For Sale By Owners: You REALLY Want To Read This
Every real estate agent looking for a listing will tell a For Sale By Owner that having an agent is significantly more beneficial than selling it without one. Understandably, a homeowner may be hesitant to believe someone who is, ultimately, in sales, so let’s break down WHY is this true.
These are the common arguments FOR doing a FSBO, followed by my responses that illustrate the reality, based on actual sales and transactions. Misleading and bogus sales pitches do exist, but the following is grounded in reality and intended to help Sellers:
1. “I don’t want to pay commission.”
Who would?! Commission can be a big chunk of the proceeds. This argument would hold the most water EXCEPT for the fact that an agent can most often NET a Seller MORE money than a Seller can get on his/her own, even with commission. Buyers with agent representation expect to pay fair market value for a property. If you go to a reputable department store, you expect to pay fair market value for a quality product. It’s the same mentality as in real estate. True, a $600 leather jacket isn’t a $900k home, however, the sales philosophy holds true.
On the other hand, Buyers without representation who look at FSBO’s are looking to get a deal. They know you, as a FSBO, are not paying broker commission and they use that as leverage when they give you low-ball offers. In fact, they’re usually not qualified for your asking price so they HAVE to offer lower. But don’t take my word for it. There are multiple studies conducted every few years, which corroborate this very concept.
2. “I can advertise just as well or better than any agent.”
The days of simply posting your ad in the newspaper and selling a home are over. The vast majority of buyers now turn to the online marketplace for their home searches. This means targeted Facebook ads, email blasts to thousands of local agents, letting the neighbors and surrounding communities know about your property, creating marketing pieces that have a track record of success in attracting Buyers, distributing to all of the online forums (Zillow/Trulia, Redfin, MLS, Craigslist, online news publications, etc) and fielding countless calls. The large brokerages also syndicate its agents’ listings to 70+ other sites. Since FSBO’s most always end up hiring an agent anyway, it’s a good source of business for us, so expect to be called by countless agents who want to get your business.
3. “Selling it myself will be easier with less paperwork and red tape.”
There are regulations that govern the sale of a home that most people don’t know about. Unless actively working in real estate, how would a Seller know about the retrofitting compliance that has to be done (or risk a hefty fine) or what disclosures need to be made to both inform the Buyer and protect the Seller or the nuances of the Fair Housing Act which regulates the type of language used in advertising and marketing? Not knowing ALL of the elements puts a Seller at risk. The number of real estate related lawsuits should act as a reason to take as many precautions as possible.
The sheer number of real estate lawsuits each year alone dictates that a Seller should do all they can to limit their liability. A real estate agent can help protect you by limiting your liability with the appropriate forms (some so obscure that very few, if any, non-agents would know about) and practices.
4. “I can contact real estate agents directly and tell them about my property.”
A licensed real estate agent cannot enter into a deal with an unlicensed individual. This means that, even if you find someone with an agent, who wants to purchase your home, they cannot enter into an agreement with you. If you want to pursue that Buyer, you’ll have to either find an agent to represent you or end up having the Buyer’s agent also represent you in a dual-agency.
Selling a home is truly a monumental undertaking with lots of involved legality and risk. Once you list your home, you need to market it. Once you market it, you need to be able to weed out the qualified Buyers from the average, unqualified ones. Then you need to vet their lenders to ensure they’ve gone through the appropriate D.U. requirements to give an accurate pre-approval so as to avoid long T.R.I.D. delays and potential cancellations. This is just the beginning. A legitimate agent who provides excellent customer service is worth the commission, especially when he nets you more money than you would receive on your own (fact).
*My full list of services is available upon request.