You have all heard the term "For Sale By Owner" (FSBO for short), and I am sure many owners have considered this option. Before becoming a Real Estate Professional I had considered this with my own property. I remember discussing this with my husband who is all about doing alot of things on his own (which later usually requires a professional anyway), but he didn't want to touch this area. His rationale was that we didn't know enough to price the house correctly, market the house properly, and insure the paperwork would be in order. This wasn't to mention scheduling showings, open houses, so forth and so on. My thought was, we'd save on the commission. The fact of the matter was, he knew enough (without any Real Estate background) to lay out the costs and show that with marketing, administrative (forms), and incorrect pricing we could be losing more than "saving". The interesting thing is the studies today say much of the same thing. I just read an article which outlined some of the 2006 findings from the National Association of Realtors when it came to For-Sale-By-Owner decisions. I wanted to take a moment to highlight some of the points in that article.
#1 Savings. 51% ventured into selling their property on their own for the reason of saving on commissions. An obvious point, but one that needs further consideration. The fact is there are alot more costs than simply putting a sign on the front lawn. The most important cost being the "opportunity cost" which is the cost associated with pricing the property too low. Yes, it may have sold quickly but how much did one lose if the house would have been priced differently and the buyer would have still been willing to pay that price. Although this is a sepculative area. The fact is that in many cases where the seller was considering selling on their own and consulted a Realtor, they found that their planned price was well below what the property should be priced at. $25,000 on up in many of the cases. I will get to marketing in just a bit.
#2 I have a buyer lined up. 22% made the decision because someone they knew expressed interest in buying the property. The article made some great points where many times this happens and the the original expressed interest fizzles out. The other thing that can happen is that this type of situation puts in the misconception in the seller's mind that since one person is interested there will easily be others. Buyers come from all different avenues, and one then has to consider are they strategically positioned to grab the attention of potential buyers.
#3 My neighbor sold on their own, and everything went great. As I stated in a previous post, every situation can be different. Get all the facts. Who did they sell to? What price compared to the rest of the area? How long did it take them? What did they do? When did they sell? For example, you may find that they sold at a time when little was in the area for sale and the demand was high. Or you may find that the sold low.
The savings piece is obviously the most influential reason for selling on one's own, but again the other costs have to be considered. Namely marketing and exposure. Again, there are some misconceptions in this area.
#1 I can post on the internet just like Realtors do. Yes, there are sites allowing for these listings but what is the exposure and real traffic. Statistics show that over 80% of home buyers are using the internet first (and that number is growing every day) and almost 80% of those shoppers are going to . . . Realtor.com. So where do you want to be? Realtor.com utilizes area MLS systems to insure that listings are posted properly. Listing on the MLS system can cost from $377 on up.
#2 I'm on the MLS that's enough. If anyone has done a search in my area (and many others are like this) for a property you will come up with a list that can take hours to go through. Studies show that consumer behavior when it comes to the internet is centered around "instant gratification". That means most people don't go past the third screen when searching for anything. So where do you show up? The other behavior that is interesting is that intenret shoppers looks for visual cues. Something to make what they are looking for stand out such as a banner are things moving. My listings get an "Enhanced Listing" which is an additional cost for me to market, but well worth the exposure benefits. Again, that costs more money. In addition, only 80% are shopping this way. So what are you doing to capture the attention of the other 20%? Print ads such as magazines and newspapers, flyers, so forth and so on can not be disregarded. And again . . . all cost money.
#3 I'll hold Open Houses. There has been alot of interesting feedback on Open Houses recently especially the scenario where traffic was minimal or non-existent. Open Houses serve a marketing purpose but are becoming less of a focus. I feel they serve alot of purposes. Sometimes more than we think, but successful Open Houses require up-front advetising and a very open-mind as to the purposes the event will serve. For example, when just the neighbors show up. Who do they know? Remember 80% are shopping the internet first. With today's video and photo technology one can get a great perpective of a property prior to getting in a car and driving to it. The important thing with Open Houses is what are you doing with the leads you get? Are you following-up? How? How often? So forth and so on.
Obviously there many other areas of discussion that can go into this topic, and at this point I am getting close to writing a novel here. But I wanted to just touch on some of the key things that both consumers need to know and what professionals have experienced. My advice to consumers especially in today's highly competitive market, make an educated decision. You can very easily get yourself into a situation of selling low, transaction issues, ineffective marketing, so forth and so on. I offer FREE Comparable Market Analysis in my area and always take the time to expalin these in detail to the owner along with a detail of the marketing that I do. I also have a great network of professionals to refer someone to both here through Active Rain and my own personal contacts out of the area as well. Selling a property is a partnership and I will always recommend having a Realtor as a partner when selling a property.
For sellers in the Palm Coast area visit http://www.kathywestrealtor.com/FREE_Home_Evaluation/page_1708959.html for a FREE Market Analysis of your property. For those outside of the Palm Coast area, there are many great professionals here on Active Rain or feel free to drop me an email if you would like me to refer you to someone in your area.