In the hot Treasure Valley real estate market, there are many people selling homes who believe doing a “For Sale by Owner” (FSBO) transaction will help them save money by not having to pay a REALTOR® to market their property. Some people are under the false belief that because this is a seller’s market, buyers will line up to buy their property.
Believe it or not, even in a hot real estate market, FSBOs can fail, wasting the seller’s time and sometimes costing them more money than if they used a REALTOR®.
Let’s explore this topic a little further.
Why FSBOs Fail
There are various reasons why doing a FSBO may not be worth the modest savings of not using a REALTOR®. Let’s take a look at some of the common mistakes and issues surrounding FSBO properties.
Not Preparing the Property
Using a knowledgeable real estate agent can help guide you through the listing process of your home. One aspect of listing a property is to make it ready for sale. Agents can make recommendations on removing unnecessary furniture, cleaning up clutter, guiding owners on what repairs to make to maximize return, staging, cleaning, etc.
Curb appeal will be crucial when selling a home, and using a REALTOR® to help you prepare the home can maximize your return.
Homeowners may think they understand the market and what similar homes are selling for or may have a particular figure in mind of what they want to sell their home for and consequently wind up overpricing it. Since they’re not plugged into the market like an agent is, they don’t have the understanding of inventory, market conditions, and supply and demand and then wonder why their home isn’t selling.
Lack of Marketing
Many people who try to sell their home on their own think that placing a sign in the yard and listing the property for sale in Zillow will be marketing enough to bring buyers in. The Multiple Listing Service, or MLS, that REALTORS® belongs to is a powerful marketing machine in its own right. Additionally, many agents have their own websites that connect directly to the MLS, showing new listings in real-time. Instead of putting all the eggs in one basket, working with a REALTOR® can increase the property’s exposure on not just one website but potentially thousands.
Presentation is important, so not having professionally done photos can also be detrimental to selling the home. Since people are scouring the Internet for properties, the first showing will happen online. As the adage goes, “you only have one chance to make a first impression,” and if your home’s photos aren’t staged appropriately and done by a professional, buyers may quickly move on to the next property that has more appeal.
No Showing Access
People who are shopping for a home are doing so on their terms and schedule. If you are selling your home on your own, you’re responsible for the follow-up and finding time to schedule showings. Many FSBOs do not use a secure and trackable lockbox system, giving unvetted strangers access to the property. And while most traditionally listed home showings occur without the homeowner present, FSBOs don’t generally have that luxury. As such, potential buyers may be turned off as they can’t envision themselves in the house.
Something else to keep in mind is that some health districts have specific protocols in place due to the COVID-19 pandemic. As a homeowner selling their own home, you have to adhere to those guidelines when showing the house. As tempting as it may be to have a free-for-all for viewing the property, that’s not a prudent idea.
Agents are trained on safety protocols and act as gatekeepers for showings, limiting the number of people in a house. They also can coordinate the showings, so you don’t have to, saving you time.
Dealing with Buyers
Follow-up is critically important when selling a home. Returning emails, texts, calls, etc., promptly is vital to ensuring a smooth transaction. Another problem is wasting time with people who aren’t genuinely interested. Being able to properly screen people is something real estate agents do on behalf of their clients. Is the person pre-qualified? Do they have a home to sell first? Those are some questions to ask before showing the property but seldom are by a FSBO seller.
Seller is Not a Professional Negotiator
While pricing the home is part of selling the house, many people working without an agent aren’t professional negotiators and can sometimes leave money on the table. Negotiating the purchase contract is part of the process. Is the correct amount of earnest money being collected? Does the seller need to stay in the home beyond closing for any reason? How much time does the buyer need to secure a mortgage? What contingencies and clauses need to be included?
Most homeowners aren’t going to be intimately familiar with real estate contracts and may find them confusing. Consequently, they’re not fully understanding what the agreement is holding them to and may overlook conditions that aren’t in their favor.
In the off chance that a bidding war does happen for a property, does a homeowner have the expertise to evaluate and truly understand each one?
An agent can help navigate the offers and show you the ones with the best terms.
Having Unrealistic Expectations
As we mentioned above, with “price,” many homeowners going it alone may have unrealistic expectations of the process. They might think that they don’t need to pay a commission to an agent who brings a buyer or that they don’t need a home inspection, etc.
Not Closing the Deal
If a FSBO successfully receives an offer, several things can throw a wrench in the process and cause the sale to fall through. Real estate has a specific order of events that need to transpire for the deal to take place. These actions will involve many different parties (e.g., title company, buyer’s mortgage company, home inspections, etc.) that need to be contacted and coordinated with at appropriate times. Missing a step in the process can delay or even cause the sale to fall through.
Net Less Money
Many homeowners who are selling their homes without an agent are doing so to save on paying out a commission. In this hot real estate market, it’s not uncommon for homes to be sold for thousands over the asking price. But those types of deals result from bidding wars thanks to many people wanting the same house. Those people find out about that home as a result of the marketing. And generally, the house is priced appropriately, causing the sale price to soar as people compete against one another.
You generally won’t have to worry about a bidding war if you do a FSBO.
The Last Word
As you can see, there are several reasons why you should use a REALTOR® when selling your home. Yes, you may wind up saving some money off commission payments, but the benefits and potential to capitalize even more on the investment far outweigh the modest savings.