5 Huge Reasons FSBO – For Sale By Owner – is a Disastrous Idea
Some people truly believe – initially anyway – that if they skip the standard initial first step in the home selling process – hiring a real estate agent – they will save themselves tons of money. That assumption is, to put it bluntly, completely wrong.
Now, we know what you’re thinking. You would say that you’re real estate agents. True, but as such it’s our responsibility, and that of every other real estate agent, to look out for home sellers, even the ones we haven’t met yet. That’s why we have put together this honest list of just five of the biggest reasons why trying to sell your home ‘FSBO’ – for sale by owner – is such a losing proposition.
The way real estate is sold and marketed has changed a lot, especially over the last ten years or so, and it’s still changing all the time. A for sale sign in the yard – all that most FSBO sellers really depend on – just no longer cuts it. Most people now begin their home search online, looking for listings that are accurate, to the point and, possibly most importantly, have great photos (and increasingly videos too.) If you work with a good real estate pro they will help guide you through all of that – and do most of the work for you. If you are trying to go it alone attempting to market your home yourself is almost certainly going to be a costly and frustrating experience.
Pricing your home right is key to a successful home sale, no matter what the current state of the market. You can look up home sales online and try do figure it out yourself, but do you really have the skills? The majority of FSBO sellers don’t know the real and current market value of their home, don’t understand market reports and simply don’t have the experience to price their home correctly.
Because of this, according to the Canadian Real Estate Association, FSBOs lost about 16 percent of the sales price with a median selling price of $310,000 while agent-assisted homes sales averaged $249,000. And if they happened to sell the home to someone they knew, which many FSBOs do, as the owner’s marketing options are limited, the median price dropped to $251,900, because, well, you know, Fred and Sue are pals, and they expected ‘a deal’.
The Legal Stuff
There is a lot of legal paperwork that comes along with a sale. You can hire a lawyer to help you through it, but that can be problematic for a number of reasons. The first is cost. Have you checked hourly rates for lawyers recently? They don’t come cheap and a lot of the work you’ll need them to do is stuff a real estate agent would have done for you. The second is something that many people don’t know; liability issues.
You see, attorneys can close a real estate transaction, but they don’t carry errors and omissions (E&O) insurance. What’s that? Well, let’s say that Sue claimed her kitchen floors were hardwood. Except the buyers discover they are actually a cheaper wood veneer. The chances are good that Sue is going to pay the price for that. Had she been working with a real estate agent they either would have caught the white lie or covered it with E&O insurance.
You can’t sell a home unless you show it to potential buyers. And potential buyers like to home shop on their own schedule. If they happen to have a free Wednesday afternoon, they will want to see homes on that afternoon. Is your boss going to be OK with you leaving to do that? And if you adopt a ‘show when you can’ policy, and limit viewings to weekends you will lose out on potential buyers and you’ll also find that your free time is gone.
FSBO sellers are prime targets for scammers, and we’ve heard about some real doozies. They’ve included fraudulent loan documents, faked mortgage pre-approvals, bogus negative inspection reports, even bad check deposits. If you attempt to sell your home yourself you are by yourself. There is no experienced help at hand. Most real estate agents have almost seen it all and can spot the signs of a scam fast.
Finding the Right Real Estate Agent
Hopefully we’ve convinced you that working with a real estate agent is the best way to go. But what should you look for when choosing one? Aron recently covered this very topic in our new talk series. Check out what he had to say.