A common question we receive is why do people try to sell their home without the help of a Realtor? Below are some reasons why that we believe this is a bad idea.
There are multiple reasons people choose to sell their home without using a Realtor, but the most common reason is an effort to save money by not having to pay commission. Sellers mistakenly make this assumption, however statistics prove otherwise. Sellers also often fail to realize that they may have to pay another agent on the ‘buy’ side, that their listing will not get the same exposure as an MLS listed property, and their pricing strategy will be more of a shot in the dark than a properly researched comparative market analysis. FSBO homes actually sell for significantly less than those listed by a real estate professional, according to a report by the National Association of Realtors.
Here are some of the main reasons why a for sale by owner can be a major mistake.
1. Marketing your home online isn't as easy as you think
These days the vast majority of buyers begin their search online, and sellers trying the "for sale by owner" method will undoubtedly not receive the same exposure they need in order to reach the widest audience. The use of an agent guarantees widespread exposure for the listing by way of the multiple listing service. The agent will also be able to market the listing to fellow agents to share with their buyers.
2. For sale by owner homes are often incorrectly priced
Sellers that try and sell their homes as a FSBO usually set the price based on a website tool like Zillow or an amount that their neighbor says they were offered. Pricing a home can be both an art and science.
A Realtor will provide a comparative market analysis prior that details recently sold and active comparable listings. They will also have local knowledge of the area and the current market. This puts them in the best position to price the property accordingly so that the seller will receive the best offer.
3. You could underestimate (or overestimate) how much money to spend on repairs or updates
Meeting with a Realtor at the beginning of the process is beneficial, as a good agent will make sure you don't waste time or money on things that aren't necessary. For homeowners it is very difficult to look at their homes objectively to decide what, if any, updates/repairs should be considered to appeal to the largest audience of potential buyers. This could end up costing the seller as they may invest a significant amount of money into something that will not be effective and will not provide a return on their investment. An agent has a better pulse on what improvements or repairs will result in the highest return.
4. Dealing with Showings
FSBO sellers are unaware of the work involved in arranging showings. Additionally, they don't have have experience dealing with less serious buyers. These could include people who just like to look at homes with no intention of buying and/or investors looking to flip the home for profit. These investors usually call the seller multiple times in hopes of saving the same commission the seller is looking to save. Usually these offers are really low and almost always never lead to a sale.
An agent will handle all of the scheduling and tours so that all that's required of the seller is to make sure the home shows well and leave during the allotted times. That is also another reason to hire a Realtor as buyers are usually very uncomfortable with the seller being present while they tour the home. The agent will gather important feedback from the buyers that they would be unwilling to share directly with the seller. This can help make future showings stronger.
5. Preparing your own paperwork can be tricky
If you don't have experience in law or with contracts pertaining to the sale of real estate, then it's best to let agents handle this. In addition to the agreement of sale contract there's a multitude of addenda and disclosures designed to cover anything and everything that could potentially go wrong. Just one example would be the lead-based paint disclosure that is required for houses built prior to 1978.
Your agent will take care of all paperwork and documentation to avoid liability. If a seller does not use a Realtor, then they're legal exposure drastically intensifies.