More than 90 percent of all for-sale-by-owners failed in 2016, leaving the sellers to ultimately opt for a real estate agent only after they’ve realized their mistakes.
The typical FSBO home that year only sold for $190,000 compared to the agent-assisted homes that sold for $249,000, on average. That’s a 31 percent difference!
The problem is that homeowners who choose the FSBO route often harbor dangerous naiveté about the road ahead. Particularly when it comes to the process of selling lake homes, the arena of real estate is a complicated one to navigate for amateurs.
The unfounded belief that for-sale-by-owner can help save money, coupled with a lack of marketing skills or effective pricing strategy makes for an unfortunate combo that ultimately wastes time and money.
The majority of FSBOs fail and upon closer inspection, it isn’t hard to see why.
FSBO Seems Logical at First, But…
The decision to sell a home without the representation of an agent can almost always be traced back to one determining factor: money.
After all, a real estate agent’s commission is typically 6 percent of a home’s sale price. Opting for FSBO on a $500,000 house could theoretically save a seller $30,000.
To justify their decision, many homeowners claim to have good enough knowledge of their neighborhood to successfully manage a sale. They reason that they’re able to speak to potential buyers about real experiences living in the community.
To be fair, that is a highly valuable trait to have. However, they might think they understand their local market, but an expert agent understands it better.
And in the absence of an agent, homeowners have complete control over the process. With free rein, they don’t have to listen to opinions on how to market, price or negotiate their deals.
But that’s probably not a good thing. A seller needs the valuable exposure of an agent to take advantage of valuable counseling and expertise from an experienced professional.
Sellers also opt for FSBO with the belief that their home will get the special attention it deserves.
Whereas any good agent will have multiple clients, for-sale-by-owner ensures the seller laser-focused attention on his home alone. But this is only a plus if the seller has ample amounts of time on her hands.
Unrepresented sellers are responsible for all the tasks of an agent. They must ensure the home is inspected, repaired (when necessary), professionally photographed, listed across multiple sites and more. And all of this costs money.
FSBOs also need to be available to answer phone calls and show their home nearly 24/7.
If you do things the right way, selling a home is a full-time job. It takes a LOT of work and commitment and what the seller might assume should be done is probably just the tip of the iceberg of what’s really required to get top dollar for the property.
The Usual Pitfalls
There are generally two factors that determine every successful home sale: price and marketing. Typically the biggest challenge FSBOs face is appropriate pricing.
Appraising a home’s value requires accuracy of market knowledge, including recent sale prices of comparable homes nearby.
While a skilled agent will inherently understand and have access to the necessary tools for a competitive pricing strategy, it could be a steep learning curve for an amateur.
Many who attempt to sell their homes on their own make the mistake of badly overpricing by factoring sentimental value into the price. In fact, overpricing is the number one reason homes don’t sell.
Marketing is also a difficult task to undertake alone. Real estate agents have extensive market exposure thanks to sprawling professional networks and name recognition. FSBOs, on the other hand, are usually forced to rely only on word of mouth, yard signs and social media for exposure.
The goal of a good marketing strategy is to attract a solid buyer. Because agents have more promising marketing channels and connections, FSBOs usually don’t attract as many competitive offers.
We’ve already noted that homeowners typically choose for sale by owner to save money. Ironically, unrepresented sellers can often be nickel and dimed into some major expenses along the way.
All the money needed for brochures, signage, attorneys, MLS websites, photography, contracts and credit checks on potential buyers adds up fast. Not to mention when selling a home, the paperwork and red tape alone is downright daunting.
Unrepresented sellers often run into legal obstacles when questions of liability and disclosure come into play. In a litigious society, ignorance of local laws and regulations won’t protect you from a lawsuit.
For an amateur looking to sell, it would take no time at all to be completely overwhelmed.
A Good Agent is Irreplaceable
Experienced agents have a deep understanding of their local real estate nuances, as well as expertise in negotiation and strategic marketing.
They’re also well-versed in the paperwork and legalese necessary in any selling process. And with access to valuable resources like professional photographers and strong buyers, a good agent’s value is irreplaceable.
After looking at all the obstacles FSBOs have to face, a 6 percent commission is a small price to pay to avoid them. At the end of the day, a good real estate agent is an indispensable tool in the home buying or selling process.
Their level of skill, expertise and professionalism beats an amateur laden with endless learning curves any day.