Thinking of selling your home yourself? For Sale by Owner, also known as FSBO, is the process of selling your home without having a real estate agent represent you. Some people sell their home FSBO because they’re going to sell it to someone they know. But usually they sell their own home to avoid paying a commission to an agent.
Here are a few things to keep in mind if you’re thinking of selling your home without the help of a real estate agent.
Watch John and Anthony on Fox25 Morning News in Boston talk about the Pros and Cons of FSBO
Tips for Selling Your Home FSBO
Serious home buyers search online for homes in the area and know what homes like yours are selling for, so be sure to price your home within this range. FSBO sellers often overprice their homes without researching comparable homes in the area. A report on FSBO sales from the National Association of Realtors (NAR) shows that FSBO home sellers find getting the right price for their home is one of the most difficult aspects of selling a home on their own. Take the time to research recent home sales in your neighborhood to determine the right price for your home.
A “for sale” sign in front of your home is not enough. You need to think about the best ways to market your home. Start by taking high quality pictures of all the rooms and features of your home. And don’t take one picture per room, take several. In a listing, the more pictures the better. Getting online exposure for your home is a necessity. There are many FSBO listing sites that will post your listing for a fee. And don’t forget other online channels such as Facebook or Craigslist to feature the home. It’s also a good idea to hire a real estate attorney to prepare the purchase and sales agreement and advise you on any legal matters that come up during the sale.
Does a Homeowner Really Save by Selling on Their Own?
The quick answer is NO but let’s break down the numbers. If your home is worth $200,000 on the open market when you hire a Realtor you would be paying a 5-6% commission, or about $10,000 to $12,000. Most FSBO’s realize that they have to offer a commission to a Real Estate agent who brings a buyer. The typical commission to a buyer’s agent is 2.5% which is $5,000. So now you are down to saving $5,000 to $7000. But that can and probably will get eaten up during a negotiation due to a seller being less experienced at negotiating than a Realtor. Therefore the seller is more likely to make the wrong comment that can and probably will work against them. In addition to this, the typical FSBO home sells for much less, around $150,000 according to NAR, compared to $215,000 for agent-assisted home sales.
Why it’s Not a Good Idea to Sell Your Home without a Real Estate Agent
The share of FSBO sales has been decreasing according to NAR. In 2001 13% of sellers sold their own homes. In 2011 it fell to 10%. More home sellers are using real estate agents to sell their homes because they know the home will sell for more money, even with the commission.
Because real estate agents have more experience and resources for selling homes, they can also sell your home faster than selling FSBO. According to data from the MLS Property Information Network for the past month, of homes sold priced between $300,000 and $500,000, 1,376 were traditional homes sales using an agent and 35 (just 2%) were FSBO. Of the traditional sales, homes spent an average of 110 days on the market before they were sold. FSBO sales, on the other hand, spent an average of 141 days on market—28% longer than traditional sales.
One of the most common things home sellers forget to factor in is the time involved in selling a home. Not just the time needed preparing the home for sale by doing such things as clearing the clutter, making repairs and staging the home to make it more appealing to buyers. You also need to set aside enough time to devote to marketing and showing the home. Most home buyers look at homes on the weekends so you’ll need to be around to show the home. You’ll also need to be available on short notice in case a home buyer wants to see the home right away.
When you sell your own home it will be seen by far fewer buyers than it would if you used an agent. Giving the home maximum exposure is essential to selling a home. Most buyers search online for homes before they schedule an appointment to see the home in person. The problem with FSBO homes is that only a licensed real estate agent or broker can list a home on a Multiple Listing Service, or MLS.
You do have the option of listing your home on a Flat-fee MLS. These services have a licensed agent list the property for you for a one-time fee. Some of these services will just show your listing on the basic MLS, and for an additional fee the listing will be shown on other real estate sites such as Realtor.com and Trulia. If a licensed agent shows and sells your property you will still have to pay a commission.
Keep in mind many home buyers feel uncomfortable giving their honest opinion of the home or they won’t ask questions with the homeowner right there. They also may not know how to negotiate an offer with a seller directly. They expect an agent to do that for them. And before a buyer’s agent brings in potential buyers, they will want to have you sign an agreement that says you will pay them a commission if they bring in a buyer who buys your home.
And finally, many sellers who sell their homes FSBO don’t know how to properly market the home. According to an NAR 2011 study of home buyers and sellers, a yard sign was the most popular method for selling their home. This method advertises only to people driving past your home, not all of the potential buyers looking for homes.
How a Real Estate Agent Sells Your Home
A good real estate agent has a large network of contacts and resources to effectively market and sell your home. They can post your listing on MLS and other high traffic site like Trulia, Realtor.com, and Zillow. They can send out online newsletters to their contact list to advertise your home. A good real estate agent will also have access to virtual floor plan software to showcase your home with high definition pictures.
A real estate agent also provides valuable services such as screening potential buyers for you, making sure they are financially able to buy your property before they even see it. They can give you an estimate of the closing costs, so there are no surprises. They can offer tips on what today’s buyers are looking for and what you can do to increase the home’s appeal.
An experienced real estate agent will also know what to do if an issue comes up during the sale such as a failed septic inspection or a property line dispute. An agent won’t have an emotional attachment to the house so they can be objective and effectively negotiate the terms of the sale. They will take care of such paperwork as legal documents and advise you about which documents need to be filled out and signed. So if you’re serious about selling your home for a good price, leave the work to an experienced real estate agent.