Should I Try For-Sale-By-Owner? 5 Reasons the Answer Is No
Some home owners are tempted to sell their home on their own. If you're considering this route, or even if you've made up your mind, here are 5 things you should consider:
1. You'll pay an agent to negotiate against you
88% of all buyers used an agent in 2016. If you want qualified buyers to consider your home, you'll have to pay their agent roughly 2-3% of the sales price. That means you're paying a professional to negotiate and work against you.
2. You'll sell your home for less
A research study in July, 2017 by Dr. Michael Sklarz and Dr. Norman Miller from Collateral Analytics found that for-sale-by-owners sold for an average of almost 6% lower than comparable homes sold with an agent. That negates your 6% commission savings and you have to do all the work and take on all the responsibility yourself. Consider that you'll almost certainly have to pay a buyer agent and you lose 2-3% to sell on your own.
3. You don't know how to price your home
Real Estate sells for market value. This isn't an average or median value. Pricing is part art, part social philosophy, and part science. And, those automated valuation sites are usually too high or too low. Price your home too high and you'll sit on the market chasing it with price drop after price drop. There is also the possibility that you will not price nearly high enough and miss out on tens of thousands of dollars.
3. Buyers know you aren't paying a commission
When a buyer sees a for-sale-by-owner they immediately see a bargain. They'll take 3-6% off of their offer before they ever talk to you.
4. You're adding another full-time job
Are you prepared to manage incoming calls from both buyers and agents? Do you know how to determine whether incoming buyers have financing approval? An unapproved buyer can tie you up in escrow for weeks before failing to obtain financing and defaulting on the contract or triggering a contingency.
The paperwork involved in a real estate transaction gets more unwieldy as time goes on. The law requires that documents are filled out correctly and in a timely manner. Not doing so can invite legal trouble.
Are you prepared to stage your home to sell? Agents have basic knowledge (or employ someone who does) of what a home should look like to draw the most interest. In addition, those projects you are planning on tackling before listing may not even be necessary. An agent can help you determine how to prepare your home for sale.
5. You don't have an online marketing presence
Buyers do the vast majority of their home searching online. It's as simple as that. If your plan is to stick a sign in your yard and tell your friends on Facebook, that's not going to cut it. You need an online marketing strategy that cuts through the mass of home advertising on the internet and draws buyers in. A great agent will have that infrastructure in place.
It seems to be the case that most successful for-sale-by-owner transactions are between family members or close friends. A seller may see this is as a done deal and have no desire to pay an agent. We can tell you through experience that even these types of transactions can go bad. There is never a time when you should be without expert, professional representation.
Check out one way we market our homes on the Home Stories page and then Contact Us to discuss marketing and selling your home!
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