Many people are deceived into thinking that they can save money and sell their house easily on their own thanks to FSBO websites. These websites help you list your house for sale on your own instead of listing through an agent. After your home gets listed on their site, people will contact you, see your house and sometimes you’ll find a buyer.
Sounds simple right?
The benefit is that you’d save about 6% in real estate agent commissions from the sale of your home. So why do most people still hire agents rather than sell the house themselves? The answer is that selling a home is complicated. If all you do is list your home on a website, then you could be getting yourself into trouble without even knowing it…
What does FSBO mean?
FSBO stands for For Sale By Owner. This is the shorthand way of saying that you are listing your home for sale without a real estate agent or realtor helping you sell. People will do this if they are hesitant to pay a real estate agent’s commission. There are websites that allow people to list their homes without the help of a real estate agent, but for most people the benefits of having a real estate agent outweigh the cost of not having one.
Does FSBO really work?
To put it plainly, no, FSBO does not work out for most people. Unless you are a real estate agent yourself, listing your home on your own can cost you more than the commission you would have paid a real estate agent. While you may save the 6% commission you would have paid a real estate agent, you’re likely to sell your home for less than 94% of the price you would have sold at with the help of a real estate agent. Beyond that, the process will be more time consuming, you could make legal missteps, and you may make the wrong moves if you don’t have a pulse on the real estate market the way an agent would.
Selling and buying a house could be the largest financial decision of your life. If you want to make this decision without the assistance of an agent or a realtor, you have to be very careful and understand the pitfalls that FSBO home sellers can become victims to.
Reasons FSBO Home Sellers Fail
Not Understanding the Process
Selling a house is not as easy as selling a car. It’s an extensive process that demands a lot of knowledge, patience and time. You have to understand everything that goes on between deciding to sell your house and its payment finally arriving in your account.
First, you have to familiarize yourself with all the relevant legalities that go into preparing the contract for the sale of your house. This is crucial for home sellers without an agent. You will have to hire a real estate attorney for that or else you could get yourself into legal trouble quickly. If you choose to list your home FSBO, you should consult a real estate attorney before listing your house for sale.
If you are listing your home on your own, you are effectively the agent of your own house. Make sure to be sure to become a good one.
Research everything, from the FSBO listing websites to the cost or repairs demanded by potential home buyers. Try to reach as many potential home buyers as you can using social media and your personal contacts. Figure out what makes a house desirable for a buyer and what are the deal-killers, and finally, be a patient negotiator.
Even the most savy FSBO sellers won’t be experts in all things real estate. With all the research you can do on your own, you will still get your home sold faster and at a higher price with a quality real estate agent. The process will be easy for you and you can confidently avoid legal trouble from doing your own legal work incorrectly.
Not Knowing the Value of Your Property
People who list their home on their own often make a huge mistake before they even get to show their home to potential buyers.
Everyone is emotionally attached to their home. This makes it harder to objectively price the property and understand its value from the buyer’s point of view. Buyers will point out problems in your home that you don’t even consider noteworthy. And they will negotiate for a lower price.
Pricing the house accurately is crucial. When an agent helps you price a house, they do it with a wealth of experience backing their numbers. They’ll account for the state of the real estate market and a variety of factors that will influence the value of your home and the time it takes to sell.
If you are doing it yourself, you must research the current housing market trends. It helps to find the median price of a property in your neighborhood and prepare a realistic estimate of the necessary repairs.
This is something you will have to reevaluate after every potential client’s visit. It is also important to stay objective and not get emotional when buyers seem to undervalue your beloved home.
Know that in most cases, properties sold through a realtor sell for a much higher price than the ones sold by the owners. FSBO owners typically sell their home for less than 94% of the price they would have sold with a real estate agent, so the safer option is to hire a realtor to help you sell.
Bad Marketing and Poor Home Showings
Even though the FSBO sites are a great way to place your house in a listing, the number of potential buyers on those sites will be dramatically lower than an agent’s.
You can mitigate this problem by marketing to potential clients in other ways, like advertising open houses through your social media accounts. Even still, unless you have a prominent following on social media or want to pay for ads, this may not attract any people to view your home besides your friends and family.
If you list your house on your own, you should always be ready to show your house. It would drastically shrink the list of potential home buyers if you are only available to show your house on weekends or after working hours. Because you already have a smaller list of potential buyers because of your FSBO listing, you can’t afford to miss any showings for potential buyers.
When you consider listing your house as FSBO, you will have to be positive, enthusiastic and energetic when you show your house to strangers. It is typical that viewers will complain about the worn staircases, creaky doors, and other quirks about your house they find undesirable.
If you work all day and have to do showings right after, you have to ask yourself, can you handle that after a hard day of work?
For most people, it’s better to let a realtor field buyer’s complaints and market your home so that you can sleep easy and keep your free time free.
The most tricky and most important part of selling a home is undoubtedly the final negotiations.
Negotiating is a skill that many people feel they are intuitively good at, but a lot of people overestimate their ability to facilitate a good negotiation- especially when negotiating terms for a sale they aren’t well versed in…
Negotiating is a skill that takes practice, and negotiating terms for a real estate sale takes practice and expertise. There are so many variables to take into account that it is nearly impossible for a lay person to have the skills or knowledge to do this well.
Think about these examples:
- How much lower than the listing price would you be willing to sell for?
- Someone is willing to buy the house at your price, but is not willing to put in the earnest money (money someone puts down to show they are serious about buying), what would you do?
- If the buyer hands you a list of thousands of dollars worth of repairs as part of the contract, will you be able to re-negotiate the final price?
- Do you know what a rent-back agreement is and how much that is worth to you if the buyer isn’t open to the idea?
- Would you sell to someone who isn’t a pre-approved buyer? Would your price be different for a buyer who isn’t pre-approved?
- If someone was willing to pay cash, how much would you be willing to sell for?
- If your first buyer lowballs your offer and says “Take it or leave it.” what would you do?
- If your home has been on the market for months and your only buyer gives you a lowball offer, what would you do?
These final negotiations are the hardest part of closing the deal without an agent. Many properties for sale by owners either sit for months because the owners are unable to close the deals or end up selling the house at far too low a price because of inexperience in negotiating.
These are just a few problems that come with selling a house without an agent or a realtor. With diligence, patience and proper research, you might get lucky and sell your house at the same price you would have with a realtor.
But the process requires a level of understanding that comes with experience. If you are sure you can overcome these hurdles, go for it- with caution. Motivation and research can make up for experience and contacts if you’re willing to put in the work and take the risk. The decision, ultimately, is yours.
If you want to list your home but want the comfort of an expert by your side, we have a long list of the best real estate agents for you. FastExpert only accepts agents who are the best in their area, so you’re sure to be in good hands with our realtors. Enter your zip code and connect with an agent today!