If you want to buy or sell a home this Spring be warned — demand is high, and supply is low. A hot market like this might tempt potential sellers to go at it alone; however, it’s not as easy as you’d think. Here are the TOP THREE PERCEPTIONS OF FSBO and how they might end up costing you money.
FSBO Perception #1
Perception: People are getting into bidding wars on homes. My house will practically sell itself.
Reality: Selling the house is just one step in a long and complex process.
This is the most common one we hear. Sellers often assume that finding a buyer is the most important thing, and the majority of what Realtors offer. That’s not even close to the truth. Correctly pricing and marketing the home, evaluating and negotiating the best offers possible, managing timelines, and overcoming problems are just a few of the many things Realtors facilitate.
Before listing a home, your Realtor should provide a “Market Analysis” of your home and compare it to recently sold homes in your neighborhood. This will ensure you correctly price your home to sell. If you price it too low, you might lose out on potential money. One would think that in a seller’s market you could just price it higher to avoid underselling. However, you might run into appraisal issues down the line if you price the home too high. This can result in needing to drop the price or losing the buyer and their offer all-together.
An agent will also help evaluate offers, so you can determine which is the best one. Many times the offer with the highest dollar amount isn’t necessarily the offer that will get you the most money. In addition, there are other things to consider such as types of financing, timelines, types of inspections allowed, closing expenses and more.
Another benefit to an experienced Realtor is that they can avoid problems before they occur. There are hundreds of issues that can happen between an accepted offer and signing the final documents. A good Realtor should help problem solve and offer guidance throughout the process to keep things moving forward. Many times these are things that can delay a closing, cost the sellers more money or even kill a sale.
The Downside of FSBO
Since the seller represented themselves and wasn’t aware they could try different techniques to reduce their loss, they signed the addendum and we moved forward with the transaction.
A few years ago, one of my clients fell in love with a house that was listed as an FSBO. I scheduled a showing and helped draft and negotiate an accepted offer. Several weeks later the bank appraisal came back on the home, and it was $12,000 lower than the purchase price. In my opinion, this was not an accurate appraisal price; however, I represented the buyer and had a fiduciary responsibility to work on their behalf. I notified the seller that the bank appraisal came in low and drafted an addendum with the purchase price that reflected the new appraised value. Since the seller represented themselves and wasn’t aware they could try different techniques to reduce their loss, they signed the addendum, and we moved forward with the transaction.
In the end, the seller lost $12,000! If I represented the seller, I would have attempted several things to mitigate the loss, potentially allowing the seller to keep more money in their pocket. Furthermore, a Realtor’s commission would have cost them less than the $12,000 they lost. In fact, the seller more than likely would have made more net money if they had hired an agent.
In an FSBO situation, the buyer has to make sure all paperwork is correct and on time. Timelines are important but making sure the seller has all the necessary documents, and those documents are filled out properly, is crucial. Most of these are legally binding. The statute of limitations in Nebraska is five years, so one mistake could haunt them for years.
A Realtor also ensures vendors complete things on time. The Realtors on the Blythe Team go above and beyond and help orchestrate things for our clients quite often. The agent can often schedule appointments that are beneficial for everyone, making it so the client doesn’t even need to be present to meet the contractors.
Experienced Realtors know the ins and outs of the business and are there to guide you towards the best decision and ensure the process is moving along smoothly.
FSBO Perception #2
Perception: With a market like this, I don’t need to market my home.
Reality: Marketing brings in the most qualified buyers.
The ultimate goal when selling your home is to profit as much as you can, in the ideal timeframe with as little stress as possible. The more people who see your home, the more opportunity to find qualified buyers. This is where marketing comes in. Listing the home in the MLS, sending email blasts, promoting the home on social, and holding open houses are a few ways an agent will market a home. Nearly half of FSBO sellers did not market their homes and only 6% were listed on an MLS website. Comparatively, 91% of sellers who hired a real estate agent listed their homes on an MLS. The MLS displays listings across many brokers and brokerages. With nearly 3,000 realtors in Omaha and surrounding areas, you are missing hundreds of potential buyers by not marketing your home.
Here is a good comparison analogy. If you want to buy a specific car, would you rather visit a dealership that has the car in stock? Or would you rather check the classified ads in hopes you find that specific car?
FSBO Perception #3
Perception: If I sell it myself, I’ll make more money because I won’t have to pay commission.
Reality: Studies have shown that FSBO homes are typically sold for less than comparable homes sold with the assistance of a Realtor.
Last year, only 8% of home sales were FSBO. FSBO homes sold at a median of $217,900. Comparatively, homes sold with the assistance of a Realtor sold at a median price of $242,300. In addition, 38% of all FSBOs were homes sold to people who knew the buyer. And in these transactions, the homes sold for even less. If we calculate a 6% commission from the median sold price of $242,300 above, the seller could still walk away with around $10,000 more than they would get through FSBO. This general stat doesn’t include a seller paying for a buyer’s closing costs, repairs to sell the home, etc. These are all things a good Realtor could negotiate down or out entirely thereby increasing your net profit.
FSBO, while possible, is oftentimes difficult to manage. Hiring a real estate agent to sell a home is still overwhelmingly popular, with 89% of sellers choosing to do so in 2019.
Thinking about selling your home? Contact the Blythe Real Estate Team today to get started.