Attempting to sell your house yourself–without an agent, is what the industry calls a For Sale By Owner or FSBO. This can be especially daunting for a lay person. There are many complexities of a real estate transaction that may seem simple when you’re on the outside, but the truth is much more complicated. Let us navigate some of those troubles with For Sale By Owner transactions in this article.
Let us start with statistics! According to the National Association of Realtors, “FSBOs accounted for 11% of home sales in 2018. The typical FSBO home sold for $200,000 compared to $280,000 for agent-assisted home sales.” That is a lot of money to lose, right? And that is if your transaction turns out to be typical one.
COVID Way
Heading into the fall season has its own challenges in these times of COVID restrictions. As a result, this new overlay to our lives allows us to revisit why hiring an agent may be beneficial to your end game. One major change in this environment are the new banking restrictions. Many people have been furloughed and many other people have had their hours and pay drastically changed. Self-employed individuals are seeing a particularly large hurdle with the new COVID banking restrictions. This new reality is affecting the industry in real time and things are changing daily. Buyers who qualified for mortgages just a few months ago are learning about these new realities which put a huge burden on a new buyer. Good news is that interests rates are at historic lows.
Safety
Unfortunately, being a real estate agent can make you a target for assault, rape, or worse. Right here in Maryland, we have seen worse. Opening your home to strangers comes with inherent risks. A good real estate agent understands this and will require a mortgage pre-approval, among other things–helping to give you peace of mind.
Marketing
Real estate agents wear many hats throughout the process. One major role of a real estate agent is that of marketer. Some agents off load this task to other qualified professionals and some take on this responsibility in-house. Either way, an effective marketing strategy is key to a successful listing of your house for sale. If people cannot find it, they cannot buy it! Most shopping is done online first now. The online presence is a huge component to marketing and can be a great source of trouble with For Sale By Owner sales. Real estate agents are connected to specific services meant to disperse your property across many different platforms of social media, print ads and so on.
Negotiations
Negotiations are hard. Emotional negotiations are even harder. The real estate agent acts as a third-party mediator who, over the course of years of experience knows the nuisances of strategy. The agent understands both sides of a transaction and knows that buying a home has different priorities and being aware of those is a key strategy. If everyone just met in the middle, this would be easy. The truth is more complicated. Many sellers are attached to their home, which is understandable. This may cause undue stress on the negotiations and turn buyers away. Dealing in a coordinated professional way, makes for a smoother transaction and agents are trained for exactly that.
Contractors
Ever dealt with contractors? Yeah, exactly! Real estate agents interact with many contractors throughout the process: stagers, inspectors, brokers, lenders, construction companies, title companies and more. It can get messy. In many ways, a real estate agent acts as a general contractor overseeing and coordinating vendors and contractors through every aspect of the transaction. All while looking out for your best interests.
Legal Liability
Do you have all the documents needed for a transaction in your local jurisdiction? How long do you keep these records? What are you required to tell the other party and what do they not need to know? The questions go on and on. Real estate agents have the answer. And if an agent does not have the answer, they are well connected and have many resources available to them that the average homeowner who wants to list their home as For Sale By Owner (FSBO). Realtors are members of local organizations that specialize in local rules and regulations so that contracts, notices, and addendums are both legal and enforceable. I am a member of the Anne Arundel Association of Realtors, but have access to statewide forms as well.
More Bottom Line
Many homeowners believe they can save money on their bottom line by not using a real estate agent and selling for themselves as a For Sale By Owner. That is understandable at first thought–the agent’s commission is a big part of the cost of the sale other than closing costs. What they may not be considering is that it costs money to sell your home effectively. The services a real estate agent provides such as marketing, staff, staging etc. can add up quickly and soon overwhelm you. Those costs are built in and optimized over many transactions. Agents want your home to sell for the most money in the least amount of time. An emotional roller coaster of a transaction may have you considering cutting costs, incorrectly prioritizing which may result in less buyers, more time and more costs associated with your transaction. And remember the statistic above? Yeah, the average For Sale By Owner transaction lost 80k just on price alone.
