However, if something goes wrong, this equation could quickly turn to favor the protection of a realtor. The following chart summarizes the advantages and disadvantages of both selling methods. It uses a $300,000 home and several assumptions to explore the feasibility of both selling options. This scenario will assume that the home is already paid off and there is no mortgage. It will also assume that all taxes are paid and that no litigation results from the sale. It will also assume that the home needs no outstanding repairs as a result of the sale.
Fig.1. Sale by Realtor
Revenues
Losses
Total
Asking price of home
$300,000
Realtor fees (avg. 6%)
$18,000
Home Inspection
$300
Home Owner's Warranty
$300
NET PROFIT
$281,400
Fig. 2. For Sale By Owner
Revenues
Losses
Total
Asking price of home
$300,000
Listing in MLS
$300
Home Inspection
$300
Home Owner's Warranty
$300
Advertising/Marketing Costs
$500
Lost time from work to show home
$5,000
Misc Costs, copying, filing fees, gas
$500
NET PROFIT
$293,100
As one can see, it is possible to retain approximately $12,000 more by selling the house yourself under this circumstance. However, this scenario makes many assumptions that reflect perfect conditions. When considering selling their home themselves, many people do not account for the time they will have to spend selling and marketing the house. They also do not account for many of the miscellaneous costs. The amount that one saves by selling their house themselves is offset by the amount to time, hassle, and worry that they spend.
Now let us consider the worst-case scenario and the seller makes a mistake. In this case, the buyer claims that a leaky pipe was not disclosed at the time of the sale and water damage resulted from the error. Now, the seller must retain a real estate attorney. Fees for real estate attorneys can range from $100 to $250 an hour (KeytLaw.com). That can add up quick. If the case becomes complicated, 1,000 hours of work quickly mounts to $250,000. Legal fees could quickly turn a profit into a loss. Now the expertise of the real estate agent is more promising and worth every dollar.
Conclusions and Recommendations
Determining the actual costs of selling a home is difficult to determine with any certainty. However, one can make several assumptions and compare many hypothetical situations. The estimates used in this feasibility study are considered to be averages. However, there could be considerable variation depending on location, market conditions, and the overall appeal of the home.
Many sellers think that they are saving money by selling their home themselves, but they are not considering all of the costs associated with this option. There are many hidden costs involved in selling one's home by themselves. It is not as easy as it would seem at first. If the market is poor, then the sellers may find themselves stuck for...
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