10 Reasons Why 92% of (FSBO) For Sale By Owner Fail
Selling real estate is not necessarily a matter of IQ but rather a matter of specific Education, Training and Experience.
A study in 2016 showed that the main reason why people tried to sell their home on their own was to save on real estate commissions.
That same report showed that only about 4% of people in Canada / USA sold to consumers directly while another 4% sold to friends, neighbors and relatives. The rest gave up altogether.
If you are reading this then you are likely considering selling your home yourself.
There are many reasons why selling your home yourself is not only difficult, but there are many reasons why most people fail in reaching the goal of finding a home buyer.
Most FSBO'ers fail simply because they usually do not know what questions to ask when they receive an inquire from a potential buyer. Most sellers get excited that they have received a call and forget to qualify the buyer. It's frustrating when that buyer shows up on a Saturday afternoon and loves your home, but you find out they have a credit score in the 500's. Yuck!
Do you know if they are qualified for a loan? If they are, are they prequalified, preapproved, or approved for that loan?
If you receive a phone call from a perspective buyer, these are the two main questions you should ask them before allowing them to view your home.
Another important questions would be "Are you working with a Realtor who is expecting to be paid a commission?"
Many people are working with their mom, dad, family member or best friend, and they will want them to be paid for all their previous efforts.
1) Are you working with a lender and are you approved for your loan?
2) Are you working with a Realtor who is expecting to be paid for their services?
People often underestimate and underspend on marketing their home.
If you are going to sell your home yourself you must fully commit and not skip out on a single expense. Most people start with a sign in their yard, an ad in the paper and putting their home on Craigslist. That's fine and all, but there will be little to no market exposure, and market exposure is everything when it comes to selling your home for top dollar!
Here are some of the hidden costs that For Sale By Owners often forget about:
Most FSBO'er do not understand how to accurately price their home.
If you decide to put your home on the market without a Realtor, it's best to hire an appraiser to give you a outside perspective of what the actual value of your home is.
- Deep Cleaning. Windows, baseboards, blinds, showers, cobwebs, everything!
- Declutter. Get rid of wasted furniture, and make rooms feel as large as possible. Especially the master bedroom.
- Get rid of the gold. It's time to get rid of anything gold - light fixtures, faucets, door knobs, etc. In today's market, buyers will reduce their over all offer price, if they seem a ton of gold.
- Curb Appeal is a MUST! Freshly cut lawn, trimmed bushes, annual flowers, a new door mat, and a painted front door. Red is always popular and buyers love it!
- Nothing broken. If it looks broken, and buyers can see it, then you must fix it before it goes on the market.
A good Realtor will be able to get your home on MLS which will distribute your home to hundreds of websites. The use of cutting edge technology and well planned marketing will get your home in front of anyone who may be looking for a home like yours.
Sellers do not know how to handle the three C's - Contracts, Contingencies & Closing.There are much more difficult things in this world then understanding the Real Estate Purchase contract, but it's important to understand now that there is much more then price that needs to be negotiated. For example, how long do the buyers have before they are locked in? Do you hire a title company to help you? Do we have to close in 30 days? What if I need to find a replacement property? What if my buyer has to sell their home first? As you can see, there are a lot of things that need to be addressed in the purchase contract. One mess up here can cost you everything!
Most FSBO sellers do not know how to handle the home inspection and required repairs.Once an offer has been accepted the buyer is most likely going to do a home inspection. In almost every case, even the best of homes have a laundry list of items that need to be addressed. Things in crawl spaces, attics and roofs, which are almost never inspected during home ownership, are almost always areas where issues are found. Older homes may even have items that were in code during it's construction but are now considered to be "out of code."After the inspection, the inspector will issue a report, and your prospective home buyer will often require you to make the necessary repairs. This is typically the second biggest negotiation in the entire deal, and can often make or break a deal.
Not willing to pay a Buyer's Agent CommissionAt some while your home is on the market you will be contacted by a Realtor who has a buyer who wants to see your home. This agent has worked long and hard to find their home buyer a property, and is going to want to be compensated if his or her buyer want to make an offer on your home. These buyer's are also going to want their agent to write the offer and handle the escrow because they see the importance of having broker representation. If you are unwilling to pay even a buyer's agent commission then you will miss out on many opportunities to sell your home.By being willing to pay a buyers agent commission, you can have them handle all of the paperwork, the entire escrow, all of the inspection, and make sure that there is no legal loop holes that haunt you months or years later.
Is there a cost for the safety of you, your family and your possessions?