FSBO a few reasons why people want to sell their own home and a few reasons why they may want to reconsider.
I think we all can agree that the first and principal reason that people want to sell their home themself is that they would like to save a portion of the commission.
Let's see how that might work out the final offer price of $200,000 for the home. If the home seller was to pay a 5% commission to sell their home to an agent, what would that cost them? It would be $10,000 in commission fee's that are split between the selling agent and the buying agent. So the seller might think that they are saving $10,000. Now a buyer comes along and is represented by an agent and makes an accepted offer. Now that agent has done their work and brought in a buyer and would like to be compensated for the efforts. This is done by the seller as tradition has it, unless another agreement has been acknowledged. Now let's say that the buyer's agent will accept a 2.5% commission or $5000.00. Well the seller still saved $5000.00.
Now as a FSBO, they came up with some very innovative ways to market their home. They first found how to pay a fee of $500 to $800 to get a listing on MLS with no representation, that seemed like a fair price to the sellers and they had made that one of their marketing tools, and it so happened to be the place where the buyer's agent had found the listing. They also put a 4 week add in the local paper that would run on Friday, Saturday and Sunday, this was another $400.00 in expenses that they had. The sellers knew that signage would be important and so would flyers. A professional looking sign was the answer they had in mind, along with color copied flyers. This added another $200.00 to their selling ticket. They had heard about a Home warranty policy that they could purchase that would cover a majority of home issues if something where to happen in the next year after the sell, this would only cost $400 for a one year policy, but would be a great selling point.
To figure out what their house would be worth they had based the value of the house with that of their local neighbors. They first came up with $213,000 based on what was selling in the area. The FBSO did not have a lot of detailed information on each house, but they thought they would be in the ball park with that price since some of the homes had sold for more and some for less in the last few months.
The Sellers had a monthly mortgage payment of $1000 and had hoped for a fast sell so that they could make an offer on another home before the summer was over and school started up again for the kids. They expected that if they listed in early July, they would have the house sold and be in their new home by September. The house was slightly overpriced for the Age, style and condition of the home. They had not updated much since they had moved in seven years before, with the start of a family; there was just not enough time. The house had some traffic for the first few weeks but then it became little or nothing until they finally got an offer from our buyers.
They had collected a few agent business cards that had been left at their door or when agents had brought prospective buyers over to look at their property. Out of curiosity they called a few to ask if the client was interested, and polity the agents would respond back with a short statement such as "you had a very nice house but my clients are still looking for that perfect match". They knew that because of their work schedule they would only be able to show the house on the weekends or between 6pm -8pm during the weekdays. They had some people interested in seeing the house at different hours, but it really did not fit into their busy schedule, they knew if the people were really interested; make the effort to coordinate their schedule around the sellers. Weekends for the sellers seem to be a constantly on call or let's stay home routine. They were smart people and knew that they needed to be available for any potential buyers, but it did seem to interrupt the summer fun that they normally had enjoyed the previous years with the kids. The children seemed a little more temperamental during the showings; the sellers both concluded that this was due to the fact that they really had been putting the activities on hold until the house sold.
Finally they got an offer on the property and agreed to the buyer's agent commission. The FSBO asked some questions to the buyer's agent but he was honest and said that in all fairness he represented his clients and could not ethically give advice to the sellers at this point. He did mention that there are real estate attorneys out there that could go over the paper work, but they charge about $250 an hour, more in some cases. They FSBO had handled contracts before with the purchase a car and felt they could handle it from that point on, how hard could it be.
From excitement to confusion, the rollercoaster ride was just getting worse it seemed. Now they thought everything would be simple and downhill after the inspection was done. A fax sent to the Sellers informed them otherwise. The roof was questionable and might need to be replaced for the bank to give a loan on the property. They also wanted an Oil tank inspection and sewer scope done since the roof came up as a red flag. They counter offered a price of $200,000 to adjust for the roof, they also wanted the inspections paid by the seller for the tank and scope, and this was another $700 in expenses.
The agent did say that the buyers are very interested but they had some issues that if taken care, would close the deal. They new the roof would be some money but had not looked into; a quote was presented by the buyers themselves by a company they had done business with before. Running out of time and wanting to get the sell down with they agreed to the second offer. They really did not want to waste time going back and forth with negotiations; it was too stressful and was making the home life a little uneasy. They accepted the last offer.
The FSBO's started to add up the cost of everything. There was the $700 for the Tank and Sewer inspection. $575 to have limited representation on MLS. 3 months of Local Adds running every Friday, Saturday and Sunday $1200, $200 for the sign and flyers, along with $25 more dollars to replace the flyers that seemed to just disappear over night. Another $400 spent for a home warranty policy. $3100.00 spent so far. They would have to rent an apartment and put some stuff in storage since they did not get the house sold before the school year started. Storage would cost $75 a month but they would be saving $200 because they would rent until they found a suitable home. The Wife pointed out that they would need to get a moving truck for a second time and that would be just one more stressful move and more expense to have the movers come in yet a second time. To top off things, they had verbally discussed taking the washer and dryer with them once the transaction was done but at closing it was pointed out to the FSBO that no were in the contract did it state that the washer and dryer would remain with the sellers. It was pointed out that they agreed that all the appliances would stay; they were under the impression that it was all kitchen appliances. The buyers could not seem to remember given a verbal agreement on the subject but where willing to sell the units to them for $500.00. Out of anger and frustration the buyers declined the offer and made arrangements to buy a new set for $800.00 now they had got up to $3900.00 in added expenses. With the buying agent's commision added of $5000.00 and the expenses the FSBO had over 3 months, a grand total of $8900 was realized. The time and stress that went into the sell of the house could not have been given a price tag, nor the time lost with the children during summer break. The fact that the sellers took longer then they thought and that they had to hire a moving crew twice was not a wonderful after thought either. The FSBO figured they had worked a minimum of 12 hours a week for 12 weeks on the sell of their home, They figured that they saved a little less then $10 an hour based on the time they spent on the sell of their home. This did not include the time they had to give up small pleasures or weekend vacations.
Having somebody in your corner, working for you and your best interest, is worth every dollar spent. Real estate agents have many expenses that they cover in the process of the sales transaction period. Often these expenses come directly out of our pocket of the real estate agents as an advertising and marketing expenses. Realtors do not get reimbursed until they sell the home.
Timothy Butterworth
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