So you probably think I’m crazy as a real estate agent to talk about this topic in terms of mythbusting. I suppose I should automatically wince when the term FSBO is spoken but I don’t. The truth is, FSBO may be the best choice for you. Let’s find out shall we?
The NAR – National Association of Realtors has much to say about FSBO’s. Most is true, some is a tad misleading. Let’s check out what’s what.
They say that FSBO’s only account for 9% of home sales. Which is true.
They also say that FSBO’s stay on the market longer. Also true. An average of 19 days more in fact. And it is also true that around 20% end up re-listing with an agent. I should know! I have garnered many clients in this manner.
In addition, they say that your home will sell for more money through a real estate agent than going it on your own. That is true, but…you have to read the fine print.
It is true that FSBO homes tend to sell for less than agent assisted but that is generally because FSBO homes are in markets with lower over-all price points. FSBO’s tend to be mobile and manufactured homes in smaller more rural communities. So it’s not really a fair comparison because single family detached homes are always going to have a higher price tag. Especially if they are in a larger more competitive market. Here is a study that was done in Madison, Wisconsin that looks at single family detached homes and it shows a 0% difference in home sold prices between FSBO’s and agent assisted. However, we must note that Madison had an unusually popular FSBO website, FSBOMadison.com, and a relatively large FSBO market share, 14% of all homes sold were sold as FSBOs. Areas with smaller, less developed FSBO markets might fare differently.
What it really comes down to is not the money factor but the time and headache factor. It’s not your job as a consumer to know the ins and outs of your particular real estate market. It’s not your job to keep up on all the latest mortgage rates, zoning restrictions and real estate regulations. It’s not your job to have a laundry list of real estate related contacts, such as stagers, photographers, repair men of every variety, appraisers, surveyors, inspectors, loan officers, mortgage brokers and home warranty and title companies. We live and breath real estate so you don’t have to.
The common complaints among FSBO’s are:
- Not sure how to price house accurately
Not pricing accurately is one of the biggest reason homes don’t sell. There are many factors to consider when pricing a home and some that it may be harder to see from inside the situation. An agent can prepare a comparative market analysis for you so you can see what similar homes sold for and price accordingly.
- Qualifying a buyer
This happens even to agents! Sometimes a buyer is so excited to purchase a home they don’t realize that they cannot afford it. Making sure a buyer can obtain a qualifying loan and can cover all buyer’s debits is a vital step in the selling process. Also, unfortunately, some buyers who do not qualify for financing at all will try to take advantage of FSBO’s because they know they are inexperienced. It can also be harder to weed out uninterested buyers that can distract you from serious ones. This is a skill real estate agents develop over time.
An agent has many more avenues to advertise your home than you do. In fact, according to the NAR, 32% of FSBO’s marketed their homes through friends and relatives.
- Familiarizing yourself with basic real estate regulations and contracts
A few states make this easy for you, like Wisconsin for example, that publishes a free real estate sales contract form that both agents and FSBO’s can use. That simplifies the paperwork a lot for Wisconsin FSBO’s. Missouri and Kansas, unfortunately, do not. Kansas especially has very specific forms that must be used and regulations that must be followed.
- Coordinate the details of a closing
This is a time consuming, generally two week process, that agents usually pawn off to their administrative assistants so you can imagine how much fun it is.
With an agent you won’t have to worry about these things and you can be assured your home is getting much more visibility. However, maybe you are really good at advertising, are a whiz with contracts (or live in Wisconsin!), do not need to move soon and live in a lower priced market so you are ready to FSBO. Great! If it’s the right choice for you then you should do it. Just be sure you go into the process informed and educated. Do your research, prepare for the pitfalls and roadblocks and don’t spend dollars to save pennies. In the end you must decide for you and your family which is the best route for your situation.
I would love to hear from FSBO’s and agents alike, any comments, success stories or horror stories you may have on this topic.