With the housing market as hot as it has been, many homeowners think it’s a good idea to sell their homes by themselves. This is known as For Sale by Owner (FSBO). In this hot market, some are even having success in selling. This spreads the fallacy that doing it yourself could be better.
At times, FSBO’s occur when an owner is selling to someone they know, otherwise, people do it under the common misconception that doing so will save money on the commission. What these sellers fail to recognize is that although FSBO’s don’t need to pay a commission, the homes typically sell for much less than if a seller’s agent handled the transaction. According to the National Association of Realtors, 7% of homes sold in 2017 were FSBO. The average FSBO home sold was $200,000 compared to $265,500 for agent-assisted home sales.
Aside from selling for much less, what are other reasons FSBO can hurt a seller’s bottom line?
1.Time: Unless you plan to take a lot of time off from work, people simply don’t have enough time to do everything necessary to market the property to prospective buyers. From staging, taking professional-grade photos, and marketing correctly, selling a home is an arduous process. Listing agents take care of all these tasks for you and if you’ve hired the right agent, they’ll also have a team on their side to protect your most valuable assets which are your time and money.
2. Buyer Agents avoid FSBO: Buyer’s agents will often avoid showing FSBO homes altogether. They don’t like bringing their clients to these homes because they are so frequently overpriced, poorly staged, and it’s more difficult to schedule a showing without a seller’s agent. The transactions can be dicey, as the sellers likely do not have all their correct documentation prepared and can thus be a headache for buyers.
3. Costs: When people sell by themselves they do so with the hope of saving money. But little do they know, they will be putting a lot of money into this upfront and with no guarantee that it will work. As well, seller’s agents are highly experienced with negotiating and creating enough buzz to generate a sale with multiple offers. The more offers a seller receives, the more money they make in the end. If buyer’s agents aren’t taking your FSBO seriously, a multiple offer situation will not occur.
4.FSBO Homes Aren’t Correctly Priced: This is one of the biggest reasons that FSBO homes don’t sell as quickly or for the most amount of money. Real estate agents are far more in tune with the current market. Some mistakes we see FSBO Home Sellers make include:
- Basing home price off homes on the market and not ones sold
- Not understanding that buyers know you aren’t paying commission
- Often they are too subjective and don’t see the true value of their home
Real estate agents have the experience and tools available to them to make sure that they put the house up at the best price to incite as many strong offers as possible.
5. Inadequate Resources for Proper Marketing: In order to get the maximum number of offers on your home, you’ll need as many people to see your listing as possible. FSBOs often underestimate the importance that marketing plays in selling a home. At Lamacchia Realty we focus on marketing more than anyone because we understand its power. The difference you’re able to get from a real estate company like Lamacchia Realty is:
- Professional Photography creating the highest quality of photos
- Interactive floor plans so prospective buyers can visualize the rooms in the home
- Reverse Prospecting – finding buyers, not just waiting for them to come to you
- Social media – a large network to reach buyers and their agents
- Creating ads
- Putting up signs
- Staging the home
There is so much that goes into marketing a home and failing to do so will hurt your chances of a high sale price.
6. Paperwork: As you can imagine, the transfer of properties from one person to another includes a lot of paperwork. Sellers don’t often understand how this side of the process works and are unaware of the various inspections and disclosures. If any issues pop up such as a failed inspection or property dispute a real estate agent will understand right away what needs to be done. Often, agents have teams of people working with them to ensure a successful closing on a property. Their real estate attorneys will provide legal representation to protect your interests.
7. Liability: Selling a home comes with its liabilities even when you hire a Realtor. There are, however, far fewer liabilities at stake when you have a Realtor who knows how to protect you and can behave as the liaison between you and the buyer. Sellers almost always make representations that they shouldn’t to buyers which could come back to legally bite you after the sale.
It is for these reasons that, on average, people can lose 60 thousand dollars off their home sale price when they sell by themselves. If you’re considering selling your home yourself, meet first meet with an agent to decide if you’re making the right choice. A commission is a small price to pay for peace of mind, a higher sale price, and asset protection.