In today’s market, as home prices rise and a lack of inventory continues, some homeowners may consider trying to sell their homes on their own, known in the industry as a For Sale by Owner (FSBO). Selling your home on your own as a FSBO might seem like a good way to “save” money, but at the end of the day it might cost you more than using a professional to help you sell.
1. Exposure to Prospective Buyers
With 95% of buyers searching online for their new homes it’s critical to have an internet marketing strategy for a home. The right real estate agent will have an Internet strategy to promote your home. Do/can you have a broad-based internet marketing strategy to expose your home to the widest possible audience?
Furthermore, do you have the resources and/or experience to stage your home, retain professional photographers, write marketing copy, publish marketing material, etc. to engage the interest of prospective buyers?
2. Results Come from the Internet
Where did buyers find the homes they actually purchased?
- 50% on the Internet
- 28% from a real estate agent
- 7% from a yard sign
- 1% from newspapers
The days of selling your house by putting out a lawn sign or putting an ad in the paper are long gone. Having a strong internet marketing strategy is crucial to selling a home quickly and at top dollar.
3. There Are Too Many People to Negotiate With
Some of the many people with whom you must be prepared to negotiate if you decide to be a For Sale by Owner, include:
- The buyer who wants the best deal possible
- The buyer’s agent who solely represents the best interests of the buyer (besides, if the buyer has representations, why shouldn’t you?)
- The buyer’s attorney (in some parts of the country)
- The home inspection companies, which work for the buyer and will almost always find some problems with the house
- The termite company if there are challenges
- The buyer’s lender if the structure of the mortgage requires the sellers’ participation
- The appraiser if there is a question of value
- The title company if there are challenges with certificates of occupancy (CO), encroachment issues or other permits
- The town or municipality if you need to get the CO permits mentioned above
4. Being A FSBO Seller Has Become Complex
The paperwork involved in selling a home has increased dramatically as industry disclosures and regulations have become mandatory. Potential liabilities for a home seller have increased hugely. This is one of the primary reasons that the percentage of home sellers who FSBO has dropped from 19% to 7% over the last 20+ years. Do you even know all the disclosure and contract forms that are required and how to properly prepare them?
There are over 230 possible steps that need to happen during the course of every successful real estate transaction. Don’t you want someone who has been there before, someone who knows what these steps and actions are, someone who can guide you through all the steps to ensure you don’t make a mis-step that can derail the sale of your home?
5. You’ll Net More Money When Using an Agent
Many homeowners believe that they can save on the real estate commission by selling on their own, but they don’t realize that the main reason buyers look at a FSBO home is because they also believe that they can save on the real estate agent’s commission. The seller and buyer can’t both save the commission.
A study by Collateral Analytics revealed that FSBO’s don’t actually save anything, and in some cases may be costing themselves more, by not listing with an agent. One of the main reasons for the price difference at the time of sale is that,
“Properties listed with a broker that is a member of the local MLS will be listed online with all other participating broker websites, marketing the home to a much larger buyer population. And those MLS properties generally offer compensation to agents who represent buyers, incentivizing them to show and sell the property and again potentially enlarging the buyer pool.”
The study showed that the difference in price between comparable homes of size and location is currently at an average of 6% this year.
And, while it may seem counter-intuitive, studies have shown that homes typically sell for more money when handled by a real estate professional.
Research by the National Association of Realtors in their 2018 Profile of Home Buyers and Sellers revealed that, “the median selling price for all FSBO homes was $200,000 last year. However, homes that were sold with the assistance of an agent had a median selling price of $264,900 – nearly $65,000 more for the typical home sale.”
Why choose to list on your own and manage the entire transaction when you can hire an agent and not have to pay anything more?
6. You Need A Skilled Negotiator
Having a skilled and experienced negotiator on your side could save you thousands, perhaps tens of thousands of dollars. Each step of the way – from the original offer, to the possible renegotiation of that offer after a home inspection, to the possible cancellation of the deal based on a troubled appraisal – you need someone who can keep the deal together until it closes.
7. What Is The Home You’re Selling Worth In Today’s Market?
There’s so much information on the news and on the internet about home sales, prices, and market demand. How do you know what’s going on specifically in your area? Real estate values and demand for homes are very much “local,” if not “hyper-local.”
An experienced real estate agent should be your primary resource to competitively and correctly price your home at the beginning of the selling process? Hiring an agent who has his or her finger on the pulse of the local market will enhance your selling experience and ensure a higher sale price. And, you need someone who is going to tell you the truth, not just what they think you want to hear.
8. Security Issues When You FSBO
Have you considered how to keep your home and family safe when showing it to strangers? How would you vet prospective buyers when they call for an appointment. Keep in mind that when you agree to show your home as a FSBO, you are letting strangers into your home. How safe are you? Are those strangers “real” buyers or simply “casing” your home? With an agent you have the comfort of knowing that buyers who come to see your home have been vetted not just for safety, but also for their financial ability to purchase a home.
The Bottom Line About Being A FSBO
Today’s real estate market is highly competitive and highly complex. Selling a home is not something you want to do as a “do-it-yourself” project. Working with a real estate professional to guide you through the process is a simple (and cost-effective!) – step that will give you a huge advantage!