With housing on the upturn, multiple offers and rising sales prices are being reported in our market. Some potential home sellers might think that selling their home simply requires placing a “For Sale” sign in their front yard. Many Sellers have learned the hard way that selling a home in today’s marketplace is much more difficult than they imagined; and their efforts to save money on commissions may have been more costly than they anticipated.
Before venturing into doing the do-it-yourself option of being a For-Sale by Owner (FSBO), you need to fully understand what is involved in the selling of real estate and then compare the perceived advantages and the actual disadvantages to trying to sell your property on your own.
Here are seven good reasons why hiring an experienced professional REALTOR® may actually net you more money on the sale of your home when all is said and done – as well as saved you countless hours, headaches and stress in the process.
- Being a FSBO may not actually save you as much as you think. While you might save some of the cost of hiring a professional real estate agent to represent you, you may still need to pay 2% or more to the Buyer’s Agent in order to attract a larger pool of Buyers. Additionally, the true “savings” may be far less after you add all the other costs associated with selling – advertising, brochures and flyers, For-Sale signs, etc.
- You may get less for your home. The National Association of REALTORS® in 2017 found that over 93% of Homes Sold utilized an Agent and that the typical Sold price was 11% higher than a FSBO sale, resulting in higher net proceeds, even after paying a commission. That equates to a 5% or more loss for those do-it-yourselfers hoping to save a 6 percent or less commission. In addition, prospective Buyers of a FSBO property, looking for a bargain, may automatically reduce their offer by the amount of the real estate commission the Seller is attempting to avoid paying.
- A LOT goes into selling a home. Only 7 percent of Sellers sold their home on their own in 2017, according to NAR®. Novice Sellers may think you just stick a For-Sale sign in the front lawn and Buyers will beat a path to your door. Guess again! Professional agents develop comprehensive marketing plans, take professional photos and virtual tours, manage inspections and appraisers, oversee staging, hold Open Houses, place print and online Ad with Social Media, seek out potential Buyers and Negotiate with the Buyer’s Agents to get the best price possible for their Seller. Homeowners need to ask themselves if they are ready and capable to do all of that work on their own. Six factors necessary to get your property sold:
- Setting the right price. In today’s competitive real estate market, Buyers have access to more information than ever before. You have one chance to make a good first impression. In determining your asking price you should calculate the average sales price to list price ration in your neighborhood. If you’re serious about selling your house on your own, you may want to offer a Buyer a price incentive. After all the Buyer you’re looking for isn’t using a broker either. National statistics indicate that For Sale By Owners usually wind up with about 11% less than what they could have gotten by using a broker.
- Create your marketing plan. An ad in the paper, a sign in the front yard and word of mouth is a good place to start – but where do you go from there? The more qualified Buyers that you expose your property to, the higher the odds of finding a Buyer that’s willing to pay your price. I invite you to take a look at our marketing plan, and learn some strategies that may help you get your home sold.
- Preparing your home. Many factors come into play in preparing your property for showing. I’ll be happy to give you our secrets for properly preparing your home for showing
- Five questions to ask every prospect. (1) Are you pre-approved? (2) What’s the name and phone number of the person who pre-approved you? (3) How much did you get Pre-approved for? (4) What’s your possession deadline? (5) Do you have a home you need to sell first? You have to separate lookers from Buyers. You don’t want to wind up entering into an Agreement with somebody that down the road doesn’t qualify or is not in a position to buy your property. Our Team will be happy to put you in touch with competitive local lenders to help you pre-approve you prospects.
- Properly presenting your home. Don’t get emotional. When we show properties to Buyers, we don’t even want the Sellers there, because Buyers are less likely to express their true feelings. We invite you to call us today and we’ll share with your our strategies on presenting your property professionally.
- Negotiating the sale. It’s a fact even in a Seller’s market over 0-% of the properties sold sell for something less that the asking price. Prepare yourself for offers less than your asking price. Don’t get emotional. After all, one of the main reasons a Buyer is shopping For Sale By Owners is to try to get a better price. They know you’re not paying a commission. Be prepared, and present evidence proving the value of your property. A third party negotiator can literally save you thousands in negotiating the sale of your property.
- FSBO’s limit their potential pool of Buyers. FSBO properties are usually not listed on as many of the home search engines and websites as listings handled by real estate agents. This is problematic given that over 90 percent of Buyers use the internet to commence their home search, according to NAR®. Also, FSBO typically can’t put the advertising, marketing and networking resources into reaching as many potential Buyers as real estate professionals do. And with commissions reduced, or even eliminated for Buyer’s agents, there’s little incentive for real estate agents to show your home to their clients.
- Setting the right listing price is hard to do. Real estate professionals review comparable sales and local market conditions, as well as the pluses and minuses of your home as they suggest the list price. As an owner, you may not have a clear or objective sense of what that price should be. The right price may get your home multiple offers and perhaps even bids over the asking price. However, if the list price is too high then many potential Buyers may not even look at your home, let alone make an offer. On the flip side, you could undervalue your home’s features that may justify a higher sale price.
- It’s not always easy to be a “closer”. Getting a potential Buyer to make an offer isn’t the end of the process. It is not uncommon for agents representing Buyers and Sellers to negotiate back and forth on many of the terms in the purchase contract, including price, occupancy requirements and other conditions of sale – and there are often additional negotiations regarding credits and repairs during the escrow process. FSBO’s may find themselves sitting across from an experienced “closer” looking to drive a hard bargain and cut the best deal for themselves, rather than working to reach a “fair” compromise between both parties. This is a critical part of the transaction, FSBO’s should ask themselves who is looking out for their best interests? Working with a professional REALTOR® could help Sellers avoid several of the pitfalls during the negotiation and closing processes.
- Legal landmines in selling a home. There are a myriad of potential legal landmines for FSBO’s. Who will write the purchase contract? What if a Buyer’s contract proposal has clauses and other terms that could be detrimental to you? Sellers are obligated to disclose all material facts about their property and any omission or incorrect information could later be grounds for a claim or lawsuit. A REALTOR® can help you through that process by providing you with the correct advisories and disclosure forms. Realtor’s also carry a $1MM E&O policy to protect the parties against any future litigation.
- We offer an Easy Exit clause in our Listing Agreement where you can fire us if we don’t perform or fail to communicate regular updates on the sales status every week.
Selling a home is a lot harder than most people realize, even in a good market. And I’s very easy for non-professionals to make mistakes along the way that will end up costing them in the long run. With the sale of a home being the single biggest transaction most of us will ever make, this is the time to use an experienced REALTOR® to manage the process.