With such a shortage of homes for sale and homes selling so quickly, For Sale By Owner (FSBO) may seem like a smart idea… how hard can it be to put out a sign and run a few flyers? Before you jump in, here are some things you should know.
FSBOing has become more and more difficult
Paperwork and legal requirements have increased dramatically. Purchase agreements used to be only a few pages long… most transactions I now work with are around 30 pages. There also may be other requirements depending on where you live: disclosures, city inspections, well sealing, sewer line repair, etc. Realtors are familiar with the legal requirements and how to fulfill them… are you? These are some of the reasons the percentage of people FSBOing has dropped from 19% to 8% over the last 20 years.
Internet exposure is critical
With 95% of buyers searching online and 80% of buyers finding their home online or through a Realtor, Internet presence is critical in selling your home. While sites such as Zillow have made it easier to promote your own home online, most serious buyers are working with a Realtor and searching through the MLS, which gives you maximum exposure, often with a presence on 100’s of websites including those of competing brokers. How your home presents through your online photos and marketing is critical… which is why a staging consult and professional photo shoot are key services we offer as your Realtor.
Get ready to negotiate
Here are some of the people you should be prepared to negotiate with if you decide to For Sale By Owner…
- The buyer who wants the best deal possible
- The buyer’s agent who solely represents the best interests of the buyer
- The buyer/buyer’s agent again following a buyer’s inspection, which almost always finds some problems
- The appraiser (and possibly the buyer/buyer’s agent again) if there is a question of value
Evaluate offers
You may be expecting to get to choose the highest price offer in a bidding war, but evaluating offers involves more than just price. Factors to consider in addition to price…
- The lender and whether the buyer is pre-qualified or pre-approved… will they make it to closing on time?
- Amount of earnest money
- Amount of down payment
- Type of financing
- Verification of funds if cash buyer
- Contingencies
- Closing date
- Will the property appraise for sale price?
- Seller contribution to closing costs
About commission
You may believe you will save the real estate commission by selling your home yourself. Realize that a main reason buyers look at FSBOs is because they also believe they can save the real estate commission. Reality is you can’t both save the commission.
If your buyer is represented by a Realtor (most are), they will expect you to pay a commission to their agent on their behalf as occurs in traditional real estate transactions. This means you get to keep about half, which you can apply to your marketing costs of Internet ads, signs, photos, flyers, lock box, scheduling, etc.
A study by Collateral Analytics showed that most FSBOs don’t actually save anything, and in some cases may be costing themselves more by not listing with an agent. One of the main reasons is greater exposure resulting in multiple offers. The study showed that the difference in price between comparable homes of size and location averaged 6%.
Bottom line
Before taking on the challenges of selling your home on your own, get together with an agent to discuss your options and determine what makes the most sense for you.
RE/MAX Results HomesMSP Team – info@homesmsp.com
