5 Times You're Better Off Without a Real Estate Agent

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Selling your home on your own — commonly known as "For Sale By Owner" or FSBO — can be complicated. It takes plenty of paperwork. You'll have to stage your home so that it appeals to buyers. And you'll have to market your property so that your home reaches the largest number of potential buyers.

But if you are willing to do the work, selling a home on your own can save you money. Here are five times that you shouldn't use a real estate agent to sell your home.

1. You're in a Red-Hot Real Estate Market

Steve Udelson, president of Owners.com, a real estate site that helps buyers go the FSBO route (for a lower commission than the standard 6%), says that certain markets have always been strong ones for FSBO properties. He points to South Florida as an example; owners have long sold their homes there without the help of real estate agents.

"There are certain markets that lend themselves to selling on your own," Udelson said. "These are markets in which there is a lot of turnover and homes generally sell quickly. It's easier to find buyers in these markets."

Are home sales on the rise in your market? How about average selling prices? And are homes selling quickly — generally moving in fewer than three months? Then your market might be a prime one for a FSBO property.

If buyers are already flocking to your market and willing to spend big dollars on homes there, you might be able to reach them without the extra marketing push from a real estate agent. Just be certain that you understand the ins and outs of your area's real estate pricing, so that you get the best return possible on selling your home.

2. Your Home Has Been Newly Renovated

Having a home in a top market is just one benefit. It helps, too, to offer a home that features renovated kitchens and large master bathrooms. Kitchens and baths are the rooms that make the greatest impression on buyers. If your home's kitchen and bathrooms are newly renovated, you'll gain an edge, whether you're working with a real estate agent or not.

Consider it this way: Buyers will tour your home and similarly priced ones in your neighborhood. If your home features a modern kitchen with the newest appliances, while your neighbor's features one that hasn't been renovated in 15 years, the odds are that buyers will make an offer on your property.

3. You Have the Time

Selling a home takes time, and lots of it. You'll have to take phone calls from possible buyers. You'll have to schedule showings. You'll need to keep your home clean so that buyers will be impressed when they take a tour.

And that's just what happens before people start making offers. Once you receive an offer, you'll need to negotiate on the final sales price. You'll also have to work with your buyers on making repairs to your home before the sale closes. Then you'll have to schedule a closing date and make sure that all the paperwork necessary to close a home sale is in order.

"Are you able to show your home when buyers call?" Udelson asked. "Are you willing to handle your own marketing? Can you handle the negotiation period? These are all possible pain points that you'll have to consider."

If you and your partner are gone all day, work long hours, and aren't able to devote the time necessary to selling a home, it might not be smart to sell without the help of a real estate agent.

4. You're Willing to Spend a Bit Upfront

It's difficult to sell a home without listing it on your area's Multiple Listing Service. This service, commonly called the MLS, is a listing of homes for sale in your area. Buyers will search your local MLS to find the homes that interest them.

Agents are the ones who typically list the homes of their clients on the MLS. If you're not working with an agent, you'll have to pay an MLS listing service to do the job for you. These flat-fee listing companies will usually get your home on the MLS for $200 or so. Don't skip this step: You'll struggle to attract buyers if your home isn't listed.

5. You Have Enough Equity to Be Flexible on Selling Price

The more equity you have in your home, the better. That's because you'll usually need to pay a 3% commission to whichever agent represents your eventual buyer.

The agents who work with buyers usually split the standard 6% commission that sellers' agents charge. Agents representing buyers won't show your house to their clients if they know you aren't willing or able to pay them that 3% commission out of the proceeds of your home sale. But if you can promise that commission, you'll get far more buyers — along with the agents representing them — to tour your home.

If your home is worth $250,000 and you owe $150,000 on your mortgage, you have $100,000 equity in your residence (your home's value minus what you still owe on it). If you sell your home for $250,000, the 3% commission that you pay to your buyer's agent will cost you $7,500. You'll also have to pay back what you owe to your mortgage, so that will eliminate another $150,000 from your final profit.

That leaves you with a potential final profit of more than $92,000 once your sale is closed. That's still good money.

But if you have little equity in your home, you might do better to work with an agent. Yes, you'll be paying the standard 6% commission, but studies have shown that homes marketed by real estate agents generally sell for higher prices than do those sold as FSBOs. And when you have little equity, landing the highest final sales price is important.

Have you ever sold (or purchased) a home without an agent? How'd it go?