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Is For Sale By Owner Right For You?
Short answer: Maybe. If. . . The "if" is, if you can price your home competitively. Statistically, most For Sale By Owners start off overpriced for their neighborhoods and by the time they finally sell, they've actually had to come down below  market value. This is a shame, because FSBO is such a great opportunity to use the Realtor commissions you're saving to price more competitively and sell quicker than listed properties. Bottom line: Experts advise, if you're going to try FSBO, don't get greedy. Use the financial advantage you have wisely, and you may just beat the odds. For more good advice on how to make FSBO work for you, contact Barb and Eric and ask for our free FSBO How-To Package. |
Trend: Fewer Home Sellers Going For Sale By Owner
The proportion of homeowners selling without a real estate agent continues to drop. In 1997, 18 percent of owners went FSBO (For Sale By Owner). In the first quarter of 2003, it was only 14 percent. The trend is clear. And so are the reasons.  FSBO seems on the surface to be a great idea, potentially saving sellers half or more of the real estate commissions paid by those who list their homes with real estate companies. So why are fewer and fewer sellers choosing to go FSBO?
 The main reason is money: Sellers just make more on the sale when they use a real estate professional. The median FSBO selling price in 2003 was 20 percent lower than the median agent-assisted price. Even subtracting broker commissions, that leaves a lot more profit for homeowners who hire an agent to sell.
Other reasons for the decline of FSBO include: the increasing complexity of the transaction process, with more disclosures and legal requirements than ever before; the time required to market and show a property; and security concerns about the motives of strangers dealing directly with owners and walking through their homes. Source: National Association of Realtors
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The biggest danger in setting out to sell without an agent is thinking it's going well when it isn't. Beware of these common FSBO myths:
"We're getting lots of lookers, and some of them say they may call us back." Of course they do. Nobody looks a seller in the eye and says "It's all wrong, you won't be hearing from us." Your yard sign may get lots of calls to see the house. But the fact is, a much lower ratio of unrepresented buyers are qualified to buy. On the other hand, when an agent shows a buyer client your house, you can be sure that buyer is a qualified prospect. Agents don't waste their time and gasoline driving people around to look at houses they can't buy. The lesson: Even if you don't list your home on the MLS, offer a competitive commission to buyers' agents; their cooperation is well worth the cost.
"I'm saving money on commissions." Not necessarily. Buyers see "For Sale By Owner" as an invitation to reduce their offer by 6 or 7 percent, knowing that you're not paying real estate commissions. They also feel -- and statistically, they're right -- that most FSBO's overprice their property beyond the neighborhood's established market value anyway.
"I know how to negotiate for the best price." Really? Better than someone who makes his or her living orchestrating real estate transactions -- probably doing several of them every month? The fact is, most For Sale By Owners never get full market value for their home -- and remember, that's despite the fact that most of them overpriced the property to begin with! Do the math, and it's easy to see where the problem lies.
"I know the selling points of my home better than an agent could." Not likely. You do know your home itself better than an agent could, but it's doubtful that you know how to sell it better than a real estate sales professional. In any case, it doesn't matter. Because the chances are you won't get many opportunities to try. Buyers are reluctant to bring out and discuss objections with the owner because of the personal element involved. They don't want to put the owner in the position of defending his own home. So they just smile and say, "We may be back," and you never hear from them again. But if the buyers are working with an agent, they'll voice their dislikes to the agent, and the agent will know how to counter their objections with salesmanship. "Yes, the colors are wrong, but remember, paint is just paint." Or, "Yes, I know you wanted one more bathroom, but at this price you could afford to add one." This is one more reason to offer an attractive commission to buyers' agents -- and to stay out of their way while they show your home. |
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