Why Do For Sale By Owner (FSBOs) Sell for Less?

FSBOQuestion:

Why Market your home with a Realtor, when you can sell yourself and avoid paying commissions?

Answer:

Results. More cash in your pocket. It is a proven fact FSBO homes sell for less than they would if they were professionally marketed by a Realtor. Even after a FSBO home is self marketed, it still usually sells for less when it officially hits the market given it was a known FSBO.

Here are some of top the reasons why:

1.) Why wouldn’t a serious buyer work with a realtor? It costs buyers NOTHING to go through the process of a home purchase with the guidance, expertise and professionalism a top Realtor can offer throughout the process.  A buyer’s Realtor/Agent will not show homes that are not on the MLS because they have no guarantee they will be paid for their time and effort working with the buyers. Working with buyers often takes a significant investment, in time, effort and energy. There is no good reason a buyer would “go at it alone” on such a large purchase without advice from an expert. This is especially true in high cost metropolitan areas like Southern Fairfield County, where the entry points for single family homes in New Canaan, Darien, Westport and Greenwich are between $1mm-2mm. The smart and savvy consumers who buy in these markets want to make an informed decision looking at competitive homes, understanding the market.  They want to be with a Realtor throughout the process from negotiations, inspections and mortgages.  They want someone in their corner, as a seller should as well.  Real estate transactions are not simple endeavors. For active, full time agents, selling real estate is a demanding 24/7 job.  Finally, it is simply uncomfortable for most buyers to deal with a seller directly knowing that they can not be objective and frank in their conversation and have no buffer to lighten what they see as a fact, when most sellers are emotional about their homes or hope it will be worth more than the market will tell them.

2.) How will the power of the internet work for or against you? Without expert advise on home staging and repairs, professional photographers to capture the best light and angles and a slew of websites getting the attention of the buyers, its nearly impossible to market a FSBO correctly. What’s more is that the real estate websites that do pick up marketing a home as a FSBO will be caught in the bowels of internet history, making it difficult to sell professionally in the future.  Things that will work against sellers 1.) your home may be difficult to find on the internet (THE #1 PLACE BUYERS FIRST SHOP FOR HOMES) 2.) once its found the quality of presentation is low. Buyers who are looking for a deal love FSBOs because they believe there is a reason for a homeowner avoiding to pay a real estate commission. If you do decide to properly market your home with a Realtor at some point, this can work against your ultimate goal of achieving your highest and best price. First impressions are everything, and you want to attract the right buyers from the beginning by presenting the home in the most professional manner possible.

3.) Will you be able to create momentum and generate interest and urgency? How will you be able to market your property? One of the most useful aspects of the professional marketing process is that if its done correctly, your home will sell in the first month of marketing. This takes very careful and thoughtful expertise, a discerning eye and experience. Preparing your home for the market, carefully marketing it and then getting it listed on all the relevant MLS systems and websites with the best photos and descriptions to appeal to the widest audience is paramount to a successful sale at the highest possible price. Maximum exposure to the right audience is key, and the only way to achieve that and cover your bases is through a Realtor and respective Broker.

4.) Will you have time to be present for every showing and qualify the “buyers” walking through your door? It takes a lot of time and energy just to prepare a house for showings. How will you know its worth the time to spend with potential buyers walking through your door? How do you know they have the money to purchase your home and are qualified? How do you know its safe to let them in your house? All of these go back to #1. Why would a serious buyer not look for real estate without calling a Realtor? To this point, buyer’s agents have to go through a process with their buyers from day 1 to determine that these buyers are qualified, serious and most importantly ready to buy.

5.) Is it comfortable for you to negotiate with buyers directly and what kind of results will you achieve? Perhaps you negotiate every single day in your work life or in another sector. Real estate is a different animal. You have to know why a buyer is or isn’t offering more or less for you home vs. the one that just sold down the street. More importantly, a FSBO is often a signal to the buyers that there is financial distress, which is why they ultimately garner lower offers and sales prices. FSBOs are a “bottom feeders” best bet.

6.) Are you acting in your best interest? This seems like a rhetorical question, but what happens when a buyer asks you questions about why you are selling, or where you are going after this sale or if you have recently lost your job? When you are being represented by a Realtor they would know how to handle these questions in a poised and professional manner. Ultimately, they will not compromise the best interest of their client, unless they have been granted specific instructions to disclose any of this information. Bottom line is Discretion: A solid and professional Realtor will take discretion and confidentially seriously and is obligated to act in your best interest.

7.) Would you want to look at a house you may purchase with the owner there? Its more comfortable for buyers to be able to focus on the space of the rooms and envisioning themselves there without the distraction of the seller talking about all their personal experiences and points of view on the house. As a FSBO, the seller needs to be present for every showing. Not everyone has the personality to put buyers at ease and give them the space they need to observe and feel the vibe in the home.

8.) Do you have full access to all the market data, trends and facts? This information is key in pricing your home appropriately the FIRST time around and an honest and professional Realtor will be focused on doing so. The FACTS are the cornerstone of real estate transactions, no matter what you FEEL it is worth.

9.) Can you navigate and advise on the appraisal process? 9/10 buyers need, want or take advantage of low mortgage rates and go though the mortgage process. The most important aspect of obtaining any amount of mortgage financing is navigating the appraisal. This is something experienced Realtors will be able to add value to and ensure the home appraises for the purchase price.

10.) What are your industry relationships? Do you have relationships with everyone you need throughout the process to achieve the goal of marketing your property to the closing table? A real estate professional heavily involved in their local market is going to know just who to call for a quick paint touch up, handyman to help move heavy pieces of furniture into storage and stagers when its appropriate to bring them in. Other Realtors, Attorneys and Mortgage pros are all necessary along the way to get the job done and protect your best interests.

Of course, FSBO transactions can be successful, but there is a reason that 90 percent of homeowners prefer to work with a professional rather than risk an unsatisfactory home selling experience. Hopefully these 10 questions listed above have been insightful. Marketing your home for sale with an experienced and professional Realtor is the best way to go for a variety of practical reasons, but most importantly the bottom line – your wallet and results.

Nicole Steel is a top selling Realtor (in the top 1% nationally), covering the towns of New Canaan, Darien, Rowayton, Stamford, Greenwich and Wilton. She has sold real estate both locally and internationally for 14 years and prides herself in putting her clients interests first, always. She can be reached directly at 646.239.1596 or nicole@nicolesteel.com


© 2017 Nicole Steel is a real estate agent with Steel RE Partners and licensed in the state of Connecticut · Last modified: 16 January 2016 · Log in · Site Map · IDX · Real Estate Web: darrylo