactions that month alone?

If I own a vase from the Ming Dynasty, how should I sell it? Should I stick a sign in my yard that advertises that I am selling an exquisite vase? My first thoughts are that I need to find buyers for my product! I would be much wiser to employ a major auction house like Christy's (which will have access to a huge pool of potential buyers) instead of sticking the vase in my driveway hoping the right buyer comes driving by your house one day. To get

To get the highest price for your home, you are going to want and need maximum exposure of your home. Its basic supply and demand.

So, sure, you CAN sell your home yourself. Is it the best idea for the masses? Not in my opinion.

You can sell your own home as well as you can do your own taxes or represent yourself in a court of law. (provided you follow ALL of the Federal State and Local Laws.) IF you have a buyer such as a family member or friend you can sell your own home provided you follow ALL of the Federal State and Local Laws. (the trick is, you have to know them to follow them) As my colleagues have pointed out, in most cases sellers who sell their own home net less than if they used a real estate professional and it takes them longer in most cases. People don’t think twice about having someone come and cut their lawn, or how much they pay to have their car serviced, they even pay someone to cut their children’s hair. The largest financial transaction in most cases are peoples homes, and they don’t feel that a licensed professional (per each State’s requirements) is worthy of compensation to suggest fair market value, suggest touch ups for maximum value, market, show and sell your home. Oh yes, don’t forget qualify the buyers (even if they are represented by an agent) negotiate the best deal on your behalf, go through the documents before during and at the closing table. Most Surgeon’s know how to perform surgery, but few practice on themselves.

All the best,

Joe

Jolie hit it on the head. And, in many cases, it works both ways. I've seen sellers become so empathetic at a buyers tale of woes that they end up negotiating against themselves. Stay away and let the pros do what they get paid to do and what they are better at doing than you are.

Yours is a wonderful self-service. I totally agree that there are many people who would NEVER use a Realtor to sell their home. They frequently call me to get "free" comps and advice.

And I completely know where you're coming from... I understand how to sell real estate and I frequently laugh loudly at the claims of Realtors.

Thanks for asking this timely question. ;-)
Paul

I want to first say I am an agent and a little biased in this question.

Of course you can sell your home on your own. You may also fix your own car when its broken, program your computer, fly a plane, handle investment portfolio and so on and so on....

It is obvious that you see no value in the profession of real estate. But most people only buy or sell 5 homes in there entire life. Hardly enough experience to say they are capable. But in the end if and who you chose to sell your home is totally up to you.

Knowing that 87% of all buyers use an agent puts you as a FSBO at a disadvantage. Agents will show listed homes first. If they do show your home, a trained agent will extract information from you in casual conversation that will be used to their clients advantage.

If you do use an agent remember all agents are not created equal. Like any job, you have poor, average and superstars, and now I guess with FSBO we have novice. I know if I were dealing with 100s of thousands of dollars in ech transaction..I lick my chops when I see poor, average agents and FSBO. I know my client who chose to hire me will be getting the best deal. A small price to pay for such a reward

There are good and bad Agents / Brokers everywhere but a self-proclaimed real estate sales expert can cause legal nightmares for a Buyer. A Buyer without someone to represent them will not know enough to make an offer based on fact since most FSBOs think their property is worth more then their neighbors.

sell it to the bank ..

Kurt. You're clearly a veteran, and have no doubt been called to the rescue with your expertise for free help and advise a number of times.

OMG! Every answer I read to this inexplicable question is correct or has shades of truth.........and the question is asked by a person who only asks it in order create a financial benefit to himself....or is naive....or because this is the only way to enjoy having communication..contentious as it is.
I am not sure why the question is being asked other than to create controversy. I am ok with the question as it does allow whoever reads this blog to get a handle on what to expect whether buying or selling a property.
I will not go into my experience or tenure in the business as a Realtor. Well, maybe it should be state that I am a Broker and have many years in residential real estate. Actually, this is my fourth downturn or Recesson.
I will make this statement: Without a Broker, in most cases, there is only folly. If you doubt my position, let me send you the voluminous contracts, addendums, contingency times frames, removals and how they are to be removed...not to mention if they are not removed, various inspections from radon, asbestos, termites, lead based paint, geology, zone clearances, etc. Now lets talk disclosures, i.e. sellers, agents and the material facts, etc. Wow, I hope I'm getting through to some of you because I want to save my energy for the clients I want to protect as well as contain the emotions and stress they are feeling in one of the biggest decisions they are making in the moment. Oh yeah, let's not forget schools, Meagan Laws, busy streets, contiguous commercial buildings, etc. Now the big one...........lawsuits. Isn't it great that you as a seller or buyer carry that very expensive Errors and Omissions insurance? Oh, you don't.....gosh, how do you protect yourself from frivolous lawsuits? Well, in most cases, agents have E and O. I know that is their coverage. But there are positive side effects from that...........yes, if I make a neglegent or legal mistake......I have coverage that(if not from fraud)will create a possible windfal

OMG! Every answer I read to this inexplicable question is correct or has shades of truth.........and the question is asked by a person who only asks it in order create a financial benefit to himself....or is naive....or because this is the only way to enjoy having communication..contentious as it is.
I am not sure why the question is being asked other than to create controversy. I am ok with the question as it does allow whoever reads this blog to get a handle on what to expect whether buying or selling a property.
I will not go into my experience or tenure in the business as a Realtor. Well, maybe it should be state that I am a Broker and have many years in residential real estate. Actually, this is my fourth downturn or Recesson.
I will make this statement: Without a Broker, in most cases, there is only folly. If you doubt my position, let me send you the voluminous contracts, addendums, contingency times frames, removals and how they are to be removed...not to mention if they are not removed, various inspections from radon, asbestos, termites, lead based paint, geology, zone clearances, etc. Now lets talk disclosures, i.e. sellers, agents and the material facts, etc.

Wow, I hope I'm getting through to some of you because I want to save my energy for the clients I want to protect as well as contain the emotions and stress they are feeling in one of the biggest decisions they are making in the moment. Oh yeah, let's not forget schools, Meagan Laws, busy streets, contiguous commercial buildings, etc. Now the big one...........lawsuits. Isn't it great that you as a seller or buyer carry that very expensive Errors and Omissions insurance? Oh, you don't.....gosh, how do you protect yourself from frivolous lawsuits? Well, in most cases, agents have E and O. I know that is their coverage. But there are positive side effects from that...........yes, if I make a neglegent or legal mistake......I have coverage that(if not from fraud)will create a possible windfall financial protection for you. Insurance has a purpose and that is to cover mistakes and payoff the injured parties even if the agent has no means of paying off for their mistakes. So, lastly, get an attorney.....but ask this question, are they full time in real estate and are they good negotiators? Can they see the big picture or get lost in the legalese of detail?
So, I hope I have been clear and if not, I have a feeling I will be sorry for what I have said. If so, I beg your pardon..........it's late, I'm old and I am going to bed. Sleep tight and goodnight.

Have you ever visited a new home development? If so, you may remember being impressed by how well the model was put together. That was no accident. Your home should have the same secrets.

Priced Right: In today’s market your home needs to be in a condition that is above averegaed and priced below 5 to 10% of the market.

Top Condition: A home that sparkles get’s top dollar.
Exterior: Siding, door frames, landscaping, curb appeal
Front Entry: Front door, lighting
Living area: Furniture arrangement, carpeting
Kitchen: Ton of counter space, appliances
A home protection plan needs bought
A sellers disclosure needs completed
Minimum of 6 photos to go on websites professionally taken
Mail 50 post cards
Home inspection

Curb Appeal: Your home has (7) seven seconds to make a first impression. If the buyer is not turned on in that time they will leave.

Bright Decoration: Probably the best dollar-for-dollar investment for selling your home fast is fresh paint.

Rooms to Maneuver: The 3 most inspected rooms are the Kitchen, Master bedroom, and garage.

Good Seasoning: Make the most of the season by limited accenting your home with color and fragrance.

Show Time: When a buyer comes in do all you can to avoid making the prospects feel like an intruder. People know when they are looking at the kitchen so don’t point out the obvious.

Negotiations: Approach negotiations in a positive frame of mind, not as an adversary of the buyer. Get a finance specialist to help with financing options.

Contract Signing: One of the most important moves you can make is to reply immediately to an offer.

Misc:

Maximize home exposure, pre-qualify prospects,

To end this information my team does not take listings without it being a 5 star seller and pass a 100 point inspection. We will also examine the absorption rate for the market. If any of this information is wrong the home will not sell and we will not take the listing.

You're right. You've found out the secret. You've uncovered the truth. How did you do it? By yourself...no doubt.

This question reminds me about the adages, “a lawyer who represents himself has a fool for a client,” or “a fool and his money are soon parted”. Education, training, practice and patience are key elements of a Professional Real Estate Agents as with anything. So it would seem, in terms of real estate, that if you educate yourself, practice the elements of real estate, show patience in a negotiation and training yourself in matters of real estate, then “Quacks like a duck, walk like a duck.”

You stated, “In fact, if you understand how to sell real estate on your own, you will laugh at their claims loudly and feel that these people are actually creating a demand when in truth there is no demand for them.” I don’t know if you realize it or not, but understanding something is the beginning of educating yourself and the more you know, you’ll find yourself in the midst of training yourself and dare I say it, you have just validated the demand.

Brokers don’t tell people that they shouldn’t sell their real estate themselves; in fact, we cannot coerce or negate anything because it exposes Brokers to liability.

But one may not realize is, that by law, depending on how many properties you own and sell, you have to have a license. In Arizona, the number is more than 3; of course, you can spin it and try to do the work around, but if you get caught, you are punished for practicing without a license. To offer information on, “How to Sell Real Estate without a Broker,” can be construed as practicing without a license . . . I’m sure a good attorney can work that spin. Hopefully, you can see the point of liability.

With Real Estate sales it is always, always about DISCLOSURE AND LIABILITY which is why a Broker is necessary because the risk is high without one.

As far as marketing the property, sure when listed with a broker, a seller should always spread the word; sellers are just as much a marketing tool as that advertisement in the paper or email marketing camp

Sure, people sell their home on their own all the time. I don't think anyone is questioning whether it can be done. The real 2 questions here is

1. Does a For Sale By Owner(FSBO) net more money trying to save the commission?
2. Can a For Sale By Owner(FSBO) sell it in less time?

Lets first answer question #1
What kind of buyers do FSBO's attract? Of course they attract buyers who think they can take advantage of homeowner not represented by real estate professional. They attract buyers who think maybe the homeowner doesn't know the true value of his/her home. They attract unqualified buyers, because those buyers know the homeowner won't ask them the appropriate pre-qualifying questioins that most Realtors ask. They attract buyers who want to do some illegal creative financing scheme that they know they won't get away with if a Realtor is involved. And most important they attract buyers who think "This homeowner would normally have to pay a Realtor a 6% commission, so I'm going to deduct that right away from the sales price." FSBO buyers are looking to save the Realtor's commission on the sales price. So at the end of the day, this is why FSBO's rarely net more money, if they can even keep the deal together after the Seller and Buyer try to negotiate with each other and not offend each other in the meantime.

Now question #2 (Can a For Sale By Owner(FSBO) sell it in less time?)
Everybody knows assuming you have the right price on any item you want to sell, whether it is a car, a watch, or a house, the more you market it, the higher your odds of selling it a quicker amount of time. So my question is what resources is a FSBO depending on to market their home? A little 1"x1" ad in the paper and then hoping someone sees it? If thats all it took, wouldn't everyone avoid using a Realtor and save thousands of dollars? Okay maybe they could do an open house? Well according to national statistics 1% of all homes are sold through an open house. So that's great lets do an activity that fails 99% of the time. The only other thing I can think of for marketing for a FSBO is to put it on the internet. Lets face it, most buyers are working with Realtors. Why you ask? Because a buyers agent is FREE! So why wouldn't a buyer hire a Realtor to work for them, find them the house of their dreams, negotiate the offer, and then review the title work, get a home inspection done and negotiate the repairs needed to be done, and the list goes on. So if most buyers are working with a Realtor, which houses do you think a Realtor is going to show to a buyer? The ones that are already listed and have easy access or go through the trouble of getting in touch with a FSBO and make sure they can get compensated and then do the work for both sides of the transaction.

I'll be honest any homeowner can do what I do to sell homes, but most choose to hire me because they don't have the time to spend doing the marketing activities it takes to sell a home. I'm not saying a homeowner can't sell their home on their home. They can by all means. I just don't want them to try thinking they will come out with more money or that they will sell it faster. Below is a link to my marketing plan. If you are a homeowner and you have the time or access to the technology that I use, then by all means I'm not superman. If I can do it, you can too. This is what I do for a living and most homeowners have another job that they do for a living and tell me that they just don't have the time nor do they want to do what I do

Just wondering, how many houses have you sold this month?
SInce you obviously see no value to the job that real estate agnets do, nothing any of us say will make a difference, but a close examination of your argument makes me laugh at your claims loudly, particlulary after examing the link you provided.,
Let's look at your sage advise for people contemplating selling on thier own:
First, you point out that 7% of all sellers sell on thier own, this ignores the fact that 93% of all sellers use a licensed real estate agent, once you take out for estate sales, non arms length transactions, court ordered sales, auctions, corprate relocations and other non tradtional sales, the number grows to about 97%. Almost 90% of FSBO's end up using a real estate agent in some form or fashion.
You state correctly that the most important step in selling a home is pricing it correctly, however your advise of getting an appraisal up front has a few flaws. First, appraisers use use historical data (what has happenened in the past), they are ill suited to make assumptions about current market trends nor are they qualified to make presumptions about what may occur. Second, and most importantly, there are several different types of appraisals, so if a consumer obtains one type of appraisal, they may be required to obtain a second type of appraisal when a buyer is found costing the consumer more money and often yielding different results. Does that mean that a consumer should never obtain an appraisal up front? No, but in general they can obtain the same information for free.
You also leave out a very important aspect of selling a home. The terms of sale are almost as importnant as the price. This is dicated by the local market. For example, in my market, it is very typical that sellers pay a large portion of closing costs, so if a seller prices his home on the market without this incentive (no matter how well it is priced), they are not competitive.

You then offer advise on advertising. You correctly point out that the seller's home will not be in MLS, but leave out one of the most important aspects of the MLS. When a buyer contacts me about a certain property, they ulimatley will ask, "what else do you have?", I can provide them with any number of properties that match thier wants and needs, a FSBO does not (and cannot) have this luxury. This is a major reason that most buyers call real estate agents rather than FSBO's. The benefit for the seller is that thier home is exposed not only to a single agent's buyers, but to to any number of member agents who have buyers as well. If the local MLS has 1000 members and each member has three buyers that are looking for a specific house, the potential for a sale is dramatically higher.

So, you advise that sellers buy classified ads, experience tells me that this generates the fewest calls of any advertising medium for real estate and it is the most expensive medium, maybe individual owners have different resulls, but I cant see how. This also leads the reader to believe that all real estate agents do is place advertising, which is far from correct and (in fact) makes up a very small part of our job.

You also advise that FSBO's get a large wooden sign and offer a quote from a CPA that seems to justify this advise. They claim that at least half of the calls came from people driving by. Of course the logical question to this person is where did the eventual purchaser come from, what is the use of having an expensive sign (or any sign at all) if the purpose for the sign is not met.

Of course, you leave out the most important thing a good real estate agent brings the table and the reason that most buyers and sellers use thier services. Good agents are great negotiators. They have the abillity to remove the emotion from the sale and create a wn-win situation for the buyer and seller.