Before you consider selling your home by owner, you might want to know the TOP 10 Challenges For Sale By Owners face in this market or the next. You know that I am a real estate agent. So, you should know ahead of time that I am bias. I obviously want to represent property owners like you so that I can earn your business and pay my mortgage. But seriously though, I am a homeowner myself and even as an active real estate agent, I will never attempt to sell my home on my own. Selling a house is simply too difficult of a task to take on without the help of other experts.
I’ve been in the real estate sales business for 6 years and when I first started, the real estate market was not as tough as it now. We did 100% financing and in some cases lenders would lend 106% of the property’s LTV (Loan to Value), which meant that we had a greater pool of buyers to market to. Now that the economy and real estate market is not as confident, the buyers who buy today must have job security, at least 3.5% down (3% of the purchase price for closing costs) and a good credit score with credit history, which is a challenge within itself for some buyers.
So, here are your 10 Challenges For Sale By Owner face as I see it. They are not in any particular order and they are certainly not meant to scare you. They should, however, provide you with things to consider before you venture down the FSBO road.
1. For Sale By Owners lack access to qualified buyers or a means to qualify buyers.
Real Estate agents like me focus on building a buyer’s list. As new homes come on the market, we are consistently feeding our buyer’s lists details of new properties for sale. When you list your home for sale by owner, even if you post on websites like forsalebyowner.com or craigslist.com, the majority of buyers won’t know about your desire to sell. Most buyers work with a real estate agent to find the home of their dreams. According the the National Association of Realtors, 9 out of 10 buyers buy with the help of a real estate agent, which means more than 90% of all real estate transactions occur with the help of real estate brokers (We are able to track these numbers because closings are public records and NAR sends out surveys to FBSOs asking for their feedback). A for sale by owner listing generally does not fall upon an agent’s radar and even if it does, the Multiple Listing Service (MLS) provides a significant list of homes to show and market to buyers. Even if you get buyers to call you and preview your home, you will not have a means to qualify them. Agents work with lenders, brokers and will know ahead of time how much home a buyer can afford.
2. You’ll get noticed by some buyers but from the wrong type of buyers.
A number of real estate investors will shop for sale by owners ads because they know you are unlikely to know the value of your home. Some savvy investors or buyers will even discount your home more than the price of a real estate commission since you are unrepresented and not using the help of an agent. SO, in actuality you might be losing even more money in the long term. Let’s face it. Some buyers are insincere and simply do not have the means to buy a home, yet they will contact you to fill their curiousity. Now, for you to show your home that is unlikely to buy in the near future is a waste of time for you whereas for an agent, a buyer that can buy now, may one day do so. So an agent will remain in contact with this person while you will lose interests and discard their contact info.
3. For Sale By Owners Suffer from What We Agents in the Real Estate Business Call Follow-Up Failure.
I don’t expect you to think like an agent, but when you’re selling your home by owner, you have to think follow-up. First, you should know that you’re going to get a ton of phone calls once you add a yard sign, a craigslist ad, or some other type of Internet marketing. The phone calls are going to come from agents that want to represent you. At the same time, you’ll get calls from investors looking to steal your home and maybe one or two serious buyers. What many for sale by owners do is let their calls about their home sale go to voice mail, which is a BIG mistake. The act of screen your calls will likely cause you to screen out the serious buyers. Besides, buyers buy at the height of their excitement. If you fail to call back in a timely manner, you’ll lose their interests. Also, if youmake changes to your home or listing, you’re far less likely to call the buyers, agents, or investors back who first inquired about your home initially to tell them about your price changes or other changes to your listing.
4. Buyer’s Don’t Trust For Sale By Owners
Some buyers are first time home buyers and they may not know how to approach you. They may even perceive you as being difficult, non-negotiable for not hiring an agent in the first place or over-priced. They certainly won’t trust what you say about the home or if they do, they’ll take it with a grain of salt. You see, real estate agents have a legal and ethical obligation to disclosure latent or hidden defects of the home. These defects might be things you might leave out, unintentionally simply because you might not know what to disclose in the first place.
5. Its Hard for For Sale By Owners to Be Objective
You’ll have a hard time selling the value of your home. Buyers will be wary of you for the reasons stated above.
6. No Contract, No Representation, No Full Disclosure Costs More Money
Real Estate agents are in the business of getting people to the meeting of the minds, which is where you have a written agreement between you and the buyer. Agents can provide you with a standard real estate contract, one that you can alter with the help of an attorney. If you do not provide this standard contract to your attorney up front, many attorneys will charge an higher fees for having to write a contract and essential negotiate terms between you and the buyer or the buyer’s attorney.
7. Homeowners simply do not have the time to market their homes effectively.
You more than likely have a full time position doing something else other than trying to sell your home. Buyers are a lot of needs and in some case, they might need to see or show the home to a person they trust. They’ll have to have it inspected and have an appraisal done on the property if they intend to finance the purchase. If you have other commits, i.e. your job, you’l have a hard time setting these appointments.
8. Insufficent Marketing Exposure
Real Estate Agents like me have a marketing budget. It takes money to make the phone ring with interested buyers. Many for sale by owner eventually list with an agent simply because they don’t have the funds to keep pace with the other homes for sale that might competing with your home.
9. Owners don’t appreciate or understand the value of a good agent.
Real Estate Agents, Realtors like me, are the glue that keeps a difficult deal together. When you sell by owner, you are less likely to get to the closing table even if you secure a buyer because buyers will inevitably ask for things like repairs. Since you represent yourself, you are less likely to be agreeable to their demands and even less likely to negotiate fair terms for yourself. Attorneys, even good real estate attorneys, rely on real estate agents to seek a balanced or fair resolutions between you and the buyer.
10. Owners will want to hire a cheap broker or agent which is generally more costly in the long run.
The desire to “save” money generally ends up costing you more in the long run, especially if you have to list with multiple agents to get the job done.
If you want to list your property with an outstanding agent, call me at 713.647.2867 or email me at firstname.lastname@example.org today!