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Latest posts by John English (see all)
- Classification for a Legal Bedroom in NYC - July 21, 2018
- The Complete Guide to Selling Your Home in NYC - July 19, 2018
- Taxes for Foreign Buyers in NYC: Understanding the FIRPTA Tax - July 17, 2018
A for sale by owner, or FSBO, the transaction is a common method for homeowners who see a chance to make a better profit by cutting out the realtor commission. It may seem like a better deal but according to the NAR Profile of Home Buyers and Sellers, that is not the case. The average FSBO price was $185,000 while the average for a home sold through an agent was $245,000. That’s a difference of $60,000 which can easily cover the agent’s commission (usually 6%) and leave a better profit.
If you’re still considering selling on your own here are the top reasons FSBO’s fail in real estate.
1. You have to do all the marketing yourself
These days, buyers always start their home search online. Sellers trying to market on their own will be unable to devote fulltime work to it and won’t reach as wide an audience. The NAR report found that 42% rely on a yard sign, 32% rely on friends and family and a little under 15% rely on social media.
Without the use of an agent, you’ll be very limited in the number of prospects you can attract. A real estate agent knows how to properly market a property and has contacts with other agents that can share the listing with their clients.
2. FSBO homes can be priced wrong
The key to any listing price is to find the sweet spot. Not too high and not too low. Without market knowledge and experience it’s hard to find that sweet spot. Those selling through FSBO tend to set a price based on an online assessment tool or their own gut feeling.
An overpriced home can languish on the market for months or even years. Even if you lower the price later it can be stigmatized by buyers who see that it has been on the market a long time. A trained agent knows how to price correctly and find that sweet spot in no time.
3. You have to handle all the paperwork
The NAR report also found that understanding paperwork was the most daunting task for FSBOs. Selling a home in NYS can require as much as 15 different documents which must all be filled in and filed correctly.
Without a competent agent to guide you through the paperwork, mistakes and misunderstandings can happen. Failure to file paperwork correctly can cause delays and result in a whole deal being canceled. Unless you have a background in law or contacts its best to lave paperwork to the pros.
4. Liability is all on the seller
Everyone makes mistakes but a seller not represented by an agent pays for those mistakes. Real estate agents have errors and omissions (E&O) insurance, along with enough experience to catch a mistake. If you make a false claim, even unknowingly, in the listing or paperwork you could be liable for litigation.
The whole point of FSBO is to save money. What’s often not taken account of though is the many hidden costs in selling. You’ll need to pay for signage, photography, flyers, home inspection, contacts and so much more. It’s hard to estimate these costs so they can quickly fly out of control. Working with an agent means all the extra work gets taken care of and ensures nothing is forgotten.