Thoughts on FSBO Home Selling...

Many homeowners opt to sell by owner because they assume that they will be able to attract similar interest and offers compared to selling with an agent, and that the process of solifying a purchase contract and going through escrow to a successful closing is fairly straightforward. If all the pieces of a real estate transaction fall into place, it can appear that selling a home is simple. And so some people question why they would pay a commission for something they are capable of doing themselves.

Doing it yourself
Our society is increasingly empowered by do-it-yourself information on the internet, and so it's not surprising that the number of homeowners giving the sell-by-owner method a shot is on the rise. The good news is that it is estimated that close to 25% of all the homes sold last year were for sale by owner (FSBO). If you take advantage of our Utah For Sale By Owner Assist Kit! (apply here), you could very well be one of them!

However, before you jump in, you owe it to yourself to pause and consider that even successful FSBO home sellers have some interesting opinions of the process. Close to half of FSBO home sellers polled in a recent real estate follow up study said that they would hire a professional the next time they sold, rather than FSBO again. Thirty percent said that, in retrospect, they were unhappy with the net profit that resulted from their home selling efforts. There are quite a few reasons why past By Owner Home Sellers decide that there is good value in hiring an agent to be responsible for selling your house. Some of the reasons are are related to economic and social market factors, and some of them to how you personally value your time, energy, and privacy.

Is it worth it?
Many FSBOs determine that the time, paperwork and everyday responsibilities involved were not worth the amount of money they saved in commissions. For others, the financial savings end up being substantially less than what they had estimated at the time they made the decision to sell by owner. The costs of marketing, advertising, provider fees, and incidentals add up!

Pricing your home correctly is one of many important factors
Selling a home requires an intimate understanding of the real estate market and real estate considerations. Dedicated professional Realtors® have committed themselves to developing their knowledge of all aspects of real estate. One aspect of home selling that is widely discussed is the "art/science of pricing". If the property is overpriced, it will inevitably sit and develop a reputation for being a problem property. Depending on your situation, the cost of extended time on market can quickly eat up any "savings" you were hoping to see by selling by owner. If the property is underpriced, you may very well sell quickly, but you may also have unnecessarily foregone some of your hard earned home equity! Pricing a property in the right range for attracting buyers AND maximizing profit is no simple endeavor! It is influenced greatly by local market conditions (number of houses available, mortgage rates, real estate trends, demographic and economic forces, to name a few). Property value is ultimately determined by the marketplace, but if your asking price is too far off the mark, you effectively rule out even the possibility of enticing a buyer to negotiate. Pricing is just one of many pitfalls that FSBOs have potential to make uninformed decisions about that can offset and even outweigh the cost of a Realtors® commission.

What kind of buyers will you attract?
It can be quite disappointing for FSBOs when their hopes for full price offers are met with mostly low-ball offers from investor buyers. When home sellers experience this firsthand, a good number begin to question if their life would have been simpler, and bottom line healthier, if they had hired a Realtor® to take care of their transaction. Industry experts argue that compelling MLS data (asking price vs sold price) supports the theory that they are better able to attract offers that are closer to asking price. Since professional Realtors have and arsenal of industry networking and marketing resources at their disposal, they are able to draw from a larger pool of qualified "retail" homebuyers, which typically results in faster sales for more money. 7 out of 10 FSBO sellers end up listing with an agent after

Before you decide to sell FSBO, consider the value of your time and energy, along with the amount of responsibility you assume, versus the actual dollar and/or net cost of employing a real estate professional to spearhead your home sale for you. You CAN sell your own home successfully on your own -- but it is quite a lot of hassle, and it takes a willingness to learn the details and nuance of an entire profession. For many, the work it takes to learn the ins and outs of an entire profession is just not worth it for the return on a single transaction!

Take the FSBO Home Selling Assessment Quiz

Q. Do I have the time, energy, know-how, and ability to devote a full forced 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.

Q. Am I prepared to deal with an onslaught of buyers who perceive FSBOs 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 usually leaves you financially worse off than than paying broker commissions.

Q. Am I aware of and prepared to protect the privacy and safety of my family, property and possessions?

There are two nice things about giving prospective buyers access to your home through an agent:

the identity and motivation of those prospective buyers is verifiable
most agents will insist that their buyers are pre-approved (or at least pre-qualified)

Q. 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.

Q. 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.

Q. 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.

Q. 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.

Q. How do I make sure the transaction goes smoothly after a buyer makes an offer?

This can be treacherous ground -- after all, selling a home is likely to be one of the most complicated legal transactions you are likely to enter into. Even most commission-based real-estate agents can provide only general tips or suggestions based on what is "typical" in a transaction. They cannot advise you on the legal implications of the documents and terms you are agreeing to. If you do not feel comfortable with and knowledgeable about the legal terms and application of real-estate contracts, consult a real-estate attorney in your area. Such attorneys will be able to draft or review the contracts, answer questions you may have, prepare some of the closing documents and perhaps attend closing with you. Your agent or flat-fee real-estate service provider may be able to refer you to such an attorney. Legal counsel may be helpful even if you have a real-estate agent, but it is particularly valuable if you are pursuing a FSBO transaction.

I sincerely hope these tips and ideas are of value to you. If you determin that I can be of service to you either via the FSBOAssistUtah Program or as a Listing Agent, feel free to contact me and we can discuss your options.