Why People Sell FSBO and Why They Fail
FSBO implies that the owner must know how to professionally market, show the property, negotiate a selling price for the house, and (of course) manage to get all the necessary paperwork completed for the eventual home sale.
That last aspect usually includes finding an attorney to draft the necessary sale contract, as well as a title company to support and help complete the sale. All these aspects can turn out to be pretty challenging for someone who is not fully prepared to take on this challenging task.
It is also important to do extensive market research on the matter before you market yourself to them.
That comes first and foremost because a real estate agent usually charges about 4% to 6% of the selling value as commission. The first thing you need to do is lay out your plan to convince them you are worth that money.
The National Association of Realtors and Bankrate.com have reported on their sites that most FSBO homes are overpriced. That is true and is usually a natural effect of people knowing the actual cost of their property and the value of their hard built equity, all combined with a desire to draw some profit out of the sale.
Overpriced properties are far less likely to be sold and far more probable to scare off potential buyers.
It is a known fact that a lot of owners who lack professional presentation skills and/or developed negotiation skills end up selling their houses at far lower prices than their home is actually worth. Per statistics, a professional real estate agent manages to sell homes at an average price that ranges about $40,000 more than the prices that private homeowners settle for.
Working at their own pace, giving the house a personal touch, and making all the decisions.
Some of the other aspects that frequently encourage homeowners to go the FSBO route is the privacy, knowledge, and decision-making aspects of a sale. It is clear that the owner knows their house best, making it easy for them to focus on the good aspects of the house and stay away from the bad. But demonstrating that you are a partner working together, will eases this fear.
The seller must not only be able to present the house in an appealing, professional way, but also help the buyer imagine himself living there, all while negotiating the best price. This is where your expertise has to show.
The Unexpected Cons of FSBO
The debate over real estate agent vs. FSBO sales has been getting more and more heated over the past several years. However, even if the necessity and the roles of real estate agents have been seriously questioned, they remain America’s favorite way to sell and buy homes.
As per statistics, approximately 80% of American home sales are currently brokered by professional real estate agents. Numbers don’t lie.
Selling the property as FSBO takes longer than usual and requires extensive time and effort from the owner.
FSBO is not an easy task. On the contrary, it requires special knowledge, hard work, time, skill, and dedication to make it happen. Cleaning and preparing the house for showing can be a challenge in itself without professional help and counseling. They need an authority who does this for a living.
A home that has not been properly cleaned and prepared for selling will probably give the buyer the idea that the owner must have slacked in maintenance matters and thus leads to a decrease of the final selling price.
It is also a common fact that houses take considerably longer to sell through FSBO. So, at the end of the day, when choosing between FSBO and a real estate agent, they have to wonder how much effort they are ready to invest in this aspect and how much their time is worth.
FSBO listings enjoy better support nowadays, but is still a far cry from the real estate agent pool.
FSBO listing now enjoys far better online support than it did a few years ago. There are several networks that support FSBO properties and their owners.
These networks offer nationwide listing services and marketing tools, all at low or flat rate prices. However, they are still hard to compare to the large pools that real estate agents usually tap into.
All these aspects cause the house to take a longer average time to sell and thus cause further inconvenience to the owner.
FSBOs are usually overpriced, but still end up selling below market price.
Very few of the owners who opt for FSBO have extensive knowledge of the housing market or honed skills in the real estate trade. That and the emotional factor, combined with a natural want to draw profit out of the sale, causes owners to overprice their homes.
Overpricing usually scares off potential buyers, leaving the house on the market for a longer period (which can be a real disadvantage to those who want a fast sale or actually need the money). Your market and property analysis makes the difference here.
Many buyers don’t trust FSBO and prefer to work with a real estate agent.
There is also the matter of trust involved. For fear of getting scammed or out of a desire to undergo a smooth bureaucratic sale process, buyers usually prefer to work with real estate agents.
The professionalism and experience of a high-performance agent inspires confidence in buyers that the process can bypass paperwork effortlessly, which clearly puts FSBO at a disadvantage, no matter how you look at it. As we all understand, it is a buyers’ world out there, after all.
As a conclusion, FSBO might be a great strategy only for good negotiators who have great real estate trading skills, are not in a hurry, and are willing to dedicate a considerable amount of time and work to the process.
The FSBO represents a huge responsibility for the owner, as it puts all decisions on his or her shoulders. Building trust is one of the most important things you will do. You do this by firmly establishing yourself as an expert.