For Sale By Owner (FSBO) is the process of selling real estate without the representation of a real estate broker or real estate agent.
According to the National Association of Realtors’ Profile of Home Buyers & Sellers, 35% of homeowners who decided to FSBO last year did so to avoid paying a commission or fee. But, homes sold with an agent net 6% more than those sold as a FSBO according to Collateral Analytics.
Before you decide to take on the challenge of selling your house on your own, let’s connect to discuss your options.
There are many benefits to working with a real estate professional when selling your house. During challenging times like the one we face today, it becomes even more important to have an expert help guide you through the process. If you’re considering selling on your own, known in the industry as a For Sale By Owner or FSBO, please consider the following:
1. Your Safety Is a Priority
During this pandemic, your family’s safety comes first. When you FSBO, it is incredibly difficult to control entry into your home. A real estate professional will have the proper protocols in place to protect not only your belongings, but your family’s health and well-being too. From regulating the number of people in your home at one time to ensuring proper sanitization during and after a showing, and even facilitating virtual tours for buyers, agents are equipped to follow the latest industry standards recommended by the National Association of Realtors (NAR) to help protect you and your family.
2. A Powerful Online Strategy Is a Must to Attract a Buyer
Recent studies have shown that, even before COVID-19, the first step 44% of all buyers took when looking for a home was to search online. Throughout the process, that number jumped to 93%. Today, those numbers have grown exponentially. Most real estate agents have developed a strong Internet and social media strategy to promote the sale of your house. Have you?
3. There Are Too Many Negotiations
Here are just a few of the people you’ll need to negotiate with if you decide to FSBO:
The buyer, who wants the best deal possible
The buyer’s agent, who solely represents the best interest of the buyer
The inspection companies, which work for the buyer and will almost always find challenges with the house
The appraiser, if there is a question of value
As part of their training, agents are taught how to negotiate every aspect of the real estate transaction and how to mediate the emotions felt by buyers looking to make what is probably the largest purchase of their lives.
4. You Won’t Know if Your Purchaser Is Qualified for a Mortgage
Having a buyer who wants to purchase your house is the first step. Making sure they can afford to buy it is just as important. As a FSBO, it’s almost impossible to be involved in the mortgage process of your buyer. A real estate professional is trained to ask the appropriate questions and, in most cases, will be intimately aware of the progress that’s being made toward a purchaser’s mortgage commitment. Further complicating the situation is how the current mortgage market is rapidly evolving because of the number of families out of work and in mortgage forbearance. A loan program that was there yesterday could be gone tomorrow. You need someone who is working with lenders every day to guarantee your buyer makes it to the closing table.
5. FSBOing Has Become More Difficult from a Legal Standpoint
The documentation involved in the selling process has increased dramatically as more and more disclosures and regulations have become mandatory. In an increasingly litigious society, the agent acts as a third-party to help the seller avoid legal jeopardy. This is one of the major reasons why the percentage of people FSBOing has dropped from 19% to 8% over the last 20+ years.
6. You Net More Money When Using an Agent
Many homeowners believe they’ll save the real estate commission by selling on their own. Realize that the main reason buyers look at FSBOs is because they also believe they can save the real estate agent’s commission. The seller and buyer can’t both save the commission. A study by Collateral Analytics revealed that FSBOs don’t actually save anything by forgoing the help of an agent. In some cases, the seller may even net less money from the sale. The study found the difference in price between a FSBO and an agent-listed home was an average of 6%. One of the main reasons for the price difference is effective exposure:
“Properties listed with a broker that is a member of the local MLS will be listed online with all other participating broker websites, marketing the home to a much larger buyer population. And those MLS properties generally offer compensation to agents who represent buyers, incentivizing them to show and sell the property and again potentially enlarging the buyer pool.”
The more buyers that view a home, the greater the chance a bidding war will take place.
Listing on your own leaves you to manage the entire transaction yourself. Why do that when you can hire an agent and still net the same amount of money? Before you decide to take on the challenge of selling your house alone, let’s connect to discuss your options.
Through all the volatility in the economy right now, some have put their search for a home on hold, yet others have not. According to ShowingTime, the real estate industry’s leading showing management technology provider, buyers have started to reappear over the last several weeks. In the latest report, they revealed:
“The March ShowingTime Showing Index® recorded the first nationwide drop in showing traffic in eight months as communities responded to COVID-19. Early April data show signs of an upswing, however.”
Why would people be setting appointments to look at prospective homes when the process of purchasing a home has become more difficult with shelter-in-place orders throughout the country? Here are three reasons for this uptick in activity: 1. Some people need to move. Whether because of a death in the family, a new birth, divorce, financial hardship, or a job transfer, some families need to make a move as quickly as possible. 2. Real estate agents across the country have become very innovative, utilizing technology that allows purchasers to virtually:
Meet with mortgage professionals
Consult with their agent throughout the process
All of this can happen within the required safety protocols, so real estate professionals are continuing to help families make important moves. 3. Buyers understand that mortgage rates are a key component when determining their monthly mortgage payments. Mortgage interest rates are very close to all-time lows and afford today’s purchaser the opportunity to save tens of thousands of dollars over the lifetime of the loan. Looking closely at the third reason, we can see that there’s a big difference between purchasing a house last December and purchasing one now (see chart below):
Many families have decided not to postpone their plans to purchase a home, even in these difficult times. If you need to make a move, let’s connect today so you have a trusted advisor to safely and professionally guide you through the process.
When buying a house is high on your priority list and you spot The One—the house that has everything you’ve ever dreamed of and more—it can be tempting to put pedal to the metal and close the deal as quickly as possible. But slow down!
No home is perfect beneath the surface, and few know this better than your real estate agent. And that means it’s time to sit down with this professional and pepper him with questions about the place you’re hoping to make your own.
And while certain questions seem rather obvious—should you offer full price, how soon can you close—there are many others you may not think to ask an agent at this pivotal juncture. But you should!
Here are six questions to ask a real estate agent to flush out what he’s truly thinking, that could help you figure out if this place is really right for you.
1. ‘Would you buy this house?’
This question may be the ultimate litmus test of whether you should purchase a home. If your agent would have reservations about buying the house for himself, that’s a waving red flag. So if you get the sense your agent isn’t as enthusiastic about the home as you are, ask why. His answer might give you pause, too.
2. ‘What is the sales history of this house, and how would it affect my offer?’
Before making an offer on a house, ask your agent for the property’s sales history, says Chris Dossman, a real estate agent with Century 21 Scheetz in Indianapolis.
Was it previously an expired listing? Was it leased? Was it ever a bank-owned property or other type of distressed home? These factors could suggest a home has been a struggle to sell—which could mean you could snap up this home at a bargain-basement price.
3. ‘What contingencies do you think are worth getting—and skipping?’
“When buyers and sellers get cold feet about the purchase or sale of a home, they sometimes think they can just back out,” says Linda Sanderfoot, a real estate agent at Coldwell Banker in Neenah, WI. But when a seller accepts a buyer’s offer, both parties sign a legal and binding contract—an official document that requires the buyer and seller to execute the transaction.
So how binding that contract is depends on the details. Some contracts have contingencies built in that enable the buyer or seller to walk away from the deal without penalty. And contingencies are often included for a home inspection and an appraisal.
But note that having too many contingencies tends to turn off sellers, so make sure to strike the right balance by asking your real estate agent for guidance. For instance, you might be OK waiving a home inspection contingency if the home is newly constructed, whereas it’s more essential with an older home that might need extensive repairs.
4. ‘Are there any upcoming condo or homeowners association assessments?’
When you purchase a condominium or a home within a homeowners association, you’ll receive the HOA’s financial documents, which outline important information such as reserve funds and CC&Rs (covenants, conditions, and restrictions).
These condo docs and disclosures can be hundreds of pages long—which could overwhelm home buyers, who could forget to check if there are any upcoming assessments. Assessments are periodic one-time payments made to the HOA above and beyond the monthly fee, usually to cover capital improvements or repairs. Since they will affect your monthly housing expenses, you’ll want to know whether they could go up anytime soon—and your agent is adept at navigating these documents to pinpoint the answer.
5. ‘What’s happening in this neighborhood, and how will that affect home prices?’
Good real estate agents hear everything about what’s happening in the communities where they do business. And although federal fair housing laws prohibit real estate agents from commenting on a neighborhood’s demographics, your agent can still give you advice on whether you’re making a solid investment based on local housing market trends and economic factors that affect home values.
So go ahead and ask: Are the neighborhood’s home prices rising or falling? Are there new amenities (e.g., parks, shopping, public transportation, Whole Foods) being built in the area?
These are all important things to consider before buying a house, and a real estate agent can help you cut through the noise and really tell you what’s up.
6. ‘Can you recommend a home inspector/handyman/real estate attorney in the area?’
Local expertise matters not only with the real estate agent you hire, but also the other professionals you could meet while negotiating this real estate deal. So if you need recommendations for a home inspector, handyman, real estate attorney, or anyone else on your home-buying journey, make sure to ask your agent for recommendations to boost the odds of smooth sailing.
When homeowners decide to sell their houses, they obviously want to get the best possible price for their home with the least amount of hassles along the way. However, for the vast majority of sellers, the most important result is actually getting their homes sold.
In order to accomplish all three goals, a seller should realize the importance of using a real estate professional. We realize that technology has changed a buyer’s behavior during the home buying process. According to the National Association of Realtors’ 2018 Home Buyer & Seller Generational Trends Report, the first step that “42% of recent buyers took in the home buying process was to look online at properties for sale.”
However, the report also revealed that 94% of buyers who used the internet when searching for homes ultimately purchased their homes through either a real estate agent/broker or from a builder or builder’s agent. Only 2% of buyers purchased their homes directly from a seller whom they didn’t know.
Buyers search for a home online but then depend on an agent to find the home they will buy (52%), to negotiate the terms of the sale (47%) & price (38%), or to help understand the process (60%).
The plethora of information now available has resulted in an increase in the percentage of buyers who reach out to real estate professionals to “connect the dots.” This is obvious, as the percentage of overall buyers who have used agents to buy their homes has steadily increased from 69% in 2001.
If you are thinking of selling your home, don’t underestimate the role a real estate professional can play in the process.
With home prices on the rise and buyer demand strong, some sellers may be tempted to try and sell their homes on their own (FSBO) without using the services of a real estate professional.
Real estate agents are trained and experienced in negotiation and, in most cases, the seller is not. Sellers must realize that their ability to negotiate will determine whether or not they get the best deal for themselves and their families.
Here is a list of some of the people with whom the seller must be prepared to negotiate if they decide to FSBO:
The buyer who wants the best deal possible
The buyer’s agent who solely represents the best interest of the buyer
The buyer’s attorney (in some parts of the country)
The home inspection companies, which work for the buyer and will almost always find some problems with the house
The termite company if there are challenges
The buyer’s lender if the structure of the mortgage requires the sellers’ participation
The title company if there are challenges with certificates of occupancy (CO) or other permits
The town or municipality if you need to get the CO permits mentioned above
The buyer’s buyer in case there are challenges with the house your buyer is selling
Your bank in the case of a short sale
The percentage of sellers who have hired real estate agents to sell their homes has increased steadily over the last 20 years. Let’s get together and discuss all we can do to make the process easier for you.
How do you select the members of your team who are going to help make your dream of owning a home a reality? What should you be looking for? How do you know if you’ve found the right agent or lender?
The most important characteristic that you should be looking for in your agent is someone who is going to take the time to really educate you on the choices available to you and your ability to buy in today’s market.
As the financial guru Dave Ramsey advises:
“When getting help with money, whether it’s insurance, real estate or investments, you should always look for someone with the heart of a teacher, not the heart of a salesman.”
Do your research. Ask your friends and family for recommendations of professionals they’ve worked with in the past and have had good experiences with.
Look for members of your team who will be honest and trustworthy; after all, you will be trusting them to help you make one of the biggest financial decisions of your life.
Whether this is your first or fifth time buying a home, you want to make sure that you have an agent who is going to have the tough conversations with you, not just the easy ones. If your offer isn’t accepted by the seller, or they think that there may be something wrong with the home that you’ve fallen in love with, you would rather know what they think than make a costly mistake.
“Buyers from all generations primarily wanted their agent’s help to find the right home to purchase. Buyers were also looking for help to negotiate the terms of sale and to help with price negotiations.” Additionally,“Help understanding the purchase process was most beneficial to buyers 37 years and younger at 75 percent.”
Look for someone to invest in your family’s future with you. You want an agent who isn’t focused on the transaction but is instead focused on helping you understand the process while helping you find your dream home.
In this world of Google searches, where it seems like all the answers are just a mouse-click away, you need an agent who is going to educate you and share the information that you need to know before you even know you need it.