In 2015 the average FSBO was sold for $210,000. The normal home with an agent's help went for $249,000. It's not a surprise what we can offer.
But there is a difference in just telling them everything you will do for their home verse why it makes such a big difference when they list with an agent.
Paperwork
This is one of the most difficult, and not thought of parts, that owners run into when selling by themselves. According to the National Association of Realtors' 12% of FSBOs said that it was the hardest part of the whole process. It varies from state to state but there is a whole lot of forms and legal paperwork they get stuck with. The sales contract, disclosures, maintenance records and more are what needs to be done.
Even if they have a pre-made contract that doesn't mean they will understand each part of it.
Inspections
Sellers who don’t know the rules can get stuck with unnecessary and costly repairs. Owners should not expect their reports to cover more superficial conditions, the types that can be fixed with a can of paint. Many of the owners aren't going to have a trained eye to know everything that needs to be fixed up and changed and many will end up relying on the inspector for this information. Inspection reports and the timeframe in which they are delivered vary a lot from situation to situation. A realtor makes this situation much more fluid.
Hidden Costs
Sellers think they are going to save a lot of money. But they are going to be nickeled and dimed the entire way. There's a bunch of additional things that will cost them.
- Holding Cost - Homes with agents spend less time on the market.
- Lawyer Fees - When deciding to sell your home yourself you will need to pay for a lawyer to not only facilitate the process but to deal with payment, work on complex mortgages, leases, formalize contracts as well as helping close the deal.
- Back Payments and Taxes
- Closing Costs - This can vary depending on where you are at.
Time
This is part of the hidden cost as well, but it is one of the biggest cost associated with FSBO. This is where you can start to tell them about the steps you take to get homes seen and sold. Show them the numerous strategies and platforms that you can use, that they won't have access to. You might hear the argument that it doesn’t take an agent that much time to sell a house.
But no matter what usually, it will always take the agent less time to get it sold. Talk to them about all the time they will have to put in, doing each task, from trivial ones to marketing the home where they can. This is why this is the biggest benefit of hiring an agent.
Scams or Safety
Scams include fake paperwork , phony buyer deposits (scammer sends too much in a bad check ), purchases through a third-party (a fake attorney, etc.) and asking for personal information. Without a professional, there is no one to call up when things go wrong. Pre-approving buyers and checking them before an open house becomes much more difficult when you don't have an agent. Since the owner is not familiar with these processes, they won't be able to spot out a problem (like leaving valuables out) as easy as agents can.
For Sale By Owner properties also tend to attract the seasoned investor looking for a great deal. This can lead to the owner making poor choices and negotiated poorly.
Liability
Mistakes happen. If the owner makes these mistakes, then they have to pay for it. In most cases, agents will cover their own mistakes, since it only falls on them.
Joe Nickelson is a real estate professional dedicated to helping home buyers and sellers achieve their dreams of owning property, and helping real estate agents stop using the sometimes-vicious tactics that weigh on their consciences. He believes that the Smart Agents books will, quite literally, change people’s lives for the better. Check out his full bio here!
