Is Selling Your Home For Sale by Owner Ever a Good Idea?
So you’ve heard that the real estate market your home is located in is one that is considered hot right now. Homes are selling and relatively quickly too. So if it’s an ‘easy sell’, as this seems to suggest, why not try saving some of the profits from your home sale by cutting out an agent commission and selling it yourself?
For sale by owner can sound like a good idea. Some people – a very small percentage of those that try – do pull it off. And if you think you’ve got the chops to navigate your way through a real estate transaction, more power to you. But first, lets take a look at the most common problems that pop up when you list your home For Sale By Owner.
Will You Really Save Money?
Avoiding paying a real estate agent’s commission is usually the biggest reason people consider going the FSBO route. And that, in many ways, is understandable, we all like to save money. But many FSBO sellers don’t actually do that at all.
One big problem is that buyers know the seller isn’t going to be paying a commission to an agent, so they often make a lower offer based on that knowledge. In a home sale the final sale price, and who pays for any commission, a home warranty and closing costs are all negotiable. Sellers without an agent need to be savvy in order to come out on top and in most cases they don’t. On average, in 2015, the average For Sale By Owner home sold for $210,000 versus $249,000 for a home sold by a real estate agent. And don’t forget, most potential buyers WILL have an agent, so you may end up having to pay some commission after all.
Do You Have the Paperwork Smarts?
A home sale is not a transaction made in back alley in used bank notes. It’s a pretty complex process that involves far more paperwork than any homeseller realises until they actually go through a home sale for the first time. All too often an FSBO sale runs into trouble because, despite the time they spent reading articles and real estate guides and watching YouTube instructional videos, the seller simply does not understand what needs to be done. And often, at this point they have a choice, lose the deal, take a lower price or bite the bullet and call in an agent to help.
Do You Have the Time and Patience?
OK, you’re confident in your ability to navigate the legalities of a sale. But do you have the time and patience to navigate through it? Imagine this; you’re curled up on the couch watching TV, and there’s a knock at the door from a potential buyer (or maybe just a nosey neighbor?). Is it safe? Is it legitimate? How would you know? Should you open up? Realtors have systems in place that vet buyers before they ever show them a single home – including their ability to pay –
And it’s not just ‘stranger danger’ that’s a problem. Home buyers care very little for a home seller’s schedule. They only have, let’s say, Saturday afternoons and Sunday mornings free to shop for a home. So that’s when they want to be accommodated. That means that whatever plans you had for the weekend have to go out of the window. And that may happen a lot. And will your boss really keep giving you afternoons off so you can rush home to show to a last minute caller?
Do You Know How to Spot a Scam?
Or at least when you are being taken advantage of? Seasoned real estate investors are often very drawn to FSBO properties because in their minds often that For Sale By Owner sign actually reads “Hi. I’m gullible and in over my head”. And they take advantage of that fact. These buyers – and others – know they may be able to leverage a better price and or more incentives for the home because the seller often lacks the skills and knowledge to negotiate properly. And do they feel bad about it? No, not really, it’s just the name of the game.
Going back to the original point, if you feel you do have what it takes to sell your own home, I wish you luck. But here’s one last stat for you. On average 7 out of 10 who attempt an FSBO end up hiring an agent anyway, because it all just becomes too much. So if you really do want a great price and a quick sale working with an agent right from the very start really is the best way to go.