Why 'For Sale by Owner'
is a Bad Idea
Today I met with a longtime friend who told me he’d like to discuss selling his home. He also told me he was considering selling it himself, For Sale By Owner (FSBO). In the real estate world we refer to these as ‘fiz-bo’s’.
The first thing I told him when we met was that if he was going to sell that he would be leaving money on the table if he decided to list it himself. He had many people chirping in his ear about how “anyone could sell a home in today’s real estate market.” I agreed that yes, many people can and do sell their homes without the help of a realtor, but they aren’t getting top dollar for their homes and the process was not as straightforward and simple as many think.
I explained the benefits of listing a home on the MLS to maximize the exposure of the listing and how the goal was to drive as many potential buyers to the property as possible. Yard signs and websites that allow FSBO listings would definitely not produce the exposure that an MLS listing would.
In addition, I explained, it is a documented fact that homes sold by a realtor sell for more than FSBO properties. According to the National Association of Realtors, in 2021 FSBO homes sold at a median of $260,000 last year, significantly lower than the median of agent-assisted homes at $318,000.” (1) I also explained that most buyers are already working with a realtor and in most cases FSBO seller’s end up paying commissions to those realtors. So what does that leave for savings? The listing agent’s commission.
The fact is that the time and aggravation that a listing agent will save you is well worth their fees, but when you factor in that a home will sell for significantly more when it’s listed with an agent, the decision of whether to sell with an agent or not should be an easy decision to make.
When pressed about how “anyone can sell a home in today’s market,” I explained that even if that was the case, the argument is not valid because the goal is to net as much as possible on the sale of your home and the best way to do that is by working with a realtor.
Most people don’t have any idea how to effectively manage a multiple offer scenario. They don’t know how to get the best offer possible in that type of situation. They also don’t know what ‘final and best’ means, or what an escalation clause is. Most don’t know the difference between a strong pre-approval letter vs. a weak one. Most don’t know about the benefit to a seller if their buyer offers to waive their appraisal clause. And all of that is just the tip of the iceberg.
Here’s the bottom line, 93% of sellers use a listing agent (2) and there is a reason for that. If you are going to sell your home and you decide to try and do it yourself, the statistics show that you will most likely be leaving money on the table and it’s very likely you will end up using a listing agent anyway. Hire a pro! Don’t leave anything to chance. The investment you’ve made in your home is too big to risk not maximizing the return you get on it.
May 5, 2022
©2022 by Scott Hobbs.