6 Things to Consider BEFORE Attempting to Sell Your Home Yourself!
Congratulations on your decision to explore selling you home on your own. My intention for you is to help you make the best decision for you and your family. I believe every home owner should educate themselves on their options. I’ve been working with and consulting “Unrepresented Sellers” since 2005. I’ve seen a lot and I want to help you NET the most amount of money possible. Education is the highest and best use of your time.
We’ve all heard the phrase “Time IS Money” well, I’d like to add, experience is Money Saved and errors avoided. You don’t want to learn after you’ve lost $20-$30k that there was a better way or that something could have been avoided or that money was left on the table. I know from speaking with and tracking 100’s of FSBO’s over 16 years in my markets and comparing realtor sales and my own experience that doing this wrong can and will most likely cost an unprepared homeowner upwards of $20,000. I may be a bit biased because I’m writing this post/article but, this is also a great step in your process!
There are many benefits to working with a real estate professional when selling your house. During challenging times like the one we face today (COVID-19 Pandemic 2020), it becomes even more important to have an expert help guide you by managing and directing you through the process. If you’re considering selling on your own, known in the industry as a For Sale By Owner or FSBO (Fiz-Bow), please consider the following:
1. Your Health and Safety Is Your #1 Priority
During this pandemic, your family’s health & safety comes first. When you FSBO, it is incredibly difficult to control entry into your home. A real estate professional will have studied all the proper protocols, adapted and put in place within their business communication, marketing, tools, and systems to protect not only you and your belongings, but your family’s health and well-being too. From regulating the number of people in your home at one time to ensuring proper sanitation during and after a showing. My team facilitates virtual tours and video walk-throughs for buyers. Agents are equipped to follow the latest and ever changing industry standards recommended by the National Association of Realtors (NAR) to help protect you and your family.
2. A Powerful Online Strategy Is a Must to Attract a Buyer
Recent studies have shown that, even before COVID-19, 44% of all buyers first step was to search for their home online. Throughout the process, that number jumps to 93%. Today, those numbers have grown exponentially. The most cutting edge real estate agents have developed a strong professional Internet and Social Media strategy to promote the sale of your house and to attract buyers daily even before listing a property. We lead generate and prospect daily so we are not starting from a dead stop when we list your home. Have you created and implemented a social media presence to attract buyers?
3. There Are Too Many Negotiations
Here are just a few of the people you’ll need to negotiate with if you decide to FSBO:
Yourself, setting the right price, setting expectations, choosing to stay current with real estate and financial market conditions
The Buyer, who wants the best deal possible
The Buyers’ Agent, who solely represents the best interest of the buyer
The Buyers’Inspector companies, which work for the buyer and will almost always find challenges with the house
The Appraiser, if there is a question of value
As part of our training, agents are taught how to negotiate every aspect of the real estate transaction and how to mediate the emotions felt by buyers looking to make what is probably the single largest purchase of their lives.
4. You Won’t Know if Your Purchaser Is Qualified for a Mortgage
Having a buyer who wants to purchase your house is the first step. Making sure they can afford to buy it is just as important. Knowing where they are in the process and if they have the means to overcome any Underwriting requirements is priceless. As a FSBO, it’s nearly impossible to be financially involved or knowledgeable with the mortgage process or status of your buyer. A real estate professional is trained to ask the appropriate questions and, in most cases, will be intimately aware of the progress that’s being made toward a purchaser’s mortgage commitment level.
Q: How many levels of mortgage commitment are their?
A: 4 or 5 depending on the mortgage company and / or the type of financing the buyer has applied and is qualified for.
Further complicating the situation is how the current mortgage market is rapidly evolving because of the number of families out of work and in mortgage forbearance. A loan program that was there yesterday could be gone tomorrow. You need someone who is working with lenders every day to guarantee your buyer makes it to the closing table.
Q: What percentage of properties that go under contract never make it to closing?
A: The National Average can’t give an accurate picture so it varies and here is why:
a. Does the Purchaser have a contingent offer (need to sell their home before buying yours) this number is on the rise from 1.4% to 4.3% in just the past few years.
b. Home Inspections Reveal Major Problems
c. Cost of Repairs
d. Financing Falls Through
e. Appraisals Com in Low
f. Clouded Title or Title Searches Reveal Significant Issues
5. FSBOing Has Become More Difficult from a Legal Standpoint
The documentation involved in the selling process has increased dramatically as more and more disclosures and regulations have become mandatory. In an increasingly litigious society, the agent acts as a third-party to help the seller, and buyer, avoid legal jeopardy. This is one of the major reasons why the percentage of people FSBOing has dropped from 19% to 8% over the last 20ish years.
6. You Net More Money When Using an Agent
Many homeowners believe they’ll save the real estate commission by selling on their own. Realize that the main reason buyers look at FSBOs is because they also believe they can save the real estate agent’s commission. The seller and buyer can’t both save the commission.
A study by Collateral Analytics revealed that FSBO’s don’t actually save anything by forgoing the help of an agent. In many cases, the seller may even net less money from the sale. The study found the difference in price between a FSBO and an agent-listed home was an average of 6%. One of the main reasons for the price difference is effective exposure:
“Properties listed with a brokerage that is a member of the local MLS will be listed online with all other participating broker websites and consumer services, marketing the home to a much much larger buyer population. Those MLS properties generally offer fair compensation to agents who represent buyers, which gives them incentive to show and sell the property and also potentially expand the buyer pool even more.”
The more buyers that view a home, the greater the chance a bidding war will take place. The more agents who have access to the home, the more buyers it is exposed to.
Listing on your own leaves you to manage the entire transaction yourself. There are 38 areas that cause real estate transactions to fail. Why take the risk when you can hire an agent and still net the same amount of money? Before you decide to take on the challenge of selling your house alone, speak with a real estate professional to discuss your options.
For Sale By Owner (FSBO) Statistics – National Averages
- FSBOs accounted for 11% of home sales in 2018 and for 9.1% of home sales in 2019.
- The typical FSBO home sold for $200,000 compared to $280,000 for agent-assisted home sales.
FSBO methods used to market their homes:
- None: Did not actively market home: 36%
- Yard sign: 31%
- Open house: 24%
- Friends, relatives, or neighbors: 21%
- Up Front Flat Rate Agent – Multiple Listing Service (MLS) website: 20%
- Online classified advertisements: 13%
- Social networking websites (e.g. Facebook, Twitter, etc.): 11%
- For-sale-by-owner websites: 5%
- Direct mail (flyers, postcards, etc.): 4%
- Video: 1%
- Print newspaper advertisement: less than 1%
Most difficult tasks for FSBO sellers:
- Getting the right price: 19%
- Preparing/fixing up home for sale: 13%
- Selling within the planned length of time: 7%
- Having enough time to devote to all aspects of the sale: 5%
- Understanding and performing paperwork: 3%
Source: 2019 National Association of REALTORS® Profile of Home Buyers and Sellers