FSBO stands for “For Sale by Owner”. A lot of homeowners assume it’s okay to sell a home on their own, FSBO style. They assume they can make thousands of dollars more at closing than if they hire a real estate broker and pay sales commissions. Many homeowners choose to sell their home without the help of a realtor and do very well. others find out the hard way how helpful a real estate broker can be and how they can actually help make more money at the end of negotiations. Selling your own home can sound appealing, and it can save you thousands of dollars if you’re willing to do it. It can also cost you thousands of dollars if you go about it the wrong way.
Here in Spokane Washington, the FSBO market has been through many ups and downs. More recently, the seller’s market that ended a few years ago, it was definitely easier to sell your home without the help of a broker. Recently however, the market has moved towards a more balanced market. Many experts say it is now a buyer’s market, as the number of expired listings has skyrocketed along with the total number of active listings. As of last week, Spokane had over 5,300 active listings in the Spokane Association of Realtors MLS. There we also have 2,711 residential sales completed in the last six months. At the current rate of sales with that number of listings, it would take them all over a year without any new listings being added to MLS. With nearly 2,000 real estate agents actively marketing these homes, a self-employed person seems at a distinct disadvantage under current market conditions. Of course, real estate agents, brokers, and agents are experts in their field and expect to be paid a reasonable price for their services.
Any homeowner who decides to sell their own home takes on a tremendous amount of work and responsibility, but there are potential benefits and challenges to doing it yourself.
The main motivation for someone to sell their FSBO home is to avoid paying a sales commission and to keep that money themselves. Real estate brokers generally charge 5% to 7% of the total sale price as fees. If your home is worth $200,000, those fees are $10,000 to $14,000! This is money that you could possibly keep in your own accounts by selling your house yourself. Conversely, if you make a mistake by underestimating the value of your home, leave it on the market too long, poorly negotiate the details of the transaction or poorly prepare the sales contract, you risk losing even more.
If you decide to sell your home FSBO, you need to analyze the potential savings and weigh it against the value of your time and effort. In the process of selling your home on your own, you will necessarily spend a considerable amount of time researching the legalities, technical aspects of sales contracts, negotiation strategies, comparable properties and the current state of the local real estate market. . These are all things a real estate agent keeps up to date with as part of running their business. If you don’t have time for this, you might be better off hiring a real estate professional.
It is possible to market your home simply and without the help of a real estate professional. Posters, signs, flyers and newspaper ads can be effective marketing tools and they are accessible to everyone. Using these marketing strategies will start eating away at the money you intended to save. By using a real estate professional, the agency will often absorb the marketing costs.
Realtors sometimes use all the marketing options of FSBO sellers, but they have access to the greatest marketing tool available and it is not available to someone selling on their own. Real estate brokers have access to the Multiple Listing Service or MLS. This is a computer database service that instantly publishes available property information to all other realtors and agents who are corresponding members of that particular MLS. Additionally, with recent syndication deals, the information on these listings is pushed to hundreds of other websites that offer searchable information on homes for sale in the state and even across the country and around the world.
When someone sells his FSBO home, he assumes all the responsibilities of selling the home. These include not only the costs of the various professionals, but also the time and effort required to find and select them for the quality of their service and their professionalism. Estate agents have established a network of related professionals and agencies that will help you through the process. As an FSBO seller, you work from scratch.
Selling a home can be an emotional experience. After all, it could be where you’ve lived for years and it could be the place of your most treasured memories. Home buyers tend to be very critical of the homes they consider buying. Having a potential buyer who is a stranger come into your home very critically can be a nerve-wracking experience. This is a very important aspect of being represented by a real estate professional. As an agent, they represent your interests and protect the owner from direct confrontation in negotiations. Real estate agents are expert negotiators. A real estate professional views the sale of a home as a business transaction, there will be low offers, offers made that are never meant to be accepted, etc. Remember that the buyer may be a better negotiator than you, or they may work themselves with a professional real estate negotiator.
Real estate contracts are complicated. There are a lot of legalities involved in selling a home. Most states have laws protecting consumers. Some of them relate to proper disclosure, lead paint, radon, inspections, etc. Many sellers may violate state laws without ever intending to. If you’re determined to sell your home without hiring a real estate professional, have a lawyer review all relevant contracts. This is one area where even one misplaced word can undo all your hard work. Realtors pay for “Errors and Omissions” insurance to protect them and their clients in the event of an error like this. In most cases, real estate agents use pre-printed legal forms that have been reviewed by attorneys and determined not to favor one party over another.
If you have the time, the patience, the money, and the desire to sell your home on your own, then don’t hesitate and give it a try. But be aware of what you’re getting into first. There’s a good reason real estate agents exist; buying and selling a property is not easy. Realtors provide valuable service and earn commissions by serving their clients well. In the end, you may decide that your time and happiness are worth more than the commissions you might save. Know yourself, research your options and choose wisely.