Homeowners who sell their home on their own are known as For Sale By Owner (FSBO). Many home sellers believe that they can save the real estate commission and avoid paying a real estate agent by selling their home on their own. However, due to the real estate market, savviness of today’s buyers and potential legal issues, most FSBO’s end up using and understanding the value of the real estate agent. Over the last 20 years, the percentage of homeowners selling their own property as a FSBO has dropped from 19% to around 5%.
More than 2/3 of FSBO’s end up listing their property with a real estate agent.
The 3 major reasons that selling a home on your own may not work are:
- Buyers are very savvy and conduct a lot of research before buying a home. Part of that research includes consulting a real estate professional. As sellers pay the real estate commission in a sale, the majority of buyers understand that it is in their best interest to have an agent represent them and their interests. Thus, as a FSBO, you must be prepared to pay a standard buyer agent commission. This is most important because those buyer’s agents working with you have to do double the amount of work if you are not a licensed, experienced professional.
- Real estate agents are professionals and know what they are doing! Real estate agents are licensed professionals. Not only are they aware of the laws, industry disclosures and other requirements, but they know where the buyers are! Recent studies by the National Association of Realtors have shown that as many as 98% of buyers search online for a home. In comparison, less than 25% look at newspaper ads and even fewer find your home by the sign you put out front. Most successful agents have a comprehensive internet strategy to promote your home. Do you?
- Many people are involved in real estate transactions. There are many people in a real estate transaction who work on behalf of the buyer and will be working to negotiate the best deal and terms for the buyer. In addition to the buyer, most buyers will have a buyer’s agent who you will most likely be paying and whose job is to represent the best interests of the buyer. The buyer’s attorney represents the buyer’s interests in all contracts and legal documents. Home inspectors are hired by the buyer and always find some problems or issues with your home. They often encourage buyers to renegotiate pricing following inspections. Shouldn’t you have someone also working on your behalf?
The number of individuals selling their homes on their own as a FSBO has sharply decreased over the last few years, despite the booming real estate market and the tools available on the Internet. The fact is that there are many considerations in a FSBO and that professionals experienced and licensed to sell real estate are the most qualified to do so. Most FSBO’s realize this once it is too late and their selling price and profit is significantly less than it would have been if marketed initially by an experienced and qualified agent.