Everyone has a bit of a DIY streak, and sometimes people are tempted to apply this to selling their home. While hiring an agent may seem expensive, or even unnecessary, there’s a lot to consider before selling your home independently. If you're thinking about it, it’s worth knowing the pros and cons of going it alone before diving in.
Pros of FSBO
Choosing the For Sale by Owner approach to selling your home has its appeal, and it’s not just because of the savings it brings.
The typical commission charged by real estate agents is 3% each to the listing and the selling agent, which is typically paid by the seller. As a result, FSBO can seem like an attractive option because you’re crossing off this expense right from the beginning. One detail to bear in mind, however, the majority of homeowners still pay a traditional buyer’s agent fee, so the prospective savings is really only 3%.
More control of the sale
With FSBO you have the first and last say in terms of how you want the sale to go down. From the asking price to the way your home will be advertised, which buyers to show it to, and even potential negotiations, you are in control of the sale. You also have all the responsibility. If you aren’t sure how to go about marketing your home, you might be disappointed with the result. According to a recent study done by NAR the following ranked among the biggest challenges for sellers:
Accurately pricing the home
Preparing the home for market
Having enough time to deal with all of the aspects of the home sales and marketing process.
Predicting the timeline for the sale
You know your home
You live in your home, no one is a better expert on your home than you. As a FSBO seller, you know exactly what the strengths of your house are, and as someone who has lived in the house and neighborhood for a long time, you may be able to use your knowledge to communicate with buyers. However, you also may not be able to see past your own perspective to help buyers imagine their life in your home. It can be difficult to disassociate your home and personal life with the business transaction that selling your home truly is. Buyers often expect a discount when dealing directly with a seller, which can be emotional and insulting if you are trying to negotiate on your own behalf.
Cons of FSBO
Being left to your own devices when it comes to the sale sounds great, but there’s more to selling a home than just putting up a listing and waiting for the calls to roll in. Here are some facts to take into consideration if you’re still considering a FSBO:
You could actually net LESS by doing FSBO-
According to a 2018 study released by the NAR, homes that FSBO sold at an astounding 40% less on average than homes listed by a realtor. Considering that most FSBO’s still pay a 3% commission to the buyer’s agent that’s potentially a 37% net loss. There could be other factors that could cost you additional revenue. Not knowing the normal market for things like seller concessions and home inspection repairs could cost you even more in the long run.
No professional help
Opting for FSBO means you are missing out on the exposure you would otherwise get if listing through the MLS (multiple listing services). For Sale by Owner websites do exist, but they get far less traffic than professional listing platforms. Even if you adversized on Zillow, FSBO ads drive interested buyers directly to real estate agents, making it difficult to contact the actual seller. Not only that, but you also run the risk of failing to attract buyers, if your listing’s photos and description aren’t appealing enough. Additionally, you will also have to handle all the paperwork and legal requirements, appraisal process, organize open houses, as well as screening your potential buyers to make sure that nothing is amiss and they do in fact qualify to buy your home.
If you’re considering For Sale by Owner as a seller, it’s always best to remember that it’s another full-time job, as you are now fulfilling the role of a real estate agent. If you don’t have knowledge or the time to advertise your home, show the buyers around, discuss the transaction details and deal with the ensuing paperwork, you might find it more trouble than it’s worth. Especially if it costs you more in the process.
You might not close the deal
A career Real Estate agent is highly motivated and qualified to sell your home. FSBO can be more stressful and time-consuming for both sellers and buyers, and as a result, some buyers might avoid buying your home, and opt for the smooth sailing that comes with a real estate agent.
Selling homes for top market value and having a smooth sale is an intricate process. It takes skill, time, knowledge and resources. Most individuals who are professionals in other industries just don’t have the time to dedicate to learning and executing the process. Only 11% of homes were sold by FSBO in 2019 according to the NAR’s 2020 report. Hiring the right agent can save you time and stress, and actually make you more than you pay them to begin with.