People who sell their own homes do so primarily to save money on commission. However, this doesn’t necessarily mean they will get more money in the sale. A recent survey of home buyers and sellers* shows that the typical FSBO home sold for just $184,000 compared to $230,000 among agent-assisted home sales. So how does this happen?
1. FSBO Homes Aren’t Priced Correctly
This is one of the most common reasons FSBO homes don’t sell as well as agent-assisted home sales. FSBO sellers aren’t as aware of the current market as well as an experienced Real Estate Agent, so they tend to overprice their homes. FSBO sellers don’t consider the fact that buyers know they aren’t paying a commission—and therefore expect a low price on the home. FSBO sellers often base their price on estimated prices shown on third party listing sites such as Zillow, which doesn’t get its information based on the most recent home sales. Real Estate Agents, however, have access to the actual selling prices of homes in your neighborhood. They know what today’s buyers are looking for and what they are willing to pay. They are able to put together a Competitive Market Analysis (CMA) to determine a price for your home that more accurately reflects the current market and will attract buyers.
2. Buyer’s Agents Avoid Showing FSBO Homes to Their Clients
Another reason FSBO homes don’t sell is Buyer’s Agents don’t like to show FSBO homes because they are often overpriced, poorly staged, and it’s more difficult to schedule showings with an owner than a seller’s agent. Buyer’s Agents also avoid showing FSBO homes because many times they know they aren’t going to be fairly compensated. This means a large pool of potential buyers won’t have access to your home, and you will miss out on more opportunities to sell your home. Getting qualified buyers to view your home is a key to getting it sold. Some sellers waste a lot of time showing a home to a buyer only to find out they don’t have the financing in order to purchase the home. A Real Estate Agent will screen buyers before they view your home and will only show your home to qualified buyers.
3. Too Little Resources to Show and Market the Home
Scheduling conflicts are one of the main reasons why FSBO homes don’t sell for as much as agent-assisted home sales. Will you be available at a moment’s notice to show your home if a potential buyer wants to see it? Sellers can often underestimate the work that goes into selling a home. Taking pictures of the home, putting up signs, creating ads online and in print, staging the home, writing descriptions, placing listings online, arranging and participating in open houses, and working with buyers all takes time. It’s a Real Estate Agent’s full time job to take care of all of these tasks as well as negotiate the offer so you will get the most money for your home.
4. Incomplete Paperwork
One of the biggest reasons FSBOs don’t sell is because they don’t understand the paperwork involved in the sale of a home. Sellers are often unaware of the required inspections and disclosures. They don’t have the experience needed to address appraisal issues, standard real estate contracts, closing documents and titles. An experienced Real Estate Agent will also know what to do if an issue comes up during the sale such as a failed septic inspection or a property line dispute. An agent won’t have an emotional attachment to the house so they can be objective and effectively negotiate the terms of the sale.
For these reasons it’s no surprise fewer homeowners are choosing to sell their own homes these days. FSBO home sales are actually down from 19% of all home sales in 1991 to just 9% in 2012. And of those FSBO home sales, most knew the buyer before the sale.