AN 8-STEP CRASH COURSE IN “FOR SALE BY OWNER (FSBO)” TECHNIQUES
Posted by New Home Resource on October 26, 2015 in
If you’ve ever sold your home or an investment property before, at some point you’ve probably asked yourself: “Why shouldn’t I just sell it myself and save the commission?” That’s a great question. And although we touched on this topic in our last article, we thought it might be a good idea to delve a little further into the details.
In fact, we’re going to champion that idea for you and help you prepare for the task! So grab your pencils and highlighters, because we’re about to give you a Crash Course in For Sale By Owner techniques.
1) Remember, anyone – including you – can sell your home. All you have to do is underprice it. That’s been proven by studies showing that “for sale by owner” properties lose between 14%-20% on the price they could have gotten by using an agent. (So saving that 3% Selling Agent commission will come in handy.)
2) Great news! You get to keep your schedule wide open! At least, that’s if you want to make sure you don’t miss any prospective buyers. Because without an agent, you need to be on-call 7 days a week to show your property. If you’re not, of course, that means fewer offers and even less possibility of receiving a full-priced offer. (Then again, you might want to put a value on your time as you’ll be losing income for taking off work.)
3) That also includes taking time to market your property – whether with flyers, or online ads, or signage, or any other non-MLS methods you can think of. You’ll be paying for the cost of all this marketing, along with putting in hours of your time to let the public know your home is available for sale. Of course, without the instant and mass exposure of an MLS listing, you won’t have as many places to market your property as a real estate professional. That will mean less showings, fewer offers, and a lower sales price.
4) Tell yourself: “I can always list it later if it doesn’t sell.” If you first attempt a “for sale by owner” without success – and later decide to list with an agent – you may have already eliminated many potential buyers who saw or knew of your home in the first place. One of the reasons is this: In real estate, the first week your home is on the market is considered its “Golden Time.” That’s typically when you will get the most interest and the most money for your home. And the longer it’s on the market, the less money people are willing to offer.
5) Put on your “negotiating” hat. Because you’ll be the one to field all the phone calls, emails, and inquiries that come in about your property – and you’ll need to know the right things to say – such as how to ask pre-qualifying questions to determine if a buyer is financially able to buy your home. (No sense taking the time to show it if they aren’t.) That’s all before you find a buyer, of course. Once an offer comes in, keep in mind all it takes is one missed call to potentially kill a deal. But if you do get a contract – then you’ll need to make sure to meet with the appraiser and home inspectors, too – so be sure to schedule your time accordingly. (Oh, and know that “More than one in three appraisals contain inconsistent property ratings.” So you need to brush up on how appraisals are done, too.)
6) Put your attorney on stand-by. Because the odds are you probably don’t understand the contract process well enough to avoid legal problems, or how to explain to a buyers’ agent how you want things drawn up. You’ll also need to have the right forms and real estate disclosures on-hand to comply with the real estate laws in your state. Without an attorney (and they’re cheap, right?) – you won’t have any protection between you and potential buyers. And by the way, with the new TRID regulations that have recently gone into effect, buyers have even more protections than ever before.
7) You may still need to pay a Buyer’s agent commission. Most serious buyers are already working with an agent, so some of those phone calls will be to see if you will “cooperate” with them. If you don’t, they won’t even bother to show your home to their client. If you do, you’ll be paying them the standard commission at closing (generally 3%). That means you’re putting in all your time and money into saving only half of the full commission (3%). You might want to make sure that pencils out.
8) Be prepared to do it all more than once. Not every real estate transaction gets through to the end, for many reasons. Some can be avoided (with the help of an experienced professional), and some can’t – but estimates of real estate sales that fall through range from 10-20%. If yours is among them, you’ll need to take the time, effort, and money to start over again (more marketing, calls, showings, inspections, paperwork, contracts, fees, etc.). Of course, you’ve lost your “Golden Time” opportunity – so it will probably take longer, and you’ll get fewer and lower offers – but you’ll never be bored!
Okay, we do have to admit to a little bit of tongue-in-cheek with the foregoing information – but the point is, all of it is true. And while some sellers may be up to the task, potential FSBO sellers should be aware of these facts:
• Only half of home sellers who try “for sale by owner” actually sell their home on their own.
• In 2013, the typical FSBO home sold for $184,000 compared to $230,000 for agent-assisted home sales. (That’s a difference of 20%.)
• FSBO sellers list the following difficulties with selling on their own:
o Understanding and performing paperwork
o Getting the price right
o Preparing/fixing up home for sale
o Helping buyer obtain financing
o Attracting potential buyers
o Selling within the planned length of time
o Having enough time to devote to all aspects of the sale
All of that is contrasted with these most recent statistics:
• 88% of sellers were assisted by a real estate agent when selling their home.
• Recent sellers typically sold their homes for 97% of the listing price.
• The typical home sold was on the market for 5 weeks.
Perhaps the biggest mistake made by most FSBO sellers is this: Placing too little value on their own time. In truth, working with a professional real estate agent will more often than not net you better results.
New Home Resource helps current and future homeowners with all of their Las Vegas real estate needs. Whether your preference is for a newly-built home from a local builder, or a resale property in just the right location, a New Home Resource Realtor® is here to find the perfect property for you. Please contact a New Home Resource Realtor® today at 702-365-1000 or at www.newhomeresource.com. Broker Joanna Piette, and agents Denise Moreno Thrasher, Jessica O’Brien, Evelyn ‘Beng’ Kern, Lance Partin and Kathy Paterniti are all here to help!