You Can Act As Your Own Real Estate Agent — But Should You?

You’re ready to list your house for sale and are crunching some numbers. The national average real estate commission is 5.8% of the home sale, and half of that figure goes to the listing agent. You could save some cash if you sold your home without an agent … So, can you be your own real estate agent?

Yes, you can be your own real estate agent by selling your home “for sale by owner” or by obtaining a real estate license. According to the National Association of Realtors (NAR), only 8% of homeowners sold their homes without an agent in 2020.

But just because you can do something doesn’t mean that you should. Selling your own home comes with major responsibilities and significant risks — which is why most FSBO sellers earn less on their home sale than sellers who enlist a real estate agent.

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To explore the matter, we dug into transaction data and spoke with top real estate agent Anthony Marguleas, who works with over 65% more single-family homes than the average Los Angeles agent. Here are nine reasons why you shouldn’t try to be your own real estate agent:

1. You’re statistically likely to sell your home for less

Yes, you can be your own real estate agent and sell your home. But it’s a major risk — statistically, FSBO sellers sell their homes for less money than sellers who partner with a real estate agent.

A study by Collateral Analytics, reveals that FSBO homes tend to sell for 5.5% to 6% less than agent-assisted sales. Similarly, NAR reports that the typical FSBO home sold for $217,900 compared with $295,000 for agent-assisted home sales.

And these stats reflect all real estate agent-assisted sales; when you zoom in on the difference a top real estate agent makes, the sale price gap widens. HomeLight’s data reveals that the top 5% of agents sell homes for as much as 10% more than the average agent. “A good agent gets more,” Marguleas agrees.

Not only would you be doing all that work for virtually no savings, but you could be leaving money on the table if you sell your house yourself instead of using a top agent.

Your house is one of your most significant assets — why wouldn’t you want an experienced professional representing you?

2. Your perception of your home’s value is subjective 

Pricing your home without the guidance of a real estate agent is tricky. In fact, 15% of FSBO sellers admitted they had trouble deciding on the right price for their house. In HomeLight’s recent Top Agent Insights Report, 70% of real estate agents name overpricing as the leading mistake FSBO sellers make. Sellers who act as their own real estate agents often have unrealistic expectations of how much their home is worth. For instance, they may want to tack the cost of a new roof or a pool remodel onto the listing price, when, in reality, most home improvements do not provide a 1:1 return on investment.

Pricing a home for sale is a complicated process that requires objectivity, market analysis, and marketing knowledge. In an agent-assisted sale, a real estate agent determines your home’s fair market value by conducting a comparative market analysis (CMA). They’ll compare your home’s features against those of similar homes recently sold in your area. That’s tough to pull off solo if you don’t have access to property data on the MLS.

If you act as your own real estate agent, you should consider hiring a licensed appraiser to provide a professional, objective assessment of your home’s worth; an appraisal typically costs around $450 to $550.

3. It’s difficult to separate your taste from your buyers’

You may think you have a real gem since you’ve poured money into renovations and decor. But, beauty is in the eye of the beholder, and buyers may not feel the same way you do about your house.

Taste-specific decorating can be a turn-off for buyers, who become distracted by the seller’s possessions and fail to picture their own belongings there. Too many FSBO sellers overlook the following staging faux pas:

• Family photos on display
• Controversial artwork
• Religious holiday decorations
• Sickly plants
• Outdated window treatments
• Aging carpeting
• Polished brass finishes and fixtures
• Bold paint colors
• Themed rooms

Because real estate agents track the trends and talk to countless buyers every day, they have a better idea of what sells in your market — and what doesn’t. They intimately understand what interior design schemes and finishes appeal to local buyers and can advise how to style your home accordingly.

4. Your emotions can interfere with negotiations

Memories can cloud your objectivity in negotiations, as well. Too many FSBO sellers have emotional reactions during the negotiation process. Studies prove that emotions influence our valuations. Fond memories and associations of good times at a property can convince a seller it’s worth more than it may truly be.

But you can’t put a price on memories — or, at least, you shouldn’t.

A real estate agent can prevent you from making emotional mistakes, like declining to counter a low offer that offends you or prematurely conceding to a low offer if you have a deadline

“You can’t be offended. You need strategies,” says Marguleas, who shares that many buyers are willing to significantly increase their offer after some back-and-forth.

5. Each phase of the sale process will take you longer

Selling within a specified period is one of the top five most difficult tasks for FSBO sellers. Some FSBO sellers panic if the process isn’t moving along quickly enough.

Top agents like Marguleas know how to navigate the process and protect the seller’s time, with steps like conducting a pre-inspection to get ahead of repairs and soliciting backup offers in case a deal falls through.

“An agent will continue to market and show your home even after an offer has been submitted,” he explains, adding that it’s a way to put pressure on the first offer if things are dragging out. An agent can also follow up with a buyer without conveying the same sense of desperation a FSBO seller might.

6. You’d need to clear your schedule to manage responsibilities

Do you have time to act as your own agent? Marguleas confirms that real estate agents can log up to 200 hours in selling your house. There are numerous aspects of a real estate agent’s job you’ll have to cover on your own. Before acting as your own real estate agent, consider if your work and personal obligations would leave you enough time to do all the things an agent does.

Some of the tasks involved in listing your home include:

• Preparing a comparative market analysis for your home to determine pricing
• Hiring a professional photographer to take listing photos
• Producing videos for virtual walk-throughs or advertisements
• Digital marketing
• Posting signage
• Networking with other agents
• Staging your home for showings
• Fielding calls about the property
• Screening buyers
• Scheduling showings
• Negotiating offers
• Completing contracts and other paperwork

7. You’d need to navigate piles of legal paperwork

Real estate transactions can entail over 180 pages of paperwork. The paperwork required to complete a house sale includes the mortgage statements, appraisal, proof of insurance, and sale contract. According to NAR, 30% of home sales were delayed in October 2020 due to complications, errors, or missing paperwork.

8. You don’t have professional liability insurance if you’re unlicensed

FSBO sellers accept some legal risk in selling their homes. According to one real estate law firm, the 9% of sellers who sell their own homes are more likely to face legal issues during or after the sale. For example, in most states the buyer can sue if the seller fails to disclose property defects such as water leaks, structural damage, or infestation.

Real estate agents carry insurance to protect them from legal issues. Malpractice insurance protects the agent against fraud claims, misrepresentations, negligence, failure to disclose, and other violations of the agent’s or broker’s legal and fiduciary duties.  Their insurance will also protect you if any mistake made is the fault of the agent.

Agents also usually have liability insurance to cover:

• Premises liability: Responsibility for injuries or damages that occur at the office or other places of business
• Infringement liability: When someone claims infringement on a patent, copyright, trademark, or trade secret
• Employer liability: Liability for injuries or damages caused by an employee while they were at work

Many also carry a separate professional liability insurance policy, also known as “errors and omissions.”

If you’re still not convinced to use a real estate agent, you should at least take the precaution of hiring a real estate attorney. For $300 to $400, an experienced real estate attorney can offer services to smooth the transaction, such as:

• Advise a seller on a basic residential transaction
• Prepare and review offers
• Review title work
• Schedule closing at a title company
• Prepare the deed

9. It takes time and money to obtain a real estate agent license

Perhaps, you think it might be better to get a real estate license to sell your home. While it may seem like a smart idea to undergo training to become your own real estate agent, consider whether the time and cost (often upwards of $1,000) of training is worth the potential benefits.

Steps to get your real estate license typically include:

• First, you must complete a pre-licensing course from an accredited real estate licensing school. The number of hours required varies by state. On average, these courses cost around $350.
• Next, you need to pass the licensing exam, which consists of two parts: the national section on general real estate principles and practices and a state-specific section covering your state’s real estate laws. This test costs $100 to $300 on average.
• Once you’ve passed the exam, you can activate your real estate agent license. This process includes submitting an application and required documents and paying a fee to your state’s real estate agency ($200 to $400 on average).
• Finally, you’ll need to join a real estate brokerage licensed by the state to oversee your real estate transactions. Brokerage costs range from $25 to over $500 per month.

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Note that even if you’re a trained, licensed real estate agent, you may still encounter bias and emotional complications in selling your own home. Many licensed real estate agents consult or hire another agent to help them stay objective during the home sale process.

Header Image Source: (Ana Teixeira / Unsplash)