You don't need a realtor

General Advice

DEC 20, 2022

Yup, it's true. You actually don't need a realtor when buying or selling a home or any other property. Does it help to have an agent represent you and facilitate the entire transaction? Absolutely - but is it necessary? Not at all. Below are a few of the different options that you can consider if you're still deciding to work with an agent or not.

iBuyer Programs

You may have heard of the term "iBuyer" thrown around over the last couple of years as many larger investing companies have been buying up single family homes across America. The process is very simple: submit your property information on their sites, wait for an offer, and accept the offer if you're happy with it. The iBuyer will then either resell the home right away, or put some renovation into it and resell it for a larger profit.

The obvious advantages here for the homeowner are that this saves a lot more time & money (in realtor commissions) to sell the home as iBuyer programs are giving you an all cash offer with a quick closing timeline. In addition, the homeowner doesn't have to hassle with strangers viewing the home, have a "for sale" sign listed in front of their property, or any other socially facing signal that they've decided to sell their home.

A few of the key disadvantages, however, include the fact that iBuyer programs are created to make money for the iBuyer at the end of the day. The all-cash offer they'll provide is often not as high as a homeowner could fetch if they decided to list & market their property properly through a good realtor, nor should the homeowner expect to receive multiple offers on her property if iBuyers are used.

FSBO (For Sale By Owner)

In this instance, the homeowner would lead the entire process of selling her home from start to finish. The owner would market the property on their own, take calls, conduct showings, review offers & negotiate them, as well as find her own attorney, inspectors, etc. It's important to note that in this method, although the owner is not responsible for paying a selling agent's commission — she would still be inclined to pay the buyer's agent commissions, assuming the buyer's agent found them the listing.

The advantages of going through a FSBO process typically varies depending on the acumen of the homeowner overall. If someone has real estate experience & network, the FSBO process will be a lot smoother for them as they already know what to expect, and are able to follow local & federal laws around fair housing practices.

Common disadvantages of a FSBO listing include the fact that most owners lack the skill to properly market & price their own property. Statistically, most FSBO homes sell for under market because the owner isn't strategic with their process or approach. There's also the added concern that when you're showing your home to potential buyers, a homeowner has no idea of knowing whether or not the buyers are serious, qualified, or even dangerous people.

Discount Brokerages

Since discount brokerages work with the business model of higher sales volumes, they're able to offer their clients/sellers a lower commission charge than other brokerages. Although this might work for a homeowner depending on the market they're in, usually you get what you pay for.

Some of the advantages of working with a discount brokerage include the fact that it costs lower in overall commissions to the seller, and that you'd still have the ability to work with an agent to field your questions and to show your home.

The disadvantages of a discount brokerage often include an overall lack of marketing or strategic guidance when it comes to actually selling your home. For example, agents and discount brokerages know that the more listings they work with the higher their overall payout — and so their attention will be spread across multiple clients which could lead to slower response times, and less availability to show your home.

Renting your home

Although this isn't something most people consider right away when having to sell their home, it's an alternative to using a realtor if you don't desperately need to sell right away. Some of the advantages of renting your home out include the fact that you can now benefit from building equity faster, because your tenants are helping you pay your mortgage.

A few of the disadvantages when it comes to renting your home include the responsibility that comes with being a landlord, as well as the fact that if you are planning on buying a new house — your bank may require you to sell your current home in order to qualify for the down payment requirements or debt-to-income ratios.

Selling to an investor

Selling to an investor is a common way to avoid using a realtor because investors are also happy to save you money on commission costs, as it means they can offer a lower offer price. All investors are looking for projects to be able to make a profit from and are usually more open to purchasing properties that are distressed or need a lot of renovation.

This is advantageous to homeowners that haven't been able to upkeep their property due to financial constraints, as investors care about ensuring that they can add value to the home and later sell it for a higher profit. It's also an added value to the overall community, because homes that normally need a lot of renovation wouldn't normally get mortgage-approved by retail buyers.

The disadvantage of selling your home directly to investors is similar to that of iBuyers: investors needs to make money and they'll likely provide an offer that leaves them room to profit after renovating or updating the property.

Note that this content is meant for informational purposes only and is not intended to be construed as financial, tax, legal, or insurance advice.


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