Real Estate Matters: Senior couple prefers real estate transactions without using an agent
Reader comment: My husband and I sold a vacant lot in Texas this past year without any agents being involved. We have followed the market closely. We agreed on a price, filled out the documents and closed in an attorney’s office for a total cost of $250. We also purchased our present home in 2007 without a real estate agent.
It’s possible that we may have paid too much, but we live in our desired neighborhood, close to parks and city center in a property we love. At 80, we have seen and heard of many incompetent or inept agents who are not good with details.
Our take: When it comes to buying and selling real estate, there are sellers that can — and do — sell their homes on their own, without using an agent or attorney. There are also home buyers that purchase homes on their own without the aid of a real estate agent or attorney. In fact, an entire industry has emerged that buys homes directly from sellers and turns around and sells them to unagented buyers. These enterprises are referred to as iBuyer companies.
Homeowners who sell on their own are frequently referred to as FSBO sellers (the acronym stands for “For Sale By Owner”). These sellers advertise the homes themselves, pay whatever fees might be out there to list their homes in the multiple listing services (if they choose to do that), show their homes and handle whatever paperwork they need on their own.
The one thing they don’t do is pay is a full commission to sell their home. They may pay a commission to the broker that brings them a buyer or a fee to list their home in a multiple listing service, but if the buyers find the seller on their own, no commissions get paid. The savings are potentially huge, since the cost for a full-service agent is typically 4% to 6% of the sales price, a cost normally paid by the seller (although not always).
On the buy side, the internet allows buyers to search online for homes anywhere in the world, but buyers regularly drive by FSBO signs in neighborhoods they’re exploring.
Most real estate closings have one real estate agent representing the seller and one representing the buyer. In some cases, the same agent may represent both sides (which is often referred to as dual agency, transactional agency or non-agency, and we’ve written extensively about what sort of representation a buyer or seller can expect in that situation).
The number of FSBO closings varies from time to time. According to the National Association of Realtors (NAR) 2020 Profile of Home Buyers and Sellers, a report distributed to NAR members and available to the general public for purchase, FSBOs accounted for 8% of home sales in 2020 (that number was 15% in 1981) with a median home price of $217,900. According to the Realtors, FSBO homes sell for less than agented homes.
The Realtors also say that 85% of homes are sold with the help of an agent, which leaves 7% of unagented sellers unaccounted for, assuming that the 8% of sales attributed to FSBOs is correct.
As we have often said, if you can sell by owner, why wouldn’t you? We’ve sold property by owner over the years and enjoyed saving on the commission. Sure, you’ll save the commission and some sellers feel they know their home better than any agent ever could, so they’ll do a better job of showing the property. You seem to fall into this category and have ventured into the real estate world without working with real estate agents or real estate attorneys. Good for you.