If you’re thinking about listing your home as for sale by owner (FSBO), there are several pros and cons you should definitely consider before deciding to sell the home yourself. While saving 5–7% on commission costs by not using the service of a licensed real estate agent seems very appealing to many, the things are not that simple and the selling process is way more complex and involves a lot more than just putting a for sale sign on your front lawn.
One of the advantages to going the FSBO route is that you are in total control of price setting, the showing days and times and the negotiations with the buyers. You can take advantage of the many websites that can help with listing your home for sale, such as ForSalebyOwner.com, Zillow.com, Craigslist, etc.
One of the cons to listing your home as for sale by owner is the risk of selling your home for less than what it’s really worth.
Statistics have shown that the average For Sale by Owner home sells for about 15% less than homes sold through a Realtor®.
Many homeowners set the price of their home based on what their neighbor down the street is asking for their home. What you have to keep in mind is that the asking price is not the actual selling price and a lot more factors go into determining the accurate value of your home. What you paid for your home 5, 10 or 15 years ago or the cost of any improvements that you’ve made since then are not important when trying to come up with an accurate number. Your home is worth what buyers are willing and able to pay for it, and only an educated and thorough understanding of the current real estate market is going to help determine the value of your home.
Also, your home will benefit from less visibility and exposure to potential buyers, as only licensed real estate agents can list homes on the Multiple Listing Service (MLS), the largest online tool used by Realtors® to promote their listings. You can market the home yourself by using the websites mentioned earlier, as well as flyers, for sale and open house signs.
Preparing all the legal disclosures and forms is your responsibility, and if you are not familiar with the guidelines and requirements, there is a financial and legal liability related to the accuracy and delivery of these forms.
Weeding out the unqualified buyers can also be difficult, as many people who are not yet ready to buy a home or able to obtain proper financing, will seek out homes that are for sale of owner, with the thought in mind that most sellers are pretty inexperienced and unable to recognize these issues. There’s also the “just looking” and “just curious” folks that will waste a lot of your time which could be used toward assisting serious buyers.
One last thing I would like you to take into consideration is the fact that safety is a major issue when selling your home by owner. A for sale by owner sign is often an invitation to strangers with not so honorable intentions to come into your home. Take proper measures to stay safe and screen the people that ask to view your home. Asking for a copy of their pre-approval letter or proof of funds is a good way to make sure that they are bona fide buyers.
I am not saying that selling a home without the assistance of a Realtor® is a bad idea or impossible to accomplish. What I am saying is that you should take all these factors into consideration, prepare and educate yourself on the process, so you don’t end up spending dollars to save pennies in the end.