Our town's community Facebook page is starting to look more like the MLS than a page to announce 
community events and items for sale. It seems that every other day, some homeowner throws up a notice that their house is for sale for $X and they really want to avoid having to use a Realtor. While there is an appeal of doing a grassroots effort to find the perfect buyer for a home and the perception of saving money, many homeowners overlook some potential pitfalls and the probability that they may lose money in the end.
Consider the following:
1. When fishing in the ocean, is it more effective to use a net or a fishing pole? 
That's the closest analogy to selling "for sale by owner" or hiring the services of a Realtor. When Realtors are charged with finding an able and willing buyer for a listing, they use every means possible including the MLS, homefinding sites like Zillow, mining their own buyer databases, networking with other agents who are working with buyers, print advertising, direct mail, blogging, Facebook advertising, and so forth. A For Sale by Owner (or FSBO) relies on word-of-mouth, a sign on their yard and possibly a post or two on Facebook. Sure, they might get a buyer, but is it the BEST buyer they can get for their home with the BEST terms at the BEST price? Unless it is on the open market, one never knows.
2. Price, price and price.
Price is and will always be the most important factor in selling a home. Realtors have at their fingertips scores of data which they analyze to propose a listing price that will acheive a reasonably quick sale at the best possible selling price. I, for one, have developed an comparative market analysis tool that dissects every aspect of a home's offerings and the comps that help justify a proposed sale price. And usually when the advice from the Realtor is taken, the house moves quickly. Many, many times I've scratched my head when I see a FSBO posting their house for sale for well-over what comparable homes have sold for. But they sometimes underprice too. I had a buyer looking to buy a FSBO home and I realized the owner had under-priced the home by $30,000. I told my buyer to jump on it and sure enough, the appraisal came in that much higher.
3. And in this corner...
Negotiations can be tricky and many Realtors are experienced in putting deals together while keeping emotions out of it. Afterall, the goal is for both parties to be happy and feel like they have won.
4. Filtered feedback is like getting no feedback
FSBOs show their own homes to prospective buyers. Do you think buyers will be direct and say "Hey, nice house but it smells like cats and we couldn't wait to leave"? More likely, they will come up with some other excuse as to why it is not a fit. Because there is no Realtor involved, honest feedback is not shared with the seller. And therefore, it can take longer to sell because the seller has no insight as to what buyers like and dislike about the house.
5. Get ready for the unexpected
Serious or unresolved inspection issues, houses not appraising out, unexpected damage, underwriting snags, buyer's deposit deadline being missed are just some of the problems that can come up during a transaction. Realtors who have been involved in many transactions can help sellers navigate through these murky and stressful moments.
6. Commission - who really pays it?
Typically the Realtors' commission comes out of the transaction so although it shows up as a seller expense, the buyer is contributing to it by the amount s/he is paying for the home. A buyer's mortgage is based on the total sale price, not after the commission is paid by the seller. Buyers are quick to jump at these FSBOs as they think they are getting a deal because Realtors are omitted from the process. But more often than not, buyers tend to overpay for the house because they don't have an agent doing the due diligence to show them the correct market value. In the end, the seller and the buyer can't both save on commission.
And on the subject of commission, keep in mind that while on the surface it looks to be a significant amount but the Realtor needs to share that with the agent who brought the buyer, then both agents need to give a cut to their brokerage. Then there are the expenses of marketing the home, taxes and miscellaneous costs of doing business.
If a seller can expend the time and energy, make the house available to all qualified buyers, be able to effectively negotiate, can keep emotions out of the process, be open to spending a significant budget to market the home adequately, be able to come up with a realistic price, can handle any and all bumps in the road with solutions and patience, then FSBOing might make sense and a post on Facebook might do the trick. But considering it is a seller's most important asset, is it worth the risk?
Thinking about selling? Call Kristin Graves, Sales Associate, RE/MAX Properties at 201-825-6600 x222 to discuss all the options and make an educated decision.
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