I've been working in and around real estate for 20 years now. 2 decades! What? Wow! I started my career in banking where I handled a lot of home equity loans and worked with
The Real Deal With FSBO Properties
For Sale by Owner (FSBO) happens when homeowners decide to put their house on the market and advertise it without the help and support of a professional real estate agent. FSBO implies that the owner must know how to professionally market, show the property, negotiate an advantageous selling price for the house, and 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 in order to avoid unwanted surprises. Based on reports, quite a number of people who start confidently with FSBO end up losing the sale or hiring an agent. If you are determined to sell your home on your own, make sure you have the energy as well as the necessary time to perform all these tasks before starting on the road to FSBO.
The number one reason why people decide to sell their homes without an agent is to save money. Most real estate agents usually charge between 4% to 6% of the selling value as a commission. With that, the real estate agent also brings vast experience and a wealth of market specific knowledge that the seller can truly benefit from. Agents also usually help owners set a fair, realistic market price for their home. That is an important aspect in order to manage to sell the home successfully in a reasonable amount of time. The National Association of Realtors and Bankrate.com have reported that most FSBO homes are overpriced. Sadly, overpriced properties are far less likely to be sold and far more likely to scare off potential buyers. While the correct pricing aspect can be quite easily bypassed with some solid real estate and community sales market research, the following negotiating part cannot. 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, professional real estate agent manages to sell homes at an average price that ranges about $27,000 more than the prices that private homeowners settle for. So, considering all these aspects, saving 4-6% of your home value in commission can be a lovely and tempting at first glance, but is it really worth it considering the percentage you might lose on the final selling price?
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 home for showing can be a challenge in itself without professional help and counseling. The owner must also consider the real estate agents present and sell homes as a full-time job and, therefore, be prepared to allocate a considerable amount of time to this aspect when choosing to put his/her home on the market without professional help and support.
Many buyers don't trust FSBO and prefer to work with a real estate agent. Buyers fear getting scammed and also desire a smooth purchase process. The professionalism and experience of a high-performance agent inspires confidence in buyers that the process can complete legal paperwork and mandatory disclosures 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. On the other hand some people might not have the necessary skills to handle negotiating, the hassle of paperwork, and coordinating the many aspects of a home sale. Others simply value their time enough to choose a real estate agent and the benefits that come with this choice. Whatever you choose, make sure you take the time and consider all details and possibilities. Your home is your life investment. Selling it is a big decision. Make it count!
James Angus is a licensed Realtor and Qualifying Broker with Realty One of New Mexico specializing in Residential Real Estate in the Greater Albuquerque Metropolitan area. James is an Albuquerque nati....
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