The numbers are clear: homes that are sold without an agent sell for less money and take much longer to sell than agent-assisted home sales. According to NAR, the typical FSBO home sold for $200,000 compared to $265,000 for agent-assisted home sales.
There are a lot of reasons for this, but one big one is that the typical FSBO seller isn't nearly as experienced as the typical real estate agent. For most sellers, this is their first or second time selling a home, whereas an experienced agent has sold dozens or hundreds of homes.
Does that mean a homeowner can't effectively sell their home without an agent? Not at all. It just means they'll be at a disadvantage in some areas.
Let's review some of the most common mistakes made by sellers who go the solo route, and how they can avoid them.
One of the most valuable things an agent brings to the table is a network. They know how to get the word out and let the right people know that your house is on the market. After all, more eyeballs on your home means better odds of finding a buyer.
But if you're selling your home, all that marketing falls on your shoulders.
That's a big ask, especially for a first-timer. A "For Sale" yard sign is a start, but it's not going to be enough. For starters, you need to think about how to get on the MLS (probably via a flat fee MLS listing service), how to reach prospective buyers in your area, and how to present your home to them.
If you're an FSBO seller, you could start by making social media profiles for your listing. They're free, and they have a huge potential reach. List on FSBO websites, Craigslist, and on every social platform you're active on. Consider making a video tour of your home, too, so buyers can get a sense of the space. Finally, compile a "fact sheet" for your home, listing its amenities, features, and nearby attractions, including schools, shopping, and dining. Make sure you make hard copies for showings, as well as an electronic copy to post to your listing profiles.
Because experienced real estate agents have sold so many homes, and know so many people looking to buy, they have a pretty well-developed sense of what buyers are looking for. But owner-sellers may be too close to their properties to be able to evaluate them objectively, and they might have a fuzzy sense of what buyers want. Their best bet is hiring a professional home staging service, which runs, on average, between$1,600 and $2,400 a month. This can be a double hit because, as we mentioned above, FSBO listings take longer to sell. So not only will you be paying for staging, you'll be paying for it longer than you would have if you'd gone with an agent-assisted sale.
Of course, sellers can stage their home themselves, if they keep a couple general rules in mind.
First, you want to let in as much flattering, natural light as possible. Remove all heavy window treatments and drapes, and take photos and videos of your home when it's getting the most light.
Second, remove clutter; experts recommend removing at least half your belongings, including furniture.
Third, aim to make your home impersonal. Buyers want to be able to visualize themselves living in a space, and your personal stuff can get in the way of that. Think "chain hotel" more than “eccentric bed and breakfast.”
Keep those principles in mind, and your staging shouldn't be too difficult.
Mandatory disclosures are just that: mandatory. That means that if you fail to tell your buyer everything you're required to at the time of the sale, they can take you to court for damages years later.
Mandatory disclosures vary from state to state, which is why it can be tough to get it just right. In almost every state, you're required to disclose any problems you know about— this usually covers things like the foundation, the roof, the appliances, the heating and cooling systems, pests, etc.
In other states, they take it a step further; the state expects you to know about certain types of problems with your home, so even if you genuinely don't know about them at the time of the sale, and they come up months or years later, the buyer can still sue you for negligently withholding information.
If you don't have an agent to backstop you, it's probably a good idea to have your home inspected before you sell it, just so you can be sure you're providing the buyer with a complete list of any issues. If you're still not sure you're making all your disclosures, you can consult online resources, or talk to a real estate lawyer in your area.
Bad Negotiation Tactics
One thing that many owner-sellers don't know is that the price they put on their home is just a starting point for negotiation. That means that they'll likely find themselves sitting across the table from the buyer's agent, haggling over price. This can be stressful, especially if the seller doesn't know what to expect. What if the buyer asks for a contingency sale? What will your counteroffer be? If their home inspector finds problems that you don't think are legit, how do you appeal that? If they ask for repairs or repair credits, what should you say yes to, and what's their responsibility? Can you negotiate the commission of the buyer's agent?
A home sale is a high stakes negotiation with thousands of dollars on the line. If you're a lawyer, or if you regularly engage in negotiations as part of your job, this might come naturally to you. If not, make sure to prepare accordingly!
Not Understanding the Real Costs of Selling
Let's be honest— the main reason most people decide to sell their home solo is because they don't want to pay real estate commission, which is usually between 5 to 6% of the final sale price.
But commission is only part of the picture. On top of upfront costs like marketing and staging, there are closing costs, which average between 2% and 4% of the final sale price. For someone going into an FSBO sale thinking they were taking the free route, those costs can be shocking.
And that 5% to 6% commissionthey thought they were dodging by not using an agent? A seller still has to pay the buyer's agent a 3% commission, so even those savings are usually only half as significant as they thought.
One last option many sellers don't consider: the low commission real estate agent. In tough times like we're about to experience with the rise of coronavirus and economic instability, many agents are willing to lower their fees.
Going through with a FSBO sale isn't impossible, and in many cases it may not even be that difficult; thanks to a hot market and the power of the internet, attractive homes don't last long on the market, agent-assisted or not.
And if your FSBO listing doesn't sell as planned? You can always consult an agent, iBuyer, or other home selling service to help you make another go at it. The bottom line is: you'll never know until you try!