Is Selling For Sale By Owner A Good Idea?

This could be fun she said. Or, very costly.

FSBO (pronounced FIZZ-bo), or For Sale By Owner, is a way of selling your home without the use of a professional real estate agent or broker. The idea behind FSBO is that by selling your home yourself, you save the approximate 6% that would be both Real Estate Office’s commissions.

Some homeowners don’t bat an eye and understand the importance of a Professional. But because of computers and smart phones, it has lately become more tempting to try yourself.

Here is why this is extremely dangerous. Without a professional that knows what paperwork to use, proper laws to follow, disclosures to provide, terms, and rights, transfer tax, title reports, easements, gross easements…

But wait, there’s more. Lots more, that would require a 300 page book, so we’ll stick to the basics. Potential “Lookie-Loo” (Buyer’s) assume that they can offer you 6% lower just because you are selling FSBO. Yeah, that was fast for cutting you down on price.

Having an Agent represent you is an extra layer of guidance that is generally priceless compared to the fee. Not only that, using an Agent almost always nets ya Homeowner more money from the sale. Most people don’t like to give an offer to homes that are selling FSBO because they are worried that they will somehow be taken advantage of, or that the Homeowner may be hiding something. Usually, buyers worry that a major home defect will be discovered later, or that a costly lien will pop up on title.

To win big in selling your home, use an experienced, professional Real Estate Agent. Don’t feel nervous to ask for referrals, testimonials or even a print out of the Agent’s sold property history. They should have that on the fly and you can also usually see their track record on the internet. If you don’t, that’s a sign that they don’t have an internet presence, and you should keep looking.

Only about 10% of sellers that decide to do FSBO are successful at it, and almost all of them don’t end up saving themselves money. FSBO sellers often end up accepting a much lower price for their home due to lack of negotiating skills, signing an offer with horrible contingencies, only having one offer to choose from, or pricing it wrong from the start.

Lastly, can you afford to make selling your home a new full-time job? Because in selling your home, that’s exactly what the process entails.

Do you have the time and capital to spend on the marketing, advertising, inspections, understanding a title report, paperwork, phone calls, showings, and repairs or appraisal work orders? Do you know the difference in types of financing and which type of financing will be allowed for your home? Are you ready for the non-stop solicitation from Realtors bombarding you with phone calls and the classic line insisting they “have a buyer for your property,” but don’t?

Selling with a Professional Real Estate Agent also has other advantages. The Realtor will list your home on the MLS (Multiple Listing Service) and other popular websites where pre-approved Home Buyers and Realtors are searching all day. These Realtors also have an extensive network which gets your home sold quickly and you’ll have multiple offers to choose from.

Before you decide to sell your home yourself, thoroughly consider these important factors:

• You will need to know how to perform an accurate, reliable CMA
• Have a marketing plan that you know will work
• What do you know about Title Reports?
• Do you know how to vet a Buyer’s qualifications?
• Are you familiar with the appraisal process?
• Where would you get your Real Estate Contract from?
• Do you know what a work order is?
• What is your level of expertise regarding your state’s Real Estate Contracts?
• Are you familiar with the state’s required material fact disclosures?
• What must a Homeowner disclose and what is not required to be disclosed?
• What items must be installed in a home that are required by state law?
• How well do you know your areas market trends?
• Are you a great negotiator? Hint: How you say things can cost you.
• How much is a Buyer actually willing to pay if there was a bidding war?
• Do you know how to create a bidding war?
• How would you negotiate multiple offers?
• Have you ever been in a legally precarious position?
• Do you a rainy day fund for unanticipated legal expenses?
• How much time, money and effort you can spare?
• Are you prepared for showings, and how would you handle them?
• Are you willing to pay a Buyer’s Agent?
• Do you have a good Real Estate Attorney?

According to just about every Real Estate Professional Study and Association:

When a Homeowner sells a FSBO, they usually end up with less money in their pocket, regardless of how well the Market is doing.

If you have an urge for a DIY project, try baking some chocolate chip cookies from scratch, or try sewing yourself some new golf shorts. That way, you’ll have better luck and statistically, you will pocket more money than if you were to sell yourself.

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