Whether sellers are trying to keep more money in their pockets, or just think they can sell their homes on their own without any help, they typically meet a ton of obstacles along the way.
Taking the ‘For Sale By Owner’ (FSBO) route isn’t as easy as planting a “For Sale” sign on your front lawn and putting up a few pictures on the internet. There’s a ton of work that goes on behind the scenes that many folks who aren’t directly working in the real estate business usually don’t understand.
Homeowners might know their homes inside and out, but that doesn’t mean they should take on the role of real estate agent in the process.
Here are 5 issues that FSBOs often face along the way, prompting many of them to bail out of the DIY route and get an experienced agent to take over.
1. They Don’t Get the Exposure They Need
There are plenty of online classified advertising sites out there, some of which are free to use. But they still pale in comparison to the type of exposure that your home would get with the help of a seasoned real estate agent.
Many sellers have a tough time reaching the masses of buyers out there who are looking for a home in your area. With professional marketing expertise, a network of contacts with other agents who work with qualified buyers, and brokerage support, a real estate agent can market your property much more widely than the average seller.
Studies show that about 92% of buyers use the internet to search for a home. Real estate agents typically have an online marketing strategy to get maximum exposure for their listings.
2. They Don’t Have the Time
The majority of people who are selling their homes work full-time. That means much of their free time on weekends and weeknights is spent marketing their homes, holding open houses, taking phone calls from potentially interested parties, scheduling and chaperoning showings, and all the other tasks that are needed to successfully advertise and sell a home. Most people simply don’t have that kind of time to dedicate to competently and adequately sell their homes.
And then there’s the issue of privacy and safety. You likely wouldn’t enjoy being bothered with a knock on the door or a phone call during dinner or while you’re playing with your kids on the front lawn. Not only is your privacy being pushed aside, your safety could be compromised too.
Professional real estate agents will take the calls from potential buyers or their agents, and will make sure that buyers don’t enter your home without a licensed realtor. They’ll monitor your home during the sale process by making sure that appointments are scheduled through the office, and a unique security code is properly obtained to access the house. Realtors can screen visitors, and follow-up with anyone who has been to the home.
3. They Leave Money on the Table
The biggest reason why people decide to forego the use of a real estate agent is to save money by avoiding the commission fees. This is a totally understandable reason to want to try the selling process alone. However, buyers know that they there is no seller agent in the mix, and that no commissions will have to be paid out. Armed with that kind of information, buyers will likely lower their offer price.
Many components of a real estate transaction are negotiable aside from the listing price, including the deposit amount, the closing date, who pays for commission, and closing costs, among others. Without savvy negotiation skills, it’s tough for sellers to come out of the transaction with the most money in their pockets. In fact, FSBOs sell an average of $39,000 less compared to those who are represented by an agent.
Like any other real estate transaction, the final sale price, the party responsible for paying the commission, a home warranty, and closing costs are all negotiable. Sellers without an agent need to be savvy in order to come out on top. According to the National Association of Realtors (NAR), FSBOs sold their homes for an average price of $210,000 compared to $249,000 for homes sold by a real estate agent in 2014.
In many cases, sellers think they won’t have to dish out any money for commission at all. But if the buyer is represented by an agent, you might be stuck paying their commission.
4. They Fail to Come Up With a Solid Listing Price
The importance of the listing price can’t be underestimated. In fact, it’s one of the most critical aspects of a successful real estate transaction. Sure, just about every homeowner will be tempted to set a high price to reap the most money, but that route is the wrong one to take.
Why? Let’s say a buyer is looking for a home in your neighborhood within the $250,000 to $300,000 range, and you list your home for $325,000. Your home will be totally off the radar for these potential buyers. Meanwhile, the home down the street that’s almost identical to yours is listed at $295,000 – that’s the one that will get their attention.
At the end of the day, your home needs to be listed at a price that the market dictates. You really don’t have a leg to stand on if you list over that price point. Your home is basically worth what buyers are willing to pay for it. If you overprice your home, it’ll end up sticking around on the market a lot longer than necessary. At some point, you’ll probably wind up lowering the price just to garner some attention.
Without an experienced real estate agent, sellers don’t have the expertise nor the tools to help pinpoint an appropriate listing price. Realtors have access to relevant market information about recent sales of similar homes in your area. Studies have shown that homes priced right from the get-go sell faster and for a higher price compared to those that hang around on the market.
The Bottom Line
Selling a home can be a complicated and intricate process that tends to come with a variety of obstacles. Without the necessary experience, you could wind up leaving money on the table, or even leave yourself vulnerable to legal liability.
Plenty of FSBOs who have tried their hand at selling on their own end up calling a real estate agent to finish the job because they realized first-hand that the job is not as clear-cut as it may have seemed from the onset. You’d be a lot better off working with a licensed real estate agent from the start so you can clear more money and don’t have to worry about issues that can creep up after the sale is done.