Looking to sell your home yourself to save money? For Sale by Owner, or FSBO, is one option. The savings can be significant with the typical commission in the Outer Banks at 5 to 6%; half goes to the listing agency and half goes to the buyers’ agency.
Buyers Agent Commission
FSBO property owners should be prepared to pay a commission to any buyer’s agent. In the Outer Banks, the commission is between 2.5 to 3%.
While you can refuse to pay this amount, but the result is likely to be no agents actively informing their buyers of your property and no traffic.
You will need to pay a commission to any agent that brings a buyer and closes. That is the good news. The bad news is most agents won’t bring the buyers anyway. See, they really don’t want to work with you; and knowing another agent is not working on the deal, they will have more work to complete the deal, increased legal risk and likely a large headache.
There is a whole industry set up to help you. Look at websites like forsalebyowner.com, FSBO.com or Owners.com. A listing on forsalebyowne.com site is free for 7 days (no you won’t get that lucky and sell it that fast). The Standard package is $99 a month and the deluxe package is $199 per month. The basic package is the listing on the site, a standard listing on “Redfin, Homefinder & more” and 20 photos. This site even provides a home selling guarantee where the fees paid are refunded once your home sells after working with a full service agent.
These resources look great at first sight. The problem is they don’t have the reach that realtor tools have. Some of these tools may offer the option to list on MLS at approximately $400. This is so basic, you will go nowhere without it. Some may also place your listing on some affiliate sites. Most of the time, the number of sites and the reach does not compare to what a realtor has in their tool box. At Eillu, our listings are sent to over 900 affiliate sites. We are one of the only Realtors in the area to have our listings included on international sites for even greater reach.
For a typical buyer, these sites leave a bit to be desired because they do not show all available listings. The forsalebyowner.com site displayed 19 listing for a nearby zip code and filtering it for FSBO displayed only 9 results for the zip code. On the FSBO.com site only 1 property was displayed for the same search. A similar search on the Eillu website shows 60 results for the same location. Do a Google search for any town and see how many FSBO sites show in the rankings. Few to none. Most buyers won’t go past page one of the Google search to locate a FSBO site and your listing.
The buyers who do use the FSBO sites may be the ones who are looking to take advantage. They may be sharks or scammers who are looking to take advantage of an unsophisticated seller. There may be bargain hunters with the attitude that the commission savings should be passed on to them and demand even more price concessions.
Time on Market
FSBO properties tend to stay on the market longer than agent represented properties. As the saying goes, time is money. If you add up the monthly cost of continuing to own your house, you will know how much each additional month of waiting for a sale will cost you. These costs include the mortgage, property taxes, insurance, utilities, fees and seasonal maintenance costs. This is how much equity you lose each month by sticking with a too-high price or not having the reach to find potential buyers. Chances are it won’t take long to run down your equity.
Pricing you home for market conditions at the start will save you time and money.
Pricing & Market Familiarity
FSBO sellers are at a disadvantage compared to real estate agents. Even if you have lived in an area a long time, you do not understand the nuances of property values the same as a seasoned real estate pro does.
Some sellers price the property based on the amount they need to break even or to satisfy a profit goal. Other may take an emotional approach of what “they think it is worth”. Sure, you can take a guess at what you think you can get for the property. If you undershoot it, you will be leaving dollars on the table. Perhaps, more than you would have paid in commission to the listing agent. If you over shoot it, your listing will not sell and time and money will be wasted.
Setting the best price for your property based on exact features and conditions compared to comparable properties that have sold will provide the best chances for success. It takes some data, analysis, and skill but this how you arrive at the market price.
Contact Eillu to get a custom Current Market Analysis for your property today!
FSBO Sold Price Falls Short
While you may be going the FSBO route to save money by not paying the listing commission, statistics suggest you will eventually end up with less when you walk away from the closing table. According to the National Association of Realtors, FSBO properties sell for less than agent represented properties. FSBOs accounted for 8% of home sales in 2015. The typical FSBO home sold for $185,000 compared to $240,000 for agent-assisted home sales.
At Eillu, we believe 1.5% listing commission is fair compensation for our services. This is half of what our competitors charge in the Outer Banks market. We have also capped our listing commission at $15,000 to remain fair to higher end property owners. The 1.5% listing commission does not apply to lots and home sites.
How will you qualify buyers? How about protecting yourself and family from potential thieves? Will you insist all buyers are pre-qualified or pre-approved by a financial institution before showing the house?
The safety of real estate agents showing homes makes headlines when something goes wrong. Most agencies take steps to reduce the risk. Pre-qualifying buyers and gathering background information can trigger some red flags. Many agencies have a buddy system or a secret word or other procedures in place to make showing properties safer for agents.
No matter how you are selling the house, valuables and personal items should be removed from the home to reduce the risk and to allow potential buyers to imagine their family’s pictures hanging on the wall and imagine their belongings decorating the space.
Unfortunately, a FSBO sign on the property can make you and your family a target. What better way to case the joint then a leisurely stroll through an open house or a homeowner showing.
A homeowner using FSBO should take the risk seriously and put in plan in place to protect the family and home.
Just because you are selling your home your self does not relieve you of any legal burdens. All local, state and federal laws must be complied with. You must be able to prepare all the paperwork, research encumbrances and comply with all the disclosure laws.
A buyer’s agent, has a fiduciary responsibility to the buyer only. He is not obligated to help the unrepresented seller and it is his or her license that is at risk if things go wrong.
The higher risk and likely complications of the deal makes buyer agents prefer not to work with FSBO sellers. If a problem does arise, he is going to resolve it in the way best for his buyer. This may not be the ideal solution for the seller and he may not be aware of any alternatives.
In most cases, a FSBO seller will still need to hire an attorney to draw up the sales contract and represent them at closing. Unfortunately, 30% of the people that sell their home themselves go through litigation.
Agent Network Contacts
Every Agent has a list of contacts. Some may be new leads and some may have completed several deals. This list is golden. The list is continually being update as new buyers make contact and identify what they are looking for. These contacts have already been looking and are primed to purchase. You will miss out on these contacts by going FSBO.
Buyers will inconvenience you. They may be researching late at night and call in the wee hours of the morning. They may be in town for only a day and want a showing immediately. They will have questions and send multiple emails or daily calls. It is a full time job with unusual hours. Are you prepared for it?
What you may not consider in addition to the buyers is you will also be fielding calls from many, many agents who want to list the property for you.
When you have a listing agent, the agent has systems and personnel in place to field the calls, answer questions and schedule showings.
Sellers should not underestimate the time it will take to perform all the activities for the sale. First, the process is unfamiliar. Will you have time to research what forms are required and have the required form when you need it? How will you market and advertise the property beyond the FSBO websites? Are you adept at social media and do you have the time to respond to inquiries? Do you have the skill to create and write compelling copy for brochures and the listing?
Most sellers are not objective regarding the sale of their own home. Ego and emotion can rear its ugly head at the slightest criticism. The rusted basketball net in the driveway reminds you of games with the kids who have flown the coup, but to a buyer it is an eyesore.
Most offers also come with contingencies. They can include the sale of the buyers’ current house, a satisfactory home inspection and financing (among others). Knowing which contingencies you should accept and understanding the risk of acceptance is not always easy for the layperson.
FSBO properties tend to be unique and present some complicated situations. As the seller of a FSBO, you may not have any ulterior motives. However, some FSBO sellers choose this route and refuse to work with an agent because they have something to hide. Unfortunately, whatever that “something” is will eventually be revealed. The result is usually costly litigation where both the buyer and seller suffer.
The number of things that can go wrong are too numerous to even outline here. Of course, the same can also be said of transactions with agent representation on both sides. $%&* happens.
The difference is most agents will see potential problems before they occur and eliminate them or advise the buyer to walk away. Agents are also adept at handling the issues that arise so a satisfactory outcome can be had by all. Contracts and disclosures are in place so that the terms and remedies are clearly stated. One can see a summary of a cautionary tale of a FSBO gone wrong mentioned on many online sites.
At Eillu, we believe there is an art as well as science in pricing your home and staging it to appeal to the greatest number of potential qualified buyers. We have over 20 years’ experience in the Outer Banks real estate market. We stay on top of national economic conditions and how they will impact local pricing. Contact us today for a current market analysis to find out what your Outer Banks home is worth. Find out how Eillu can save you money on the sale of your home or save on the purchase of a 2nd home, vacation rental, investment property or retirement home.