For Sale By Owner…
Commonly shortened to FSBO, easily described as a homeowner trying to sell their home without the representation of a real estate broker.
There are many reasons why homeowners consider or attempt to sell their home on their own. One of the main reasons homeowners chose to go this route is to save the money they would be spending on commissions. Or the simply feel the don’t need the professional advice of an agent to get the job done.
No matter the reason, according to the National Associations of Realtors only 7% of FSBO’s get their home sold!
Let’s get started with many reasons FSBO’s fail to make the sale. Whether it be not understanding how to price the home or not being able to screen potential buyers. If you are thinking of taking on the task of selling your own home, you should be educated on the top reasons FSBO’s fail to ensure you don’t make the same mistakes.
REASONS FSBO’s FAIL…
REASON 1: Failing to prepare home properly before selling.
Properly preparing a home before putting it on the market is crucial to success, FSBO or not! Listing a home before it is ready can be detrimental to the chances it actually sells.
There are many preparation tips that can be followed by potential FSBO’s
Here are a few examples: Decluttering, removing personal effects, freshly painted rooms, curb appeal, etc. These tips should greatly increase your chances of actually making the sale. If you would like more advice pertaining to your specific situation feel free to send me a message HERE.
REASON 2: Failing to screen potential buyers.
Experienced real estate professionals know how to properly screen buyers. FSBO’s usually have no clue what to ask and will waste countless hours with unqualified buyers walking through their home.
FSBO’s are often unable to determine if a buyer is pre-approved or pre-qualified. Even less actually know the difference between the two.
I would suggest one of the first questions a FSBO ask a potential buyer is “are you pre-qualified with a mortgage lender?” It would also be a good idea for FSBO’s to speak with a local mortgage lender so they can send buyers more information.
REASON 3: Unable to handle inquires.
In my opinion this is the biggest reason why FSBO’s fail. It is a common myth that real estate agents make boat loads of money without working long hours. This couldn’t be further from the truth! The fact is, top producing agents spend much of our day handling inquiries about our listings and scheduling appointments for buyers.
In today’s age, buyers and buyers agents will want a fast response. Often they will call you to schedule an appointment minutes before arriving. This can be a major issue if you will be busy with your day job or if you’re not around your phone/computer nearly 24/7.
Chances are extremely high that any potential buyers are also viewing many other homes in the area, homes just like yours. If you deny them access the first time they call, they will likely never return. Especially considering most agents will push clients away from FSBO’s. Agents would much rather work with a listing agent as opposed to a FSBO.
REASON 4: Failing to let buyers view home without pressure.
Another big reason FSBO’s fail to make the sale! When buyers view a home, regardless if they have a realtor with them, they want to feel “at home”. They don’t want the homeowner giving them a tour or shadowing their every move. That feels suffocating and will not lead to a pleasant experience.
Homeowners, often follow buyers through the home and point out various detail. This seems like it would be a positive thing to do, however it makes buyers uncomfortable and unable to discuss the home with their family.
It is best to leave the home completely during a showing or at minimum step outside, go for a walk etc. Let them know you are available for any questions but don’t be over bearing while they are looking around.
REASON 5: Unable to understand specifics of the contact.
Many FSBO’s are not educated on the contracts used for purchasing a home. The sales price is only one part of the negotiation. There also is the option period, financing addendum, sellers disclosure, earnest money, homeowner association, etc.
If the FSBO is not aware of the specifics agreed to on the contract they could quickly end up in a bad situation.
Real estate professionals use contracts everyday and they are up to date on industry standards. Feel free to contact me here if you have any questions about an offer/contract.
REASON 6: Home Inspection.
The next step after the purchase agreement is signed is the Option Period. Generally ten days, where the buyer will have a home inspection done. During this ten day period the buyer can choose to back out of the contract for any reason.
After the inspection the buyer will often re-negotiate the sales price or request repairs to be made by the seller.
Many real estate deals fall apart during this phase and its crucial to fully understand the inspection/option period before signing a purchase agreement with a home buyer.
REASON 7: Exposure.
This is probably one of the biggest reasons FSBO’s fail to get their home sold! In the old days before the internet, home buyers were forced to drive around neighborhoods in search of FOR SALE signs. Those days are long gone! Now-a-days nearly ALL homebuyers begin their home search ONLINE. Websites like HAR, Zillow and Trulia have made the home search easy for buyers.
Sure, putting a sign up will let your neighbors know your home is for sale. Outside your neighborhood though, few will ever be aware that your home is even for sale! If your home is not being advertised on the three websites mentioned plus others then you will lack the necessary exposure to get your home sold in todays digital age!
REASON 8: FSBO’s are not willing (or able) to pay the buyers agents commission.
It might not seem fair for the sellers to be responsible for the full real estate commission, 6%. However when you buy a home you will not be required to pay ANY commission for using a realtor. Hints why there’s rarely any homebuyers who chose not to use a realtor.
Like I mentioned commissions are generally the main reason sellers chose to go the FSBO route. This can work, IF the FSBO is still willing to pay the buyers agent 3% of the commission. IF NOT, the buyers agent will simply not show your home to their buyer.
So if you decide to sell your home on your own be sure to advertise that you will still pay the buyers agent 3%. If not, good luck, chances are slim you’ll make the sale.
REASON 9: Not pricing the home correctly.
Real estate professionals have a lot of experience with pricing home. FSBO’s don’t! Unrepresented home sellers will often overprice the home, causing it to go stagnate. After a while, buyers will assume something is wrong with the home and will completely write off the home as a possibility.
Pricing the home too high also eliminates the possibility of creating a bidding war, which will drive the price up naturally! A bidding war can also put you into a position to accept a back up offer in the case the original offer falls through during the option period.
You cannot simply make up a number based on what your neighbors home has sold for. There are complicated strategies used when pricing your home to generate a average price per square foot when compared to similar homes, key word similar.
Real estate pros have the resources and data available to establish a price point from recent sales and pending properties. Resources and data that FSBO’s do not have access to.
REASON 10: Unaware how to ensure the deal closes.
Last but not least! FSBO’s might have read through the contact and other documents. Although, logistically speaking there is still plenty of work to be done. From ordering HOA transfer, providing home warranty, title company docs, mortgage pay off, and much more before you can close and get paid!
Finding a potential buyer and negotiating and the sales price is difficult enough. Being able to ensure the deal closes is another challenging aspect to a real estate transaction. If you have a busy day job and will not be able to take calls or respond to emails in a “time of the essence” matter during the weeks leading up to closing it is unlikely to will actually close.
Overall..
I hope you have gained some valuable insight on the difficulties associated with selling a home. We have covered a lot of ground with the Top 10 Reasons FSBO’s Fail. With that being said, nothing is impossible and some homeowners are able to close the sale in certain circumstances. Although, it should be obvious that there will be many challenges and logistical difficulties during the transaction.
If you have done your research and have plenty of free time to take calls, respond to emails, and have documents signed by all parties then there may be hope! Have a full time day job and a house full of kids? I would strongly advice speaking with a real estate professional to have them handle the transaction so you can keep your sanity.
