Does selling your home as a 'for sale by owner' really save you money?
There are many reason someone might list their home as a FSBO such as: trying to save money, they might have a real estate license, or maybe they had a bad experience with an agent. Saving money and not wanting to pay for the agent commission is usually why people try to sell by themselves. Although this might seem like a good strategy, often times the seller ends up spending more money in the long run. Here are some things to consider when deciding between selling your home by yourself or with a Realtor:
Knowing the market. It is our job as real estate professionals to know the market. We are consistently working with multiple buyers and sellers in different cities/ counties which allows us to know multiple markets. Often times, sellers are very attached to their homes (with good reason) but this can lead to over-pricing and a long period of sitting on the market.
Legal Issues. One of the best parts of hiring a real estate professional is they are your buffer. Agents are intimately familiar with laws and regulations. Sometimes I will see FSBOs that post the square footage of their home on KSL at a much larger amount than their actual amount. This information can be found on the county records, which is what should be used, unless the seller has an appraisal that discloses a different amount. You might be asking yourself, could someone really get sued for disclosing the incorrect amount. The answer is, absolutely, I have seen it happen! Think of it this way, you purchase a house where you were told the square footage was 2,500 total square feet. Perfect! That is enough space for you, your spouse, three kids and two dogs. After you close on the home, you start measuring and find out it is only 2,200 square feet. That means you paid market value for a home with 2,500 SF but only received a home with 2,200 SF. You overpaid. That is a significant difference in square footage and one that people can sue for. A real estate agent is there to buffer you against similar issues and from my experience, it is worth the money.
No Motivation for Buyer Agents. Unfortunately, some buyer agents will not show a for sale by owner simply because there might not be a commission offered and it will likely be more work for them. Without a selling agent helping the sellers, some of that will fall to the buyer agent. The bottom line, is that a buyer agent is not working for the seller, they are working for the buyer and has their best interest in mind, not the sellers.
Time and Advertising. The main issue I see with FSBOs is the time it takes to go under contract. Unless you are located on a busy street with a lot of visibility, people won't know your home is for sale unless they happen to drive down the street. However, when you hire an agent, your listing is put on the Multiple Listing Service (MLS) and fed to hundreds of real estate websites within 24 hours. When it is listed to the MLS you have hundreds of real estate agents looking at that property working with their buyer trying to sell it. When you are a FSBO and only have the ability to post it on KSL or Zillow, you are much more limited in the initial amount of traffic you will get.
Real Estate Contracts. Real estate professionals go to school for 120 hours and have to pass a state and local exam to be licensed. Within all of that training, we learn the state contract inside and out. Even after being in the business for many years, agents still find loop holes and ways to cancel contracts. Even after the state contract you might need a Lead Based Paint addendum or an addendum to negotiate repairs or changes in deadlines. I have witnessed title companies ask for new addenda simply because they didn't like the wording on the previous one. I have seen sellers go under contract with a buyer to then realize they missed an initial on the contract making the contract invalid and the buyer can walk with an earnest money refund. A Realtor knows exactly what you need for our contract and they can whip out an addendum in five minutes.
Selling real estate is our full time jobs! We start early in the morning and work late nights. We protect our clients and make it the process as easy as possible. Whether you hire a Realtor or not, please take these things into consideration. Selling your home by yourself is possible, but is it worth the time, stress and money?