15 Reasons Why NOT to List For Sale by Owner
In today’s hot seller's market it’s not a shock to hear about so many homeowners thinking about going FIZZBO. (For Sale by Owner). It’s common for people to think it’s easy, they can get top dollar or save on commission. Below is an outline of why many FSBOs fail and ultimately end up listing with a Realtor...and regrettably they left money on the table!
1. Owners underestimate the time it takes
Selling your home is a serious project and could be very costly. You will spend a ton of time trying to take those perfect pictures, writing the description and trying to figure out how to market the right way. You’ll also spend time showing the property, entertaining un-qualified buyers, and talking with Realtors who will not take you seriously. If you have the time, a creative side for photography and a bit of business savvy - FSBO might be worth a shot but it’s a full time job, you will wear many hats - prepare to allocate many hours to learn the trade.
2. Do you really know how to negotiate with various people?
Get ready to negotiate with many people. For example:
The buyer, wants the best possible deal.
The buyer’s agent, who legally and ethically represents the buyer’s best interest.
The buyer’s attorney
Home inspectors, working for the buyer, which are likely to find problems with the house
The appraiser, if the offer is less than the appraisal, the deal is likely dead unless you know the right tactics to use.
Without the help of experienced real estate agents, dealing with so many different parties alone is often a tough task for homeowners.
3. Do you know how to prepare a house for sale?
Many homeowners don’t know about the tasks that FSBOs should do before they list their home for sale. These usually include:
Declutter everything. Rooms, closets, etc.
Painting the rooms with a fresh coat of paint
Have necessary repairs done
Get the floors and carpets cleaned by professionals
Ensuring curb appeal of the home...clean up the weeds
Replacing light bulbs and outdated light fixtures
Because homes for sale by owners just have one chance to impress potential buyers, neglecting these home sale preparation tips often reduces the homeowners’ chances of selling the house.
4. Owners spend marketing dollars that don't work!
When you sell by owner you may think you’re saving money but in reality you’re often spending a lot of money up front with no guarantee of any return. Listing agents spend a calculated amount of money up front to make sure a listing sells and ultimately pays both you and them both fairly. Would you rather risk $1000’s of dollars with no guarantee of a return or let an agent take on that risk?
5. FSBO sellers are not taken seriously!
Many owners are just testing the market or seeing if they can get some ridiculous offer from a buyer, and that isn’t realistic. Usually FSBO’s are not taken seriously in the real estate market because they don’t see the value in representation by an agent.
6. Owners do not know how to screen potential buyers
FSBOs properties attract investors, low-ballers and unqualified buyers. They want to take advantage of your inexperience. What some owners think is a lot, an investor sees as a steal. Some sellers have no idea about the difference between prequalification and preapproval. No wonder they let unqualified buyers inspect the house and waste their time. Not knowing if a buyer has the ability to purchase the home acts as a big deterrent for homes for sale by owners.
7. Response time is a huge problem!
Handling questions from buyers on their listing and coordinating showing times are required to sell a home. But many sellers either aren’t able to handle such inquiries or don’t have the time and lose buyers.
Organizing showings is a tall task at times. In today’s world of instant response times, potential buyers and their agents want answers fast, they will not think twice before moving on to the next property if their questions are unanswered.
8. Stale bread is always half off...and so is your house!
Homeowners get the most money for their house in the first week of putting it on the market. The longer a home stays on the market, the less money people will be willing to offer for them.
If a seller tries FSBO before hiring an agent, the seller loses the biggest window of opportunity to get their home sold for the most amount of money possible. It eliminates buyers who have already viewed the home and might have made a reasonable offer — but have already moved on.
9. Failing to understand the contract procedures and LIABILITY
Real Estate contracts have timelines, clauses and contingencies like inspections, mortgages, etc. They are much more involved than just a purchase price. Certain parties are responsible for certain communications throughout the process and their are restrictions on whom should be speaking with whom. Any mistakes you make can cost you a lot of money, and people will look to exploit your mistakes.
10. Owners don’t know what to do with home inspection issues
Home inspections nearly always find some issues with home even when they are newer. The buyer requests problems be fixed or corrected before moving forward with the transaction.
However, many owners think that there is nothing wrong with their home, then refuse to fix the issues brought forward by inspections. As a result, the deal falls through.
11. Owners incorrectly price their homes
FSBOs often price their homes incorrectly because they lack the data and experience to do a proper Comparative Market Analysis. Pricing is set too high, which turn potential buyers off and the property goes stale and sits on the market for everyone to wonder what is wrong with the house. Price it to low and you convey something is wrong with the house or you're desperate.
12. FSBO homes lack exposure
In 2016 over 90% of buyers sourced their search of their home online or through a real estate agent. Homes for sale by owners are listed on a few websites sometimes, but there are many that don’t allow FSBOs to list their property. You might be ready to post your home on Facebook and Craigslist a few times, but you don’t have the ultimate home selling tool – the MLS. The multiple listing service can be accessed by licensed real estate agents, and is the way to get your home listed on sites like Realtor.com, Zillow, and Trulia. You want your home to be seen by as many buyers as possible to get the best price. It’s no surprise that homes sold via FSBO have seen a steady decline as online real estate has become the norm.
13. FSBOs fail to BULLETPROOF THE TRANSACTION!
After an offer is accepted, many things still need to be done prior to the closing. For example:
Confirm and follow up with the attorney(s) to approve contracts
Get the inspections completed within the contractual timeframe.
Get survey ordered.
Confirm buyer has obtained mortgage commitment.
Follow up on title work.
More...
So many sellers get taken to the clearners by professional real estate agents representing the buyers or a buyer that locks up their property for months, only to have the deal fall through! What a shame!
14. Cutting comission actually means less net profit!
Savvy buyers know you're trying to save on commission so they are discounting while the owner is pricing too high to start in most cases. This is why statistics will show homes listed with an agent will sell for more than FSBO. Think about it, if the buyer is discounting 6% and the owner is increasing by 6% that is 12%. If an agent charges 6%, you just netted 50% more profit. We will price your property to get the most money in the shortest time, that can mean 10-30% more net profit. Is that worth the 3% and all of your time?
15. Great buyer agents BOYCOTT YOU!
When you decide to sell your home yourself you are telling other agents that you don’t understand their value in a multi-billion dollar industry. Agents often see FSBO sellers as easy marks to negotiate against because they have the upper hand. They control the buyer/offer and can negotiate their own commission. They can also pick your property and price apart because they have the expertise to do so. They don’t need to worry about treating you unfairly because the chance of them dealing with you again is slim to none. More often than not they will simply ignore your listing altogether to avoid the hassle.
