The DANGER of For Sale By Owner
Today’s market is continually changing, as home prices rise and a lack of inventory continues. Some homeowners have turned to sell their home on their own, known in the industry as a For Sale by Owner (FSBO). This is nothing new, but did you ever wonder if they make more money versus using a professional REALTOR? That is the end result, as a seller, more money in your pocket, right? Take a look at several reasons why this might not be a good idea for most sellers.
Here are the top five reasons to reconsider For Sale By Owner
1. Exposure to Prospective Buyers
Sure your neighbors will see the sign, and your friends will see your posts on social media, but what about someone who’s relocating into town or even just moving across town? According to NAR’s 2018 Profile of Home Buyers and Sellers 95% of buyers searched online for a home last year and only 13% of buyers even looked at print newspaper ads. Most real estate agents have an internet strategy to promote the sale of your home locally, statewide, nationally, and now globally, do you?
2. Buyers Come from the Internet
Where did buyers find the homes they actually purchased?
- 50% on the Internet
- 28% from a real estate agent
- 7% from a yard sign
- 1% from newspapers
The days of selling your house by putting out a lawn sign or putting an ad in the paper are long gone. You need to decide are you REALLY trying to sell your home? The longer you make an attempt to sell, the less perceived value the buyer will see in your property and in fact drive down your price. Having a strong internet strategy is crucial for maximum impact on day one. Time is not on your side if you want to maximize the sale price.
To For Sale by Owner, or Not?
3. There Are Many People to Negotiate With
Are you an experienced negotiator? There’s more to a sale than the price. You need to account for deadlines, closing dates, terms, and possible multiple contingencies. Don’t forget to plan where you’re going next, at the same time. Can you feel the stress building as you read this? Here are some of the people you must be prepared to negotiate with if you decide to FSBO:
- The buyer who wants the best deal possible
- The buyer’s agent who solely represents the best interests of the buyer
- The buyer’s attorney (in some parts of the country)
- The home inspection companies, which work for the buyer and will almost always find some problems with the house
- The appraiser if there is a question of value
4. The paperwork and multiple deadlines add to a FSBO becoming more and more difficult
Real Estate contracts are updated based on legal, local changes and requirements from the town or state. Do you even know what the latest changes were? If your house has been on the market for 3 months, chances are something has changed since you listed your home. Let’s not forget industry disclosures and regulations that have become mandatory. Hence, the percentage of for sale by owners has dropped from 19% to 7% over the last 20+ years.
5. You NET More Money When Using an Agent
Many homeowners believe that they can save on the real estate commission by selling on their own. It’s short-sighted thinking because they neglect the main reason buyers look at FSBO’s, so they can save on the real estate agent’s commission. The Buyer enters the negotiation thinking the homeowner owes them a better deal since they aren’t paying a commission. The result, either you don’t sell and you lose a potential buyer, or your price just got driven down even further.
A study by Collateral Analytics revealed that FSBOs don’t actually save anything. In some cases may be costing themselves more, by not listing with an agent. One of the main reasons for the price difference at the time of sale is that,“Properties listed with a broker that is a member of the local MLS will be listed online with all other participating broker websites, marketing the home to a much larger buyer population. And those MLS properties generally offer… Click To Tweet
If more buyers see a home, the greater the chances are that there could be a bidding war for the property. This study showed the difference in price between comparable homes of size and location is currently at an average of 6% this year.
So why would you choose to list on your own and manage the entire transaction when you can hire an agent and not have to pay anything more?
Is the For Sale By Owner method for you?
Sit with a FULL-TIME Real Estate Professional in your marketplace and see what they have to offer. Their experience negotiating deals almost daily means your home sale will land more money in your pocket while handling the details for you. Consider also looking for a marketing professional that sells real estate. They will maximize the appeal of your home to drive up the price to maximize it. After that, you’ll know your options to decide what’s best for you and if you want the challenges of selling your house on your own.
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