Saturday, August 19, 2023 / by Amy Brown
Why selling FSBO is actually going to lose you money
In a time when costs are running high but you need to sell, you may be intrigued by selling your house yourself...after all, how hard can it be? Put it on Zillow, take the pictures with my phone, wait for the tsunami of buyers and save 6%!
According to the National Association of Realtors, homes sold FSBO (for sale by owner) sell for 25-33% LESS than realtor assisted sales!!!
Here's why...
1. Buyers work with AGENTS
It is FREE for a buyer to work with an agent and who has better access and the most up-to-date knowledge of what's on or coming on the market than a realtor. Put yourself in the buyer's position, if you wanted to purchase a home for the best price, in great condition, the right location, and have someone transact the deal for you who is an expert and will take care of your interests, wouldn't you choose to work with an agent?
Of course you would! There's no risk to you and only benefits.
The largest pool of buyers are going to be represented by an agent, so while you may be trying to save 6% on commissions, more than likely your buyer is going to come from an agent and they are going to ask you for 3% anyway.
IN ORDER TO SELL A PRODUCT, YOU HAVE TO HAVE INTERESTED CUSTOMERS.
2. FSBO homes are notorious for receiving lowball and requests for seller financing from unqualified buyers.
FSBO homes are a target for buyers with little to no credit or cash wholesalers. They prey on your inexperience in the industry to present a lowball offer, knowing that since you aren't paying commissions and aren't represented by someone who is going to warn you against their offer, that you might be tempted to take it. Also, since FSBO homes tend to stay on the market 4X longer than an agent assisted sale, buyers are relying on seller fatigue. This is when you have waited for as long as you could, have had no offers of real interest, and now just want to sell to whomever.
Agents pre-qualify their buyers BEFORE they ever get into the car to look at homes. They pre-qualify them through proof of funds letters or statements of pre-qualification from their mortgage lender. They KNOW that their client has the funds to close the deal...do you?
3. It takes longer to sell FSBO then it does to sell through an agent which means HIGHER CARRYING COSTS.
The reason why it takes longer to sell is because most FSBO sellers price their home according to what they want to receive and not what the current market value is.
There is actually a pricing strategy that realtors perform in order to create a more energy in the buyer pool, inciting a feeling of urgency, and propelling a sale forward in a shorter amount of time. Also, realtors know what the market will bear meaning what a buyer is going to be willing to pay. Sometimes that does not align with what you need, so keep in mind that market metrics matter, and you need to know what they are and how to analyze them in order to know if you have priced your home correctly. In today's market, if you have't had any action within the first 7 days, then you are probably too high.
In addition, every month that your home sits empty you are still having to pay for utilities, a mortgage, homeowner's association fees, and taxes. In today's market it takes an agent assisted home sale 7-21 days to get under contract and then another 21-30 days to close. That's a range of 28-51 days of carrying costs. Now multiply that x 4 for a FSBO, you should plan to carry the house and its costs for 112-201 days.
4. Unfamiliar with the transaction process.
You might think that an agent's job is easy but there are many pitfalls along the way that can end up costing you a significant amount of money.
First of all, do you know how to fill out the seller disclosures that are required and the offer to purchase documents (because your buyer is going to want you to do all of the paperwork)?
If you have to pay an attorney to do it for you, that is going to cost about $150-$400/hour.
Do you know what you are legally liable to disclose and what can get you into hot water if you verbally say something that is not on the disclosure?
For instance, if you state on the seller disclosure that the roof is fine but you know that you patched a leak last year and the home inspector finds the patch, you could be liable for returning all deposits or risk a law suit for fraudulent documents?
Do you know what due diligence is and how to negotiate seller repair requests and what your options are (you don't always have to do the repairs)?
The home inspection report comes back and the buyer wants EVERYTHING fixed...did you know that this is a negotiation, you don't have to do anything at all, and that you have other options such as a credit at closing instead of trying to find vendors to do the work in a short amount of time or do it yourself?
A savvy agent is worth their weight in gold when they are getting you out of a legal pickle or negotiating a buyer's unreasonable request down...this is why we are experts in our field.
5. Zillow and my cell phone are all that I need to get as many buyers as I want. What marketing?
Those pretty pictures that you see of other homes on Zillow were taken by PROFESSIONAL photographers. They make small rooms look bigger, they use angles to cut out your neighbor's junk car on blocks in the next driveway, and they use filters and shoot at the right time of day to create lots of light and outstanding color.
Humans are visual and we find bright, shiny objects to be the most appealing. An agent PAYS for these photos themselves. And these photos are what first attracts a buyer to your home. Photos and an enticing description of all of the things that your home has to offer that others don't is just great marketing and agents are pros at that!
Agents also market to other agents!
Since other agents have the buyers that is our go-to pool for targeting as large of a population as possible. FSBOs cannot market to agents, only the general consumer, cutting out the best pool of prospective buyers for their home.
SOLUTION!!!!
So how do you get the nicest advertising and marketing, highest negotiated price, and get your home sold quickly and smoothly????
LIST IT FOR 6% MORE WITH AN AGENT AND GET IT SOLD!!!!!
Selling a home is a business...the real estate business...you wouldn't have your neighbor remove your appendix, would you? No, you would call a surgeon! Hire an expert to do the job right the first time, put more money in your pocket, and save time and hassle, it's that easy.
See what we offer for all of our listing clients at the link below and when you get tired of waiting for the "right" buyer, call us!
https://www.ashevilleareahomefinder.com/page/my-selling-strategy/cpd1c23b18225243
According to the National Association of Realtors, homes sold FSBO (for sale by owner) sell for 25-33% LESS than realtor assisted sales!!!
Here's why...
1. Buyers work with AGENTS
It is FREE for a buyer to work with an agent and who has better access and the most up-to-date knowledge of what's on or coming on the market than a realtor. Put yourself in the buyer's position, if you wanted to purchase a home for the best price, in great condition, the right location, and have someone transact the deal for you who is an expert and will take care of your interests, wouldn't you choose to work with an agent?
Of course you would! There's no risk to you and only benefits.
The largest pool of buyers are going to be represented by an agent, so while you may be trying to save 6% on commissions, more than likely your buyer is going to come from an agent and they are going to ask you for 3% anyway.
IN ORDER TO SELL A PRODUCT, YOU HAVE TO HAVE INTERESTED CUSTOMERS.
2. FSBO homes are notorious for receiving lowball and requests for seller financing from unqualified buyers.
FSBO homes are a target for buyers with little to no credit or cash wholesalers. They prey on your inexperience in the industry to present a lowball offer, knowing that since you aren't paying commissions and aren't represented by someone who is going to warn you against their offer, that you might be tempted to take it. Also, since FSBO homes tend to stay on the market 4X longer than an agent assisted sale, buyers are relying on seller fatigue. This is when you have waited for as long as you could, have had no offers of real interest, and now just want to sell to whomever.
Agents pre-qualify their buyers BEFORE they ever get into the car to look at homes. They pre-qualify them through proof of funds letters or statements of pre-qualification from their mortgage lender. They KNOW that their client has the funds to close the deal...do you?
3. It takes longer to sell FSBO then it does to sell through an agent which means HIGHER CARRYING COSTS.
The reason why it takes longer to sell is because most FSBO sellers price their home according to what they want to receive and not what the current market value is.
There is actually a pricing strategy that realtors perform in order to create a more energy in the buyer pool, inciting a feeling of urgency, and propelling a sale forward in a shorter amount of time. Also, realtors know what the market will bear meaning what a buyer is going to be willing to pay. Sometimes that does not align with what you need, so keep in mind that market metrics matter, and you need to know what they are and how to analyze them in order to know if you have priced your home correctly. In today's market, if you have't had any action within the first 7 days, then you are probably too high.
In addition, every month that your home sits empty you are still having to pay for utilities, a mortgage, homeowner's association fees, and taxes. In today's market it takes an agent assisted home sale 7-21 days to get under contract and then another 21-30 days to close. That's a range of 28-51 days of carrying costs. Now multiply that x 4 for a FSBO, you should plan to carry the house and its costs for 112-201 days.
4. Unfamiliar with the transaction process.
You might think that an agent's job is easy but there are many pitfalls along the way that can end up costing you a significant amount of money.
First of all, do you know how to fill out the seller disclosures that are required and the offer to purchase documents (because your buyer is going to want you to do all of the paperwork)?
If you have to pay an attorney to do it for you, that is going to cost about $150-$400/hour.
Do you know what you are legally liable to disclose and what can get you into hot water if you verbally say something that is not on the disclosure?
For instance, if you state on the seller disclosure that the roof is fine but you know that you patched a leak last year and the home inspector finds the patch, you could be liable for returning all deposits or risk a law suit for fraudulent documents?
Do you know what due diligence is and how to negotiate seller repair requests and what your options are (you don't always have to do the repairs)?
The home inspection report comes back and the buyer wants EVERYTHING fixed...did you know that this is a negotiation, you don't have to do anything at all, and that you have other options such as a credit at closing instead of trying to find vendors to do the work in a short amount of time or do it yourself?
A savvy agent is worth their weight in gold when they are getting you out of a legal pickle or negotiating a buyer's unreasonable request down...this is why we are experts in our field.
5. Zillow and my cell phone are all that I need to get as many buyers as I want. What marketing?
Those pretty pictures that you see of other homes on Zillow were taken by PROFESSIONAL photographers. They make small rooms look bigger, they use angles to cut out your neighbor's junk car on blocks in the next driveway, and they use filters and shoot at the right time of day to create lots of light and outstanding color.
Humans are visual and we find bright, shiny objects to be the most appealing. An agent PAYS for these photos themselves. And these photos are what first attracts a buyer to your home. Photos and an enticing description of all of the things that your home has to offer that others don't is just great marketing and agents are pros at that!
Agents also market to other agents!
Since other agents have the buyers that is our go-to pool for targeting as large of a population as possible. FSBOs cannot market to agents, only the general consumer, cutting out the best pool of prospective buyers for their home.
SOLUTION!!!!
So how do you get the nicest advertising and marketing, highest negotiated price, and get your home sold quickly and smoothly????
LIST IT FOR 6% MORE WITH AN AGENT AND GET IT SOLD!!!!!
Selling a home is a business...the real estate business...you wouldn't have your neighbor remove your appendix, would you? No, you would call a surgeon! Hire an expert to do the job right the first time, put more money in your pocket, and save time and hassle, it's that easy.
See what we offer for all of our listing clients at the link below and when you get tired of waiting for the "right" buyer, call us!
https://www.ashevilleareahomefinder.com/page/my-selling-strategy/cpd1c23b18225243
