Potential Home “For Sale By Owner” Advantages
Each home seller’s personal situation and motivation for selling is unique. The following discussion describes the most common reasons why sellers choose to sell without using an agent.
You want to save money on commissions
People who’ve gone through a FSBO often do so to avoid having to pay real estate agent commissions. The lion’s share of the expenses related to selling your house are typically real estate agent commissions, which can gobble a large portion of your house’s equity (that is, the difference between the market value of your house and outstanding mortgages). In most areas of the country, a 5 to 6 percent real estate brokerage commission is common. Thus, on a $250,000 house, the commission typically sets you back $12,500 to $15,000.
You may already have a ready, willing, and able buyer
If you spread the word that you’re planning to sell your house, you may turn up someone who’s financially able to buy and willing to pay you the amount that you feel your house is worth. Good for you. Why pay a full commission if you’ve already found a buyer? You’re in a good position to either negotiate a reduced commission with a real estate broker or hire an attorney to help you complete your transaction.
Whether you’re contemplating selling your house with an agent or doing a FSBO, tell as many prospective buyers as possible that you’re interested in selling. Although most people don’t find a buyer for their house simply by getting the word out through their own network of friends and contacts, you won’t know whether you’ll be one of the fortunate few who successfully sell their houses this way unless you try.
Before you start getting the word out, take these tips to heart:
- Make sure that selling your house is the correct course of action for you.
- Determine the fair market value of your property.
- Ensure that your house looks its absolute best.
- Hire a good real estate lawyer to review your house sale contract and other documents.
You may know the house and neighborhood well
You may know more about the strengths of your house and neighborhood than local real estate agents, especially if you’ve lived in an area for many years. You may be able to speak from personal experience about how child-friendly the neighborhood is and how terrific the local schools are. You can praise the virtues of nearby shopping, transportation, and entertainment. You can gush about your wonderful neighbors. And you can point with pride to all the improvements you’ve made to your house over the years.
Be careful in praising your house and neighborhood. Even the most interested prospective buyer can get turned off if you’re overbearing or sound like a used car salesman. And, what you say about your property may cause you legal problems down the road. If you’re going to sell without a real estate agent, be sure to have a good real estate lawyer on your team to assist you with mandatory property transfer disclosures and to provide advice about what you should avoid saying about your house.
Here’s an actual example of legal problems caused by statements made (in this case by the real estate agent) to a prospective buyer. She was showing the back yard to a buyer and waived her arm expansively, stating, “This will all be yours.” Turns out the back fence was located 6 feet into the neighbor’s yard. Since “all they saw” during the showing was not theirs, they sued the agent for the lost 6 feet.
You may be more motivated than an agent
Your house and the money you have tied up in it are important to you. Some real estate agents, despite having dollar signs in their eyes in anticipation of the commissions they’ll earn if they sell your house, may be less than eager to invest sufficient time in promoting and showing your property.
If you decide to use an agent to help you with your sale, exercise great care in choosing the right agent. Avoid overextended agents who juggle too many listings and clients to give your house sale the attention it deserves.
You like challenges
Some people don’t select the easier path. For example, instead of working for a corporation, you may be the type who starts your own business. Many small business owners say that the desire for a potentially higher income wasn’t the primary reason they started their own business. Some small business owners pursue this career path as a means of self-expression, to make a contribution to a particular field, or for the pleasure of working with and satisfying customers.
For the same reasons, some people try to sell their houses by themselves. Although most FSBO sellers are eager to save commission dollars, a few do it for the challenge or because they want to apply skills they possess to selling their own house.
You want to be in control
Some folks just don’t like giving up control. If you’re the type of person who wants to be in charge, you may be unwilling to relinquish control to an agent.
If you sell your house yourself, you can decide when and where to place ads for your house and exactly what features to emphasize. You may want to say when it is and isn’t okay to have strangers (interested buyers and their agents) strolling through your house. Perhaps you want to ensure that your cat or the family dog isn’t let out of the house by an agent who fails to notice your special showing instructions. Whatever the reason, for better or worse, you’re the boss with a FSBO.
Your house may sell itself
If the local real estate market is strong and good houses get multiple offers as soon as the For Sale sign goes up, you may feel that selling your wonderful house will be a snap. All things considered, FSBOs usually are more successful in a sellers’ market than a buyers’ market.