In 2016, the Bryan/College Station real estate climate could easily have been labeled as a “Seller’s Market”. So in today’s sales area, where home prices are on the rise and the total amount of inventory is shrinking, many homeowners may think about trying to sell their home on their own—known in the industry as a For Sale by Owner (FSBO).
There are several reasons why this approach may not be a very good idea for the majority of home sellers. And here are the Top 5:
- Finding Prospective Buyers: Both the National Association of Realtors (NAR) and the Texas Association of Realtors (TAR) keep track of home sales each year. And recent studies continue to show that 94% of buyers search for properties on-line. In other words, nearly every buyer “drives” the internet in addition to driving through neighborhoods. Then consider that only 17% search print/newspaper ads. This is why most Realtors® have some type of internet strategy in place, to market and expose your home to prospective buyers. Do you have an internet plan?
- Internet = Results: The same data associated with the sale of a home, can also indicate from where the buyer actually found the home they eventually purchased. Here is the national breakdown…
- Found on the internet – 51%
- Real Estate Agent found – 34%
- Saw the sign in the yard – 9%
- Found in newspaper/print – 1%
In other words, the days of selling your home simply by placing a sign in the front yard and running a small ad in the local newspaper, have been replaced with some type of strong internet strategy.
- How Many People Are Negotiating: Here is a list of just some of the people with whom you will not only encounter when selling your home, but also will be negotiating with (if you choose to sell your home For Sale by Owner):
- The Buyer – who is shopping FSBOs because they are looking for a “deal”
- The Buyer’s Agent – who is legally/ethically bound to represent the best interest of the buyer
- The Buyer’s Attorney – although not as common in this part of the country, some buyers use their personal attorney to navigate the offer/negotiation/sales process on their behalf
- Home Inspection Companies – these inspectors are hired by the buyer and will likely find issues and/or deficiencies in the home; which buyers may want fixed or mitigated before they choose to move forward with the purchase
- Local Appraisers – if the buyer is purchasing the home with a mortgage, their lender will almost certainly require an appraisal. In the event the negotiated sales price is higher than the appraised valuation, as a FSBO you will be responsible for navigating the different options to keep the deal from falling apart. Most experienced Realtors® have encountered this scenario and are familiar with a number of different strategies to salvage your transaction.
- FSBO is Getting More and More Difficult: We’ve all heard the stories of a real estate transaction that took place over a handshake and a few signatures on a Bill of Sale. And historically, some real estate deals were done that way. However, with increased Federal regulations governing the lending process, the amount of paperwork involved in buying/selling a home has increased drastically. The number of industry disclosures and forms needed to protect all parties (buyers, sellers, brokers/agents, title companies, lenders, etc.) involved in the transaction can be overwhelming. This one reason alone, may explain why the percentage of homeowners choosing FSBO, has dropped from 19% to only 8%* over the last 20+ years.
*NOTE: This 8% represents the lowest recorded figure since NAR began collecting sales data back in 1981.
- You Net More $$$ when Using a Realtor®: The most common reason that a homeowner chooses to sell their home by themselves is to try and save money by not paying a commission. And yet, most buyers who choose to shop FSBO properties do so because they believe that they can save money by not purchasing a home where the commission has been added to the market value of the home. And even then, the buyer will want to negotiate a better price. Unfortunately, the seller and the buyer can’t BOTH save the commission. In fact, studies have shown that the average property sold as a FSBO sells for $185,000. Yet the typical home sold using a Realtor® sells for $245,000. Of course this doesn’t mean that an agent will be able to get you $60,000 more for your home—since the data indicates that people are more likely to FSBO in markets with lower price points. However, it does tend to show that selling on your own just may not be the best idea…or make the most sense (cents).
Final Thought: If you are thinking about selling your house on your own, at the very least talk to a real estate professional in your area, to what they have to offer. In other words…explore ALL your options.