The Pros And Cons Of How To Sell Your Home

Are you planning to put your home on the market in the near future? If you are, there are a couple of selling strategies you may want to consider, like whether you want to hire the services of a full-service real estate broker, work with a discount broker, or sell by owner. There are advantages and disadvantages to each method and it is not an easy decision.

For example, a traditional real estate broker will come up with a complete marketing plan and exhibit your home to as many potential buyers as possible. Another option that would save you thousands of dollars is selling your property on your own. Selling on your own can be a huge burden and a very stressful situation and you would have to consider if the headaches it could cause are worth it.

Below is the basic breakdown of the pros and cons to consider before you make your decide on how you want to sell your property.

Traditional Real Estate Brokers

Real Estate Brokers Pros:

Your property will have increased listings exposure. Real estate agents distribute their property listings in a database called the Multiple Listing Service (MLS). This real estate database contains the limitless majority of all properties that are listed for sale and is used by real estate agents nationwide. The details of your property are easily accessed by prospective buyers through their real estate agents or can be directly accessed by themselves using the internet. The majority of listing brokers are willing to split their 6% commission with another real estate agent who finds a buyer using the MLS, so there is plenty of motivation to show properties from a competitor's inventory.

Reputable real estate agents will do all the work for you. They will take control of the transaction and do everything from setting an accurate asking price and prescreening prospective buyers to showing your home and negotiating the final price. All you need to do is keep the property well maintained and clean.

 Real Estate Brokers Cons:

Real estate brokers are expensive, charging a commission of as much as 6% for their services. For example if your property sells for $200,000, you are obligated to pay the real estate agent $12,000 at closing. However, keep in mind, all fees are negotiable.

Some real estate agents may not always have your best interests in mind. For example, real estate agents love to have “open house” functions. This is where the real estate agents invite buyers to view a home, usually on a weekend during mid day. Open houses very rarely lead to a home sale, but real estate brokers like them, because they're often used as a marketing tool for generating buyer leads.

When listing with a real estate broker, they are in control of your transaction. You need to be prepared for strangers to roam through your home for a "viewing" at any time of day. More important, your real estate broker will be negotiating on your behalf and you will have to trust that they are providing you with all of the information necessary for you to make a final decision. In a worst case scenario, you may find that your agent is bolstering you to reduce your asking price to make a quick sale so they can move on to another property.

Discount Real Estate Brokers

Discount Real Estate Brokers Pros:

Discount real estate brokers are less expensive than the traditional real estate brokers charging sellers between 2% and 5% for their services. Typically with discount real estate brokers the higher the fee, the more services are provided. With a discount real estate broker, the commission for that same $200,000 property could cost you between $4,000 and $10,000, compared to the $12,000 a traditional real estate broker would charge you. 

You'll reach more potential buyers with a discount real estate agent than if you choose to sell your home on your own. Discount brokers spend millions of dollars each year on advertising their listings in the U.S. and abroad. A large percentage of homes handled by these low-cost brokers sell without being listed on the Multiple Listing Service (MLS).

The majority of real estate discounters will prescreen for qualified buyers and eliminate the unqualified from wasting your time. A huge positive is most of the discount real estate brokers will run credit checks on potential buyers to make sure they're preapproved for a sufficient mortgage. This saves you time and provides confidence that the potential buyers looking at your property are serious about purchasing.

Discount Real Estate Brokers Cons:

With some discount real estate brokers you will get what you pay for. Some discount brokers will only list your property on their Web sites. In some cases they will only field calls from prospective buyers, and you have to give the potential buyers the tour of your property and sell them on purchasing the property. If this is all the service that the discount broker provides, you might as well run an ad yourself.

You'll have to pay more to get your home in the Multiple Listing Service (MLS) database. While discount real estate brokers can offer you this service, they will not supply it to you for a 2% commission. Most discount real estate brokers will charge you a higher fee of 4% to 5%, for the MLS listing.

There is also the chance that most agents may refuse to show your property to their potential buyers even though your home is listed in the Multiple Listing Service (MLS) database. This is due to the discounted commission. Most discount brokers will only offer outside agents 1.5% or 2%, rather than the customary 3% buyer's commission. That may seem like nitpicking to you, but that difference in percentage can add up substantially. For example if an agent can make $4,000 selling one $200,000 home vs. $12,000 on an equivalent property, which one do you think they will want to show a potential buyer first?

For Sale by Owner

For Sale by Owner Pros:

You will earn more money in your pocket. You will keep whatever your home sells for. You can put that 6% commission that you would pay to a broker toward the down payment on a new home or toward more other important expenses.

You know your home better than anyone else. So it would naturally make sense that you could point out all of the amenities and sell it to potential buyers better than any agent could. Did you know that most agents showing a home are walking through it for the first time?

Just like they always say…If you want something done right, then do it yourself. When selling your home yourself it gives you complete control over every aspect of the transaction. You are setting the asking price, convenient times to show the home, and you will negotiate with the potential buyer. By selling your home on your own, you will know when to adjust and lower your asking price or stay tenacious because your home is attracting a lot of interest

For Sale by Owner Cons:

The biggest and most important concern with “For Sale by Owner” is you will have less exposure to potential home buyers. Selling your home without the services of an experienced real estate broker, you seriously limit the number of potential buyers who would view your property. Your house won't be included in the Multiple Listing Service without the services of a real estate broker, and most buyers feel more comfortable using a broker. Most buyers choose to view homes with a broker because they want to see all of the available homes in a given neighborhood. A professional on hand can also help potential buyers analyze the available properties.

The majority of “For Sale by Owner” homes sell for less. According to the National Association of Realtors, homes that sold with a broker went for a higher median price than those sold by an owner. Most buyers believe they can negotiate more vigorously if they are buying directly from an owner who is bypassing a substantial broker's fee.

When selling your own home you have the responsibility to set a price, place ads in the paper, field calls from prospective buyers, and sell that house like a professional real estate agent would. And don't forget about the negotiations. Many industry insiders believe that most potential buyers feel more comfortable discussing money with a third party. With all that's involved in selling “For Sale by Owner, having a full-time job and looking for a new home for your family can be an enormous hassle. You really need to consider if saving that 6% commission is well worth all of the possible stress and headaches of selling your property on your own.