In the world of real estate, deciding how to sell your investment property is a critical choice. Two primary options stand before you: going the traditional route with a realtor or taking matters into your own hands with FSBO (For Sale By Owner). Each path has its own set of advantages and disadvantages. In this article, we’ll explore the pros and cons of both approaches to help you make an informed decision.
Working With a Realtor
Pro: Expertise and Market Knowledge
Choosing the right Realtor brings years of experience and in-depth knowledge of the real estate market to the table. Having an experienced realtor on your side takes out much of the guesswork. They help determine pricing & marketing and coordinate showings, inspections, closings & more.
When choosing to work with a realtor, be sure to make sure that you choose the right partner in selling your home. Verify that they have the experience (especially working with investors) and the credentials to bring value to the transaction.
Pro: Marketing and Exposure
The largest benefit of choosing to work with a realtor is the MLS. Realtors have access to extensive marketing networks and resources via multiple listing services (MLS). These services syndicate properties for sale to other real estate professionals and consumers via IDX feeds. Zillow, Realtor.com & hundreds of others show MLS listings to consumers across the world.
Pro: Time and Convenience
Working with a realtor can save you significant time and effort. Realtors assist in preparing the property for market, coordinate showings and communication, handle paperwork and facilitate title, lending & closings.
Con: Commission Fees
The average cost of working with a realtor as a seller is 6% of the total sales price. While this 6% fee due to the real estate brokerage is negotiable, you’ll quickly find that this isn’t always the case (LINK CLASS ACTION ANTISHERMAN SUITS). If you were to take the average home price in the US of $410,000, you’re paying a realtor $24,600 for help in selling your property. 6% is substantial, especially when you’re an investor and this is cutting into your profit and ability to reinvest and grow your business.
Con: Finding the Right Realtor
Your experience in using a realtor relies on you selecting an experienced, competent agent to be on your side. It’s no secret that the licensing process to become a realtor is almost laughably easy in most states with licensure requirements being as low as 40-hrs in a number of states (1 week!). Once someone has their license they are allowed to represent you in the sale of your property. Interviewing agents is crucial to your success and having to wade through the hundreds or thousands (or 10’s of thousands in certain markets) can be difficult, to say the least. Make sure to verify a consistent track record of past sales, particularly past sales with investment clients.
Selling FSBO (For Sale By Owner)
Pro: Cost Savings
To state the obvious, saving tens of thousands of dollars is enough to make anyone consider FBSO. Saving 6% can be considerable to your bottom line and can oftentimes be the difference between profitability on a deal.
Pro: Interacting with Buyers Directly
Selling on your own allows you to engage directly with potential buyers. Not only does this foster a more personal connection and open lines of communication that may lead to a smoother sale, but it may also lead to more opportunities and a quicker negotiating period. One of the most frustrating things about selling an investment property is not having open lines of communication. Having to wait for your realtor to talk to the buyers’ realtor means a lot of room for grey area. Did you ever play telephone as a kid?
Pro: Faster Decision Making
Without the need to consult with your realtor or wait for their input, you can make decisions faster. Being able to make quick decisions is essential in any market, especially when working with investors who may have other offers out or if you yourself are looking to make an offer and need to get your property sold.
Con: Limited Exposure
Without access to the MLS, FSBO listings may not get as much exposure as properties listed with realtors. This can make it more difficult to find buyers. There are a number of ways to market a property without the MLS however, such as on Nvested!
Con: Time and Effort
Selling a property is always going to be time-consuming and will require a significant amount of effort. Selling your property without a realtor means that you are the primary driver of your sale and therefore, you are responsible for scheduling, marketing, and coordinating a successful sale.
Con: Making the Decision
Ultimately, the choice between selling with a realtor or FSBO depends on your specific circumstances and priorities. If you value convenience and are willing to pay a commission fee, a realtor might be the right choice. On the other hand, if you’re looking to maximize your profits and have the time and skills to manage the sale yourself, FSBO could be the way to go.
Before making a decision, carefully assess your property, your level of comfort with real estate transactions, and your financial goals. Whichever path you choose, be sure to do your research and seek professional advice if needed. Selling your investment property is a significant undertaking, and making an informed choice can make all the difference in the outcome.
