For Sale By Owner.
Otherwise known as: FSBO.
Sure. I get it. You are thinking: “Why would anybody in their right mind give up 6% of the price of their house to a real estate agent when all they have to to is go to Walmart, buy a For Sale sign and put it in their front window?”
I think there are several reasons this might not be a good idea for the vast majority of sellers.
Here are five of them:
1.) There Are Too Many People to Negotiate With
Here is a list of some of the people with whom you must be prepared to negotiate if you decide to FSBO.
* The buyer who wants the best deal possible
* The buyer’s agent who solely represents the best interest of the buyer
* The buyer’s attorney (in some parts of the country)
* The home inspector works for the buyer and will almost always find some problems with the house
* The appraiser – if there is a question of value
* Your bank in the case of a short sale
2.) Exposure to Perspective Purchasers
Recent studies have shown that 92% of buyers search online for a home. That is in comparison to only 28% looking at print newspaper ads. Most real estate agents have an internet strategy to promote the sale of your home. Do you? Craigslist? Good luck with that.
3.) Results Come from the Internet
Where do buyers find the home they actually purchased?
43% on the internet
9% from a yard sign
1% from newspapers
The days of selling your house by just putting up a sign and putting it in the paper are long gone.
Having a strong internet strategy is crucial.
4.) FSBOing has Become More and More Difficult
The paperwork involved in selling and buying a home has increased dramatically as industry disclosures and regulations have become mandatory. This is one of the reasons that the percentage of people FSBOing has dropped from 19% to 9% over the last 20+ years.
5.) You Net More Money when Using an Agent
Many homeowners believe that they will save the real estate commission by selling on their own. Realize that the main reason buyers look at FSBOs is because they also believe they can save the real commission. The seller and buyer can’t both save the commission.
Studies have shown that the typical house sold by the homeowner sells for $184,000 while the typical house sold by an agent sells for $230,000. This doesn’t mean that an agent can get $46,000 more for your home as studies have shown that people are more likely to FSBO in markets with lower price points. However, it does show that selling on your own might not make sense.
THE BOTTOM LINE
Before you decide to take on the challenges of selling your house on your own, sit with a real estate professional and see what they have to offer.
Still not convinced? Ask yourself these questions:
1) How comfortable are you negotiating favorable and creative terms on a $200,000-$400,000 contract?
2) Do you understand all of the disclosure laws you are legally obligated to comply with?
3) Do you know the warning signs that your buyer is about to cancel?
4) Do you know all of the ways a buyer can breach a contract?
5) Do you know all of the ways YOU can breach a contract?
6) Do you know how to write a contract? (Hint: Don’t use the one from Staples…)
There are more questions…many more.
I would never think of representing myself in a court of law. I would never think of pulling my own teeth. I would never think of re-roofing my own house. I would never think of doing anything that I could hire a professional to do.
And neither should you.
That’s my opinion…