FSBO vs. Hiring a Real Estate Agent

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Real Estate


Each year about 7% of homeowners decide to sell their home without the services of a Realtor. Nearly 50% of these For Sale By Owners have a buyer in mind, often a family member, so forgoing a real estate agent might make sense in that case. However, for other homeowners, it often proves counterproductive.

 Most sellers want to remove a real estate agent from the equation because they want to save the commission that would be paid to the sales agent. Statistics kept by the National Association of Realtors consistently show that home sellers typically net more money by using the services of a Realtor, despite commissions paid.

 Across the USA a typical FSBO home sells for $200,000 compared to $265,000 for homes listed for sale with an agent. If an agent were hired at a 6% commission the owner would end up with $53,000 more in their pocket, after the commission was paid. In Hawaii, our price points are much higher – so the amount of loss to the sellers could be even greater.

 Real estate agents are professionals; trained in real estate and tested to be sure they are familiar with local and national real estate laws. The high number of candidates who don’t pass the testing process is a testament to the standards set in the industry. Agents are also required to take 20 hours of continuing education every two years to keep their licenses active.

 Real estate agents work hard for their commissions and their work is guaranteed, because an agent only gets paid after a home is sold for the price and on the terms and conditions agreed upon by the seller and after the seller has received their share of the proceeds. A lot of the research, negotiations and contract work is done “behind the scenes” so homeowners are often not aware of the work an agent is doing. A great agent makes it look easy, which is partly why there is a misconception that a home owner can easily handle the sale of their home on their own.


The most difficult tasks homeowners report facing in trying to sell a home themselves are:

·       Setting the right price

·       Understanding and performing paperwork

·       Selling within the planned length of time

·       Preparing/fixing up the home for sale

·       Having enough time to devote to all aspects of the sale

 There is great value in a real estate agent’s knowledge and ability to research recent sales and trends. Agents also have access to in depth and relevant data through their professional associations.  The art of negotiation is another key in getting the best price. Agents can advise you when it’s best to negotiate and when it’s best to hold your ground. Selling can be an emotional process and it’s often worthwhile to have someone who’s on your side, who sees the “bigger picture” and the ultimate goal of selling a home to move on to the next chapter in life.

 Agents also have a list of trusted associates that can help in the selling of a home, such as: a handyman, a contractor, a painter, a landscaper, a house cleaner, a surveyor, an electrician, a plumber, appliance repair professionals and many more. Agents provide a lot of business to related industries and can often get better pricing and better/faster service than the average homeowner.

 FSBO properties also have the distinct disadvantage of being unattractive to the first-time homebuyers, who make up about 55% of all buyers. Another 20% of home buyers are people moving into a bigger or a smaller home and these buyers typically work with an agent they used in the past or will choose a new agent to work with – these agents will generally request a 3% courtesy fee for helping facilitate the FSBO sale. Now the homeowner is agreeing to pay for the Buyer to have professional representation, while leaving themselves unrepresented. Not a great idea, at all.  Relocation buyers make up another 10 percent of the market and will fly into town briefly to look at property, usually with a real estate agent as they have no time to hunt down FSBO homes.

 This represents 85% of buyers; who’s left? The bargain hunter. These are savvy buyers who know the market and are only interested in getting a great deal on a home, many of them are flippers who will take your discounted price, fix up your home, then sell it for a tidy profit. It might make a lot more sense to use an agent who can advise you on how to best sell your house for top dollar yourself.


In addition, a great agent will know how to market your home for sale to attract buyers. Agents also set up a secure lockbox system to protect your home while allowing other licensed agents access to show the home to qualified buyers.

 Realtors are also homeowner advocates. The National Association of Realtors looks out for your interests and fights to keep policies such as deducting mortgage interest from income tax and paying no capital gains when you sell your home for up to $250,000 if you are single and $500,000 if you are married after living in the home only two years.

 I think one of the best ways to consider whether you are up to selling your home yourself is to review the documents needed in order to buy or sell a home:


Documents needed in order to buy/sell real estate in Hawaii: 

Purchase Contract - 15 pages

Counter Offer (if needed) – 2 pages

Lead Based Paint Disclosure (if home is built prior to 1978) – 1 page

Seller’s Real Disclosure Statement - 5 pages

Receipt of Seller’s Disclosures - 1 page

Condominium or Subdivision Documents

- Articles of Incorporation (if applicable)

- Declaration of Condominium Property Regime

- Amendments / Supplements to the Declaration dated:

- Bylaws of the Association

- Amendments / Supplements to the Bylaws dated:                          

- House Rules / Regulations

- Minutes of the last Annual Owners Meeting

- Approved Minutes of the last 3 Board of Directors Meetings

- Financial Statement dated

- Current or Approved Budget/Reserve Study

- Master Lease for the Condominium

- Apartment Lease                               

- Leasehold Disclosure Information

- Conditions, Covenants & Restrictions of Association

- Amendment(s) to CC&R’s

- Covenants Running with the Land

- Property Information Form or RR105

- Building Permits

- Insurance Summary

- Parking Stall assignments

- Independent Auditor's Report


Condominium Documents Receipt & Approval  - 1 page

W-9 signed by Buyer’s Agent (if applicable) – 1 page

Escrow Instructions (for the title company) – 1 page

Pre-Approval letter (from Buyer) – 1 page

Loan Commitment letter (from Buyer – 1 page)


Survey & survey sketch

Property Inspection Report

Release of Home Inspection Contingency

Encroachment Agreements/Variances (if needed)

Termite Inspection Report

Tenting Contract (if needed)

Leasehold Disclosures (if not fee simple)

HUD statement

Title Report


Satisfaction Waiver

Final Walk Through form


For VA borrower:

 Condo approval (if purchase is not SFH)

VA certificate

VA Addendum


 Other optional documents:

 As-Is Addendum (1 page)

Courtesy to Buyer’s Agent (1 page)


*** This list is not meant to be all-inclusive, but rather is a representation of what is needed in a typical real estate transaction. Depending on the circumstances of the home for sale, other agreements, reports and paperwork may be necessary, such as: a rent-back agreement, an early occupancy agreement, an FHA addendum, an oceanfront property addendum, a short sale addendum, a building permit package, a cesspool disclosure, a private road disclosure, a non-conforming use disclosure, a new construction disclosure, a flood-zone disclosure, a 1031 disclosure and other paperwork specific to the specific situation of the home purchase.


Please note: A seller has an absolute duty to disclose material facts to the buyer, pursuant to HRS section 508, a seller may be found liable for failure to disclose defects in a property sold. A material fact is defined as “any fact, defect, or condition, past or present, that would be expected to measurably affect the value to a reasonable person of the residential property being offered for sale.”


At Home Hawaii highly recommends working with a licensed real estate agent, which offers buyers and sellers assurance that all details of the transaction are handled properly, ending in a sale in which the property changes hands smoothly with all paperwork in order and with all disclosures made in writing.