Are you thinking about selling your home? Many homeowners at the beginning of their home sale journey ask themselves: Should I List with an Agent or attempt For Sale by Owner?
These days, with the abundance of information at our finger tips, it may seem that selling your home on your own would happen with ease. The thought of saving a few thousand dollars on selling your home might be enough to entice you to go it alone. When looking at the reasons why a home owner may want to sell their home without the assistance of a REALTOR, the only advantage we find is a potential savings of a small percentage of the home sale. This is the main reason why most people attempt the For Sale by Owner (FSBO) route. However, this is generally not without hurdles better managed by a professional. Since selling your home is something most of us will probably do once or twice in a lifetime, many people are uncomfortable going it alone and for good reason. Before making that important decision, here are some things to consider:
1) The savings are usually less than you think – The reality is that 87% of home buyers are using a REALTOR. In order to entice those agents to bring you a buyer for your home, you will likely still be paying the buyer’s agent a commission. In one fell swoop, you have just halved your envisioned savings. Ask yourself – Is it really worth saving this amount of the purchase price of your home in fees to NOT have personal guidance through this (many times, stressful) process?
2) Pricing correctly – The demise of many properties is that they do not time their entry to the market with a realistic selling price. Or, they find a buyer but the bank’s appraiser does not see eye to eye with the sales price. Sure, you may have access to Zillow or Trulia’s recent sales but properly comparing a home in line with what an appraiser may report on is better left to a professional. We analyze things such as location, layout, square footage, number of beds and bathrooms, year built, yard size, style of home, condition, and upgrades following standard guidelines.
3) Qualifying buyers before they enter your home- Good real estate agents will confirm the creditworthiness of your potential buyers and their ability to buy the home by interviewing their agent & lender. In the case of an all cash offer they would even verify funds. All of these steps ensure a deal is less likely to break down mid contract stage. Most sellers would rather not waste their time showing not-so-serious buyers, but don’t have the know-how to verify the people they are letting into their home or those they are considering entering into binding contracts with.
4) It’s a full time gig – A seller’s agent will save you time by evaluating local market and comparables, creating advertising materials, set up the inspections, manage phone calls from would be buyers, showing the property on various times (days, weekends, open houses), interviewing attorneys, managing inspections and appraisers, drawing up proper paperwork, negotiating and re-negotiating. Sound like a lot? Yes, it can be a full time, nights, and weekend job while your home is on the market.
5) Exposure to prospective buyers – If you are not using an agent to representing the sale of your home, you are likely not advertising your home using the Multiple Listing Service (MLS). MLS is the number one marketing tool for available homes. Additionally, within this system, only Agents can access reverse prospecting which allows them the ability to reach buyer’s agents who are working with clients searching for property that specifically meets your home’s criteria. This system could potentially match you with hundreds of actively looking buyers you might miss out on by being a FSBO!
6) Are you an internet and marketing guru? Recent studies have shown that 92% of buyers search for a home online. Beyond MLS, a good agent has a full scale strategy to promote the sale of your home to these folks utilizing tools such as Twitter, Facebook, Instagram, and their agent networks. They have bold yard signs, office window displays, and email distribution lists to all the right people. Maybe your particular market responds well to print or direct mailings as opposed to video and classifieds, and they utilize those avenues as well. Additionally, they may hold one or more open houses, possibly including weekday broker opens and commuter open houses. These collective strategies work together to ensure full exposure for your property.
7) Paperwork and lawsuits – Real Estate transactions CAN end up in legal battles. The paperwork required for sales has increased dramatically as mandatory industry disclosures and regulations have grown. This is by far one of the more difficult aspects of FSBO. It is imperative that you know which paperwork to use and which disclosures you must have, or you could be subject to legal action. This is one of the reasons the percentage of for sale by owners has dropped from 19% to 9% over the last 20 years (*). An experienced real estate agent deals with the same contracts and paperwork on a regular basis, and is familiar with how best to protect your sale and your interests.
8) The many people you will be negotiating with- Are you prepared to communicate on a professional level with the following individuals?
-The buyer who wants the best deal possible
-The buyer’s agent who solely represents the best interests of the buyer
-The buyer’s attorney, who solely represents the best interests of the buyer
-The home inspector, which is hired by the buyer and though they must remain unbiased, will almost always find some problems with your home.
-The appraiser (buyers lender) if there is a question of value
Remember – emotions must be kept out of business deals. In the above list, who is representing your interests? A seller’s agent can act as a buffer to ensure smooth communication.
9) You net MORE money when using an agent- Numbers don’t lie. Statistics show you will net more on the sale of your home when you sell with a REALTOR. According to the National Association of REALTORS recent buyer & seller profile study, FSBOs accounted for 8% of home sales in 2014. The typical FSBO home sold for $210,000 compared to $249,000 for agent-assisted home sales.
10) You will likely end up listing with a REALTOR – As you may now understand, it’s not as easy as it looks. Therefore, 89% of FSBOs will eventually list with a Realtor. If the average FSBO sale is $39,000 less than an agent assisted sale, are you still going to spend time, efforts and marketing dollars trying to sell it yourself? Fun fact- Colby Sambratto, the Founder of Forsalebyowner.com attempted to sell his home FSBO at a price of 2 million. After 180 days of no success, he decided to list it with a REALTOR. The agent he used was able to sell his home for $150,000 more than the original list price.
Here are a few more For Sale By Owner statistics
FSBO methods used to market home:
Yard sign: 42%
Friends, relatives, or neighbors: 32%
Online classified advertisements: 14%
Open house: 14%
For-sale-by-owner websites: 15%
Social networking websites (e.g. Facebook, Twitter, etc.): 15%
Multiple Listing Service (MLS) website: 10%
Print newspaper advertisement: 3%
Direct mail (flyers, postcards, etc.): 3%
None: Did not actively market home: 25%
Most difficult tasks for FSBO sellers:
Understanding and performing paperwork: 12%
Getting the right price: 6%
Preparing/fixing up home for sale: 6%
Selling within the planned length of time: 18%
Having enough time to devote to all aspects of the sale: 6%
In closing, hiring an agent can mean less stress and more money. A win-win for all!
Parkway Real Estate is holding a home selling seminar on March 9th at 6:30pm, where potential sellers can learn more about how to prepare themselves and their homes for sale. For more information or to RSVP, please reach us at (857) 400 – 9098.
Source: 2015 National Association of REALTORS® Profile of Home Buyers and Sellers