The Pitfalls of Selling Your Own Home

"For Sale by Owner": We've all seen those signs around town and perhaps in our own neighborhood. If you're thinking about selling your house in the near future you might be thinking this is a great way to save some money--but is it really?

While keeping those commission dollars in your pocket instead of the real estate agent's pocket is definitely tempting, not all homeowners are up to the challenge of selling their own home. Even if it's a straightforward transaction, there are advertising and marketing challenges as well as plenty of legal paperwork to take care of. For most people these three items alone are a deterrent to selling your own home. A home is a financial investment so it makes sense to use a professional-in this case a real estate agent.

A real estate agent has access to the Multiple Listings Service (also known as the MLS), but you don't. The MLS is perhaps the most widely used tool to sell homes and reaches hundreds of thousands of people looking for a home. Selling your own home involves finding your own advertising venues as well as paying for any out-of-pocket costs you incur. For many, this aspect of selling your own home can be time-consuming and frustrating.

Underpricing or overpricing your home is another good reason to hire a real estate agent who is familiar with the housing market in your area. If your home is overpriced, no one will make an offer; if it is priced too low, you will lose out financially and defeat the purpose of selling your own home in the first place. A real estate agent is also knowledgeable about additional costs associated with selling a home that you might not be aware of, such as transfer fees, notary and attorney fees, and of course hidden marketing and advertising costs.

Real estate agents are also adept at negotiating the sale as well as guiding a seller through the entire sale process and what it entails, such as home inspections or repairs that need to be taken care of before the home goes on the market. While in most cases a real estate agent is not an attorney, they have a general understanding of the legal paperwork involved, most of which involves filling in preprinted contracts and paperwork. And, unless you are a longtime resident of your community, real estate agents can provide detailed information about schools, utilities, zoning and other concerns that potential buyers might have, especially if they are moving from a different state.

One of the most important and overlooked pitfalls of selling your own home is not knowing whether you have a qualified potential buyer. In other words, you may receive an offer that you are happy with and proceed with the sale only to find out that the buyer has bad credit and can't obtain a mortgage or doesn't have enough cash for a down payment or closing costs. When you hire a real estate agent, you don't have to worry about wasting time on someone who wouldn't be able to buy your home anyway. If you're still determined to sell your own home, go right ahead, but now that you have a better understanding of what's involved, you might just decide it's better to hire a real estate agent and save yourself some headaches along the way.

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There are both advantages and disadvantages to selling your own home and it isn't difficult to learn how to sell your own home, either. Number one on the list of advantages is saving money by avoiding real estate commission fees. Among the disadvantages are paying out of pocket for advertising costs, pricing your home too high or too low, and not being able to devote enough time to the house-selling process.

Hiring home inspectors has advantages for both home buyers and home sellers. Home sellers that hire a home inspector can be proactive about making the repairs necessary to help their homes sell more quickly. Home buyers can feel confident that the home they buy is not in need of any major or minor structural work. 

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