Many homeowners believe that to maximize their profit on a home sale they should sell it themselves. At first glance, they feel selling a home is simple and why should they pay a broker fees for something they could do themselves? In fact, close to 20% of all the homes sold last year were sold for sale by owner (FSBO).
However, 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 told us 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 up front.
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.
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 Ask Yourself:
Do I have the time and energy to devote a full force 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.
Do you have the time to make appointments for interested parties to stop by your home?
One of the keys to selling your home effectively is accessibility. Most likely you work full time. If you're not around to show the house, you are going to have a very difficult time. Real estate agents spend a lot of their time at their listings . . . this is what they do for a living! If you're not around, you are not going to sell your home.
Do I know how to screen potential buyers?
Another problem FSBOs have is the buyers who are not working with real estate agents are usually not the serious buyers. People who are ready to buy use agents because they don't have to pay their agent a fee, and agents have the resources buyers need to get good homes at good prices. Unfortunately, most of the buyers that are left over are merely "tire kickers" and "low-ballers". Sure, you may get a few people through the door, but most of them will walk in and out without any serious interest. Those who do might give you offending offers.
Any person can claim to have the funds available to purchase your home when in reality they do not. Make certain that prospective buyers carry a pre-approval letter from a respected mortgage company before proceeding.
Most importantly, most real estate transactions are broker-to-broker (between buyer and seller agents). Frankly, most buyer agents do not like to bring their buyers through your door because they're not going to get paid! So you've eliminated over 90% of the qualified buyers who are seriously looking to buy.
Do I know how to advertise and market my property?
FSBOs tell us the biggest problem they have is their homes suffer from a lack of exposure. Most of them paid several hundred dollars for a weekend classified ad in the daily paper. They also bought a "For Sale By Owner" yard sign. But unless the market was sizzling, few got any buyers through the door. Why?
The fact is, most legitimate buyers work with real estate agents! And real estate agents research the Multiple Listings Service to find homes for the buyers. Unless you are using a real estate agent, you're not in the Multiple Listing Service. This exposure alone is worth a lot of money.
The Real Estate industry is somewhat like the used car industry when it comes to certain areas. Each is known for using terminology that could be considered to perhaps stretch the boundaries a bit. "New paint job" in a car add can often be translated to "new paint job because the car was damaged in an accident." When it comes to real estate, a unique set of terminology also applies. "Cozy" is often a term interpreted as meaning small. "Very cozy", of course, means a home that is basically two closets hammered together!
As a FSBO seller, you need to give some thought to the terminology you will use when marketing your property. I am not so much referring to legalities as I am to common sense truth in advertising. It is tempting to list the possibilities of a home despite the fact the property offers no such basis for doing so. Such phrases I often see are things like "potential for view" without mentioning the buyer will need to add two stories to the property to get a sliver of a view! In my opinion, such advertising is a bad approach.
When marketing your property for sale, it is important that you be accurate. Yes, you can use terms that promote the strengths of the property. You should not use terms that are not based on how you use the home. If you have a two bedroom property in which you sleep in one bedroom and your child in the other, language regarding a home office, game room and such is probably misleading unless you have other rooms that specifically are being used for that purpose.
The problem with stretching the boundaries with your marketing has to do with expectations. If a potential buyer reads your ad and thinks it matches what they are after, they expect to see the attributes when they arrive. If they do not, they certainly will not be making an offer. This will lead to negative commentary among buyers regarding you and your home. You should never require a buyer to have a vision of the far-reaching possibilities of a home.
As a FSBO seller, being accurate in your marketing materials is critical. Yes, you may get fewer buyers visiting your property, but you will get a better quality of buyer, to wit, a buyer more like to make an offer. At the end of the day, that is the point after all.
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. Are you versed on the legal paperwork? You are exposed to a lot of liability!
Are you completely informed about the legal aspects of selling your home?
Are you fully confident you are using all of the necessary (and correct) forms? Not only that, is your disclosure 100% accurate? Are you capable of handling the legal contracts? Any errors or omissions in these contracts can result in legal problems! If you're not 100% confident, it's wise to hire a professional real estate agent.
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. At this point in the game, retaining the services of a Real Estate Attorney is essential. Who will pick the title company and who will pay their fees? Will you offer a home warranty with the sale of the home? What does that warranty cover and will it protect you in the even something major happens? What legal protection do you have in the event the buyer chooses to sue you 6 to 12 months later?
Going ahead with the FSBO requires that you be fully aware of your responsibilities in helping to bring the transaction to a successful conclusion.
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.
Clearly, FSBO isn't for everyone and studies have shown that as many as 80% of FSBO listers eventually choose the services of a licensed realtor to move their homes. So, before embarking on a FSBO listing, weigh all of the factors and the legal requirements of your state before proceeding.
However, 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 told us 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 up front.
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.
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 Ask Yourself:
Do I have the time and energy to devote a full force 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.
Do you have the time to make appointments for interested parties to stop by your home?
One of the keys to selling your home effectively is accessibility. Most likely you work full time. If you're not around to show the house, you are going to have a very difficult time. Real estate agents spend a lot of their time at their listings . . . this is what they do for a living! If you're not around, you are not going to sell your home.
Do I know how to screen potential buyers?
Another problem FSBOs have is the buyers who are not working with real estate agents are usually not the serious buyers. People who are ready to buy use agents because they don't have to pay their agent a fee, and agents have the resources buyers need to get good homes at good prices. Unfortunately, most of the buyers that are left over are merely "tire kickers" and "low-ballers". Sure, you may get a few people through the door, but most of them will walk in and out without any serious interest. Those who do might give you offending offers.
Any person can claim to have the funds available to purchase your home when in reality they do not. Make certain that prospective buyers carry a pre-approval letter from a respected mortgage company before proceeding.
Most importantly, most real estate transactions are broker-to-broker (between buyer and seller agents). Frankly, most buyer agents do not like to bring their buyers through your door because they're not going to get paid! So you've eliminated over 90% of the qualified buyers who are seriously looking to buy.
Do I know how to advertise and market my property?
FSBOs tell us the biggest problem they have is their homes suffer from a lack of exposure. Most of them paid several hundred dollars for a weekend classified ad in the daily paper. They also bought a "For Sale By Owner" yard sign. But unless the market was sizzling, few got any buyers through the door. Why?
The fact is, most legitimate buyers work with real estate agents! And real estate agents research the Multiple Listings Service to find homes for the buyers. Unless you are using a real estate agent, you're not in the Multiple Listing Service. This exposure alone is worth a lot of money.
The Real Estate industry is somewhat like the used car industry when it comes to certain areas. Each is known for using terminology that could be considered to perhaps stretch the boundaries a bit. "New paint job" in a car add can often be translated to "new paint job because the car was damaged in an accident." When it comes to real estate, a unique set of terminology also applies. "Cozy" is often a term interpreted as meaning small. "Very cozy", of course, means a home that is basically two closets hammered together!
As a FSBO seller, you need to give some thought to the terminology you will use when marketing your property. I am not so much referring to legalities as I am to common sense truth in advertising. It is tempting to list the possibilities of a home despite the fact the property offers no such basis for doing so. Such phrases I often see are things like "potential for view" without mentioning the buyer will need to add two stories to the property to get a sliver of a view! In my opinion, such advertising is a bad approach.
When marketing your property for sale, it is important that you be accurate. Yes, you can use terms that promote the strengths of the property. You should not use terms that are not based on how you use the home. If you have a two bedroom property in which you sleep in one bedroom and your child in the other, language regarding a home office, game room and such is probably misleading unless you have other rooms that specifically are being used for that purpose.
The problem with stretching the boundaries with your marketing has to do with expectations. If a potential buyer reads your ad and thinks it matches what they are after, they expect to see the attributes when they arrive. If they do not, they certainly will not be making an offer. This will lead to negative commentary among buyers regarding you and your home. You should never require a buyer to have a vision of the far-reaching possibilities of a home.
As a FSBO seller, being accurate in your marketing materials is critical. Yes, you may get fewer buyers visiting your property, but you will get a better quality of buyer, to wit, a buyer more like to make an offer. At the end of the day, that is the point after all.
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. Are you versed on the legal paperwork? You are exposed to a lot of liability!
Are you completely informed about the legal aspects of selling your home?
Are you fully confident you are using all of the necessary (and correct) forms? Not only that, is your disclosure 100% accurate? Are you capable of handling the legal contracts? Any errors or omissions in these contracts can result in legal problems! If you're not 100% confident, it's wise to hire a professional real estate agent.
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. At this point in the game, retaining the services of a Real Estate Attorney is essential. Who will pick the title company and who will pay their fees? Will you offer a home warranty with the sale of the home? What does that warranty cover and will it protect you in the even something major happens? What legal protection do you have in the event the buyer chooses to sue you 6 to 12 months later?
Going ahead with the FSBO requires that you be fully aware of your responsibilities in helping to bring the transaction to a successful conclusion.
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.
Clearly, FSBO isn't for everyone and studies have shown that as many as 80% of FSBO listers eventually choose the services of a licensed realtor to move their homes. So, before embarking on a FSBO listing, weigh all of the factors and the legal requirements of your state before proceeding.
