BusinessReport.com

When local businessman Andre Clouatre put his house on the market last year, he faced the same dilemma many sellers encounter: Do you go with an agent or do you go it alone?

On one hand, agents get a considerable piece of your action, typically charging a commission equal to 6% of the sale price. Many consider that outrageous in an Internet era, when so much data is available at the click of a mouse. Even agents who work for a more reasonable flat fee are taking money out of your pocket. Is it worth it?

On the other hand, selling by owner has its own problems. There’s no one to represent your interests against your buyer, who might have an agent of their own. Nor is there anyone to help you market your home, advise you on improving its curb appeal or how best to stage your furniture, all of which could end up costing you in the long run.

“There are pitfalls on both sides,” says Clouatre, whose 2,700-square-foot house sat on the market for several months while he tried selling it himself. He turned to a traditional commission-based agent and eventually hired a fee-based agent, who sold his house within a few weeks.

It’s a hard call, as any overwhelmed seller can attest. In the pre-Internet days, it was a no-brainer. Real estate agents held all the cards because they had access to coveted pricing data through the proprietary Multiple Listing Service. Though some brave sellers planted FSBO signs in their yards, they were in the minority, and Realtors raked in commissions from sales they almost exclusively negotiated.

These days, it’s a different story. Internet sites like FSBOBR.com enable sellers to market their properties on the Web, and people are taking advantage of it. Last month, the local Web site got more than 20 million hits, according to the company’s owners. What’s more, savvy sellers can find a wealth of once-proprietary information online to help them determine how best to price their homes.

Christopher Holland is among those who are selling by owner, a decision he reached after crunching some numbers. His 2,400-square-foot house in Denham Springs has been on the market since fall. He tried two agents, but ultimately rejected them both because they urged him to lower his asking price from $280,000 to the $260,000 that is more in keeping with his neighborhood average.

While the agents may have had a valid argument, Holland suspects they were merely interested in making a quick sale. His home is just three years old and is custom-built. He remains convinced it commands the $114 per square foot that his original asking price represents, not the $104 per square foot the agents were encouraging.

“By moving my house from $280,000 to $260,000 right off the bat, I’m losing $20,000 and the agent’s only losing $1,000 off her commission,” Holland says. “Of course, she’s going to tell me to lower it. She wants to sell it quickly, and it’s only going to cost her $1,000.”

Indeed, the commission issue is one of the biggest drivers behind the growth in FSBOs. Sellers are fed up with the commission structure, pointing out that it doesn’t make sense to pay an agent $12,000 for selling a $200,000 home and twice that much for selling a $400,000 home. Is the bigger home that much harder to sell?

“It just didn’t seem right to me,” Clouatre says. “What’s the value to me?”

The value, say those on the other side of the issue, comes in helping those sellers who have no idea what they’re doing. Agents can offer advice and, more importantly, protection in representing your interests against the interests of your buyer, who more than likely has an agent of his own.

This can mean very real savings. Realtor Della Neely, who works on a fee basis, suggests that unrepresented sellers are vulnerable against buyers’ agents who all too often take advantage of their position and try to pressure naïve sellers into coughing up more information than they should.

“Realtors can be the most charming people in the world and that buyer’s agent will come sit at your kitchen table and drink a Coke with you and find out what your real bottom line is—what’s the lowest you’re willing to go,” Neely says. “Then she’s going to go back and tell that to her client.”

An agent can also save a seller from making thousands of dollars in unnecessary repairs after the home inspection. If you’re a first-time seller, you might feel strong-armed into fixing a leaky roof or a broken pipe merely because your buyer’s agent says you have to or you’ll lose the sale. It could be a bluff, a call an agent may be better able to determine than an inexperienced seller.

Moreover, your buyer’s closing attorney may try to stick you with certain expenses in the closing settlement that you shouldn’t have to pay—such as document prep or notary’s fees. Neely says a good agent will always check a closing settlement against a purchase agreement for such differences.

“It might just be a few hundred dollars here and a few hundred there,” Neely said. “But after a while it starts to add up.”

Then there’s the value an agent brings to the table in helping market, price and stage your home. Sellers may have an easy time determining the average price per square foot of property in their neighborhood. But it’s often more difficult for them to look at their property objectively.

“Most people will not go into your house and tell you it smells like Labrador retriever herd,” Neely says. “An agent will.”

Advocates of selling by owner argue that while agents can provide a valuable service, sellers have access to enough information today that, if they do their homework, they can be reasonably prepared for whatever curve ball a buyer’s agent throws at them. It’s just a question of whether they’re willing to do it.

“There are pros and cons of each,” Clouatre says. “As a seller, you just have to decide what is going to work best for you.”