FSBO stands for “For Sale By Owner”. Many homeowners assume that it’s no big deal to sell a home on your own, FSBO-style. They figure they can make thousands of dollars more at closing than if they hired a real estate broker and paid commissions on sales. Many homeowners choose to sell their home without the help of a real estate broker and do well; Others find out the hard way just how much a real estate broker can help and how they can actually help get you more cash at the end of negotiations. Selling your own home may sound appealing, and it can save you thousands of dollars if you’re willing to do it. It can also cost you thousands if you do it the wrong way.
Here in Spokane Washington, the FSBO market has been through many ups and downs. More recently, the seller’s market that ended a couple of years ago made it arguably easier to sell your home without the help of a broker. Recently, however, the market has become a more balanced market. Many experts say it is now a buyer’s market as the number of expired listings has skyrocketed along with the total number of active listings. As of last week, Spokane had over 5,300 active listings in the Spokane Association of Realtors MLS. There we also have 2,711 residential sales that closed in the last six months. At the current rate of sales with this number of listings, it would take them over a year to complete without new listings being added to the MLS. With nearly 2,000 real estate agents actively marketing these homes, someone working for themselves seems definitely at a disadvantage in today’s market conditions. Of course, real estate agents, real estate brokers, and agents are experts in their field and expect to be paid a reasonable fee for their services.
Any homeowner who decides to take on the job of selling their own home is taking on an enormous amount of work and responsibility, but there are some potential benefits and challenges to doing it yourself.
The main motivation for someone to sell their FSBO home is to avoid paying a sales commission and keep that money. Real estate brokers typically require 5% to 7% of the total sales price as a fee. If your house is worth $200,000, then this fee is $10,000 to $14,000! This is money that you could possibly keep in your own accounts when you sell your home yourself. Conversely, if you make a mistake by underestimating your home’s value, leaving it on the market too long, misnegotiating transaction details, or incorrectly preparing the bill of sale, you could lose even more.
If you decide to sell your FSBO home, you should look at the potential savings and weigh them against the value of your time and effort. In the process of selling your home yourself, you will necessarily spend an enormous amount of time researching legal issues, sales contract technicalities, negotiating strategies, comparable properties, and the current condition of the local real estate market. These are all things that a real estate agent keeps up with in the course of running their business. If you don’t have the time for this, you may be better off with a real estate professional.
It is possible to market your house easily and without the assistance of a real estate professional. Billboards, signs, flyers, and newspaper ads can be effective marketing tools and are available to everyone. However, employing these marketing strategies will begin to eat up the money you planned to save. When a real estate professional is hired, the agency will often absorb the marketing costs.
Realtors sometimes make use of all the marketing options that FSBO sellers do, but have access to the greatest marketing tool available and it is not available to someone selling on their own. Realtors have access to the Multiple Listing Service or MLS. This is a computer database service that instantly publishes property information available to all other real estate agents and agents who are corresponding members of that particular MLS. Additionally, with recent syndication deals, the information from these listings is sent to hundreds of other websites that offer searchable information on homes for sale across the state and even across the country and around the world.
When someone sells their FSBO home, they assume all responsibilities of selling the home. These include not only the costs of the various professionals, but also the time and effort to find and evaluate them for their quality of service and professionalism. Real estate agents have an established network of related professionals and agencies that will help you through the process. As a FSBO seller, you are working from scratch.
Selling a home can be an emotional experience. After all, it could be the place where you have lived for years and it can be the place of your most precious memories. Homebuyers tend to be very critical of the homes they are looking to buy. Getting a potential buyer who is a stranger into your home can be a very critical and difficult experience. This is a very important aspect of being represented by a real estate professional. As an agent, they represent your interests and protect the owner from direct confrontation in negotiations. Real estate agents are expert negotiators. A real estate professional views the sale of a home as a business transaction, there will be low offers, offers that are never accepted, etc. Remember that the buying party may be a better negotiator than you are, or they may be working with a negotiating professional.
Real estate contracts are complicated. There are a lot of legalities involved in selling a house. Almost all states have laws that protect consumers. Some of them are about proper disclosure, lead paint, radon, inspections, etc. Many sellers may violate state laws without intending to. If you are determined to sell your home without a real estate professional, have an attorney review the contracts involved. This is an area where even one misplaced word can undo all your hard work. Real estate agents pay for “Errors and Omissions” insurance to protect them and their clients in the event of an error like this. In most cases, real estate agents use pre-printed legal forms that have been reviewed by attorneys and found not to favor one party over another.
If you have the time, patience, money, and desire to sell your house yourself, then by all means go ahead and give it a try. But be aware of what you are getting yourself into first. There’s a good reason real estate agents exist; Buying and selling a property is not easy. Real estate agents provide a valuable service and earn commissions if they serve their clients well. In the end, you may decide that your time and happiness are worth more than the fees you could save. Know yourself, research your options, and choose wisely.
