Selling Your Home on Your Own? It’s No Walk in The Park
It looks like a no-brainer. Spiff up your house, do a little self-staging (well, box up your figurine collections), throw a sign up in your front yard and save yourself thousands of dollars when selling your home. What the typical FSBO (for sale by owner) seller may not take into account, however, is that means making dozens (if not hundreds) of decisions, some of which can have legal, costly consequences.
Selling a home can become a full-time job when doing it on your own.
THERE ARE A FEW PROS AND CONS TO CONSIDER BEFORE GOING DOWN THE FSBO PATH, ONE THAT LOOKS NOTHING LIKE THE YELLOW BRICK ROAD.
THE MOST COMMON REASON PEOPLE SELL ON THEIR OWN IS, OF COURSE, TO AVOID COMMISSIONS.
Commissions which are paid at close of escrow (settlement) time, average between 3-6 percent of the home’s purchase price and are typically paid by the seller from the proceeds of the sale. In an agent-employed sale, the buyer and seller have their own agents, with the commission split in some fashion between the two.
YOU DON’T HAVE TO LISTEN TO AN AGENT TELL YOU HOW TO PREPARE YOUR HOME TO SELL.
Selling a home sometimes takes an investment in staging, updating, etc. if your home is 10 years old or older. In more competitive markets, that investment may be much higher in order to compete with other listings that are similarly prepared. Savvy agents tell their sellers to consider this investment in order to sell quickly and at the highest price possible, but you are responsible for both the price at which you offer your home as well as the final price you settle on.
IF YOU DO YOUR HOMEWORK, IT MEANS DOING A FEASIBILITY STUDY.
- looking at comparable closed sales within the last 3-6 months
- current listings and what those listings featured that your home doesn’t
- consider how your house stacks up in terms of size, updates, and location
The key here is the ability to put emotion aside. Look at your home as an asset, a product and not the place where cherished memories and painstaking remodels took place.
NEGOTIATING A CONTRACT WITH BUYERS OR THEIR AGENT IS AN AREA MOST CONSUMERS HAVE LITTLE TO NO EXPERIENCE WITH AND MUST THINK LONG AND HARD ABOUT.
Holding firm at a price that is unrealistically high may mean having a home on the market for much longer than typical listing periods (usually 3-6 month terms). Numerous price changes (many owners lower the price in desperation to get their homes sold) can tip agents off to a lack of knowledge on the owners’ part, making them vulnerable to buyers’ offers being all over the map.
PROFESSIONAL REAL ESTATE AGENTS MAKE IT THEIR BUSINESS TO:
- know neighborhoods
- consider the location
- see what is going on not only while a home is being listed but also where that neighborhood may be going in terms of future growth and attractiveness to the buying public (new schools, new commercial corridors bringing jobs to the area, etc.) and will market the home giving buyers all the information they have gathered in order to get the best price and terms possible.
ANOTHER ASPECT MANY FSBO SELLERS DON’T CONSIDER IS THAT YOU ARE THE SOLE POINT OF CONTACT FOR POTENTIAL BUYERS.
It’s your job to determine which buyers are serious and which are wasting your valuable time. Are buyers making appointments to see their home with a mortgage pre-approval letter in their hands? And if they say they’re paying cash, how does an FSBO seller verify their funds?
Good real estate agents are more than a friendly face on a sign swinging on a post in a front yard.
- They know what appeals to buyers in a specific marketplace.
- Have access to the Multiple Listing Service (MLS), used by agents nationwide to share listings information and get referrals from their happiest former clients as well.
- They are also versed on many of the legal ramifications of selling a home that can open up owners to a plethora of litigious possibilities, disclosures about the condition of the home, soils reports, flood maps, etc., all of which are revealed in exhaustive descriptions to buyers before sign on the dotted line.
We’re betting the average FSBO seller doesn’t read legalese for fun. So if you’re not considering working with an agent, it’s wise to hire a real estate attorney, even if you have some legal expertise yourself. Every state has its own requirements for real estate transactions and some are far more demanding than others. Be sure to make yourself the consummate expert and make it your own business to understand what can happen if you aren’t.