You may be curious about selling your home by yourself instead of hiring the services of a real estate agent.
Naturally, every homeowner wants to make the most amount of money possible from the sale of their property. I don’t blame you either.
After all, you’re the one whose been consistently paying off your mortgage and property taxes. You deserve every ounce of equity you can get!
While you may end up being able to successfully sell your home for more money on your own, it’s rare. The National Association of Realtors reports that over 90% of for sale by owners will fail and hire a Realtor to sell their home.
It’s crucial to understand what you’re up against when attempting to sell on your own and soak up any information you can. That’s why I’m here to lay out the pros and cons of selling your property “For Sale by Owner”.
1. It Might Put More Money In Your Pocket
While it’s rare, FSBOs might be able to make more money after the sale despite not using the services of a real estate agent.
Generally, the main reason why any homeowner sells on their own is because they want to save the thousands of dollars a Realtor charges in professional fees, which is generally 3% of the sales price to each side of the table, totaling 6%.
Depending on the value of your home, professional fees can total well over $30,000.
The caveat is that you’ll still need to offer compensation to the buyer side. So, you’ll still end up paying some sort of real estate agent to sell your property.
2. You Have Full Control
While you may not be a professional in the real estate industry, you still have the common sense of what goes into homeownership.
While it takes a lot to sell homes, such as creating an effective marketing plan, correct pricing, and understanding market conditions. There are a lot of resources and tools online that can feed you the information you need to make good decisions.
It’s not like the old days where real estate agents were secretive about tactics and the ongoings of the market because we had full control over who saw what in our MLS books.
Now we have tools like Zillow, that show you comparable properties and market data that can lead you to make better pricing decisions (not all of it is completely accurate though, be warned).
3. It Will Be Easier If You Live in a Prominent Area
When a neighborhood market is hot, almost anything will sell.
The advantage a FSBO has in a desirable neighborhood is a lot of free exposure.
Bunches of home shoppers will be riding through the neighborhood looking for “For Sale” signs. Yours will be seen without paying for any extra advertising.
Markets like that are also very fast-paced, meaning the time it takes to sell the home is super short. This helps you sell at a higher price and avoid “Days on Market Attrition” which reduces your price over time and weakens your negotiating position.
1. Over 90% Will Fail
As I stated previously, it’s a fact that over 90% of for sale by owners will end up hiring a real estate agent.
The odds are not in your favor.
It may just be a waste of time and money trying to sell by yourself, especially in the luxury market. Possibly some unneeded stress as well.
2. You Will Likely Make Less Money
Imagine going through all the effort and stress of marketing your home, catching a buyer, negotiating, and closing, just to make less money from the sale versus using a real estate agent.
This happens more often than you think. Here’s why:
Remember the whole “Days on Market Attrition” thing?
When you list your house on Zillow as a FSBO, the date of listing is recorded and shown to everyone that views your home.
Let’s say you’ve priced too high, taken bad pictures, and haven’t had the time to start marketing the home because you’re busy with work, the kids, etc.
Now a month has passed. Homes listed by agents all around you are selling like hotcakes, but yours is still there.
Let’s say you finally get an interested buyer and they want to make an offer.
Since nearly every buyer is working with a real estate agent (buyer agents are FREE to work with), the buyer’s agent will recognize that your home has been on the market for a long time and advise their clients to “low-ball” the offer.
Why would they do this?
Most motivated sellers will often get to a point where they will take anything just to get the property off their hands.
If you list your house a FSBO and haven’t sold it within a month, be prepared to make serious reductions in your list price if you plan on getting it sold. You’re at a severe disadvantage without a Realtor.
3. Marketing Is Not Easy
People go to college for years to learn marketing. I’ve personally learned marketing by reading tons and tons of books, blogs, and videos.
It isn’t something that you just “pick up on”. It’s a craft and it takes dedication to learn and understand.
Unless you have a background in marketing, I guarantee that you’re not equipped with the right knowledge and resources to successfully market and sell a home.
I cannot emphasize enough that it is not as simple as putting a “For Sale” sign in the yard, throwing it on Zillow, and waiting.
Especially now, when 93% of home buyers are starting their search online.
I wouldn’t be writing an article like this or building this website if I didn’t think it’d be worthwhile to strengthen my presence online.
At Berri Properties, we run Facebook Ads, Google Ads, LinkedIn Ads, conduct property tour videos, implement other videos, create podcasts, and write articles like this one.
This is all one big marketing plan that is fluid. Based on content and digital media.
This is how we sell houses and it took a long time to build it.
Don’t be naïve about marketing.
4. For Sale By Owner Websites Don’t Get a Lot of Exposure
For sale by owner websites are not as powerful as sites like Zillow or Realtor.com.
While there’s certainly no harm in listing your home with a FSBO website, don’t expect it to yield a sale.
The fact of the matter is, most people don’t even realize that such sites exist. Look at the traffic differences between forsalebyowner.com and the behemoth Zillow.
5. You Have To Qualify Buyers
Buyers need to be qualified to buy your home. Real estate agents know that the first thing that needs to be done in order to protect a seller’s interest is to qualify the buying party with proper documentation.
You need to be assured that your time isn’t be wasted by people who don’t have the monetary means of purchasing your property.
6. You Could Get Into Legal Trouble
Depending on your state, there are various disclosure laws and documentation that is required to sell a property.
In North Carolina, material facts are to be disclosed, which is anything that could potentially sway the opinion of the buyer from purchasing the home.
Then, you’ll need to fill out and sign the Residential Property and Owner’s Association Disclosure Agreement and the Mineral and Oil and Gas Rights Mandatory Disclosure Statement.
Both forms are required per G.S.47E of North Carolina.
Failure to provide these documents or disclose relevant material facts about your property can land you in serious legal trouble.
7. You Still Need To Pay a Buyer’s Agent
You might be able to get away with offering a lower commission to a buyer’s agent, such as 2%.
But you cannot get away without paying anyone at all.
As I said earlier, literally everyone is using a Realtor to buy a home because it’s free to do so.
Not only is it insulting to the Buyer’s agent for you to offer little to no compensation for their efforts, but the odds of you even finding a buyer gets lower as you drop commission rates.
You may think that real estate agents make a lot of money. You’re not wrong either.
The best real estate agents are immensely successful. But all that means is that they’ve worked very hard for that success and most agents are working very hard as well.
So, all in all, you will be paying for an agent. You might as well have your own at that point.
8. You’re a Prime Target for Bargain Hunters
Don’t get played. You’re exactly what bargain hunters want.
They know you most likely lack experience with real estate negotiations. They’ll attempt to low-ball and negotiate until you’re hardly a party to the transaction.
Be very aware of these types of buyers and hold your ground if they come along.
For sale by owners can turn out to be successful, but it’s rare.
Between lower profit margins, anxiety, stress, and not knowing the ins-and-outs of real estate sales like the back your hand is probably not worth it.
However, if you’re feeling brave enough to take on the industry and sell your house on your own, I wish you the best of luck.
If you have any questions, contact me.