It is not at all uncommon today for many homeowners to attempt to sell their home on their own, especially with the many home selling tools available via the Internet. One of the primary reasons listed by most homeowners for selling their home without using a real estate is the money they plan to save on the commission. Unfortunately, many homeowners discover the hard way that while they had planned to save money on the sale of their home they actually end up losing money. In fact, studies indicate that homeowners who do it themselves through for sale by owner, or FSBO, listings end up selling their homes for approximately 15% less than homeowners who use a real estate agent.
Homes sold by their owners without the benefit of an agent frequently sell for less because the owners simply sell the home for far less than it is actually worth. In many cases, this is because FSBOs are commonly attractive buyers who are looking to save money. These buyers typically think that because you're saving on the commission you can afford to lower the asking price.
Still yet, in other cases, the homeowner may not know what price to ask for the home when they decide to put it on the market. Sometimes this lack of education of the real estate market can result in overpricing the home so that it sits on the market so long the seller ends up selling it for a song. In other cases, the homeowner may sell the home for less money than it is worth by jumping at the first offer.
Another common problem contributing to the low sales price of many FSBOs is the lack of exposure. There is no doubt about the fact that maximum exposure helps homes to sell faster and at higher prices. When the property is exposed to multiple buyers, it is far more likely to garner more and higher offers. Due to the limited marketing opportunities of many homeowners who choose to sell their homes on their own, this kind of exposure simply is not possible.
It should also be noted that above and beyond the potential loss of profit involved in FSBO sales, many homeowners are not prepared for all of the legalities that they will have to deal with. In a home sale where an agent is involved, it is the agent who works with buyers regarding financing as well as handles arrangements such as appraisals, surveys, title insurance, contracts, etc. In a FSBO sale, there is no experienced agent to guide you along the way. Experienced real estate agents know how to ensure buyers are qualified to purchase a home before they instigate a contract with them.
When you're handling everything on your own you could easily find yourself working with a buyer who simply is not financially qualified to purchase your home. As a result the transaction may fall through before it ever closes and you will have wasted a significant amount of time and expense in the process. It is also important to know that when selling your home on your own you are exposing yourself to numerous legal liabilities. Just the seller's disclosure alone is a mistake with several risks. Unless you're extremely familiar with the legal end of selling a home, you could find yourself in above your head.
It is also important to consider the time you will need to dedicate to the sell of your home if you handle it on your own. Many homeowners find out after the fact they simply were not prepared for the amount of time they would need to spend on the home selling process. Not only will you need to spend time marketing your home but you will also need to spend time following up on leads, answering phone calls, scheduling home shows and dealing with significant amounts of paperwork. All of this can cut into your leisure time and affect your privacy. Make sure you're prepared for this when making the decision to sell on your own.
If you do decide to sell your home on your own without an agent, make sure you do your homework up front to ensure you do not fall into these potential risks. If you're not sure how much to ask for your home, find out. Many real estate agencies offer a complimentary market analysis. This gives you the opportunity to have the real estate agent look at your home and provide you with an educated decision on how much your home may bring on the current market. It will then be your decision whether you want to list the property or try selling it on your own.
Another important safety precaution is to make sure you hire a competent attorney experienced in real estate matters to help guide you along the way. While the cost will certainly detract from your profit, it could keep you from much higher legal liability costs.
Keep in mind that it is no coincidence that homes which receive the best exposure on the market sell quicker for higher prices. If you do elect to sell your home on your own make sure you use a multi-pronged marketing approach. Sure, a For Sale sign in the yard is great, but you will need to go above and beyond this technique. Take out ads in the newspaper and look into websites that provide coverage for FSBOs. Host an open house party. Give your home the exposure it describes. If for some reason, you feel you can not open market the property, remember this may mean you have less money when you do sell it.
Finally, do not forget to weigh the cost you may be saving by avoiding the commission with the profit you may be giving up. While real estate commission rates do vary from one region to the next, on average most consumers pay an average commission rate of about 6.5%. Considering the fact that selling your home on your own could cost you 15% at closing, even if you do sell your home on your own and save the commission you could still be losing at least 8% on the sale of your home. On the other hand, if you use an agent, even with the commission you could stand to bring in more more money on the final sale than if you handle it on your own.
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Source by Andrew Webber