Don’t Take the Risks of Selling FSBO
Don’t take the Risks of Selling FSBO (For Sale by Owner)
We know, the temptation is there… especially in a HOT Seller’s Market but don’t take the risks of selling FSBO. Did you know statistics show that less than 1 in 10 FSBO sales make it to closing? hmmmmm….
Why would you need a Realtor? Because today’s market is moving FAST, the stakes are high, decisions are made on the fly and there is stress beyond measure for everyone involved.
Not knowing the ins and outs of a real estate transaction can cost you more than money, it can cost you the sale of your home.
Selling your home has a myriad of problems just waiting to happen – it’s the nature of the beast.
There are required state forms, title companies, lenders, appraisers, inspectors, contractors, showings coordination, offers, escalation clauses, amendments, addendums, and sooooo much more that come into play. Why would you know about all that if you weren’t a Realtor? Most likely, you wouldn’t and therein lies the problem…
Here are 5 top risks home sellers face when they decide to FSBO.
#1 – Condition + Comparable Sales = Home Value
Lots of sellers seem to think they can name their price in the current seller’s market and that’s just not true. The value of your home is dictated by comparable home sales and the condition of your home. It’s NOT what you, your family, neighbor or Zillow thinks your home is worth.
Some FSBO’s think they don’t have to do anything beyond putting a sign in the yard and letting offers roll in. However, even in this hot market, there are homes that are not selling which usually have to do with asking price and condition.
Just posting a few cell phone photos isn’t going to cut it with today’s savvy buyers. Value is determined by the buyers, not the seller. That’s why 3rd party appraisers protect a lender’s investment by using comparable sales to assign the current market value of your home. These comparables show what other buyers have paid for homes like yours and help set the market value.
Not having a Listing Agent who can coach and guide you on condition and asking price can work against you.
#2 – Showings
Getting and keeping your home show ready is a trial for most sellers because the way we live in a home is not the same as the way we sell a home. Once you decide you are going to sell, your home becomes a “product” you want someone to purchase. Just like any other product on the market, it should be packaged and aesthetically appealing to the largest segment of the home buyer population.
Once it’s ready, you now have to have a system for buyers to know about your home being for sale, get photos done, videos made and be ready to coordinate showing requests.
98% of today’s buyers start their search online. Not having your home listed in the local MLS means you are not attracting the largest number of buyers who are desperately searching for a home. The more seriously interested buyers you attract, the better price and terms you might get!
Once you attract them, you have to let them view your home. Buyer’s Agents will start blowing up your phone as well as any person who may have seen your sign. You are in charge of coordinating all showings. Keep in mind, buyers in this market don’t have a lot of patience. They typically won’t wait around for days for an appointment. This brings up a lot of aspects FSBOers need to plan for.
- How will you handle an onslaught of requests?
- How will they access the home?
- How long is each appointment and who holds them to the time allowed?
And while we’re talking about showings, are you going to let just anyone who calls into your home? What about these questions:
- Can they afford to purchase your home?
- Are they Pre-Approved with a lender?
- How will you plan for the safety of buyers and yourself/your family with in-person showings? (since we are in a pandemic)
Listing Agents have tools at their disposal that help coordinate showings, times and getting the most people in to see your home. Safety is also top of the list for Listing Agents.
Time is precious and something we don’t get back. Knowing who is viewing your home, that they can afford it, and showing it safely is part of our job as your Realtor. We are your guide during the process.
#3 – Making Sense of Offers
Deciphering offers and ensuring you are providing the potential buyers with the required information are two more risks of selling FSBO. These are items your Realtor helps you with. If you are going it alone, do you know what information you are supposed to supply to buyers? Disclosures, measurements, utilities, square footage, exemptions, tax information, etc… are needed for buyers to make informed decisions about an offer.
When you do receive an offer, will it be on a standard IAR contract? piece of paper? verbal?
Do you know what to look for and ask about concerning the terms of the offer? Things like:
- seller paid closing costs
- home warranties
- inspection periods
- possession delivery
- who orders title work
- closing dates
are just a few items that if overlooked can really cause problems during the pending purchase time period. Do you know how to counter offer?
If you are working with a buyer who is represented by a Buyer’s Agent, you will definitely be at a disadvantage. Their agent is not representing you and your best interests – but instead their client’s. Any information you share can and will be shared with their client and can give them an advantage.
If the buyer is unrepresented by an agent, it can sorta be like the blind leading the blind. You don’t know what you don’t know and that can hurt you financially, timewise and in other ways during a sale transaction.
Having a Agent means you have guidance when sifting through offers to decide what’s best for you/your family. We know the details to look for in offers and can be sure offers are made on the forms that protect the parties of the transaction and spell out terms so you know what you are agreeing to or countering.
#4 – What Happens after You Accept an Offer
Accepting an offer is just the beginning of the process. Making it to the closing table is the goal.
In the local seller’s market, buyers can make impulsive offers because they are afraid they will miss out on yet another home! With inventory at historic lows and demand at all time highs, some buyers are experiencing regret from a hasty offer a seller accepts. This means they may not be committed to seeing the transaction through to closing.
During inspections, they may try to find a reason to get out of the contract. Regardless of whether the inspection reveals enough evidence to warrant cancelling the contract, they may still try. Do you know how to keep them in the contract?
One of the problems with a home going back on the market after it had an accepted offer is the perception of other buyers. Are there things wrong with it? Did it not appraise for the agreed upon price? Is the seller being unreasonable?
These thoughts and more go through buyer’s and their agent’s minds when they see a home go back on the market. The property can become stigmatized to buyers and this is hard to overcome.
Even if you had multiple offers, those buyers have likely moved on and won’t still be interested. It’s a rough situation that takes experience to navigate.
#5 – Complication Risks of Selling FSBO
Again, a lot can go wrong and/or delays can wreak havoc when trying to sell your home.
A buyer depends on their lender to approve their mortgage loan so they can buy your home. The lender’s underwriter will use a fine tooth comb when going through the buyer’s file. Problems can pop up that can delay the process.
With interest rates at historic lows, lenders are dealing with tons of new purchase and refinancing files everyday. This high volume can cause delays that, in turn, cause problems for buyers and sellers since they’re making plans for movers, new housing, repairs and such.
Having an agent on your side can help you understand the process and avoid as many problems as possible.
Selling FSBO is Harder than it Looks
The risks of selling FSBO are real. In addition to those mentioned above, there are lots of other areas that can cause a sale to fall through or be delayed.
While it’s easy to throw a sign in the yard, it’s what comes after that takes knowledge and expertise. There would never have been a need to have the real estate professional in the first place if selling homes were that easy.
Realtors are consistently schooled on contract laws, changing regulations and their local real estate market. The Real Estate Pros team is also constantly getting training on marketing, technology and all aspects to better serve our clients.
We’re here to guide and advise and ultimately help you achieve your goal of selling your home. It’s time for your next adventure – let us help you get started!