How to sell your Colorado Springs home as a For Sale By Owner (FSBO). The number one thing you can do is to be cooperative with the agents that call on your home. Many will be calling to try and get you to list with them, but if you are nice and agree to allow them to bring a buyer and OFFER the going rate for the buyer’s agent commission, many agents will see you as a cooperative seller and willing to show your property to their buyers.
I frequently call on FSBOs in Colorado Springs, because I have an interest in knowing all the properties available to my buyer clients. By ignoring the FSBOs I believe is a disservice to my buyers, because this is a great pool of properties that are often priced competitively and typically sell below market value.
The National Association of Realtors FSBO statistic for 2008 indicated that the average agent-assisted home sold for $211,000, while the typical FSBO home sold for $153,000. This puts the FSBOs in the same category as bank owned or short sale properties by selling nearly 25% below market. How and why should an agent ignore this value for their buyer is beyond me? A FSBO has the benefit of closing within a reasonable time (unlike short sales) and still involves a seller that is willing to make repairs (unlike a bank owned properties).
Many real estate agents do not show FSBO properties in Colorado Springs for two primary reasons:
1) If their buyer likes the property, the agent will be doing more work than on a property with a listing agent who will share in the duties required to get the transaction closed
2) They don’t want to argue over their commission when they know that properties in the MLS are obligated to pay the advertised commission.
From the FSBO seller’s side, the primary reason they prefer to do a FSBO is because they want to save the commission, ideally both the listing agent and buyer’s agent commission. In some cases it is because they can’t pay the commission without going into a short sale situation (if this is you, please visit our short sale FAQ’s). Unfortunately, what the seller does not understand is that they are shooting themselves in the foot because they are limiting their pool of buyers to only those that are not represented by an agent. This is a very small percentage of buyers in the market.
Buyers. Typically there are four types of buyers:
1) Buyers represented by an agent estimated to be about 85-90%;
2) Investors looking for properties priced at 75% or more below market;
3) Buyers that can’t qualify for a loan for various reasons but really enjoy looking at homes for decorating ideas;
4) Buyers that aren’t really in the market but if something really strikes them, they may make a purchase.
Of these four categories, the fourth is the best option for a FSBO, assuming they do not have a property to sell, because they have not committed to a buyer’s agent. Unfortunately, when you think about it, this is also the smallest percentage of buyers in the market.
When targeting the last and most likely category of FSBO buyers, you will want to make the deal appealing to them by lowering the price to the point where the home would sell minus any typical commission. For example, if a home would normally sell for $200,000 with two agents and a commission totaling $10,000, you will want to price the home at $190,000 or lower, in order to attract these buyers, because they want to take advantage of the savings as well. If you are willing to increase the pool of buyers by offering a buyer’s agent commission, you will want to price at about $195,000 when market value is $200,000 with two agents involved. This will significantly improve your chances for selling in this tough buyer’s market.
Pricing your FSBO. There are a couple ways to determine the price on your home. There are tools such as Zillow.com, that will give you a good starting point. But keep in mind, they are comparing your home with properties that may not be true comparables. This could lead to under or over pricing your home.
There are tools such as our Market Snapshot, which is specific to a neighborhood. You will need to enter a valid email address, so you can receive updated market reports for you neighborhood, as frequently as you would like. Additionally, you will receive our monthly newsletter, which will include the overall market statistics for Colorado Springs.
The most accurate method for pricing your home is to ask an agent to complete a comparative market analysis. They will try to get you to list with them, but there is no obligation. Two things to keep in mind; one, agents want your business, so make sure they justify their price with recent sold comparables and aren’t just trying to “buy” your listing by quoting a higher price than the comparables. And two, their price includes the commission for two agents. You will want to price at about 10% less as discussed above.
Marketing. Marketing your property is critical. Today, it is estimated that 85-90% of the buyers start their property search online. You will want to make sure your property is advertised everywhere possible online to increase your chances of your property being found by these buyers. Recently, I have had four friends who turned into clients because they found their dream home online and they weren’t even really in the market.
It is highly recommended that you publish a property website and point all your marketing to this website. Some sites are very simple and other can be very detailed with virtual tours. An example would be http://6547snowyrangedrive.com A virtual tour is a great alternative to open houses. It is available 24 hours a day in the comfort of the buyer’s home. A virtual tour is very helpful because is allows the buyer to “walk through” the home before even seeing it. Virtual tours can be as simple as a series of pictures woven together or the professional 360 degree views.
As you advertise your properties online and in print, check your internet presence by going to www.Google.com. To the right of the search field click on “advanced search.” In the “exact wording or phrase” type your street number and street name “124 Maple” and in the “one or more of these” type your state. We do this for all of our listings before we start our advertising. On our most recent listing (6547 Snowy Range - Colorado), before we started advertising, the number of results was 8. After 18 days on the market, there are 308 results. I recommend that you to do this for your own property, as well as, and for properties listed by agents you are considering interviewing.
We hope you found this information helpful and maybe even a little over whelming. Listing and marketing homes for sale is a very labor-intensive job when it is done correctly. If you have questions, feel free to call us.