Selling Your Home Series – Part One – FSBO
In this crazy real estate market, almost from the first day we moved in, my wife and I started thinking of when we would sell our condo and how we would go about it. One of the greatest joys in life is to purchase that first home. It can be seen as a sign of maturity and the pinnacle of adulthood.
Selling a home is the other side of the coin. You are familiar with buying a home and now you need to use what you expected in a home to sell your own. It used to be that a person who wanted to sell their home would hire a real estate agent to sell their home just like they did when it was time to buy a home. Now, there is another option – for sale by owner (FSBO) selling.
In this report we will discuss the positive and negative points to selling a home using a real estate agent as well as selling a home without representation. There are pros and cons for both so this will not be a one-sided argument. After reading this report, you will know more about:
- For Sale by Owner- pros to selling strategy
- For Sale by Owner-cons to selling strategy
- Hiring a Realtor- pros to selling method
- Hiring a Realtor- cons to selling method
- Tips for Selling your Home as a For Sale by Owner property
- Tips for Selling your home using a Real Estate Agent
Market fluctuations have a lot to do with how well a home performs during the buying or the selling phase. The tips discussed here will work regardless of market trends if you stay motivated to sell your home.
FOR SALE BY OWNER (FSBO)
More and more people are opting to cut out the middle man and sell their homes by themselves. The movement has gotten so big that there are websites devoted to listings of For Sale by Owner properties and offering resources for marketing these homes.
Selling a home alone has its own unique challenges. Sellers who lack the motivation to push through the work can end up with a home that won’t move. Before using this method to sell your home consider all of the positive and negative points.
Pros to Using the For Sale by Owner (FSBO) Selling Strategy
When someone engages an agent to sell their home they enter into a contractual agreement. Part of that agreement is to pay a commission for the opportunity to use their services to sell your home. The commission is anywhere from five to seven percent of the final sale price of the home.
With the For Sale by Owner method, a seller can cut out the middle man and save some of that money for other things. The general guidelines set up by realtors and other real estate experts can be managed by a motivated seller doing it on their own. The focus for this type of seller is to market your home in every way imaginable.
The best time to take advantage of the FSBO method is during a seller’s market. In a seller’s market, there are not enough homes to go around. It seems like everyone wants to buy your home because the inventory has been depleted.
A seller can write their own ticket when it comes to setting a fair market price for their home. The seller can get the buyer to pay for inspections and appraisals on the property. The money saved by not hiring a real estate agent goes into the seller’s pocket along with perks from the buyer.
Cons to Using the For Sale by Owner (FSBO) Selling Strategy
It is a challenge to sell a home in any market. When you represent yourself, the challenge is a bit tougher. Sellers who use FSBO are optimistic but they can lack the fundamental knowledge needed to sell their home.
The real estate game is one with a lot of rules. Laws are constantly changing with regards to closing procedures and property disclosures. Failing to abide by even one regulation can have a buyer breathing down your neck in a court of law. No one wants that when all they wanted to do was obtain a fair price for their home.
A motivated seller can seek to learn the ins and outs of the real estate business, but it takes time. When a home is on the market, the most crucial time is during the first few weeks. When a home has been listed for a while, a buyer’s interest begins to wane, especially if the market favors the buyer.
Sellers who represent themselves are likely to commit common seller’s mistakes. The most common mistake is misjudging the value of their home. Home value is not just a matter of a county assessors figure on a paper. Market trends, location, and time of year all factor into the final sale price. A home in a nice neighborhood, near good schools, and immaculately kept will sell for below market value during the winter months in a buyer’s market.
Over pricing a home can be a slow death. The house will gain interest in the beginning, but buyers will see other houses in that size range that are selling for a lower price. Instead of pursuing an offer with the higher priced seller, they will look for more moderate pricing. The result is a home that stays on the market longer than you would like.
Sellers using the For Sale by Owner strategy lack the industry contacts that make the process easier for an agent. The job of getting a home from listing to closing is not accomplished by one person. It takes a team.
Those team members include attorneys, inspectors, and lenders among others. The seller will spend a significant amount of time finding and interviewing these people to find the right people to utilize. This is tedious work. If you end up with a bad inspector or appraiser, it could mean that the deal will end before closing.
There is a lot of extra responsibility involved in selling a home. The seller sets up escrow. The escrow company that will represent the parties in the sale is charged with holding on to certain documents until such time as conditions are satisfied for those documents to be released. The seller engages the escrow company at the proper time.
Sellers are in charge of their own marketing strategy. Failure to market a home in the proper way results in a failure to sell the home or selling the home for less than expected. There are many steps in the home selling process that are foreign to the average person with no real estate knowledge base.
With a FSBO property, the seller and the buyer negotiate the purchase contract. One wrong move and the deal can fall through because of something the seller didn’t do that they should have done. Buyers not represented by an agent levels the playing field but the seller can still make costly mistakes.
When the buyer is represented by an agent, the seller will play hard ball with them instead of the buyer. This can be an intimidating situation for the seller since the agent has a distinct advantage in both knowledge and experience over the seller. The seller may find themselves handing over more to the buyer than they had planned.
This is a multi-part article covering many aspects of selling your home. Next week we’ll take an in depth look at using a realtor.