So you’ve decided to sell your home. You decide that the best way to go about doing this is to do it yourself and not use an agent. This is going to save you money in the amount of 1.5%-3% of the sales price is sales commission to an agent. After all it can’t be that hard right? Take some pictures, get it online, and wait for the offers to roll in. While some people have been successful in selling their property themselves, most for sale by owner (FSBO) homes sales fail. Find out the top 10 reasons not to sell by owner.
How long do you want your home to be on the market? The longer the home is on the market, the less it will sell for, generally speaking. The National Association of Realtors found that homes sold through the Multi-Listing Service sold 20 days faster on average, and 20% of FSBO listings had to renew their listing on the MLS because they didn’t sell. Also, the longer a home sits on the market the more it is costing you in carry costs. That’s an extra month of HOA Dues, taxes, utilities, insurance, etc.
As the expression goes, time is money. When you decide to FSBO be prepared to sacrifice a lot of time. From staging the property and taking perfect pictures to getting the description and marketing right. You’ll also spend time showing the property, entertaining the “tire-kickers” (or in this case door-kickers), and talking with agents who won’t take you seriously.
Speaking of costs, When you sell by owner you may think you’re saving money but in reality you’re often spending a lot of money up front with no guarantee of any return. Listing agents spend a calculated amount of money up front to make sure a listing sells and ultimately pays both you and them both fairly. It takes money to properly market a listing. Listing a home online, professional photography, newspaper ads, open house material, etc will all cost you money with no promise of a return. When you work with an agent they front the cost of this marketing for you. If they spend thousands and can’t sell it for the price you want, they are out those thousands, not you! This is perhaps one of the greatest things about using an agent. There is an extremely low risk and cost to doing so!
Speaking of marketing, this is one of the areas that you can benefit from by working with an agent. Experienced agents have a tried and true marketing plan for selling a home. They know exactly where to spend the marketing dollars and what will yield the best return. You might be ready to post your home on Facebook and Craigslist a few times, but you don’t have the ultimate home selling tool – the MLS. The multiple listing service can be accessed by licensed real estate agents, and is the way to get your home listed on sites like Realtor.com, Zillow, and Trulia. A large majority of home buyers begin their search on sites like these, and you want your home to be seen by as many buyers as possible to get the best price. It’s no surprise that homes sold via FSBO have seen a steady decline as online real estate has become the norm.
Saving on a Commission
According to Zillow, the most common reasons people FSBO their property is to save money. Choosing to FSBO doesn’t really save you money. On average, homes sold by agents get $230k compared to $180k for FSBO. When you find the right agent they will price your property to get the most money in the shortest time, a combination that can mean 10-30% more net profit. When you are considering saving 1.5-3% on a listing commission you should take that into consideration. It is also unlikely that you will pay zero commissions. A real estate agent will most likely represent the buyer. This agent will expect to be paid a 3% commission for procuring the buyer.
When you decide to sell your home yourself you are telling other agents that you don’t understand their value in a multi-billion dollar industry. Agents often see FSBO sellers as easy marks to negotiate against because they have the upper hand. They control the buyer/offer and can negotiate their own commission. They can also pick your property and price apart because they have the expertise to do so. They don’t need to worry about treating you unfairly because the chance of them dealing with you again is slim to none. More often than not they will simply ignore your listing altogether to avoid the hassle.
A home sale is a legal transaction. Thus, the seller and buyer have to negotiate. A real estate agent will handle all of the negotiations, but a FSBO seller will have to negotiate by themselves. A real estate agent or FSBO seller will have to negotiate with the buyer, buyer’s agent, buyer’s attorney, the home inspector, the appraiser and the bank. A FSBO will have to strategize by themselves and rely on their own expertise. Dave Ramsey, a real estate agent and personal finance personality, has said that even with 30 years of experience under his belt as a real estate agent if he were selling his home, he would hire a real estate agent. Realtors are actively selling homes and know the market in your area – they are the experts when it comes to selling a home. In your lifetime if you sold all of your homes, you would probably sell three to four homes in a lifetime, while a real estate agent sells three to four homes in a week.
Strangers in Your Home
When people choose to FSBO their property, they are putting themselves and their family in danger by allowing strangers into their home. Think about what happens in a showing. People you don’t know walk through your home, rifle through your closets, storage sheds, garages, etc. Most buyers will not want a seller following them around the entire time but even if you are present, you cannot be everywhere at once. There has been more than one report about scammers pretending to view a home and in the end rob whatever valuables they can find and easily grab. Real Estate Brokers screen potential “qualified” buyers, set appointments, and accompany buyers to all showings of your property.
Legal Help and Liability
Selling a home is a legal transaction. Remember that if you choose to sell your home yourself. Some states may not let you go through the home closing without having a real estate attorney present. Not only that, but unless you’re well versed in legal documents, you could end up overlooking a required form or disclosure and end up with a lawsuit after closing. A real estate agent knows the legal ins and outs of home selling and can help you make sure you don’t end up with a lawsuit on your hands. When you sell your home without an agent, any mistakes you make can cost you greatly. Agents have something called E&O (Errors & Omissions) Insurance. This protects them when mistakes are made in contracts. When you sell on your own, others can make sure to exploit every little mistake you make.
There’s a reason being a real estate agent is a full-time job. It takes time to stage, schedule property viewings, and get offers on a home. Agents work long hours, as well as weekends and holidays to make sure that the home is sold for the right amount in the least amount of time. Many FSBO sellers have to shorten their hours at work so they can show the home during business hours, cutting their paycheck. Other FSBO sellers keep their home on the market for a long period of time because they can’t drop everything and run when a potential buyer wants to look at the home. They don’t have enough time to put into the sale of their home, so it stays on the market for even longer, which is a red flag for potential buyers whether it’s justifiable or not. The bottom line, 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. Reach out to us on Facebook or Twitter and we would be happy to speak with you about what works for you. Or, to talk to an agent call/text today 904-494-8408 or email firstname.lastname@example.org
About the Authors: The above article "8 Reasons Not to FSBO Your Property" was provided by First Coast Realty Inc. The agents at First Coast Realty have years of experience and have been successful in the St. Augustine and Northeast Florida area for for over 25 years. If you are considering FSBO give us a call first to see if you can leverage our knowledge to your advantage. We service St Augustine, Palm Coast, Palatka, and Jacksonville areas.