Top Reasons Why For Sale By Owner (FSBO) Do Not Succeed
Everyone likes to save a few bucks. In Real Estate saving a commission translates into big dollars. It is hard to blame anyone for wanting to save the type of money that is made when a Realtor sells a home or condo. While commission rates are hardly negotiable, in Vancouver someone selling their home will more than likely be paying a Real Estate commission of approx. 3% on the sale price of the property.
On a $400,000 home a commission of 3% is $12,000. There is no question that is a lot of dough! Selling a home for sale by owner is not an easy task and that is why most people end up using a Realtor. Nationally the success rate of a for sale by owner (FSBO) is very low.
92% of all FSBOs eventually end up with a professional Realtor listing their property on MLS. However, another 4% of all FSBO listings disappear entirely and the remaining 4% are sold to friends and relatives that have been known to the sellers before they even started their private selling efforts.This is according to the National Association of Realtors.
So, why is going the for sale by owner route so difficult to pull off? There are a number of reasons why selling a home on your own is a hard thing to make happen.
What if I told you that selling a home without the services of a real estate agent is certainly possible? Are your ears starting to perk up? In order to be successful you need to know how to sell for sale by owner
. As a real estate agent that has been selling homes for the past 40+ years I constantly see a myriad of things that for sale by owners do wrong. The problem with many homeowners is they think selling a home is easy and they can figure out everything on their own without the assistance of a professional. And in those rare cases where a FSBO eventually succeeds he will never know for how much more a good Realtor had sold his property for.
There are a lot of things to consider when selling a home without a Realtor including home sale preparation, pricing the home correctly, showing the home, qualifying the buyer, and many others. Some of the issues are discussed below.
I have written numerous articles about pricing a Vancouver home properly. It is the most critical element
when selling any product but especially so when you are talking about something as large as a home sale. Over 75% of a homes marketing is about setting the proper price. Homes that are listed with a Real Estate agent and are overpriced stand a slim chance of selling. Overpricing as a Vancouver for sale by owner (FSBO) makes it next to impossible!
Many sellers seem to either do their own market research and end up choosing the wrong price or have a Realtor help them with appraising the property and ignore their advice. If more for sale by owners priced their homes based on comparable market data there would be a higher success rate. Doing extensive research of what like homes in similar neighborhoods have sold for would go a long way!
Often times people want more money for their homes because they have done some kind of recent improvement. Unfortunately many projects for the home do not have a high return. For example if you replaced a roof, a septic system, or added a pool don’t expect to see much payback on the money you invested.
Lack of Exposure - Very Bad
Some for sale by owners do nothing more than throw an old beat up for sale by owner sign in the front lawn and expect that will do the trick. Then there are others that think that going in one of the for sale by owner sites or an ad on little Craigslist is going to bring lots of traffic. WRONG!
These FSBO sites generate a pittance of Real Estate traffic in comparison to the sites some of the top web savvy Realtors use to promote homes. Their sales pitch is always “we will give you world wide exposure and save you thousands of dollars!” My goodness, this could not be further from the truth. Just go to Google or any other major search engine and type in a local search with Real Estate keywords a buyer would use. Things like your town, province and homes for sale. Using my home town as an example would be 'Vancouver Homes for sale'. Do you think a for sale by owner site is going to come up in the results? Not a chance in hell! Go ahead and try it with your town. It will be dominated by sites that show homes listed by Real Estate agents. These FSBO sites promise the world and deliver empty promises the majority of the time.
Realtors like me that know their way around proper internet exposure can change the traffic going through a home exponentially when compared to a FSBO site. Take a closer look at the 30 worldwide real estate portals to the right plus my 15,000 connections and friends on my social media channels
I use to promote my seller's properties.
There is absolutely no comparison what this kind of internet exposure can do when compared to a for sale by owner website. The cold hard facts are thousands of buyers will not even know a FSBO home is for sale.
Buyers Want to Save the Commission
One of the other factors associated with selling a home by owner is the fact that many of the people viewing the home are going to want to share in the commission savings. Most of the potential buyers who will be looking at for sale by owner homes are bargain hunters. In particular on Craigslist which is medium for 50% discount items people want to get rid of. Think about yourself when buying something. The line of thinking is that since the seller is not paying a commission they should be able to offer less for the home. Sellers end up receiving low ball offers on many occasions. Buyers will often take 10% and more right off the top regardless if the home is priced well or not.
Home Accessibility and Buyer Qualifications
These last two reasons are often overlooked by someone trying to sell their own home.
It is hard to sell a
home if a buyer can not get in to see it. Often times when a FSBO is trying to sell they need to match their schedules with the buyer which sometimes is not that easy especially for those that work full time. A Realtor of course makes this part of the home sale process go much smoother.
Lastly, private home sellers need to be equipped with the knowledge of knowing how to qualify potential buyers. There is no point in having unqualified foot traffic going through a home. This is also part of a Realtor's job. Most buyers that view homes today are pre-approved. As a FSBO you need to make sure that the same holds true when showing your home.
One more, multiple offers are even for most less experienced Realtors hard to handle. Most Realtors are specially trained like a lawyer on legal implications of multiple offers. In addition, timing is everything. While seller's and buyer's Realtors have both the tools and the knowledge to handle a bunch of offers at the same time this is virtually impossible for private sellers. As a result in a hot market most buyers do not wait patiently but walk away in order to buy another property. In any case for sale by owners leave money on the table, even after commissions, in the vast majority of all sales.
If you can sell your home on your own all the power to you! You will be part of a very slim minority but you can make it happen! Above all else remember how important pricing and market exposure is to your home selling success.
If you are a Vancouver for sale by owner and find you do want the help of a Realtor, I would welcome the opportunity to be interviewed without charge.
Want to know something really ironic? The owners of two of the most prominent real estate for sale by owner sites in the US used real estate agents to sell their own personal homes. Forsalebyowner.com creator Colby Sambrotto paid a 6 percent commission to sell his Condo in New York and Buyowner.com founder Al Bennati recently listed his Florida home for sale with a real estate agent. I am sure they have their reasons.