FSBO. For Sale By Owner. Trying to sell the home yourself. No Realtor, just you. The fact is, some people try it. Their motivation, to save money. These folks don’t want to pay a commission to a real estate agent. So to save money, they figure they’ll sell it themselves. This is where a lot of home sellers find themselves in trouble.
If you want to sell your house yourself, you first need to figure out how much it’s worth, so you know how much to ask for it. Pricing your home right is critical. Price it too high and you’ve shut out potential buyers. Price it too low and you’ve cost yourself a lot of money. How do you find that out? It’s tough, when you look at most websites you can only find “for sale” prices. You usually don’t find the prices homes actually sold for. They also don’t tell you if there were seller credits, or help with the down payment, and all that sort of thing. Remember, pricing is crucial in today’s market.
How are you at marketing? If you’re selling your home yourself, you need to become an expert marketer. Quality photographs, flyers, and an excellent online presence. Be sure to budget for it too, because the expenses — print and online advertising, direct mail, flyers, virtual tours, and a professional photographer can add up to the hundreds if not thousands of dollars. You do know how to market on the internet, right? I hope so, because that’s how buyers start their search. Don’t forget, you’ll even have to budget for the small things, like the “For Sale” sign in the front yard.
Ok, say that “For Sale” sign gets some interest. A buyer knocks on your door and you’re not there. So they call you, can you leave work to show your place? Maybe, maybe not. You can make an appointment of course, if they’re still around when you’re available. What if a real estate agent brings you a buyer, will you pay that agent? If so, now you’re only saving half the commission. If not, the agents buyer will have to pay. Here’s a good bet, they won’t want to. Let’s forget all that for the moment. Say you do get an offer from a buyer, are they pre-approved from a lender? And how do you know? And don’t forget about the inspection, you’ll have to leave work for that too. Also, when the appraiser comes by, you’ll have to be there for that too.
Are you a good negotiator? The buyer may ask for a contingency sale, like having to sell their home first. You’ll need to know how to handle that along with counter offers, who pays title insurance, repairs, or anything else the buyer may request.
Let’s talk about sales contracts. Off the shelve sales contracts are available. But, is that the best and safest way to handle one of the biggest transactions of your life? You could hire a real estate attorney to draft one for you. But remember, you’re trying save money. Before you finish the sales contract make sure you’ve made all the necessary disclosures about your home that the law requires — lead paint, inclusions, and exclusions. You know all that, right?
After the negotiations, contracts, home inspections, and appraisals you finally make it to the closing table. Who’s going to represent you? Who’s going to protect your interests and money at closing? Say you get through all this, you’ve saved money, right? Wrong! In 2015, the typical FSBO home sold for $184,000 compared to agent assisted properties which typically sold for $230,000. That’s a difference of $46,000. Sound too good to be true. Ask Colby Sombrotto, founder and former CEO of FSBO.com. When the founder of the go it alone website tried to sell his condo himself, it sat on the market for six months. No buyers, no sales. So what did he do, he brought in an agent and the condo ended up selling for $150,000 over the original asking price. So, for these reasons and more, many people are deciding not to go it alone.
The number FSBO’s has dropped in recent years from 14% of sales in 2008 to only 9% last year. Why? FSBO’s report the most difficult tasks of selling a home were attracting buyers, pricing the home right, and understanding and performing all the paperwork.
The decision of course is yours, but all the evidence points to you’ll save time and you’ll make more money if you use a realtor to sell your home. They’ll know how to price your home, how to market your home, how to get it on the Internet where millions of people will see it. They’ll handle the showings so you do not have to leave work. They’ll know to qualify buyers and how to negotiate the deal on your behalf. They’ll know the contracts, the contingencies, the inspection process and at the closing table, they’ll watch every penny of your money like a hawk to make sure you get every penny you deserve. The bottom line, studies show you’ll make more money.