Say “NO” to FSBO
In 1981, homes sold For Sale by Owner represented 15% of the homes closed while 85% were agent-assisted. The percentage of sellers handling their own homes alone has declined over the decades to only 8% of homes sales in 2020. Interestingly, half of the sellers knew the buyers and the other half did not. The FSBO sellers who knew the buyers, who were predominantly a friend, relative or neighbor, had a market time of less than a week and received 100% of the asking price, less expenses of course. According to the NAR 2020 Profile of Home Buyers and Sellers, 50% of FSBO sellers determined the asking price of their home by recent home sales in the area while slightly more than 1/3 used an appraisal. 41% of sellers stated they did not want to pay a fee or commission as the reason they sold it FSBO. Another 30% did so because they had a relative, friend or neighbor who wanted to buy their home. A significant problem encountered by For Sale by Owners was exposing their home to the marketplace. They run the risk of selling the home for a lower price because it is not marketed to the highest pool of available buyers. Negotiating on their own behalf is another concern many for sale by owners share. There are so many different things as well as people with whom to negotiate. For instance, besides the sales price in the contracts, other negotiable terms include financing concessions, closing and possession dates, inspections and earnest money. However, the negotiations could continue well up to the moment of closing with repairs, appraisals and other unforeseen things. While the seller might feel uncomfortable negotiating directly with a buyer, there could also be negotiations with the appraiser, inspectors, mortgage company or escrow company. The layer of separation that exists between the seller and other parties is the real estate professional. They are trained to de-escalate sensitive areas so that feelings are not hurt as well as acting as a go between so the way something is said can be minimized. Difficulties experienced by FSBOs include negotiations with the buyer, not familiar with the process and standards that are involved in the 92% of the transactions that are agent assisted. 89% of Sellers say they were satisfied with the service their agents gave and would use them again and recommend them to others. A seller should realize the motivation of a buyer wanting to deal directly with a seller without an agent. They are trying to save the commission but both buyer and seller cannot save the commission. The more knowledgeable and possibly, the better negotiator will usually benefit the most. 13% of the sellers were contacted directly by the buyer. It is conceivable that these buyers may have been trying to take advantage of an unknowledgeable seller to eliminate competition and purchase a home at a lower than market value. In a seller’s market, a FSBO can sell their home. The question will be whether they received the highest price with the best terms and the fewest problems. Protecting a large financial asset is important and sellers deserve the peace of mind that a real estate professional provides along with the fiduciary duties that accompany them. The median price achieved by For Sale by Owners is considerably less than the median price sold by agents. While there may be other factors involved, it certainly introduces the question “is the FSBO is selling below fair market value?” Before embarking on the sale of your home by yourself, talk to a real estate professional or possibly two, to get as much information as possible to make an informed decision. Your objective should be to maximize the proceeds from the sale. For more information, download the Sellers Guide. |
|
|
Blog
Optimize Your Sales Price
Optimize Your Sales Price
Doing a lot of work to a car before you trade or sell it to a dealer is not generally a good idea. In most cases, you won’t recapture the cost of the repairs. They can do the repairs for a less than you can. Not to mention, you are selling to a wholesaler who needs to sell it again to the end user and still make a profit.
A home sale is totally different. The owner is selling the home to an end user. Since the buyer, in many cases, is using their available funds for the down payment and purchase costs, they don’t have money to spend on repairs or decorating the home. They would need to live in it “as is” for a while which may not be as appealing as finding a home that is refurbished, up-to-date, and ready to move into.
Even if the buyer would be willing to get a home improvement loan after the sale, it would be a separate loan at a higher interest rate making their payment higher than financing it all in one mortgage at the lower first mortgage rates.
The seller may experience some inconvenience going through the remodeling process, but it will, most likely, result in a higher sales price in less time. Occasionally, sellers say they’ll let the buyer choose their own colors but not all people have the imagination to know what something will look like after it is finished. It is better to go ahead and get the work done before putting it on the market.
The bathrooms and kitchen are the most important rooms to update. If the finish on the cabinets is bad, have them painted. New countertops and appliances can make a world of difference. Paint, countertops, and fixtures in the bath give the home a great feel.
In addition to the repairs, a major cleaning and decluttering can make a home look and feel better than the competition.
The first step is to go through the home and pack up or get rid of things you don’t need or things that detract from the home like excess furniture, exercise equipment, personal artwork, etc. Now, do the same with the closets and cabinets. By getting rid of things, there will be more room and they’ll look larger.
Next, walk across the street from your house and give it a critical look. How is the drive-up appeal? Would you want to go inside to see the rest if you were a buyer? Are the trees and shrubs trimmed? Yard cleaned up? Do you have blooming flowers in the beds? Does the front door and mailbox need a new coat of paint? Do you need to power wash the outside of the home and the sidewalks and driveway? Do the windows need washing?
Buyers are visual people and beauty is always rewarded. Restaurants know that people eat with their eyes first and they go to a lot of effort to plate the food so it is visually appealing. The same approach works for selling a home. Ask your agent if they have ever taken a buyer to a home that refused to go inside because they didn’t like the looks from the street.
Your real estate professional can make specific recommendations and assist you in finding someone to do the work. This is what we do. TRUST US!
To understand the reasoning behind why a homeowner should not sell their home by themselves, we need to identify the motivation. Probably, more times than not, the homeowner wants to “save” the cost of the commission. It certainly represents a significant amount of money.