Why FSBO Fails and How Falaya Solves that Problem
For Sale by owner, more commonly known as FSBO, is used to describe an owner selling their property without the assistance or representation of a real estate agent. This type of transaction is commonly seen in the seller’s market. The most common reason homeowners try to sell on their own is that they want to save money or maximize their profits by not having to pay a real estate agent commission.
However, in the 2017 NAR profile of home buyers and sellers, FSBOs remain at an all-time low of 8%. Home sellers continue to work with real estate agents to sell their homes as the statistics remain at historical highs of 89%.
There are many reasons why FSBOs fail in real estate, especially if a seller does not know how to properly price their home or if property inquiries have been handled inefficiently.
In fact, there are advantages and disadvantages to becoming an FSBO. Before making a final decision, you need to know the downsides and try to minimize them.
FSBOs struggle to properly price their home
FSBOs tend to rely on a home appraisal based on the sale price of a neighbor’s house or the amount of money they invest in renovations.
As professionals who are familiar with the market, we know that just because you spend $ 10,000 to update something doesn’t mean you’ll get $ 10,000 more for the house when it sells.
FSBO sellers also don’t recognize that a renovated home is worth more than a home without upgrades.
Pricing a home right is an art form that many realtors spend years mastering, and even then, many will keep honing their careers. The odds of an FSBO hitting it on the money directly the first time are slim, meaning there will likely be price cuts down the road.
Marketing is a huge undertaking
FSBOs generally receive a package with marketing guidelines. However, if you are inexperienced in marketing, efforts often end in epic failure.
Agents refine their marketing efforts over time and develop tailored marketing campaigns to attract the right home buyer. It is not a skill that can be learned overnight.
Road signs, friends, family, and social media will go a long way. Also, if an FSBO does not offer a fee for a buyer’s agent, marketing attempts are even more futile.
Ultimately, most DIY sellers run into roadblocks that are outside of their comfort zone, or they end up realizing they don’t know what they don’t know.
Selling a home isn’t just about what you think, and most listing agents earn their keep and avoid common pitfalls that a novice seller couldn’t avoid.
Don’t let potential buyers see your home without pressure
Without a doubt, one of the main reasons FSBOs fail in real estate is that the landlord does not allow a potential buyer to have space while viewing their home. Most buyers don’t like to be under pressure when looking for a home.
It is suggested that if you sell your home without professional representation, you should give the potential buyer space. Giving a potential home buyer space allows them to be able to talk openly about the property without fear of hurting the owners’ feelings.
High time investment
If you want to be successful, you will have to spend a lot of time while selling your home. You need to inspect your home and make the necessary repairs. But focus only on those that will add value to your home.
You will then need to photograph and organize a video tour, write your listing and post it on as many sites as you can. Not to mention showing potential buyers around, answering questions over the phone, and more.
When an interested buyer contacts you, you must show your availability and respond quickly. If you don’t seem interested, they will lose interest. You will also need to hone your negotiating skills to ensure you get a fair price.
It’s easy to say that you want to sell your own home. But if you’re not going to get the job done, you’re doomed from the start. The National Association of Realtors states that more than 90% of all FSBOs fail. And what do they do then? Hire a real estate agent.
In-depth legal research
Each postcode will have its own regulations and laws related to buying and selling homes. You should thoroughly research all the documents or permits that you may need for a real estate sale.
For example, does your state require you to undergo a septic system inspection prior to listing? Or do you need your smoke/carbon monoxide detectors inspected? It’s the little things like this that catch out people going down the FSBO route.
If you are not a legal expert, this information is difficult to navigate, understand, and even find. Realtors already have it on file and will make sure to follow up on any legal changes.
Many people will try to sell their house without saying what is wrong (repairs, problems, etc.) and thinking that it is right. In most states, not being honest about your property issues will lead you into deep legal trouble.
The buyer wants your commission savings
One of the things that most people trying for sale by owner don’t realize is that the buyers visiting the home understand that you are not paying a real estate agent to sell the home. Unfortunately, most of these buyers feel that they should get a share in your commission savings.
Many of the potential buyers who will see homeowners for sale are bargain hunters. The reason is that since the seller doesn’t pay a real estate commission, they should be able to offer less for the house.
Many sellers end up receiving small-time offers. Buyers often get a 5% discount, whether the house is priced correctly or not. Many Massachusetts FSBOs learn this the hard way.
Still Needing an Appraisal
Even without an agent, you should still have a home appraisal. You probably don’t have the experience to price your home at the right price for you and the buyer. A professional evaluation is the best way to do this.
If your price is too low, you are losing the real value of your property and in the end, it’s money down the drain. Pricing it too high will put off buyers. And houses that stay on the market too long also keep buyers away because they assume something is wrong. Even if it is perfect, but at too high a price.
Most agents will do a full market assessment for your home as part of their offering. If you choose to do it alone, you are missing out on this experience. You will have to find a reputable appraiser, and that will cost you dearly.
How FSBO Failure Can Sting The Most
When the real estate markets are hotter for homeowner sales, they think they can be successful. Why can’t I just throw a sign on the lawn and alert someone to my door or call me?
When you are on sale by owner, you really miss the opportunity to receive multiple offers. In hot seller markets, it is not uncommon for sellers to find themselves in a bidding war.
Do you know what happens when multiple buyers go out of their way to land on your doorstep? If you are thinking of extra money in your pocket, you are right!
Bidding wars drive bids well above the asking price. By going FSBO you can say goodbye to this opportunity. You won’t see buyers fighting over your home.
It is not at all unusual not to sell as a sale by owner. What you may not realize is the possibility of getting more money in your pocket by hiring a world-class real estate agent.
Set Yourself Up For Success
While some of these common FSBO mistakes are easy to make, it’s just as easy to avoid them. If you are considering selling your own home, Falaya can help by providing you a listing on Zillow, Trulia, along with professional photos and tools to help you price your home and more.
You pay for your own MLS access and monitor activity
Even with a variety of For Sale by Owner listing websites, MLS is still the king of the listing jungle. In 2019, 9 out of 10 sellers listed their homes on MLS, which was the number one source for sellers to list their homes.
Listing your home on MLS will automatically distribute your property details to the major online listing sites. Our flat rate MLS listing service will list your home on MLS for a flat fee of $ 399.
A limited service agent will post your listing on MLS and provide minimal services, such as setting up a lockbox for a flat fee or reduced commission percentage.
Entering MLS through a flat fee service will generally cost you between $ 300 and $ 600. When you look at the 5-6 percent commission that real estate agents typically charge, it seems like a good deal. These entry-only companies often offer additional services such as marketing, consulting, and home photography.
You have to make all the decisions about how to sell your house. You decide the price, schedule the showings and you will have full control of the negotiation process.
However, there are many reasons why using such a limited service will not be a good way to sell your home.
Difficulty in selling
Even if you are selling your home in perfect market condition, with many buyers looking for a home like yours, the FSBO process is not easy. You will have a lot to do to make sure everything goes smoothly during the sale if you go alone.
With Falaya, you will be able to,
- Judge the right price
- Prepare your house
- Write your listing
- Market your property
- Process requests and deal with queries
- Negotiate with both the initial offer and later with the home inspection
- Make sure all documentation is correct
With our program, you can be an FSBO and have a fixed fee MLS listing service with a local real estate agent at the same time. S0, you will have the best of both worlds – all the benefits of an MLS listing and save money!