Many professionals in different industries train and study for years and years. Surgeons, Dentists, Lawyers, Engineers, and professional tradesmen all require extensive training. When polling home owners, 10 out of 10 said they would not want their dentist performing electrical work, or their plumber performing a root canal. In the judicial system, having a professional representative is so important that one will be given to you if you can not afford one. Many judges will not allow for individuals to represent themselves in their courtroom. As the saying goes, “show me a person who is a personal representative, and I will show you a fool,” yet, selling a home is the single most important and expensive transaction that 99% of people will make. Why would you leave this to a non professional?
Here are our Top 10 reasons why selling your home For Sale By Owner (FSBO) is a BAD idea.
The paperwork involved in selling and buying a home has increased dramatically as industry disclosures and regulations have become mandatory. This is one of the reasons that the percentage of people FSBOing has dropped from 20% to 9% over the last 10 years. Other reasons include:
Understanding & performing paperwork: 18%
Getting the right price: 13%
Preparing/fixing up the home for sale: 12%
Helping buyers obtain financing: 3%
Attracting potential buyers: 3%
Selling within the planned length of time: 7%
Having enough time to devote to all aspects of the sale: 6%
9. The “I’m smarter than you mentality”
Selling your home as a FSBO often creates a win-lose situation for someone (too often the sellers). Because you are representing yourself, often times this breeds situations where one party will attempt to take advantage of the other. Even if you have sales experience, you most likely do not have specialized experience negotiating a home sale. It is not like going to the used car lot and sitting for five hours with the finance manager to negotiate and close the deal on your new car. Additionally, many smart buyers will still use an agent. If so, the buyer’s agent does have negotiation experience, so he/she is more likely to win the negotiation, meaning less money in your pocket.
Sellers who go solo also typically are not familiar with local customs or market conditions.
“Agents know the pulse of the market and what’s driving demand, which gives them an advantage by knowing what terms are worth negotiating for and which are worth letting the other party win,” says Rob McGarty, co-founder and designated broker with Surefield, a residential real-estate brokerage headquartered in Seattle. “Also, agents know the local customs for selling a home, such as whether the buyer or the seller typically pays fees such as transfer taxes and closing costs,” Gonzalez says.
“An experienced selling agent may have negotiated hundreds of home purchases,” Agent Kean says. “We know all the games, the warning signs of a nervous or disingenuous buyer.”
8. The “Bring me Buyer and I will pay you a commission” line DOES NOT WORK
Oftentimes homeowners will say to agents who are attempting to educate them on the home selling process; “bring me a buyer and I will pay you a commission.” Buyer’s Agents don’t like to show FSBO homes because they are often overpriced, poorly staged, and it’s more difficult to schedule showings with an owner than a seller’s agent. Buyer’s Agents also avoid showing FSBO homes because many times they know they aren’t going to be fairly compensated. This means a large pool of potential buyers won’t have access to your home, and you will miss out on more opportunities to sell your home. Instead, Buyer’s Agents will show homes listed in the MLS that they know, contractually, they will get compensated for, and how much they will be compensated up front.
7. You can’t see what’s wrong with your home
Agents are experts in what makes homes sell. They can walk through your home with you and point out changes you need to make to attract buyers and get the best offers. They can see flaws you’re oblivious to because you see them every day – or because you simply don’t view them as flaws. They can also help you determine which feedback from potential buyers you should act on after you put your home on the market to improve its chances of selling.
“Anyone who’s determined to sell their own home should hire an interior designer or property stager to assess the current condition and market appeal of the home,” Kean says. “All sellers need to hire a professional cleaning service to give a home a deep cleaning before putting it on the market. A good cleaning will help remove any distinct odors such as pets that the inhabitants can’t smell since they live with it every day.”
6.You are not a negotiating expert (It can be tricky and awkward for you)
Not only are you inexperienced, you’re likely to be emotional about the process, and without your own agent to point out when you’re being irrational, you’re more likely to make poor decisions. According to Agent Kean, an agent can turn an emotionally charged inappropriate response from an offended seller, into the following response, “The seller has declined your initial request, but has made the following counteroffer.” This can be the difference between a sale or more time on market.
Here is a list of some of the people with whom you must be prepared to negotiate if you decide to FSBO.
The buyer who wants the best deal possible
The buyer’s agent who solely represents the best interest of the buyer
The buyer’s attorney (in some parts of the country)
The home inspection companies which work for the buyer and will almost always find some problems with the house
The appraiser if there is a question of value
Your bank in the case of a short sale
Are you prepared to negotiate with everyone?
5. You put yourself at risk of being sued.
Are you aware of Federal and State laws and disclosures that you must follow as a For Sale by Owner?
Do you know what to do if your home does not appraise for the price that you have sold it for?
A lot of legal paperwork is involved in a home sale, and it needs to be completed correctly by an expert. One of the most important items is the Sellers Disclosure “A seller of real estate has an affirmative duty to disclose any fact that materially affects the value or desirability of the property,” says Matthew Reischer, an attorney and CEO of legaladvise.com. The seller can be held liable for fraud, negligence, or breach of contract if he/she does not disclose properly. “The issue of whether a fact is material or not is generally established in the case law of the state in which you live,” he says.
Unless you’re a real-estate attorney, your agent probably knows more about disclosure laws than you do. If you fail to disclose a hazard, nuisance, or defect and the buyer comes back to you after they’ve moved in and found a problem, they could sue you. Agents can make mistakes, too, but they have professional errors-and-omissions insurance to protect themselves and to give the buyer recourse so the buyer may not need to pursue the seller for damages.
4. Too Little Resources to Show and Market the Home
Sellers can often underestimate the work that goes into marketing a home. Marketing a home successfully starts with taking the highest quality pictures with a professional camera to ensure that the home receives maximum exposure. Another absolute must for marketing a home is including an Interactive Floor Plan so buyers can visualize how the rooms in your home are arranged. Reverse prospecting is another effective marketing strategy that only Real Estate Agents can utilize. MLS and many subscription based real estate databases allow you to push the home out to thousands of agents that have qualified buyers searching for a home like yours. Using social media channels is a valuable marketing tactic that gives the home even more exposure. Taking pictures of the home, putting up signs, creating ads online and in print, staging the home, writing descriptions, placing listings online, arranging and participating in open houses, and working with buyers all takes time and expertise. It’s a Real Estate Agent’s full time job to take care of all of these tasks as well as negotiate the offer so you will get the most money for your home.
Not only do FSBOs empirically take longer to sell, 20% of them end up listing with a Realtor on the MLS which converts to average of 68 days longer on the market than Realtor properties. Time is money! For all of the reasons here, and many others not listed, it costs sellers on average $6,500 more to sell on their own due to more on market time alone!
FSBO signs invite strangers to come to your door at anytime and relaxes the natural vigilance of your neighbors regarding strangers on your property. When a FSBO home is listed, the neighbors and people passing by who were not thinking of purchasing a home are likely to be the traffic flowing in and out of your home. Some people may check out your home for the following reasons: to truly purchase it, to compare your home with theirs, case the place, or see how you live. Using a realtor reflects the potential buyer(s) have been identified, more than likely prequalified, and serious about buying a home, and is safer than you showing your home to John Doe or Jane Doe. Remember, most buyers will not share their financial situation with you since it can be used as leverage against them.
The most important things are safety and getting qualified buyers to view your home. Some sellers waste a lot of time showing a home to a buyer only to find out they don’t have the financing in order to purchase the home. A Real Estate agent will screen buyers before they view your home and will only show your home to qualified buyers.
2. Saving the commission (for a Dramatic loss of money)
Many homeowners believe that they will save the real estate commission by selling on their own. What they do not realize is that the main reason buyers look at FSBOs is because they also believe they can get a better deal than market homes. The very first thing a buyer WILL DO is take your list price and DEDUCT the real estate commission! The seller and buyer can’t both save the commission. Most buyers of a FSBOs will calculate their starting offer 8%-12% below the asking price, even if their home is in pristine condition. Then they will price reduce for flaws from there, and if they are a strong negotiator, can purchase the home anywhere from 10%-20% off of list! This leaves a FSBO in a precarious situation since they wanted to save 5%-7% realtor commission, but they end up selling the home for MUCH, MUCH LESS.
Studies have shown that the typical house sold by the homeowner sells for $184,000 while the typical house sold by an agent sells for $230,000. This doesn’t mean that an agent can get $46,000 more for your home, because this study also shows that people are more likely to FSBO in markets with lower price points. However, it does show that selling on your own might not make sense.
1. The CEO of BuyOwner.com listed his home with a REALTOR
The longtime chief executive of BuyOwner.com built a successful business in Florida and Georgia, helping people sell homes without a professional Realtor. Al Bennati, CEO of BuyOwner, is selling this house on St. Pete Beach. NOT USING BUYOWNER.COM. Al Bennati has listed an estate on St. Petersburg Beach for $3.78 million with Coldwell Banker agent Donna Miller. See the whole story at http://www.heraldtribune.com/article/20140515/ARTICLE/305159993?tc=ar
This is a slap in the face! He is smarter than all of his clients! GET A REALTOR TODAY
Selling your home will likely be one of the biggest transactions of your life. You can try to do it alone to save money, but hiring an agent has many advantages. Crown Realty can get broader exposure for your property, help you negotiate a better deal, dedicate more time to your sale, and help keep your emotions from sabotaging the sale. Our agent brings expertise, which few home sellers have, to a complex transaction with many financial and legal pitfalls.
Before you decide to take on the challenges of selling your house on your own, Call us today so we can strategically market your home to sell quickly for the most amount of money.