Start, by considering what generally happens when a house is sold.

A real estate agent is enlisted and performs a valuable service bringing in potential buyers to the house and facilitating the purchase. Given the large ”multiple listing service” network real estate brokers maintain and the vigor agents put into the fine art of selling, your home can usually can be sold quickly and painlessly this way.

It costs, however.

For that work, a real estate agent receives an agreed upon commission or percent of the sale price of the house. Typically the homeowner simply builds the real estate charge into the asking price, so that the agent’s fee is covered. Right there, however, one should stop - at least to call into question whether the agent’s fee is actually worth the effort.

Most of the time it is. On a $100,000 house, you’re looking at $4,000 to $7,000 for perhaps a few weeks’ work by the real estate agent. On a $500,000 house, you are talking $20,000 to $35,000! Even if you concede that real estate agents execute valuable and unique services in facilitating the actual sale of the house, and that you could possibly jack up the price of your house - still, that kind of money may be better spent.

As the seller you could get the money. Or you, the buyer, could benefit in the form of a price reduction.

Keep in mind that by employing a real estate professional you are tapping into their network of buyers that are already looking for homes.  So even if your home sells in a day it is because there was a ready and able buyer at that moment.  On your own it could have taken you months to locate the same caliber of buyer.

When should you consider selling a house without an agent?

If you’re confident your property is desirable and you’ll have little trouble drawing the buying public to it, you might go it alone. If the buyer is already known to you - a neighbor, family member, current tenant - a sale could be an easy affair. If your house has appreciated so little that the amount that goes to the real estate agent’s commission would eat into your initial investment, you might want to save the agent’s fee.

A word of caution: You should not attempt to circumvent a real estate agent when a listing contract is in effect. This is unfair and the agent could well sue for recovery of the commission.

OK. If you are still ready to go it alone, these are some points that real estate agents, lawyers, how-to authors, and veterans of the for-sale-by-owner experience advise that you keep in mind:

First determine your price. Real estate agents usually help you with this. Without an agent, you might want to call an appraiser in the Yellow Pages.
Prepare a spec sheet on the house also, listing price, property taxes, energy costs, square footage, number of bedrooms and bathrooms, type of heating and cooling, and the age and type of furnace, water heater, kitchen appliances, roof, etc.

Now determine how best to advertise. A ”for sale by owner” yard sign is usually a good idea. A well-worded advertisement in the Sunday newspaper is smart also.

Without working against your own interests, be frank about drawbacks with the house or the neighborhood.

Be prepared - just as you would if you had a real estate agent bring prospective offers to you - to negotiate on the price. If the buyer is alert he or she will know that you are saving the commission and might be inclined to ask you at least to split the difference.

Retain an attorney to examine any purchase and sale agreement (contract of sale) or other contractual matters and act as a liaison between you and the buyer if need be.

Don’t accept clauses that allow the purchase to be contingent on factors such as the sale by the buyer of another piece of property or any arrangement that prolongs the transaction and locks the house off the market.

Before you accept a sales contract and take it to your attorney, you should attempt to determine whether the buyer qualifies for the financing.

Get a list of the buyer’s employer’s name and address, gross annual earnings, gross annual income, outstanding debts.

After all that, you can decide for yourself whether saving several thousand dollars is worth it - or whether you have a new appreciation for the efforts of real estate professionals.

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