If you’re trying to sell your home on your own, you’re a FSBO (For Sale By Owner.) That’s what we call you in the real estate biz: FSBO. Think of it as a term of endearment.
While your DIY desire is respectable, it might not be the smartest thing to do if you want to sell your property for the highest dollar and you want to do it fast.
Did you know that Colby Sambrotto, founder of ForSalebyOwner.com, which is one of the most popular and robust FSBO sites on the Web, ended up listing his home with an agent AND paying a full commission?
If he couldn’t get the job done for himself using his website, how effective do you think this approach will be in getting your home sold for the highest possible price in the shortest amount of time?
There are several reasons to hire an agent to sell your home. Firstly, a state-licensed realtor has worked hard to pass a difficult test in order to be licensed to handle real estate transactions. Secondly, they’ve invested a lot of money into practicing the trade, educating themselves on real estate issues and keeping their license current. Thirdly, you need a license to practice real estate in the State of Michigan. These reasons speak for themselves.
FREE RESOURCES FOR FSBOs
Here are 10 more reasons to list your property with a realtor:
1. Trust & Credibility – Qualified buyers know that FSBOs aren’t bound by the Code of Ethics that Realtors are. FSBO sellers could do and say whatever they want to get their home sold.
2. Safety & Showings – Because FSBOs don’t have lockboxes, that means the FSBO will need to be present for every showing. There are numerous challenges with this situation, the most important of which is safety. Is the person who wants to see your house legitimate or not? Even if you accept an offer from a potential buyer, how do you know whether the person meets the income and credit requirements to close the deal?
3. Negotiation & Documentation – Throughout a real estate transaction, there are many back and forth negotiations going on. This is because real estate agents are hired to best represent their clients, and to handle the complexities involved, including: the disclosures, offer, counter offers, addendums, closing date, financing terms, comps, appraisal report, inspection report, daily occupancy rate, and more.
4. Qualified Buyers & Sale Price – Buyer’s who are represented by an agent are more prepared and qualified to buy, and they are willing to pay for quality. On the other hand, a FSBO attracts buyers who are looking for deals. The result is that many FSBOs end up selling for up to 20 percent less on average as compared with sellers who hire a Realtor. I used to sell cars. If you visit Kelly Blue Book’s website, you can enter data about your used vehicle and find out how much someone will pay for your car if you were to sell it on your own versus the price a dealer could get for the car. The dealer gets a lot more. The same goes for real estate and using an agent.
5. You Pay Either Way – Most FSBO decide to sell on their own because they think they will be saving money by not paying a commission. But, a buyer might have a contract with a realtor that states that they will pay a buyer’s agent commission of 3% (for example) and if the seller does not pay it, then the buyer must. The buyer will factor it into the price of the house. FSBOs should state in their advertising what commission they will pay a buyer’s agent. FSBOs will get more buyer agents to bring their clients in. If there is a buyer’s agent involved, you will be paying her/him either as a straightforward commission or the buyer will deduct it from the price of the house.
6. Buyer Perception – Along the same lines regarding qualified buyers, it’s easy for buyers to question a FSBO. Buyers think a FSBO is broke; otherwise they would’ve hired a professional real estate agent. If the seller is broke, then what happens if the home doesn’t appraise for the agreed price? What if the inspection report reveals the furnace and roof are on their last leg and need replacing? FSBOs deter those buyers who are willing to pay top dollar. These types of buyers aren’t likely to purchase from someone who might have also cut corners on their home instead of paying a professional to fix the plumbing, electrical, roof, etc.?
7. Buyers seek rich content —
A realtor will list your property on the local Multiple Listing Service (MLS), which is the primary tool used by buyer’s agents who can bring qualified buyers to see your home and make offers. In addition, an agent’s broker publishes your listing to hundreds of websites, helping your property stand out online.
8. Instant gratification —
Potential buyers searching the internet are seeking instant gratification. Most will only visit a website once and stay for 15-30 seconds. If a FSBO has no strategy for capturing the lead’s contact information or for immediately following up, the lead moves on to the next website. Even if the lead does contact the FSBO, unless the buyer gets back to the FSBO quickly, that lead is gone.
9. The needle-in-the-haystack effect
A major challenge for FSBOs is the needle-in-the-haystack nature of the internet. There are millions of websites including the hundreds of thousands of company and agent sites. Without search engine optimization, meta tags and a host of other branding strategies to achieve high Google search placement, the probability of the online buyer finding the FSBO’s single listing online is small.
Of course, you could post on sites such as ForSalebyOwner.com, ByOwnerMLS, or utilize the “Make Me Move” feature on Zillow. The challenge is that unless the buyer specifically wants to purchase a FSBO, it’s much more efficient to search on the brokerage or MLS sites.
The FSBO could also put his home on Craigslist. There are two challenges, however. First, the FSBO has to repost the ad regularly for it to appear near the top where it can be found. Second, there have been so many rental scams and unsavory people using that site to identify targets for possible criminal activity that listing there could be a major safety issue.
10. Internet leads are reluctant to share contact information —
Another issue FSBOs must face is that most Web buyers are reluctant to provide contact information to a stranger, especially during the search process. Instead, buyers identify homes they want to see and then normally contact a single agent who can show them everything they want to see, not just a single home. Buyers are actually more comfortable working through an agent.
(Portions of this post were adapted from articles published lightersideofrealestate.com: “5 reasons you shouldn’t buy a For Sale By Owner (FSBO) home” and on inman.com: “8 reasons FSBOs should list with a realtor.”)