Want to know the pros and cons of selling your house for sale by owner? Read this list to help you decide if you should list with an agent or try to do it yourself. So, keep reading if you’re wondering if you should sell your house yourself or use a Realtor. You’ve come to the right place. Let’s get started.
For sale by owner disadvantages (cons)
Likelihood of incorrectly pricing the home – most homeowners sell at a higher sales price when working with an agent. Having access to the analytics in MLS allows the listing agent to run a good CMA (comparative market analysis) in order to give an accurate price recommendation. This recommendation will consider your goals. Like the amount of equity, you want and the time frame you want to sell in. Your agent can analyze the past solds, average DOM (days on market), features, current pending and active listings for your area (subdivision, school zone, zip code) and give you an estimate as to the best combination of pricing and time frame. According to the National Association of Realtors (NAR), the typical FSBO home sold for $65,500 LESS than a home that sold with an agent. That’s crazy! Basically, you’d get $265,500 for a house listed with an agent compared to $200,000 for the exact same house you decided to sell yourself. It’s no wonder that NAR says pricing is the most difficult task for FSBOs to get right.
Time it takes – it takes time and effort to get a home sold. More than you think. From making the home accessible, answering phone calls, and understanding what it takes to prepare and market the property. The first phase of the time is getting the house ready to market. Selling a home yourself, basically means that you’re playing homeowner, project manager and agent. You’ll need to get your home ready to sell, in terms of fixing it up. You’ll need to coordinate any and all repair men and moving trucks. And research, interview and schedule appointments with photographers and stagers. Then you’ll need to research pricing, look at the competition and then post your home online for others to see. Once your home is finally listed, you’ll coordinate showings and talk with the buyer’s agent. You’ll be directly talking to the buyer’s agent for every showing (and second showing), during negotiations, and whenever they have questions about the property.
Lack of marketing experience – Knowing how and where to effectively advertise is key. Marketing starts online for most buyers. Professional photography, and professional staging are needed to show a home in its best light. Having an online presence for your home is required in today’s market. So, you’ll want to ensure the home is listed on the top sites that buyers use. One thing that’s very hard for sellers is to remove their emotions from the sale. They are typically too “close” to be objective and to see flaws, compared to the competition. Know what’s been selling lately, so they know how to present this home effectively. Do you know who your likely buyer is and who you’re marketing to?
Lack of understanding of the competition – FSBO homes statistically stay on the market longer. Pricing is one key factor, and the seller not understanding marketing is another. And a big determining factor is understanding the competition. Understanding what needs to be fixed and preparing your home for sale so you can better compete is very important.
Dealing with the general public – not having an agent removes the experienced middle man (your agent). Will you know the difference between looky-loos, criminals casing the joint or who’s really a pre-approved buyer? You’ll be dealing with so many different personalities. From the people that call to take a look at your house to the different agents that contact on behalf of their client. Once you get to the negotiation phase, you can be at a disadvantage because of your lack of knowledge. You’ll be working with an agent that is more experienced than you (even if this is their first deal, they have a broker they can lean on for support. And let’s be honest, this is probably not the other agents first deal. Another point about dealing with the general public is that they know you’re saving money selling as a FSBO. In all likelihood, you could attract people looking for a bargain (they do know you’re saving money on commission).
Lack of knowledge around contract requirements – agents build networks and working relationships with other agents, lenders and closing attorneys while working to ensure the deal goes through. Understanding the buying process, choosing the right professionals and resources to help along the way. It’s good to be knowledgeable about real estate laws and seller obligations. And yes, things can come back to bite you after closing. Understanding the various contract amendments and stipulations and how they impact the sale and whether they are in your favor or the buyers is important. Understanding paperwork and ensuring Is are dotted and Ts are crossed takes agents a lot of in-classroom training and practical experience. A professional agent will understand your needs and desires for selling the home, and how to translate that into the contract in order to best protect your interests.
Buyer’s agent may discourage buyers – let’s be honest, I know some buyers’ agents that don’t like to sell for FSBO properties. They will discourage their clients from even looking at them for several reasons. I’m sure you’re thinking that they just want to protect their commission, but there’s more. The agent knows that, in working with you, they’re dealing with someone less experienced. And from their perspective, if they want to get the deal to the closing table, there will be several times where they have to do extra work in order to keep the ball on track. Many agents may feel as if they’d be doing the job of both the buyer and the listing agent. Also, FSBOs have reputations of being strapped for cash or cheapskates. So, if the agents may caution their clients that won’t get as great of a deal as they think. Overall, as a FBSO, statistics shows you’ll actually attract fewer buyers.
Lack of professional real estate experience – let’s think about this – if you’re willing to pay for the buyer’s agent to bring you a buyer, then you’re essentially paying someone else to work against you. The buyer’s agent duty is to look out for the best interest of their client, not you! And relying on them to keep you up to date on contract requirements is foolish. Because again, they don’t work for you! Even though, in essence, you’re paying their commission, the buyer’s agent is legally obligated to work in the best interest of their client. And that client isn’t you.
For sale by owner advantages (pros)
Pay less commission – you have the option to only pay the buyers agent or to not pay any agents. You’ll need to use some of this savings to pay for the marketing, which can include yard signs, agent access lockbox and printed materials. Many homeowners either don’t have equity or need to use it to purchase their next home.
You have more control – there’s no middle man. You set the price and deal directly with the buyer or agent. It’s all on you. When you go to negotiate (both at the purchase price and then with potential repairs) you’ll go back and forth directly with the buyer or their agent.
You know your home the best – yes, you know your home better than anyone else! And some FSBOs feel who’s better than them to sell the home
Pros and Cons of selling your house for sale by owner
We reviewed the pros and cons of selling your house as a For Sale by Owner. The list broke down the advantages and disadvantages so you can make the best choice for you. The next step is for you to download the Get Ready to Sell Checklist now.
- Top 20 Tips for Selling Your Home
- 15 Things to Do Before Putting Your Home on the Market
- Confessions of a Buyer: What Every Seller Should Know
- 5 Quick Tips on How to Impress Prospective Buyers
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