Many people think they can save money and sell their house easily on their own thanks to FSBO websites. These websites help you list your house for sale on your own instead of listing through an agent. Your home will get listed on, people will contact you, see your house and you’ll find a buyer.
Sounds simple right?
The benefit is that you’d save about 6% in real estate agent commissions from the sale of your home. So why do most people still hire agents rather than sell the house themselves? The answer is that selling a home is complicated.
In this article, I’ll be going over what FSBO means. As well as why it may not be as good as it sounds. Let’s get started!
What does FSBO mean?
FSBO stands for For Sale By Owner. This is a way to list your home without the help of an agent or brokerage. People will do this if they are hesitant to pay a real estate agent’s commission. However, the benefits of having a real estate agent outweigh the cost of not having one.
Does FSBO really work?
To put it plainly, no, FSBO does not work out for most people.
Unless you are a real estate agent yourself, listing your home on your own can cost you more than if you just hired and agent.
While you may save the 6% commission you would have paid a real estate agent, you’re likely to sell your home for less than 94% of the price. The process is more time consuming, you could make legal missteps, and you may make miss out on great opportunities.
Reasons FSBO Home Sellers Fail
Selling a house is not as easy as selling a car. It’s an extensive process that demands a lot of knowledge, patience and time.
First, you have to familiarize yourself with all the relevant legalities that go into preparing the contract for the sale of your house. This is crucial for home sellers without an agent. You will have to hire a real estate attorney for that or else you could get yourself into legal trouble quickly.
If you choose to list your home FSBO, you should consult a real estate attorney before listing your house for sale.
If you are listing your home on your own, you are effectively the agent of your own house. Make sure to be sure to become a good one. There are plenty of acronyms and other terms to be aware of in the real estate industry.
Research everything, from the FSBO listing websites to the cost or repairs demanded by potential home buyers. Try to reach as many potential home buyers as you can using social media and your personal contacts.
Not Knowing the Value of Your Property
People who list their home on their own often make a huge mistake before they even get to show their home to potential buyers.
Everyone is emotionally attached to their home. This makes it harder to objectively price the property and understand its value from the buyer’s point of view. Buyers will point out problems in your home that you don’t even consider noteworthy. And they will negotiate for a lower price.
Pricing the house accurately is crucial. When an agent helps you price a house, they do it with a wealth of experience backing their numbers. They’ll account for the state of the real estate market and a variety of factors that will influence the value of your home and the time it takes to sell.
If you are doing it yourself, you must research the current housing market trends. It helps to find the median price of a property in your neighborhood and prepare a realistic estimate of the necessary repairs.
This is something you will have to reevaluate after every potential client’s visit. It is also important to stay objective and not get emotional when buyers seem to undervalue your beloved home.
Know that in most cases, properties sold through a realtor sell for a much higher price than the ones sold by the owners. FSBO owners typically sell their home for less than 94% of the price they would have sold with a real estate agent, so the safer option is to hire a realtor to help you sell.
Bad Marketing and Open Houses
Even though the FSBO sites are a great way to place your house in a listing, most buyers stray away from these listings.
A great way to advertise your home is through hosting open houses through your social media accounts. Even still, this may not attract any people to view your home besides your friends and family. The competition for ads is fierce, and you don’t want to burn a hole in your wallet.
If you list your house on your own, you should always be ready to show your house. It would drastically shrink the list of potential home buyers if you are only available to show your house on weekends or after working hours. Because you already have a smaller list of potential buyers because of your FSBO listing, you can’t afford to miss any showings for potential buyers.
When you consider listing your house as FSBO, you will have to be positive, enthusiastic and energetic when you show your house to strangers. It is typical that viewers will complain about the worn staircases, creaky doors, and other quirks about your house they find undesirable.
If you work all day and have to do showings right after, you have to ask yourself, can you handle that after a hard day of work?
For most people, it’s better to let a realtor field buyer’s complaints and market your home so that you can sleep easy and keep your free time free.
Not Knowing how to Negotiate
The most tricky and most important part of selling a home is undoubtedly the final negotiations.
Negotiating is a skill that many people feel they are intuitively good at. However, a lot of people overestimate their ability to facilitate a good negotiation- especially when negotiating terms they’ve never handle
d before.
Negotiating is a skill that takes practice. Negotiating terms for a real estate sale takes even more. There are so many variables to take into account, and a skilled agent would be a pro.
Consider the following if you’re thinking about listing your home as FSBO:
- How much lower than the listing price would you be willing to sell for?
- Someone is willing to buy the house at your price, but is not willing to put in the earnest money. What would you do?
- The buyer hands you a list of thousands of dollars worth of repairs as part of the contract, can you renegotiate?
- Do you know what a rent-back agreement is and how much that is worth to you?
- Would you sell to someone who isn’t a pre-approved buyer? Would your price be different for a buyer who isn’t pre-approved?
- If someone was willing to pay cash, how much would you be willing to sell for?
- Your first buyer lowballs your offer and says “Take it or leave it.” what would you do?
- How would you handle a lowball offer if you aren’t getting interested buyers?
These final negotiations are the hardest part of closing the deal without an agent. Many properties for sale by owners tend to sit for months because the owners are unable to close deals. Or they can end up selling the house at far too low a price because of inexperience in negotiating.
Should You Try FSBO?
These are just a few problems that come with selling a house without an agent or a realtor.
With diligence, patience and proper research, you might get lucky and sell your house at the same price you would have with a realtor.
The process requires a level of understanding that comes with experience. If you are sure you can overcome these hurdles, go for it- with caution. While I recommend you stay away from FSBO and trust an agent, the decision, ultimately, is yours.
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