Should I List My Home With an Agent or Sell it Myself as a For Sale By Owner (FSBO)?
Attention: For Sale By Owners! People Are Afraid To Buy From You!
Many homeowners believe that to maximize their profit on a home sale they should sell it themselves. They may even think that they have to sell the home themselves in order to avoid losing their home to foreclosure or short sale (if the latter is you, you may have options you are not aware of–contact me and I would be happy to discuss them with you). At first glance, they feel selling a home is simple and why should they pay a broker fees for something they could do themselves?
However, in a previous poll of For Sale By Owner’s (FSBO’s), close to half of the FSBO’s said that they would hire a professional next time they sold. Thirty percent said they were unhappy with the results they achieved by choosing FSBO. Why?
Many FSBO’s said that the time, paperwork and everyday responsibilities involved were not worth the amount of money they saved in commissions. For others, the financial savings were even more disappointing. By the time they figured the amount of fees paid to outside consultants, inspectors, appraisers, title lawyers, escrow and loan officers, marketing, advertising… they would have been better off having paid the broker’s fee which would have included many of these charges.
Selling a home requires an intimate understanding of the real estate market. If the property is priced too high, it will sit and develop a reputation for being a problem property. If the property is priced too low, you will cost yourself serious money. Some FSBO’s discovered that the lost money as a result of poor decisions outweighed the commission.
In addition, there are Many Reasons Why People Are Afraid To Buy From You as a FSBO!
Before you decide to sell FSBO, consider these questions and weigh the answers of assuming the responsibility versus employing a professional. A little time spent investigating up front will pay off tenfold in the end.
Questions To Consider:
Do I have the time, energy, know-how, and ability to devote a full forced effort to sell my home?
One of the keys to selling your home efficiently and profitably is complete accessibility. Many homes have sat on the market much longer than necessary because the owner was unwilling or unavailable to show the property. Realize that a certain amount of hours each day is necessary to sell your home. Listing with an agent allows your time to be freed up to do what you need to do and for your agent and others to show your home when a ready, willing and able buyer would like to see it, even when you are not home or available. The more exposure your home has, the more offers you will get and the more money you will likely receive for your home. Limiting showings will also limit the number of offers and the amount of money you will be able to get for your home. The cost of hiring an agent is often less than the amount of money you will lose by limiting the showings and offers by doing it yourself.
Am I prepared to deal with an onslaught of buyers who perceive FSBO’s as targets for low balling?
One of the challenges of selling a home is screening unqualified prospects and dealing with lowballers. It often goes unnoticed… how much time, effort and expertise it requires to spot these people quickly. Settling for a lowball bid is usually worse than paying broker commissions.
Am I offering financing options to the buyer? Am I prepared to answer questions about financing?
One of the keys to selling, whether it’s a home, a car… anything, is to have all the necessary information the prospective buyer needs and to offer them options. Think about the last time you purchased something of value, did you make a decision before you had all your ducks in a row? By offering financing options you give the home buyer the ability to work on their terms and open up the possibilities of selling your home quickly and more profitably. A professional real estate agent will have a complete team, from lenders to title reps for you to utilize…they’ll be at your disposal.
Do I fully understand the legal ramifications and necessary steps required in selling a home?
Many home sales have been lost due to incomplete paperwork, lack of inspections or not meeting your states disclosure laws. Are you completely informed of all the steps necessary to sell real estate? If not, a professional would be a wise choice.
Do I have the capability of handling the legal contracts, agreements and any disputes with buyers before or after the offer is presented?
Ask yourself if you are well versed in legalese and if you are prepared to handle disputes with buyers. To avoid any disputes it is wise to put all negotiations and agreements in writing. Many home sales have been lost due to misinterpretation of what was negotiated.
Have I contacted the necessary professionals… title, inspector (home and pest), attorney, and escrow company?
Are you familiar with top inspectors and escrow companies? Don’t randomly select inspectors, attorneys, and title reps. Like any profession there are inadequate individuals who will slow, delay and possibly even cost you the transaction.
Am I willing to work with Buyer’s who have a real estate agent?
Most serious and qualified buyers work with real estate agents. Those who don’t are usually investors and/or are looking to get a good deal on a home. Allowing real estate professionals to show your home to their buyers will allow you to maximize exposure of your home to more buyers and to buyers who are willing to pay fair market value and sometimes even a little more for a home.
Am I expecting a buyer to pay me top dollar for a home and pay their agent’s commission if they have an agent?
Some FSBO’s say they will allow buyers with agents to see their home and to submit offers. However, they expect the buyers to pay their agent’s commission and to do all the paperwork. Let’s take this in two parts: Commission and Paperwork.
If the goal is to get the highest price possible for your property, you cannot expect a buyer to pay you top dollar for a home and to pay a commission to their agent which is typically taken from the seller’s net proceeds from the sale price of the home. Expecting a buyer to pay top dollar for your home and pay commission is not reasonable when they can by a home comparable to yours for less money since paying the commission on top of the purchase price is not common practice and would in essence make them pay more for your home than it is worth. When looking at homes that are listed by agents, buyers know their offer price includes the commissions that will be paid by the seller. If a home is not listed by an agent, a buyer would expect to pay less for a home, not more which is what they would be doing if they paid listed home market value for the property and the commission. If buyers are to pay commission, then they would expect to pay listed home market value minus commission amount for the property.
Aside from the Buyer writing the offer (which they typically need an agent to help them do unless they are very experienced buyers like investors) and responding to any counter offers, the required paperwork in a transaction is the seller’s responsibility to complete and obligation by law. There are certain disclosures that the sellers must complete and provide to a buyer before they can legally sell and transfer a property to a buyer. If the seller does not complete and provide the necessary disclosures, a buyer can later sue the seller for non-disclosure and other reasons. Having a agent on your listing side protects you as the seller to make sure all the required paperwork is complete and the agent’s Errors and Omissions Insurance helps to insure you will not be financially liable for items that were not disclosed due to the agent not providing the correct paperwork.
Buyers typically like to have their own agent involved so that they have the peace of mind that the contract will be written and negotiated as well as possible, that they are advised on the types of inspections it would be prudent to have for a property and also so that they are provided with all the necessary disclosures. Buyers typically want a seller to have a listing agent involved just in case there is a reason for a law suit in the future. Typically, an agent’s E&O insurance coverage is a lot higher than an individual seller’s bank account. What I mean by that is that if a buyer were to sue a seller, a seller does not have any insurance coverage for selling their home, so if something is done incorrectly or not disclosed, then the buyer really has a low likelihood of getting fully reimbursed for the issue directly from the seller. Typically, it is an agent’s E&O insurance that pays out claim settlements. Because of this and the reasons stated above, Many People Are Afraid To Buy From You!
If these questions raise some concerns you may want to speak with a professional. I sincerely hope these tips, information and ideas are of value to you. If there is any way I can be of service just let me know. I am a very experienced real estate Broker. I If you would like a FREE consultation, send me an email through this site or call me at: 925-577-8692.
Your friend n Real Estate, Robin Watson-Bird