For-Sale By Owner Pros and Cons

As a Realtor most people would think that I would say absolutely under no conditions should you ever sell your home on your own. Only use a Realtor. I do feel that a majority of situations warrant the use of a Realtor or licensed agent. However, there are certain situations that warrant “By Owner” sales to make sense.

As a potential “FSBO” (For Sale By Owner) or “fisbo” you need to check to see if you have what it takes. Seven basic criteria should be tested prior to selling your own property. The first requirement of selling anything is the marketability. Is your property something that will appeal to a great number of buyers or will it only draw-in a small group. If you have a three bedroom 2 bath “starter” home in an average neighborhood. You will appeal to a larger group than an expensive home in an upper-bracket neighborhood. The more the home costs the longer it will likely need to be marketed. Starter homes almost always sell 2 to 3 times quicker than a home costing double or triple what they do. If you are in the upper-bracket the FSBO route may not be as good of an Idea because you already have a limited audience for your property.

The next criteria to look at is what is your window of time to sell the property. I have heard the national average on a FSBO for sales success rate is just 8%! Most FSBOs will eventually not sell or will list with an agent. The shorter the amount of time you have to sell the property the more important it should be to get an agent involved. Agents will take a particular interest in selling your property because of the commission. They will bring their own buyers to see the property and they will market it to other agents in their office and elsewhere. If you have plenty of time to wait and get the buyer yourself than the FSBO route can be more appealing to you.

Another criteria to consider is how are you going to market the property? If your home is located close to a road that has heavy traffic more people will see your signs and your property. If your home is hidden away on a Cul-de-Sac in a residential neighborhood or off the beaten track your potential to draw buyers will be more limited. If you are going to go the FSBO route you absolutely need Internet exposure. Recently, their has been a huge change in how buyers start their home search. In the past a majority of buyers started their search by using an agent. Currently, an estimate 90% of people searching for homes start their searching process without an agent by using the Internet to located properties! If you are not using the Internet to market your property to these buyers you are missing the boat. This change in buyer’s behavior creates a huge opportunity for some sellers that use the Internet properly and will have a huge negative effect on those that do not. People that are going the FSBO route should get one of the services that expose the home to a Multiple Listing Service online as an absolute necessity. As a seller you want the largest exposure of your home. Without being on the local MLS system you are limiting any chance of getting your asking price and possibly even getting a buyer.

Working with Realtors and real estate agents should also be an absolute must for FSBOs. Statistically, 80% of all buyers use a real estate agent or Realtor when buying a home. If you do not allow for that agent to be paid in the sale of your home you are flat-out foolish. If an agent brings you a buyer and your bottom-line is not met when they want their commission paid from the offer price simply don’t accept the offer. As a seller you can look at all offers and accept the one that best suits you so why turn anyone away? I am shocked when I find a FSBO that does not want to pay an agent bringing a buyer. It takes all kinds I guess…

The next consideration should be how good of a salesperson are you? If you are the type of person that would sell their car rather than trade it in you will have potential in this area. Selling a home isn’t as easy or as hard as it is made out to be. To give you an Idea of this 20,000 agents are in my association of Realtors. We were involved in 58,000 transactions. We averaged less than 3 transactions per person. When you consider that a number of agents are selling 3 homes per month or more there are several that go through the whole training process and never sell a home. Eight out of twenty agents in my office did not sell a home last year! They found out the hard way that selling a home isn’t as easy as just showing homes to people. I have people tell me all the time that Realtors don’t work very hard. I’ve heard it said it is the easiest and hardest job on Earth. You can work as little as you’d like or as much as you want. A lot of the time I have a hard time knowing when to quit working. As a potential FSBO consider if you have what it takes to sell your home. Have you had success in selling other things? Ask your honest friends for their opinion on the matter.

The sixth consideration should be how available are you to answer your phone? If you work a job that won’t allow you to answer your phone or you have a busy life and will keep you from responding quickly then you will run into problems selling your property. In today’s society people want everything right now. If they call you for information they often won’t leave a message if you don’t answer. They want to talk to a person not your voice mail. I drive my wife crazy by answering my phone at all times of the day, but my clients love it and expect it. If you are going to sell homes you need to be available at all times of the day.

The final consideration and one of the most important is the legal aspects of the sale of your home. Each state differs in their laws and often municipalities will differ in their laws as well. If you don’t know the laws and the proper forms that need to be filled out you may be setting yourself up for a big lawsuit. If nothing else employ a Realtor or Real Estate Lawyer to check your contracts before they are signed. Before I became an agent my Mother sold her home on her own. She agreed to allowing the people into the home before they bought it. This was only a minor agreement, but they showed up whenever they wanted to and left late at night. She had to contend with them and the paint fumes for days. She could have done a lot worse. Their are a lot of items on the Purchase Agreement that can cost a buyer or seller Thousands of dollars and even an experienced agent can make mistakes, and a novice home seller should be extremely careful in this area. A Realtor will often charge a minimal fee of $1,000-$2,000 to watch over the transaction and make sure to avoid problems a Real Estate Lawyer can do the same for similar charges or more. I would specify a Real Estate Lawyer because they specialize in Real Estate transactions. Not all lawyers are familiar with Real Estate transactions. Use a specialist you will be much happier with the results.

So, before you put the For-Sale-By-Owner sign in the yard consider all of these items. I will have an article what to look for when selecting an agent to represent you.

Technorati Tags: