Selling your home on your own as a “For Sale by Owner” (FSBO) can be tempting. With real estate commissions amounting to as much as 7% of the sales price, many owners consider selling their homes on their own to save money. However, selling as FSBO is more complicated than it might seem. Here are a few of the pitfalls.
- Not pricing the home correctly: Doing market research on your own is tough. Too often a FSBO house is priced based on what the owner sees online or pricing the house based on what the seller needs to net to buy a new home. Overpricing is one of the most frequent reasons FSBO sellers fail. The housing market in your area will determine the value of your home, and even Zillow recommends homeowners get a Comparative Market Analysis from a REALTOR® or an appraisal.
- Not marketing the property: Many FSBO will put a sign in the front yard, and post the home on Zillow and Trulia, then they wait for the buyers to find them. A good marketing plan will include notifying family, friends, and neighbors that your home is for sale, using social media platforms for marketing, and paying to have your home listed on the local Multiple Listing platforms.
- Not offering a commission to agents: Most FSBO are trying to save money, but they are also eliminating a pool of qualified buyers by not providing a buyers agent commission. If a buyer that is working with an agent decides to buy FSBO without the buyer’s agent, they usually expect the homeowner to drop the sales price by the presumed commission saved.
- Saying too much to the buyers: Homeowners are rightly proud of their homes, but telling buyers everything they know about the house, good or bad, can turn off a potential buyer. Buyers want to see themselves living in the home, not how you live in the home.
- Not disclosing problems or defects: Just because the homeowner is selling the home, it does not mean they are not subject to the laws governing seller disclosures. The State of Michigan requires a seller to tell the prospective buyer certain things about the property’s physical condition. This is done by completing a written disclosure statement and giving it to the buyer.
- Not negotiating terms: Not only the price but the terms of the sale are also negotiable. Be prepared for a buyer to ask for a percentage of closing cost to be paid, or for the seller to pay for repairs noted on a home inspection, or possibly for the seller to provide a home warranty.
- Not having a plan for when an offer is submitted: Once an offer is presented, do you have an attorney to review the contract? Have you opened an escrow account to hold the earnest money? Do you have a title company to close the transaction and provide title insurance for the new owners?
Selling home without an agent can be successful if the homeowner is prepared to do the research, develop a marketing plan, and choose a network of real estate professionals to help with the process. If all of this seems too time-consuming and confusing, then it is time to consider a local real estate agent.
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