I have to grin sometimes. Even though you hear the term FSBO almost daily if you’re in the real estate market, I still run into people who look at me and ask, FSBO? What’s a FSBO? It sounds like it could mean Perrier…and bow is short for Botox. Club soda? Injections?
It’s no mystery, FSBO stands for “for- sale-by-owner.” What is the mystery? Does it make more sense to pay 6% without really understanding what you getting or worse yet, to go ahead and list your home by yourself without understanding what you’re getting into.
Well, the one major pro by listing yourself, you would think, is saving the 6% commission that real estate agents usually charge to market, broker a deal for your home and monitor it through closing.
You could avoid paying this bill entirely if you sell it yourself. That looks like it could be quite a savings but since selling your house is probably something most of us would only do once or twice in a lifetime, most of us would be uncomfortable going it alone. But is it really worth 6% of the purchase price of your home in fees to have personal guidance throughout the process? Are a few things to consider.
Better price. Real estate agents can get you more money and there are numbers to support this. I’ll leave it up to you to do the research so you are confident you got the information you want. But, some of the services provided by the real estate agent are hard to measure: the art of negotiation, leverage of the local knowledge, use of incredible marketing tools such as the MLS (multiple listing service) and access to a greater marketplace.
Another key ingredient is a good real estate agent’s ability to qualify buyers. Real estate agents will cover things like screening potential buyers for financial statements that determine if the buyer is credit worthy, and in the case for all-cash offers, verify the funds. Most sellers would rather not waste time showing their home to not preapproved, not so serious buyers and looky-loos.
A knowledgeable broker (real estate agent, I use the two interchangeably, in today’s world they mean the same thing) knows how to verify exactly where the funds to purchase a home are coming from. Is the offer contingent on the buyer’s pending home sale? What kind of mortgage? By covering these bases there is a far less likely chance of the deal falling apart in the contract stage.
(I’m standing and finger wagging.) Anyone who’s had the lovely experience of going on contract, having to hassle with loose ends that should’ve been taken care of upfront, and having the deal (Nightmare On Elm Street) fall apart before closing, having to rearrange schedules including moving, staging, preparing the property to go back on the market and hassling with what should’ve been a smooth transaction, knows where I’m coming from. Hire a pro. (I’m sitting back down now.)
In addition, the property will appear on the MLS as if it’s been on the market for additional days, more than its competition. The current days on market won’t restart at zero. In the current market, it looks bad to potential buyers because, with all the other properties to choose from, this one appears to have problems so they skip over it and move on to the next home that’s actively on the market but for less days.
So, the FSBO seller is on their own with respect to requesting financial statements from potential buyers. They’ll need to know the difference between prequalified in preapproved buyers who will be using a mortgage to buy their home.
Another huge issue is saving time. Personally, I wouldn’t have the time or the inclination to properly stage my house, set up an inspection, manage phone calls from would be buyers and interview attorneys. Good real estate agents can guide sellers to reputable attorneys and inspectors as well as service providers in the case that repairs and miscellaneous odds and ends need some lovin’. This expertise from a real estate agent could represent substantial savings in time and money.
In addition, there are issues including leaded paint, mold, carbon monoxide and smoke detectors. In short there are legalities that could far exceed any savings a seller could have in an attempt to save money by not seeking professional help.
If you’ve had any experience with selling your own home, or if you know anyone that has FSBO experience, please direct your comments, questions to bettereachday.me or BruceHilliardhomes.com. That’s me, Bruce Hilliard at Windermere Mukilteo. I’m happy to do my best to help you in any way I can.