For Sale By Owner: What you don't know CAN hurt you.
A Brief Overview of Listing For Sale By Owner in Brevard County, FL
It is entirely possible to sell your home without hiring a Realtor. Choosing to list For Sale By Owner (FSBO) is a personal decision that could work out very well depending on your experience with real estate transactions and your ability to negotiate, among other things which I’ll discuss later in this post. That said, it’s possible that you can attract the attention of qualified buyers, command top dollar and close with no issues that end up costing you money along the way. I’ve seen it done before.
According to a 2015 study conducted by the National Association of Realtors (NAR), 92% of all homes that sold in 2014 involved the assistance of at least one real estate professional. The remaining 8% of total sales closed in the form of FSBO listings where no Realtors were involved. These are impressive numbers in terms of the amount of sales closed By Owner, and they prompt further research. According to the NAR study report, on average “the typical FSBO home sold for $210,000 compared to $249,000 for agent-assisted home sales.” This is a pretty significant gap. As somebody who has assisted many people who first chose the By Owner route to selling their home, this comes as no surprise.
Only 13% of all FSBO Sellers say they sold their home within the planned amount of time on the market.
If you’re listed FSBO, how many buyers actually see you?
On average, homes sold by Realtors sell for 13% higher than those sold FSBO. This means good agents really do earn their money!
The reason people choose to sell By Owner is obvious; a six percent commission can translate to a nice pile of cash. It’s no wonder so many decide to circumnavigate Realtors in an effort to save money. Though, let’s apply the same logic to other tasks typically handled by professions in this country. Would you climb a 40 foot oak tree that needed to be trimmed? Would you allow an unlicensed contractor to re-roof your home? Would you attempt your own dental work? Probably not, and as the facts suggest, homeowners selling By Owner likely sacrifice the value a skilled agent brings to the closing table. Ultimately, the data proves that, on average, those who sell By Owner do not sell as quickly or for as much money as their agent-assisted competition. While luck sometimes has a way of delivering the perfect buyer, by and large the saving of time and money is the product of professionalism and years of dedicated experience.
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Things you sacrifice when attempting to sell By Owner:
1.) Market Knowledge
In every sense of the word, I’m entrenched in Brevard County real estate. My finger must always be on the pulse of the market in order to accurately price, sell and market my listings. As an active member of our local real estate board and member of the National Association of Realtors, I have full access to the Brevard MLS. The MLS acts as a database of active, sold, pending and contingent listings. I’m privy to all matters concerning the life of a listing on our market including: price adjustments, specific contingencies for homes under contract, contracts that did not result in a successful closing (back-on-market status), back-up offers, and so forth. It’s worth highlighting that all of this information comes to me as realtime data, and that’s very important. Being able to access and analyze such complete, realtime data is simply not possible for a homeowner who is not an active member of Space Coast Area Realtors (SCAR).
Ok. So, maybe you’re well informed and know everything that’s going on in your local market. Maybe there are other homes in your neighborhood for sale and you can capitalize on having a yard sign and posting your property on Zillow and Craigslist, to name a few FSBO tactics. Right? Not exactly.
There are certainly agents who stop working for you after they list your home on the MLS. In many cases, these agents fall short at even creating an attractive listing that will sell. Arguably, negative exposure can be worse than no exposure at all. Considering this, it’s no wonder so many people decide to try and sell their own homes. There are pay-to-list services that will even allow you to list for a flat fee so long as you promise a buyer agent’s commission. Essentially, there are owners willing to pay $500 to list and a 3% commission to a buyer’s agent upon closing. Yet, they’re sacrificing everything a seasoned listing agent can provide. The idea is the same; owners are looking to save any money they can. Often, exposure and success is what is sacrificed.
From start to finish, a skilled and experienced agent doesn’t quit or take shortcuts. Prior to listing, an agent worth hiring will pour many hours (and dollars!) into crafting a listing that shows a property in its best light. Aside from gathering comprehensive, pertinent property information, professionally shot photos and video should be considered mandatory. An eloquent narrative highlighting those features that might not be readily observable is also important. Once a home is listed, the real work begins.
Traditional forms of marketing (open houses, signs, direct mailings, newspapers, etc.) are all but antiquated by the reach of the internet and social media. Most homeowners are not prepared to expose their homes to the masses the same way a professional Realtor can. More probable, homeowners are not capable of targeting those buyers who are actively in the market to buy real estate. The Reverse prospecting tool which matches listings to buyers who are working with agents is just one tool unique only to licensed real estate agents. And that brings us to another sacrifice FSBO sellers make:
3.) Access to Buyers
At any given time, I’m actively working with at least 3-5 buyer clients. Those clients that I’m showing property to are pre-approved and ready to buy. At any given time, I have another 30-40 customers connected to automatic data feeds which deliver listing content via e-mail relative to those customers’ specific search criteria. Those customers passively “search” for homes and turn into clients when they’re ready, or when a property that meets their needs hits the market.
Keep in mind that I am one Realtor. Consider the amount of buyer contacts that I have and multiply that by the 3,500+ licensed agents in the Brevard County marketplace. The result is over 100,000 buyers – all of whom are working with real estate agents. A FSBO unwilling to work with a buyer’s agent is a homeowner who is not ready to sell.
4.) Achieving Top Dollar
For years, I’ve said, “selling real estate for top dollar is a delicate balance between art and science.” The above points certainly highlight this a bit, but closing for top dollar does not stop when an offer is written. That’s because there’s many steps and a great deal of emotion behind every real estate transaction – on both sides!
Without a liaison, a Seller’s desire to achieve a certain sale price may not be well-received by a buyer who feels they’ve offered a fair price and terms. On the other hand, a buyer often needs encouragement from their own liaison. A buyer’s agent acts in a buyer’s best interest. However, a buyer’s agent is also an agent of the market. His or her job is to educate their client on market value and advise them to make an offer that will bring them the best result.
Without the help of at least one agent acting as a transactional broker, it becomes much more difficult to reach an agreement with a prospective buyer. As the data suggests, it is much more typical that a FSBO seller ends up discounting their asking price after their second or third fruitless offer.
At this point, an educated buyer will have watched the asking price fall and know they’re dealing with a beat-up seller – or, at least one who is visibly motivated to move the property. The buyer will gladly pay the reduced asking price because they know they’re getting a deal. They might also ignore certain inspection findings, and since the home has been discounted, it will surely appraise at or above contract price. Smooth sailing. The FSBO seller will finally have their buyer and avoid paying real estate commissions. Sounds like an arduous process, but at least it makes financial sense, right? Probably not.
Look back at the second paragraph of this post. Seeing that the average sale price of an agent-assisted sale is $39,000 higher than the average sale price of an FSBO sale, it’s easy to see how a six percent commission at a much higher sale price pays for itself. If we’re just looking at averages and consider the cost of commission, the average FSBO seller leaves $24,060 on the table in an effort to save money. Of course, hindsight is always 20/20. By the time a FSBO seller closes, there’s nothing he can do about the thousands of EXTRA dollars he could have taken away from the closing table.
If you’re still interested in trying to sell your home For Sale By Owner, you might want to consider the following:
1.) Homes that sell By Owner tend to have similar characteristics. They’re either located on or near busy roads or in neighborhoods with many other homes for sale. They’re priced well, and they offer a reasonable commission (at least 2.5%) to a buyers agent. If you expect to be successful and sell for top dollar, you must agree to compensate a buyer’s agent. If you want to avoid legal trouble, you will honor that agreement.
2.) Safety should be of serious concern to you. Opening your door to somebody you do not know leaves you vulnerable to crime. Realtors act as a safety barrier between consumers and those with ill intent. For example, I do not show property to people I do not know and who are unwilling to provide identification and register with my brokerage. Period. Unfortunately, FSBO sellers don’t think of these things when they’re desperate to get people in the door. Have a safety plan! It could literally save your life.
3.) Thank you for reading this far, and I mean this with complete respect: It’s never too late to admit you were wrong and change course. Over the years, I’ve helped countless FSBO sellers finish the job they thought they could handle on their own. Many of these sellers had used real estate agents in the past that burned them for time, money or both. So, it’s understandable why some shy away from hiring another ineffective real estate agent.
To those sellers on the fence about whether to list with a Realtor, I say this: Consider hiring the RIGHT agent. Realize that 80% of all people who get their real estate license will leave the business in less than 12 months. Out of the 20% who move forward after the first year, 90% of those people will be out of the business within 4 more years.
There are literally thousands of Realtors in Brevard County from which to choose, and hundreds who do fantastic work for their clients. Don’t pick the first one who says they can get the job done. Ask them to show you their portfolio of sold homes. Ask them what they’re going to do to get your home sold quickly and for top dollar. You deserve it!