In today's market, with homes selling quickly and prices rising, some homeowners might consider trying to sell their home on their own, known in the industry as a For Sale by Owner (FSBO). There are several reasons this might not be a good idea for the vast majority of sellers.
Here are five reasons, highlighted by a personal experience just this week:
1. Negotiations are complex
Here is a list of some of the people with whom you must be prepared to negotiate if you decide to engage in a For Sale By Owner transaction:
- The buyer, who wants the best deal possible
- The buyer’s agent, who solely represents the best interest of the buyer (and expects a commission for bringing a ready, willing and able buyer)
- The buyer’s attorney (in some parts of the country or if there is no buyer's agent)
- The home inspector, who work for the buyer and will almost always find some problems with the house
- The appraiser, if there is a question of value
- The title company, if there are any issues exposed by the title search
- The escrow company, if there are questions regarding buyer's and seller's debits and credits or contract items
Are you prepared to deal with the stress and possible expense of self-representation in these areas? Are you prepared to lose a sale if negotiations break down? Are you prepared to devote time and attention to each of these areas in order to close a sale?
2. Exposure to Prospective Purchasers
Recent studies have shown that 88% of buyers search online for a home. That is in comparison to only 21% looking at print newspaper ads. Most real estate agents understand the market and have a strong and comprehensive strategy to promote the sale of your home. Do you?
Just last week I had a buyer ask me to show her a property that was listed FSBO. I performed an online search for the property by address as well as searching the MLS. I could find no record of the property being for sale. This week I had another individual ask me about the same property, and again my search turned up nothing. However, the owner believes her home is being given the same exposure as if she had listed it with a real estate firm. Online exposure, professional photographs and staging, Broker's Tours, open houses, signage, print ads, word of mouth – all of these, routinely provided by a competent listing agent – are necessary to generate the exposure your home needs in order to sell in a timely manner for the best price.
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 newspaper
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, and most individuals don't have the expertise or time necessary to create and maintain such a presence. Do you have access to posting your home on your personal website, your company site, and sites such as Zillow, Trulia, Redfin, Realtor.com, Yahoo Real Estate and more? Without that exposure, and without the staging, photographs, and descriptions to support that online presence, you are bypassing your most valuable audience.
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. Do you know the laws that govern disclosure and what information you must share with prospective buyers? Are you up to date on when and how a buyer is able to walk away from a transaction and still retain their earnest money? Are you aware of the privacy laws that govern when and how you can (or cannot) use cameras or audio feed in your home? Do you have a strategy for making keys available and showing your home convenient for all concerned? The process is complex and continues to become more so every day.
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. However, saving a commission isn't the measurement of success in selling a home. Selling your home for the right price in a timely manner is the true measurement of success, and determining market value is one of the most strategic aspects of listing a home for sale. Having access to the most current and reliable data and being provided a Comparative Market Analysis for your home is one of the benefits of using a listing agent. If you undervalue your home and sell it too quickly, then you have left money on the table. If you overvalue your home and it sits for weeks and has to be marked down before finding a buyer, you have lost both time and money. Using a professional to get it right from the beginning will bring you the best value for your home.
Studies have shown that the typical house sold by the homeowner sells for $208,000 while the typical house sold by an agent sells for $235,000. This doesn’t mean that an agent can get $27,000 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.
Before you decide to take on the challenges of selling your house on your own, sit with a real estate professional in your marketplace and see what they have to offer. Your consultation should be free, and you might find you will gain more than you think by listing with an agent. And, as always, if I can answer any questions for you, please don't hesitate to ask!