For Sale by Owner (FSBO) vs. Real Estate Agent in Houston, TX


There are more than 181 million results for this subject in Google indicating that sellers are still confused about what the right answer is. I don't pretend to give a generalized response as I can only speak for the Houston market.

As you are reading this blog, you may be wondering whether or not it is worth hiring a Real Estate agent to sell your house. You are obviously thinking I can save the 6% commission and pocket more money. Of course, I understand that thought. It is very reasonable.

The latest studies conducted by National Association of Realtors show in Exhibit 8-6 of the 2016 Profile of Home Buyers and Sellers that the average sales price for an average Agent-Assisted sale was $245,000 while the average sales price for all FSBOs were $185,000. That is a $60,000 in value. Let's examine where this value was created.

In an ideal world selling a home shouldn't be difficult. After all, doesn't the public believe that all an agent does is 1) Post a sign in the yard, 2) Post the listing in the Internet, and 3) Pray that it sells. However, let me present to you the challenges that every seller will encounter when selling a home:

  1. Which deferred maintenance items are worth addressing and which ones to skip
  2. How to strategically depersonalize the home for the mainstream buyers
  3. How to take quality pictures that will wow the buyers
  4. How to find "actually sold" comparables in your neighborhood for the last 3, 6 or 12 months
  5. How to adjust the sales comparables for differences in location, condition, and features
  6. How to price the home so that it will produce the greatest buyers' traffic
  7. How to make sure that your home is marketed to "every" potential buyer in your area
  8. How to prepare for an Open House to facilitate the viewing of unrepresented buyers
  9. Being able to respond timely to every question for every interested buyer
  10. Being able to show the property according to the buyer's schedule
  11. How to strategically respond to buyers offers
  12. How to understand all the full terms and ramifications of the TREC contract and Addenda
  13. What notices, disclosures, and deadlines are necessary by law to avoid giving the buyer the upper hand
  14. How to minimize attorney expenses in case of a disgruntled's buyers lawsuit
  15. How to gainfully negotiate the buyers' offers to obtain the highest possible price for your home
  16. How to make sure the buyer's pre-approval letter is legitimate
  17. What questions to ask the buyer's lender to make sure this buyer will close on the loan
  18. How to identify which offer is the strongest offer as offered price is not necessarily the best indicator
  19. How to negotiate the list of repairs after the inspection to maximize your net proceeds
  20. How to make sure you comply with the TREC contract terms
  21. How to make sure the appraiser does not lower the price of your home
  22. How to follow up with the buyer's lender to make sure that there are no delays in closing
  23. How to be compensated when the buyer breaches the contract
  24. How to interpret the Closing Disclosures on the day of closing

After reading the above list, does it make more sense to say "It's a no brainer, you need agent representation." Why then, is there is a lot of talk about how to sell a home on your own? The truth is, sellers have had bad experiences with listing agents from time to time, complaining that their agent was unable to sell their home and frankly did not do a good job following up with the transaction like we described it above. Their frustration would indicate representation was not worth the agreed listing commission.

In general, the public does not understand that buyer agents are different than seller agents. In fact, many buyer agents confess to other agents that they are not good at selling other people's homes but are very confident in their expertise as a buyer representative. This is because the skills required of a listing agent are more technical. And quite possibly, if you hire the first Realtor you come across, chances are, you may end up experiencing the average result in the industry and join in the voices of those saying, "listing agents are overpaid." The reality is, most agents do not follow the plan outlined above.

To avoid that, you need to make sure you hire an expert agent who has a track record of selling homes for top dollar. The listing agent should have a written plan to prepare your home for sale for the best price. In fact, we have a short publication "How to Sell Your Home for Top Dollar, Fast" that we can mail you upon request.

Second, in general, top agents hold very recognized Real Estate designations such as the Certified Residential Specialist (CRS), and Certified Negotiator Expert (CNE) designations. In fact, only 3% of all the REALTORS in the US carry the CRS designation which requires the highest degree of qualifications and experience. The listing agent you hire should have these designations.

Third, the most important skill is the one that addresses your bottom line: the sales price. You will agree that any property can be sold at a lower price anytime but it requires a very skillful agent with expert knowledge of market data, property condition, house features, price adjustments, and buyers demands to understand how to correctly price the home to yield the highest possible price of the neighborhood.

Lastly, it is said that "You Never Get A Second Chance to Make A First Impression." Therefore, bringing your home into the market at its best is extremely important. Half of this task is thru the advise of a listing agent who has interior decorating skills. The other half could be by addressing some deferred maintenance and/or upgrades. For those items that require some contractor's work, your agent should have a list of available affordable contractors who can take care of your cosmetic repairs at a very affordable rates.

Therefore, don't just hire any Real Estate agent, do your due diligence and hire a top listing agent.

If you have any questions, call us at 832-607-0149.


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