Can a For Sale By Owner (FSBO) Be Successful?
Trying to sell your home today, on your own, is an uphill battle at best. Understanding the complexities of the market, home prices, weather, marketing challenges, security, legal issues, and navigating the new TRID all paint an interesting and challenging scenario for For Sale By Owner (FSBO). ).
Selling your home on your own in today’s market is akin to winning a championship game without a manager. Can be done? Possibly. It’s the best you can do? Not likely.
People who want to sell their homes on their own often have personal reasons for doing so. It is generally perceived that one will save money on the sale of their home. While this may seem like a sensible thought on the surface, there are many reasons why this isn’t necessarily true, especially today. Industry statistics show that a homeowner typically gets a higher sales price when they use the services of a professional Realtor®.
Let’s start with the TRID. This is an acronym for TILA-RESPA Integrated Disclosure rule. In a nutshell… it replaces the familiar HUD with a whole new level of complex rules and procedures that will affect your transaction. You and your buyer will come face to face with TRID at closing time. The scope of this new legislation is well beyond the scope of this article, but there are numerous web resources where one can be better informed about its procedures and requirements. In more ideal circumstances, your real estate agent®, mortgage loan officer, and closing attorney navigate these waters for you.
How do FSBOs screen potential buyers? They usually don’t. Most are so eager to sell that they open their doors to anyone. Most sellers, if you ask anything at all, don’t understand the difference between loan pre-qualification and loan approval. They have no idea if their “potential buyer” is capable of obtaining a loan sufficient to purchase their home. They may not even be who they say they are. Frustrated, many will waste a great deal of time with “window shoppers and tire kickers.”
Dealing with home inspections, organizing the home effectively, preparing that all-important first impression through presenting the home’s exterior and landscaping, and knowing what to say to prospective buyers are often areas that paralyze a sale. In addition, a seller’s emotional involvement in the sale of your home often has detrimental downsides. The home seller is often too emotionally attached to their home to remain objective in negotiations.
Most FSBOs don’t understand market prices and often price your home higher than it should be. Sellers often have the misconception that the sale price of their home is related to their financial needs or how much they have invested in their property. Not so! They will often miss out on that precious four-week window when a home is first introduced to the market due to a pricing error, poor staging, and other issues. Setting an accurate asking price to enter the market is a skill well understood by professionals but lacking in novices.
Sellers should also feel comfortable communicating directly with buyers, their agents, attorneys, home inspection companies, appraisers, and loan companies. This area alone stifles most transactions. There are also numerous ways to make legal mistakes. Contracts have specific terms that must be managed effectively or sellers can be arrested in breach of contract. HAS Real Estate Contract to Buy it is a legal document that contains deadlines, specific instructions, clauses and contingencies that are often difficult to understand for the untrained.
Because FSBOs are extremely vulnerable in so many areas that can stall a transaction, many sellers have the experience of seeing their sale fall apart at or before closing due to a lack of management of the legal details of the transaction. In fact, the National Association of Realtors® (NAR) has collected data showing that less than 10% of all FSBOs sell their property that way. Less than 1% of all home sales are FSBO.
Unless the homeowner is fully prepared for the reality of selling their home on their own, many may quickly realize the need for a trusted professional partner, a Realtor®, who will effectively market their home in a variety of mediums. , providing maximum exposure, showcasing well-qualified and potential buyers, negotiating the purchase contract, suggesting financing and closing attorneys, overseeing inspections, handling all necessary legal paperwork, and monitoring the closing. Your listing agent can take care of everything you need, from start to closing, and communicate with you throughout the process.
Is it a good idea to hire a professional Realtor® to represent your best interests? You be the judge.