Potential Home “For Sale By Owner” Disadvantages
Although selling a house isn’t rocket science or heart surgery, it nevertheless requires some important skills. Even the smartest of FSBO sellers can get into trouble. This discussion points out a few cons to going the FSBO route.
You may not know how to price property
Grossly overpriced property isn’t going to sell. Buyers and agents who know property values will, in fact, avoid it like the plague. In the end, you may not get as much for your house as you could have by pricing it realistically to begin with.
If you underprice your house, you may sell it below its market value — shortchanging yourself thousands of dollars — perhaps even tens of thousands. Say good-bye to the commission you “saved.”
You may not know how to prepare your house for sale
Your familiarity with your house can be a liability if it blinds you to your house’s flaws. You may like your house’s clutter and quirks, but their dubious charms may turn off prospective buyers. One important benefit that a good agent brings to the table is a fresh pair of eyes and a desire to whip your house into get-it-sold shape.
You may not know how to market your property
Did you know that a humble, low-tech For Sale sign and a classified ad (in local papers and online) are two of the most potent forms of advertising available to people who sell their houses without using an agent? Do you know how to use the Internet to market your house? Unless you have a background in real estate or marketing, you probably have some research to do. And, by undertaking a FSBO, you miss out on two powerful promotional tools only available to agents: the Multiple Listing Service (MLS) and brokers’ tours of newly listed properties.
You may not know how to separate real buyers from fakes
Serious buyers make good offers. Bogus buyers waste your time and money. In the worst of all possible scenarios, you may unintentionally allow someone with criminal intentions into your house.
You may not have enough experience as a negotiator
If you know you’re a weak negotiator, you have to be especially careful about selling your house without an agent. Not knowing smart negotiating tactics can cost you big bucks. Even if you are a good negotiator, your financial and emotional involvement in the sale may cause you to lose your cool when bargaining with a buyer, or you may undermine the deal by appearing greedy. Secure the services of a good real estate lawyer who, in addition to keeping you out of legal hot water, can also act as your negotiating agent.
You may get yourself into legal trouble
Selling your house yourself to save on real estate brokerage commissions is a hollow victory if the buyers sue you after close of escrow. Perhaps you didn’t give them the mandatory federal, state, and local property disclosures about problems such as lead-based paints or work you did on the property without a building permit.
House selling is a team sport.
Trying to save money by avoiding legal fees is a false economy. If you’re not using an agent, you need to have a lawyer review the sales contract before you sign it. If that’s not possible, at least put a clause in the contract to say your acceptance is subject to review and approval of the contract by an attorney of your choice within five business days after you sign it.
Don’t discriminate! Disqualifying prospective buyers on the basis of race, color, religion, sex, age, familial status, national origin, pregnancy, citizenship, disability status, veteran status, or genetic information is illegal under federal law. Your state may have additional categories. Discrimination can get you into a heap of legal trouble and can cost you big bucks. If in doubt, check with the Equal Housing Opportunity agency in your area.
You may not know how to close the sale
You won’t save on commissions if your deal falls apart in escrow. As a FSBO seller, you have to make arrangements that a good listing agent normally handles. Do you, for example, know how to open an escrow; get, read, and interpret a preliminary title report; order property inspections; handle contingency removals; and order a payoff demand for your mortgage?