My Blog

For home sellers, it’s tempting to want to “save” yourself some commission, especially now, in a market where sellers are being squeezed by buyers left and right. However, there is so much information out there to indicate that this just doesn’t work in most cases. What you think you save, you actually lose for various reasons addressed here.

First of all, one of the most difficult parts of selling a home for an agent is finding buyers. Over 90% of home buyers start their searches online. Yes, there are some For Sale by Owner websites that you can post your home on but are those sites where consumers go to in order to find property to buy? Most of the time the answer is No. Here is a list of the top real estate websites by rank, according to hitwise.com for the week ending 7/10/10:

Rank	Website	Visits
1.	Realtor.com	5.91%
2.	Zillow	3.87%
3.	Yahoo! Real Estate	3.30%
4.	Trulia.com	3.00%
5.	Rent.com	2.90%
6.	ZipRealty	2.36%
7.	Homes.com	2.05%
8.	Apartment Guide	1.76%
9.	RE/MAX Real Estate	1.46%
10.	Apartments.com	1.42%
11.	MSN Real Estate	1.40%
12.	MyNewPlace	1.40%
13.	ForRent.com	1.36%
14.	Rentals.com	1.31%
15.	Century 21 Real Estate	1.01%
16.	HomeAway	0.97%
17.	Move.com	0.95%
18.	ConnectWithLife	0.93%
19.	Redfin	0.93%
20.	ApartmentFinder.com	0.86%

I don’t know about you, but I don’t see byowner.com, etc. on this list. Which tells me that the majority of buyers are not going there to find their next home. So, as a FSBO, you’ll have to rely on either people driving by and seeing your sign (hopefully, you’re on a busy street or in a neighborhood that sees a lot of traffic) or, you have to rely on agents to show your home.

Speaking as an agent, I’m always hestitant to call on a FSBO. Typically, home sellers who are not using an agent are much less educated about the process than someone who is. It takes twice as luch time to negotiate a contract with an unrepresented party and agents usually end up doing work for the other side that they’re not being compensated for. In addition, there are still sellers out there who won’t pay a buyer’s agent commission. This is suicide in this market. You’ve already excluded 90% of the buyers out there from seeing your home and now, you’re excluding just about every other serious buyer out there as well.

In this market, you want only serious buyers who have been pre-qualified and who are actually looking to buy-NOW. When you stick a sign in your yard with little to no marketing attached, you can expect to get calls from your neighbors but not much else.

Here are some interesting facts from doorfly.com on the pitfalls of trying to sell your own home:

If you are trying to sell your home and considering For Sale By Owner, consider all of the following home seller statistics.

On the positive side of trying to sell yourself:

• A recent study by the U.S. Department of Justice found that people who sell their own homes can save as much as $7,500 in real estate commissions on the sale of a median-priced house.
   
• According to the For Sale By Owner web site, depending upon the metro area and region the success rates of FSBO range from about 40% to 85%.Like all real estate marketing, the most important factor is the location of your property (both from a local and regional standpoint). It’s the same issue that real estate agents face. Attractive properties (good homes in good areas, that are priced correctly) sell quickly and unattractive ones don’t.On the down side to consider:
  
• It is a statistical fact that the competent agent negotiates a higher sale price than the owner does. The buyer responds differently to the agent than they typically do with the seller.
   
• The buyer of a “By Owner” expects to pay less than the fair market value because they don’t expect the services of the professional.
   
• FSBOs sell at least 3% below the real estate industry sales.
   
• For Sale By Owner sales typically take longer to secure an offer and longer to get the offer to closing.
   
• If the property is on the market just one month longer than it could have been, about 1% is lost in costs to the seller.
   
• Statistics tell us that only about 3% – 4% of home buyers actually buy the home that they called on.

In addition, consider this-it is now taking 2-3 contracts to secure a closing. Many, many contracts are falling out due to inspections and the like. If it’s that difficult for an agent who sells homes for a living to keep deals together, how difficult do you think it would be for someone with zero experience to do so? Another point-as a for sale by owner, you do not have access to sale information, only agents do. So, who do you think is in a better position to negotiate-a buyer that is represented by an agent with access to MLS or you, the unrepresented seller. Also, consider the legal ramifications if you improperly disclose or market your home. Who do you want to be sued-you as a seller with no agent or a brokerage with deep pockets? Also, as an unrepresented seller, when there is an appraisal issue (and they happen frequently), how would you navigate your way to resolving it? With no access to comps, the answer is-you can’t. You’re stuck either reducing the sales price or allowing the contract to terminate.

In terms of pricing, which is king right now, as a FSBO you have little to compare yourself to. Even if you’ve seen a couple of homes that compete with yours in your neighborhood, have you also seen the sold properties? Any agent will tell you when you sit down to price your home for sale, you should spend more time looking at SOLDs rather than active listings. The reason is because active listings don’t indicate what things are selling for only what people are asking. If there are a lot of over-priced listings that have been sitting for awhile, pricing yourself to be competitive with them won’t help you sell, it will help you sit.

These are just a few things to keep in  mind before deciding to list your home with an agent or the DIY way.