In a world full of DIY advocates – via posts, videos and pages, we have all been given a spark of confidence to do things on our own that we would have NEVER tried in the past! They give us that expert how-to advice and how NOT to from experience and personal fails and redo’s. Why is this new phenomena catching on? Saving money and time alone have always been my driving factor! And about 50% of the time, I may come up with a satisfactory rendition of what I was trying for, or I’ll fix the issue that was causing me to google the How-To in the first place. That seems worth it, right? Well, for certain crafts or baked goods, or that pesky running toilet or leaky sink, it could be. But would you test out your DIY skills on a larger scale? Believe it or not, some people today are and it’s on the biggest investment they will ever make in their lifetime. Their home.
For Sale By Owner used to be a common practice for homeowners years and years ago. But as the financial market and investments have grown to what they have today, is that the best idea? Contracts are no longer a handshake. People can’t be held to their word these days. Would you be comfortable writing up a legally binding contract on your most valuable asset, being held to every word, paragraph and change made? Dates missed can hold you liable or in default as well as out time to make necessary changes that could have been negotiated. Real Estate agents are licensed after taking mandatory classes on all of these details – big and small. Is the average 6% commission you would pay them to sell your house for you worth it? Here, I’m going to tell you why I think it is!
1. The “Saving Commission” myth.
Selling your home FSBO actually doesn’t save you money. It can actually cost you money. Did you know most FSBO are listed for LESS than what the market of similar properties are selling? The average home sold by a realtor is $230,000 vs $180,000 on like properties sold as FSBO. Real estate agents will price the home according to the market and bring buyers quicker – which can in combination mean 10-30% more in net profit. So, is it worth spending on average 6% of your profit? Seems like an easy decision.
A person who decides to do FSBO will spend a large amount of time staging the home, trying to take the perfect pictures, marketing on their own on the various sites available, showing the property, etc. The average time a FSBO is on the market is much longer than a house listed with a Realtor from day one. Why? Most serious buyers will not look at a FSBO. Only 18% of buyers looking for homes will look at a private listing, and they are the bargain shoppers. They want a discount if agents are not involved, and expect you to share the cost savings with them, on top of a better price. The average homeowner loses 9% or more of what the home would have sold for if listed with an agent. That means 82% of buyers are cut out of your buying pool. And what do you think happens after that time lapses with no sale? You end up listing with an agent anyway. Only 7% of FSBO homes actually sold as a FSBO in 2017.
3. No Cost upfront
People assume there must be some upfront cost to sign and list with a Realtor. Not true! In reality, the real estate agent is paying to sell your house! All agents are required to join and pay dues for the ability to list homes in specific counties, areas, etc. Also, if professional pictures and drone or video tours are done, the agent is paying for this out of pocket, whether they sell your house or not!
Mistakes can cost you greatly when it comes to a contract to sell. Assuming all buyers are a novice at this as well is just as risky. Imagine if an investor comes in, trying to low ball the offer and push on specific items included, dates for transfer, etc. A real estate agent is educated in these practices. They also have E&O insurance, known as Errors & Omissions insurance, which can protect them if mistakes are made in a contract. Remember, a contract is legally binding once executed and agreed upon by both parties.
The perception of FSBO homes is that the seller isn’t as serious as if they had actually listed with an agent. Perhaps its just a test to see if there is any interest at this time. Or people assume the price is over-exaggerated and unreasonable.
That’s some food for thought! If you or someone you know is considering selling, consider the pro’s and con’s! Is this an undertaking you are ready to make? If you are considering an agent, call me! It’s just a conversation! I believe once we talk, you will see that knowledge and professionalism will get your home sold, AND at the price you want.
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