If you are thinking about selling your home, it is likely that you have at least thought about going the “For Sale by Owner” route. Perhaps you know someone who sold their home independently of an agent, and the idea of saving some money on agent commissions can certainly be appealing.
However, selling a home is not like selling your used furniture on Craigslist, or even like selling a car — it is a complicated process with many potentially hidden costs and even legal pitfalls. So much so, in fact, more than a few “FSBO” sellers come away regretting the decision to branch out on their own.
Of course, many FSBO transactions do come off without a hitch, but this is rare. You can certainly do it, and do it successfully, but before putting up that “For Sale by Owner” sign, here are five downsides to this option that you should at least be aware of.
1. Your home will be seen by fewer buyers.
The first thing FSBO sellers miss out on is the opportunity to put their listing in front of thousands of potential buyers through a multiple listing service (MLS). A real estate agent pays to list your home on this database, which propagates your listing to hundreds and thousands of agents and real estate brokers — all of whom have a financial interest in marketing your home to their clients to get their part of the commission money. You could spend thousands of dollars yourself to place ads for your home and still not get the same amount of coverage — and besides, that’s the money you were trying to save on commissions.
The bottom line is that far fewer people will even know that your home is for sale — and as a result, statistically speaking, your home will take longer to sell.
2. Buyers will be less trusting.
There is something about an official realty company sign in front of your property that sends a subtle message to prospective buyers that this is a legitimate deal — that the sales process is being handled by trained professionals on both sides of the equation, that the pricing is fair, that disclosures are thorough, etc. A “For Sale by Owner” sign conveys none of these assurances, so buyers have to take your word for it — and many of them will not. Not only will fewer buyers see your home — even fewer will be interested in it.
3. You will not make as much money.
For most sellers, the whole concept behind FSBO is to save on agent commissions and perhaps a few other fees. However, without the expertise of an agent to price your home competitively and negotiate the best deal, you are far more likely to sell for less than the home is worth. This also frequently happens because prospective buyers naturally expect to pay less for an FSBO home, so sellers get used to receiving low-ball offers — and the longer the home stays up for sale, the more likely sellers are to take a deal.
According to statistics compiled by Realtor.com, the median sale price on agent-assistant homes nationwide in 2015 was $249,000. By contrast, the median sales price for FSBO homes was only $219,000 — a gap of $39,000. When FSBO sellers sold to people they knew (which often happens), the sales prices drop even lower, by a wide margin. Granted, you might not lose $39,000 in profits by selling your home yourself, but the vast majority of self-sellers end up making considerably less money than they would have spent on agent commissions. Long story short, an experienced agent knows how to earn their commission and still get you more money on the sale than you can make on your own.
4. You could get stuck in a bad deal.
Remember — home sales are complicated. There are a lot of details in the fine print of contracts, legal descriptions and other paperwork that may not work in your favor as a seller — but the difference is, a seller’s agent would notice it and you will not. FSBO sellers are more vulnerable to unfavorable deals simply because they do not know how to detect them.
5. You could get into legal trouble.
One of the scariest parts of selling a home on your own is that there is no buffer against legal liability if you make a mistake — and given the complexity of these transactions, it is more likely than not that you will make a few. For example, if you forget to put an important flaw on a disclosure form or mistakenly call your wood flooring “hardwood” when it is actually laminate or engineered wood flooring, you could be liable for the costs of that mistaken disclosure. A good licensed agent not only can improve your accuracy and guard against legal errors, but he or she also carries errors and omissions insurance just in case a serious mistake occurs.
Given the downsides of going the “For Sale by Owner” route, chances are you will do much better financially and have greater peace of mind by hiring a professional licensed real estate agent to help you. To learn more about how we can simplify and enhance the sales process, call Atlanta Fine Homes Sotheby’s International Realty at 404.948.4812.