For Sale By Owner, also know as “FSBO”. The idea here is you can sell your house yourself, thereby saving all that commission money you pay a REALTOR®.
Granted, I am a REALTOR®, so I am a bit biased in what I am going to say here. “Why in the world would you want to put the sale of the most valuable asset you own into non-professional hands?”
I am NOT saying that people out there are non-professional. What I am saying is that unless you sell real estate for a living, you are NOT a real estate sales professional. And maybe your home isn’t your most valuable asset, but the odds are pretty overwhelming that it is.
There is plenty of data out there that says the average FSBO home sells for 5 – 10% below market value. And that’s just the sales price folks; it doesn’t include the marketing, time and frustration costs of selling your home. Given that the “typical” commission rate for a home sale is 6%, is a FSBO really saving money if they get 5 ”“ 10% less on the sale? That’s not advanced math. You may be saying to yourself, “Self, even if I sell it 5% below market, I save 1% on commission!” Please go back and re-read that part about NOT including marketing costs, the cost of your time, and the cost of the frustration involved.
There is also data that supports the fact that 80 – 90% of people trying to FSBO wind up listing with a real estate agent. If selling your own home was so easy, and saved so much money, why would 85% of the people doing it give up? Hmmmm
Yes, sometimes it works, but a lot of times it doesn’t. True case: About 6 months ago, I got a call from a couple in my neighborhood. They were considering selling their home and wanted to talk. So talk we did. I did a “CMA” (Comparative Market Analysis) which told them what I considered to be the market value of their home. It was about $20,000 less than what they wanted. They also wanted me to cut the usual commission by 66%. So it didn’t work out. But I stayed in touch. In our market, prices are increasing aroundd 4% a MONTH. In 5 months, their house could be sold for what they wanted. So I called them back, we talked, and they said they’d think about it. That weekend I saw the Assist-2-Sell sign in their yard. Assist-2-Sell charges people flat rate fees to do various things for them under the guise that they can save the seller oodles of money.
I live two streets over from this house. I drive by it every day. For the last four weekends, I’ve seen “Johnny” (the owner) out at the crack of dawn putting up his open house signs, tying balloons on them, all that stuff. In the evenings, I see Johnny trudging around in the 110 degree heat, taking his signs down. This happens EVERY Saturday and Sunday.
I’ve talked to them. They still want too much (but not as far off as before) and they are offering a 1% co-broke. (What the buyers agent receives. The usual around here is 3%). The house is NOT in our MLS (“We save a lot of money by not putting it in there”, says Johnny). I assume it’s on an Assist-2-Sell site, but I can’t find it as they seem to list homes by office, and there is no indication of which office it’s listed with, and no way to search across offices. Nice system. Maybe it’s not on the A2S site either, saving Johnny even more money.
One fundamental rule of real estate sales: if you want to sell your house, people have to know it is for sale.
This week marks week #5 that Johnny is trying to sell his home himself. For a home like his, in our market, the average time on market is more like five days, not five weeks.
Johnny used to smile, wave, and even flag me down to talk when I saw him putting up or taking down his signs. Then a couple of weeks later, he just smiled. This last weekend, he just nodded his head. Johnny appears to be getting quite frustrated selling his own home.
Here is a snippet from a recent article on FSBO’ing:
In addition to all the tasks an owner usually does — prepping the house, keeping it clean, containing kids and pets — you have to perform the tasks usually overseen by the agent, such as:
Setting the asking price;
Advertising and marketing the property;
Showing the house to prospective buyers (often with little notice);
Differentiating between well- and poorly qualified buyers;
Making disclosures required by federal, state and local laws;
Negotiating the final deal;
Opening an escrow;
Ordering a payoff for your mortgage.
All this mess frustrates Johnny. I understand why! It’s not easy. Failure to do some of these things means you home will never sell. Failure to do others (ie: proper disclosures) sets you up for a law suit.
I’ll post more on the trials and tribulations of For Sale By Owner later. Of course I’m going to tell you to use a REALTOR®. But honestly, I’m not just saying that for my own good, I’m saying if for YOUR own good, too!