The most commonly cited reason from home sellers for considering offering their property FSBO – for sale by owner – is to save money on real estate commissions paid to a broker/brokers. This may be especially true right now as the lingering effects of the COVID-19 pandemic have lots of people watching their wallets.
However, an FSBO is not a good idea for the vast majority of sellers. Why? We could spend all day on the subject, but for now here are just five reasons that taking on the ‘challenge’ of selling their own home usually turns out to be a lot harder – and far less successful – than people think, especially in 2020 and a post COVID-19 pandemic world.
1. Online Strategy for Prospective Purchasers
Recent studies have shown that 95% of buyers search online for a home, and they do so before they even think of calling a real estate agent. In comparison, only 13% use print newspaper ads. Most real estate agents have an Internet strategy to promote the sale of your home via their own websites and social media presences.
Many also invest money in PPC advertising to drive traffic to their listings and in SEO and content creation to drive interested, active buyers to the web properties via organic traffic. Could you do the same?
Then there is price. Do you know what your home is REALLY worth? Online calculators give a very loose estimate, the bot has never been to your unique home so has no clue what really is, and isn’t, salable about it. Comps can help too, but are inaccurate for the same reason.
2. FSBOs are a Hard Sell to Agents and Their Clients
You may be selling your own home, but most people use a real estate agent both to buy and to sell their home. And while no good Buyer’s agent will ever refuse to show an FSBO if the client likes it they are rarely going to suggest it.
Why? FSBO’s often have a reputation of being overpriced and the owners difficult to work with. Also, most FSBO’s will not be on a lock box, so that makes showing those types of properties even more difficult since everything depends on the seller’s availability.
The COVID-19 pandemic has complicated things even more. There are now very strict rules in place for home showings -here in the Waterloo Region and elsewhere.
While real estate agents know not only a possible sale but their license depends on following these often complicated procedures and protocols, FSBO sellers may not be as concerned. Which will make many (most?) home buyers and agents feel unsafe about viewing the property.
3. There Are Too Many People to Negotiate With
Here is a list of some people with whom you must be prepared to negotiate if you decide to try to sell your home For Sale By Owner:
- The buyer who wants the best deal possible
The buyer’s agent, who represents the best interest of the buyer
The buyer’s attorney
The home inspection companies, which work for the buyer and may find some problems with the house that delay or derail the sale
The appraiser, if there is a question of value
That’s a lot of people. Are you ready to deal with them all?
4. FSBO Has Become Increasingly Difficult
The paperwork involved in the FSBO process has increased dramatically as industry disclosures and increased regulations have become mandatory. This is one reason that the percentage of people FSBOing in Canada has dropped from 19% to 7% over the last 20+ years.
5. You Net More Money When Using an Agent
Many homeowners believe that they will save the real estate commission by selling on their own. We realize that the main reason buyers look at FSBOs is because they also believe they can save the real estate agent’s commission. But data says they won’t save any money at all.
A study by Collateral Analytics revealed that FSBOs don’t save anything by forgoing the help of an agent. Sometimes, they may cost themselves more.
One of the main reasons for the price difference at the time of sale is that properties listed with a broker that is a member of the local MLS will be listed online with all other participating broker websites, marketing the home to a much larger buyer population. And those MLS properties generally offer compensation to agents who represent buyers, incentivizing them to show and sell the property and again potentially enlarging the buyer pool.
The more buyers that view a home, the greater the chance of a bidding war for the property. The study found the difference in price between comparable homes of size and location is currently at an average of 6%.
Listing on your own leaves you to manage the entire transaction yourself. Why do that when you can hire an agent without additional cost?
Before you take on the challenge of selling your house on your own, sit down with a real estate professional in your marketplace to discuss your needs.