Homeowners trying to sell their homes on their own — for-sale-by-owners (FSBOs) have many reasons why they want to sell on their own. The reasons usually end up being…
- They think they can save the Realtor commission.
- They don’t think they need the help of a professional.
- They think it is relatively easy to do.
If these reasons were true there would be no need for a Realtor and everyone would just sell their homes themselves. Data collected by the National Association of Realtors has shown a dramatic drop the amount of homes sold by FSBOs in last ten years. In 2005 13% of the homes sold were FSBO compared to only 8% in 2015! Of that 8%, half of the sales were inter-family sales, that means only 4% actually sold their home themselves! Studies of the prices have also shown that the average homeowner will net an extra 13-16% with the help of a Realtor.
There are lots of reasons why FSBOs are unable to sell their home themselves but mainly it is under estimating the amount of time and work involved in the process. Here is just some of the work that needs to be done.
- Having the time!
- Most FSBOs already have full or part time jobs and family commitments that limit the amount of time they can dedicate to process.
- Their schedule doesn’t allow them to show the home on the buyers schedule so the buyer moves on.
- They don’t respond to buyer’s inquiries or questions in a timely manner. In today’s world Buyers want the info instantly or they move on.
2. Lack of exposure
FSBOs are often listed on a few websites, and rarely update the sites to keep them fresh. Over 90% of Buyers start their search online and every search engine has its own criteria and algorithms to keep content at the top of search results. FSBOs end up getting buried on back pages andare unable to give their homes adequate exposure in the market.
However, when sellers hire a real estate agent, the professional can give a property comprehensive online exposure. The agent even has tools to extend the exposure further, which FSBOs don’t have.
3. Negotiating with multiple parties.
- The buyer, seeking the best possible deal.
- The buyer’s agent, who represents the buyer’s best interest.
- Home inspection companies, working for the buyer, which are likely to find some problem or the other with the house.
- The appraiser, if the home’s value needs to be assessed.
Without the help of experienced real estate agents, dealing with so many different parties alone is often a tough task for homeowners.
4. Qualifying buyers
FSBOs often have no idea about the difference between prequalification and preapproval, and they don’t know that buyers should ideally be preapproved or at least prequalified. They end up letting unqualified buyers inspect the house and waste their precious time. Not knowing if a buyer has the ability to purchase the home acts as a big deterrent for homes for sale by owners.
5. Understanding stats and “Market time”
Studies show homeowners get the most money for their homes in the first week of putting the property on the market, the longer the “market time” the less the home sells for. The longer a property sits “on the market” people start to the age old question… “What’s wrong with it?” The longer FSBO homes stay on the market, the less money people will be willing to offer for them.
6. Contract preparation.
The contract to buy a home involves much more than just the price offered by the buyer. Also, real estate contracts have lots of timelines and clauses and involve several common contract contingencies, such as inspections and mortgages.
Many FSBOs don’t have a firm understanding of such contracts and might not know what they are agreeing to or how to negotiate particular parts of the contract.
7. Handle the home inspection findings
Home inspections almost always find some issues with houses even when they are relatively newer structures. In such cases, the buyer requests problems be fixed or corrected before moving forward with the transaction.
However, many FSBOs believe that there is nothing wrong with their home, which is why they refuse to address the issues brought forward by home inspections. As a result, the offer falls through.
8. The closing process
Even after an offer is accepted, many things still need to be done prior to the closing.
- Get the inspections completed within the allotted time.
- Ensure the attorney(s) approve contracts.
- Check if the buyer has obtained written mortgage commitment.
- Find out if title work is reviewed.
- Utilities switched
- Final walk thru
If you are thinking of selling your home take a moment and ask yourself “Do I have the time and knowledge to sell my most important asset?” I would urge you to take the time to speak to a Realtor about your options and the value they can bring to the process. Remember a Realtor markets and tries to sell your home on their own money and don’t get paid unless you accept an offer you are comfortable with!