Why FSBO’s Fail
To hire a real estate agent or to not hire a real estate agent? That is the question. Before deciding to go the FSBO route to sell your home, considering the statistics of how often For-Sale-by-Owner’s fail may make you realize that hiring a real estate agent is actually in your best interest!
According to an article on Inman, there are 10 reasons why for-sale-by owners fail. Data from a National Association of Realtors survey shows “that less than 10 percent of FSBOs actually sell.” Here are some of the top reasons why:
1. Too many people to negotiate with: Lots of different parties are involved in real estate transactions and dealing with all of these people can be a difficult task. Just to name a few: the buyer, the buyer’s agent, the buyer’s attorney, home inspection companies, your bank, the appraiser, etc. Experienced real estate agents know how to deal with these different parties and completely take that task off of your hands!
2. Homeowners do not know how to prepare the home for sale: Many homeowners are unaware of all the “pre-listing tasks” that are necessary to complete in order to impress potential buyers. These include: decluttering, painting the rooms with fresh paint, completing necessary repairs, getting floors and carpets professionally cleaned, creating curb appeal of the home, replacing outdated fixtures, etc.
3. Owners do not know how to screen potential buyers: According to the Inman article, homeowners often have no idea that buyers should be pre-approved or at least pre-qualified. Time can be wasted on unqualified buyers who do not have the ability to purchase the home.
4. Owners fail to solve buyer’s queries: A lot of homeowners simply do not have the time to handle buyer’s inquiries on the listing or to coordinate showings. Buyers and their agents want quick responses or they will move on to their next potential property.
5. Owners don’t understand the concept of golden time: The concept of golden time is that “homeowners get the most money for their homes in the first week of putting the property on the market.” The longer the property stays on the market, the less money people will be willing to offer.
6. Owners fail to understand the contract procedures: A contract is much more than just an offer from the potential buyer with their price. There are timelines, clauses, contingencies, etc that are often involved. Many homeowners might not know how to negotiate these parts of the contract and/or may not even know what they are agreeing to.
7. FSBOs don’t know how to handle the home inspection findings: There are almost always some issues found during a home inspection of a house even with relatively newer structures. In these cases, the buyer will typically request the problems to be fixed before moving forward. FSBOs have a tendency to believe that nothing is wrong with their home and they refuse to fix the issues that are brought forward. As a result, the offer will fall through.
8. FSBOs incorrectly price their homes: Due to lack of experience, homeowners often price their property incorrectly. A price too high can deter potential buyers away.
9. FSBO homes lack exposure: FSBOs can usually be found on a couple websites but many websites will not allow FSBOs to list their property. Real estate agents can give the property not just online exposure but also exposure in the local segment of the newspaper or use other tools to help market the property and get the word out there.
10. FSBOs fail in the closing process: After inspections there are still many things that need to be taken care of prior to closing. These could include: ensuring the attorney approves the contract, ensuring the survey is ordered, checking that the buyer has obtained a written mortgage commitment, finding out if title work has been reviewed, etc.