10 common difficulties that come with FSBOs
1. The ‘on sale’ vs. ‘for sale’ mentality
Buyers may look at FSBO homes as “on sale” instead of “for sale.” Homes with unrepresented sellers sell for nearly 33 percent less and take significantly longer to sell than homes sold through the Realtor network.
Plus, let’s be honest, a yard sign from a well regarded brokerage company looks a lot more professional than a “For Sale By Owner” poster from a hardware store taped to the mailbox.
2. Buyers get uncomfortable dealing directly with sellers
Some buyers don’t prefer to tour a home with the owner of the property. Often, they might not feel that they can speak freely and could be uncomfortable having the homeowner follow them around. This could make them less likely to make an offer to purchase the home.
3. Emotional attachment to the home
Homeowners are emotionally attached to the home, which inhibits their ability to negotiate and depersonalize the space. This is the reason that professional agents don’t sell their own homes.
4. Overspending during prep
Homeowners might not know what is necessary to fix or update in their home, so they might overspend when preparing their home for sale. A good Realtor should be able to provide an owner with an outline of which features are important to homebuyers and help them prioritize a punch list to prevent them from wasting money.
Showing a home to unqualified buyers or con artists is a dangerous waste of time and energy. Unrepresented sellers don’t have systems in place to vet qualified buyers. They will be inundated with calls from real estate agents who’d like to list and sell their home, “just-looking” types who don’t intend to buy, investors looking for a flip, earnest buyers who are looking at homes they can’t afford to buy and even criminals.
Most professional Realtors will only work with qualified, motivated buyers.
5. Issues with commission
The vast majority of homes for sale find their buyers through other real estate agents who are helping them shop for a home, not through the homeowner’s listing agent (or a yard sign for that matter).
Realtors work with buyers for free with the understanding that when they purchase a home the agent will receive a commission on the sale. It takes a lot of work and time touring homes and seeing a purchase of a home through to closing, so it is fair to expect compensation for your professional services.
Homeowners who sell their own homes without a Realtor usually do so to save on commission — they either offer no commission to a buyer’s agent, or a commission that is lower than the industry standard for their area.
Although Realtors have a fiduciary responsibility to their clients to find them the best home regardless of compensation, some may steer their clients toward homes that promise a competitive fee.
6. No access to the multiple listing service (MLS)
While it is true that many people start their home search on a public website, like Zillow, most agents never look at those sites — they search for homes through the MLS database. In other words, Realtors primarily market a home for sale to other Realtors.
Buyers will most likely come from another agent, so if a homeowner isn’t advertising their home where buyer’s agents are searching, they aren’t reaching buyers.
Pricing is a crucial component to selling a home. As Realtors, we will look at comparable home sales and neighborhood statistics, use a deep knowledge of every home available for sale in the area and a fundamental understanding of the current housing market to arrive at a value for a home.
The public websites are unreliable, so an unrepresented seller might not have the right information and almost certainly doesn’t know the local real estate market nearly as well as a pro, which can lead them to price their home incorrectly. Too high then the home sits on the market and gets stale, too low then they might fail to to see a good return as buyers are much less likely to make an offer above the asking price on a FSBO than they are on a home listed with a Realtor.
They often want an unrepresented seller’s “savings” on broker fees to be passed on to them, so they are more likely to offer a lower price. It’s a lose-lose.
In addition to placement on the MLS, there are many different ways a Realtor will advertise your property, and all of them cost money and take time to create. Realtors rely on efficient systems based on data and experience that they have put in place over time. From professional photography, personal websites and videos to targeted digital and print marketing, the expertise necessary to be successful is great and the costs add up — but good agents absorb those costs because they believe in the value they have placed on the home.
9. De-personalizing the home
De-personalizing a home for sale is imperative. Having a real estate agent partner with a seller to comb through the home and start packing up photos and unique items is a huge value-added service. They are moving anyway — might as well start packing!
Most great real estate agents will pay for a consultation with a professional home stager to further declutter and prepare a seller’s home for sale. I am a Realtor and a professionally certified home stager. I will consult with my clients from day one and provide a free staging plan for them to execute, and when they move into their next home I will be there to help with design.
It is hard for unrepresented buyers to depersonalize their own homes, but for real estate agents, it is about maximizing the home’s appeal and raising its value for more prospective buyers.
10. Paperwork and legalities
The amount of paperwork and organization it takes to guide a home sale transaction from offer through closing is immense. Most unrepresented sellers are not familiar with the process or terminology, nor are they truly aware of all the potential pitfalls and legal protections necessary in a real estate transaction.
A quick conversation about paperwork can make a homeowner feel overwhelmed and ill-prepared, and they might be inclined to pass off that stress to the confident trained professional standing in front of them.
from Inman NewsBYRICH PELUSO