THE HIDDEN COSTS OF SELLING YOUR HOME WITHOUT A REALTOR®
There is no denying it, the housing market has been a rollercoaster over the last several years. From the Covid-19 driven frenzy in 2020 to the significant inventory slowdown this year, buyers, sellers, and agents have all had adapt and grow comfortable with change. In any given market, many homeowners think it’s a good idea to sell their homes by themselves. This is known as For Sale by Owner (FSBO). When the market was very hot a few years ago, some even had success in selling this way. This spreads the fallacy that doing it yourself could be better.
At times, FSBOs occur when an owner is selling to someone they know. Otherwise, people usually pursue this route under the common misconception that it will save money on the commission. What these sellers fail to recognize is that although FSBOs don’t require a commission, the homes typically sell for much less than if a REALTOR® handled the transaction. According to the National Association of REALTORS®, 10% of homes sold in 2021 were FSBO. The average FSBO home sold was $225,000 compared to $330,000 for agent-assisted home sales.
Aside from selling for much less, what are other reasons FSBO can hurt a seller’s bottom line?
Time: Unless you plan to take a lot of time off from work, people simply don’t have enough time to do everything necessary to market the property to prospective buyers. From staging, taking professional-grade photos, and marketing properly, selling a home is an arduous process. Listing agents take care of all these tasks for you and if you’ve hired the right agent, they’ll also have a team on their side to protect your most valuable assets which are your time and money.
Buyers Typically Avoid FSBO Properties: Buyers will often avoid putting an offer on FSBO homes altogether. These properties are frequently incorrectly priced, poorly staged, and it’s far more difficult to schedule a showing without a seller’s agent. The transactions can also be dicey, as the sellers likely do not have all their correct documentation prepared and can thus be a headache for buyers.
Extra Costs: When people sell by themselves, they do so with the hope of saving money. But little do they know; they will be putting a lot of money into this process upfront and with no guarantee that it will work. As well, seller’s agents are highly experienced with negotiating and creating enough buzz to generate a sale with multiple offers. The more offers a seller receives, the more money they make in the end. If buyers aren’t taking your FSBO seriously, a multiple-offer situation will likely not occur.
FSBO Homes are Often Incorrectly Priced: This is one of the biggest reasons that FSBO homes don’t sell as quickly or for the most amount of money. Real estate agents are far more in tune with the current market. Some mistakes we see FSBO Home Sellers make include:
- Basing home price off homes on the market and not ones sold
- Not realizing and/or understanding that buyers are aware that you’re not paying a commission
- Being too subjective and not seeing the true value of their home
Real estate agents have the experience and tools available to them to make sure that they put the house up at the best price to incite as many strong offers as possible.
Inadequate Resources for Proper Marketing: In order to get the maximum number of offers on your home, you’ll need as many people to see your listing as possible. FSBO sellers often underestimate the importance that marketing plays in selling a home. At Lamacchia Realty, we focus on marketing more than anyone because we understand its power. The difference you’ll see from a real estate company like Lamacchia Realty is:
- Professional photography capturing the highest quality of photos for your listing
- Interactive floor plans so prospective buyers can visualize the rooms in the home
- Reverse prospecting – finding buyers, not just waiting for them to come to you
- Advertising the property on social media – perhaps the largest, modern-day channel to reach buyers and their agents
- Creating ads
- Installing up signs
- Staging the home
There is so much that goes into marketing a home and failing to do so will hurt your chances of a high sale price.
Crucial Paperwork: As you can imagine, the transfer of properties from one person to another includes a lot of paperwork. Sellers don’t often understand how this side of the process works and are unaware of the various inspections and disclosures. If any issues pop up such as a failed inspection or property dispute, a real estate agent will understand right away what needs to be done. Often, agents have teams of people working with them to ensure a successful closing on a property. Their real estate attorneys will provide legal representation to protect your interests.
Liability: Selling a home comes with its own unique set of liabilities, even when you hire a REALTOR®. There are, however, far fewer liabilities at stake when you are working with a REALTOR® who knows how to protect you and can behave as the liaison between you and the buyer. Sellers almost always make representations that they shouldn’t to buyers which could come back to legally bite you after the sale.
It is for these reasons that, on average, people can lose thousands of dollars from their home sale price when they sell by themselves. If you’re considering selling your home yourself, first consider meeting first with a reliable, expert REALTOR® to determine if you’re making the right choice. A commission is a small price to pay for peace of mind, a higher sale price, and asset protection.