WHAT IS THE WISE CHOICE?
FOR SALE BY OWNER or REALTOR®?
FSBO - For Sale By Owner
Approximately 10% of FSBOs sell -- 90% do not!
Is It Worth Listing with a Professional Realtor®?
Before you FSBO, do your research.
Approximately 90% of all FSBO properties, where the seller does not already know the buyer, end up listing their house with a professional Realtor®.
Only about 6% of FSBOs actually sell and about 4% take the home off the market and do not sell.
Why is it that only about 6% of FSBO homes sell?
More importantly, do the sellers actually save any money?
You must know the facts about selling your home yourself:
1) FSBOs cannot list their home in the MLS (Multiple Listing Service)
2) Agents won't usually show FSBO homes
3) FSBOs usually overprice their home
4) Buyers may feel intimidated negotiating directly with the seller
5) FSBOs are likely to stumble into legal trouble*
*Real estate transactions are loaded with potential liability for unwary sellers,
particularly in states that have extensive disclosure requirements.
A FSBO who overlooks even one required form or legally mandated disclosure
could face a protracted and expensive buyer lawsuit after the transaction closes.
Even in a normal or healthy real estate market, selling without a Realtor® is only successful about 10% of the time. This means that approximately 90% of your fellow FSBOs never attract a buyer. Eventually, they almost all list with a Realtor®.
80-90% of all FSBOs eventually list with a Realtor®
Unfortunately, even though they hire the marketing capabilities of a Realtor®, market exposure may have already hurt the chances the home will get a good offer, especially if the seller and Realtor® add the commission to the FSBO price. A home is only worth what a financially-capable buyer is willing to pay, and buyers have a pretty good idea nowadays what they can buy for their money.
Deciding to "save" money in this economy has become a necessity.
So, is it a wise choice to sell your home without the help of a professional Realtor®?
Sellers today are faced with many difficulties and scenarios. That is why most hire a Realtor®.
Still many sellers decide to go it alone.
In today's tough economy, we all want to save money. Homeowners who have lost equity in their homes as a result of declining values may feel the only way to salvage what is left of their equity is to sell the home themselves and pocket what they would otherwise pay in commission.
If you are considering selling your home yourself, you must ask yourself whether you feel:
1) Qualified to market your home successfully
2) Exposing your home to those looking for extreme bargains and presenting low-ball offers is practical
3) Able to strongly negotiate for yourself effectively
4) Knowledgeable enough to accept a buyer's representations to purchase in good faith by verifying funds and the financial responsibility of the potential buyer
5) Knowledgeable enough to prepare a contract which accurately reflects what you and the buyer have agreed to, including all verbal agreements
6) Safe enough to invite people you don't know into your home
(protecting everything from cash, jewelry, and firearms to prescription drugs)
7) Prepared in case of possible future lawsuits**
**Many more lawsuits with damages are awarded from the 6% of homes
that sell without professional representation than from the 94% of homes
that do. If you sell your home and get sued for thousands of dollars and
have to spend time in court defending yourself -
What is that worth to you?
There have been sellers who have had to buy back properties months
after they sold them and moved on. There are people who have lost
everything because they tried to "save" money and didn't know what
they were doing or were unaware of all the legalities.
In a market saturated with short sales and foreclosures, there is only one way to compete . . . Price.
You must price your property competitively.
So what matters most to you? Is your goal to actually sell your home?
If so, you need your property exposed to the greatest number of potential buyers as possible, and the only way to do this is have your home listed in the Multiple Listing Service (MLS). There simply is no way around this reality. And it takes a Realtor® to enter a home into MLS.
For Sale By Owners are possibly only attracting drive-by traffic.
The thousands of Realtors® with access to MLS do not even know you exist; and if they do, they will avoid you for a variety of reasons. Why would a Realtor ever consider showing your FSBO property when there are dozens or possibly hundreds of comparable LISTED homes to show their buyer? Knowing there is a listing, means the Realtor® can relax and not worry about having to negotiate for their commission with a perhaps unreasonable home seller.
In MLS, all listings clearly show the commission that will be paid at closing and it is guaranteed by a signed legal document called a "Listing Agreement."
With FSBOs, a buyer's agent risks a seller changing their mind and refusing to pay the verbally agreed upon commission.
In this market, Realtors® avoid FSBOs like the plague because of all the potential problems.
Historically, FSBO buyers are looking for a bargain. Their mindset is this: "No matter what the price tag says, I will offer 5-10% less because I know the seller is saving the commission."
So, let;s just say that your home should sell for approximately $200,000.
You calculate you are saving 6% commission (for example),
so you price it to split the commission savings with the buyer -- $194,000.
That's a win/win, right?
The buyer pays $6,000 less than if you had it listed with a Realtor®
and you get $6,000 more than if you had to pay a 6% commission to a Realtor®.
But when the offers you get from FSBO buyers are for $180,000 or $188,000 (the sales price minus 6-10%), FSBO sellers may counter at full price or sometimes raise the asking price to compensate for buyer's low-balling. Usually, the FSBO buyer moves on because getting a bargain is more important to them than buying a home.
FSBO Woes: Why It's So Hard to Sell Your Own Home?
When you couple the above statistics with the new market conditions, you may have literally close to no chance of ever selling your own home. The only homes that are getting any showing activity are the ones listed with a Realtor® and which are priced attractively.
But regardless of where the home sellers think they should price their home, NAR (National Association of Realtors®) says that the average FSBO sells their home for 12% less than listed homes with a Realtor®.
The irony is that many times FSBO sellers are so caught up in
"saving" the commission that they lose thousands of dollars.
They are stepping over a quarter to pick up a dime and then
think they've come out ahead - all the while they are doing
all the work themselves just to get to that point of loss.
And, perhaps more importantly, these sellers unfortunately hurt the values of all the surrounding homes by selling for less than the home was actually worth. All the area homes now have been hurt by that one comparable low FSBO sale. Instead of helping the neighbors, the FSBO seller hurts them all.
What are the 94% of people who sell their homes with a Realtor® thinking? Do they want to waste money?
Or could it be that they have discovered that using a good professional Realtor® is a smart investment that may save them thousands of dollars, help the neighbors, and give them a much more enjoyable experience along the way.
Using a good professional Realtor® may make you more money.
When it comes to selling your own home, if you "save" a 6% commission
by selling for 10-12% less than you could have (or not sell at all) - how much have you actually saved?
Most buyers are working with agents, and why not - it doesn't cost them anything and they get a lot of help. Buyers working with agents don't usually see homes that are FSBO because the agents use the very efficient Multiple Listing Service (MLS) to search for the 90% of homes that are listed. Today's market-savvy consumers are also searching and researching online, where the websites get their feeds directly from that same MLS listing service.
So, if every buyer will see your home if it's listed, but only a fraction will see it by not being listed, it makes the buyer pool smaller and, therefore, more difficult to sell for top dollar - if at all.
Even if a FSBO is listed on the MLS, if the seller isn't offering a commission, then buyer agents will not show your home to 90%+ of buyers who are in the market for their next home, reducing your potential offers also. The FSBO home could be the "gem" of the neighborhood, but if no one knows about it, how can the FSBO seller receive even an attractive offer?
Many FSBO sellers want to sell themselves because of bad experiences with an agent. Yes, there are bad agents who are unprofessional and many who are unqualified. However, every seller has the same opportunity as any other seller to acquire the services of the best agents at the same commission rate as a less qualified agent - you just may have to "shop around" and do some interviewing. A little work can provide great rewards in the end.
There is a HUGE difference between someone with just a license who sells a couple homes per year and a full-service professional Realtor® who has ethical training and education and is recognized by the National Association of Realtors®. A professional Realtor® will know the neighborhoods, the local marketplace and sells homes frequently.
(Please watch the video below - "The Difference Between a Licensee and a Realtor®")
Information herein is deemed
reliable, not guaranteed.
Remember Your BEST Choice is the Wise Choice©, and the wise choice is enlisting a professional Realtor® for your Real Estate transactions.
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Information herein is deemed reliable, not guaranteed.