The google search “what forms do I need to sell my house by owner” yields over six billion results (yes, billion). Selling a home by owner, known as a FSBO (pronounced “fizbo”) in the biz, is a thought that some homeowners may have but most smartly shy away from it. Here are 13 reasons why it makes more sense to work with an agent.
1) Knowledge of the process
There is a logical progression of events that lead to the successful sale of a home. A knowledgeable and experienced agent will know these details cold, and work to ensure that all goes as smoothly as possible. If selling a home by owner, ask yourself:
- What is supposed to happen, and when?
- Are things going the way they’re supposed to?
- What happens next if things go sideways?
- What can be done if a deal falls apart?
2) How to determine home value
This is the biggest challenge someone selling a home by owner faces. They have no frame of reference, no expert, no advocate guiding them along the way. They normally expect they will receive full reimbursement for any improvements or costs sunk into the home and bake them into their listing price.
Selling is an emotional process to begin with, so doing it without an agent makes it 10x more extreme. These sellers tend to over-inflate what their home is worth — either by basing their list price on what others (that may or may not be similar) are asking, or thinking that their home is worth $10,000 more because it has one extra square foot of granite.
Accessing the recently sold information can be done online by anyone. The value of a broker isn’t in having the information, it’s in being able to correctly interpret the information. The best comps are based on three things — similarity, proximity, and recency. Another important factor that someone selling a home by owner won’t know is how the market trends may have changed since one or more of the comps have sold.
3) How to prepare the home
Oh, how a fresh set of eyes makes a difference when a home is being sold. Someone selling a home by owner is often noseblind to how their home smells. And they think that the way they have lived in the home is how everyone else would live in the home, therefore assuming that’s how it should be shown to potential buyers. Selling a home requires a five sense appeal, and preparing your home without help is a major problem for most.
4) Marketing of the home
Talk about putting your foot in a bucket … Someone selling a home by owner often knows very little about how to do so and knows even less about how to properly market it.
5) Liability of selling a home by owner
When someone is selling a home by owner, they usually have no idea about all that is involved. And many of those aspects of selling can include handling the process the way it’s supposed to go — and therefore understanding the liability that must be assumed by someone. And if you’re a seller selling on your own, that someone is you.
6) Expecting to save themselves money
This is likely the reason most people selling a home by owner are trying to do so. They want to save money, at least on the “listing side” (i.e. they’ll pay a buyer’s agent but want to save paying an agent to represent them). I’ve got bad news though … When a buyer sees a home being sold “by owner”, guess what their first thought is? Yep, that they deserve to get the money the seller is trying to save.
How can both the buyer and the seller save the same money? Spoiler Alert: they can’t. And what’s the difference in average selling price between working with an agent or going FSBO? A whopping 24.67%!
7) Handling showings & open houses
Many FSBOs are also DIY’ers who just figure that this is something else they can do on their own. And more power to them. Except, they don’t realize that they are likely taking on a second job when needing to coördinate and handle the showing requests that come in. If they plan to be there when buyers are viewing the home, they are now tied to the home for all showings.
Sellers make plans just like everyone else, and when a showing request comes up, it often throws a monkey wrench into the works. And oh by the way, sellers who think that a buyer will change their schedule around in order to see their home if the time requested won’t work are dead wrong. There are often other homes that can replace it on the schedule, and buyers likely assume that a FSBO will probably be more of a headache to begin with due to the fact they don’t have an agent guiding them.
Open houses are another touchy subject. How should a FSBO handle them? Another hassle that gets alleviated by working with an agent.
8) Knowing what’s important to buyers
Do you think that someone selling a home by owner knows the ins-and-outs of what is most important for buyers, especially in the tech-driven real estate market of today? Nope.
9) Qualifying an interested buyer
So, let’s say you do get to the point of having a buyer view the home. How do you gauge their interest level? How do you get feedback to begin with for that matter? Do you just take a buyer’s word for it when they say they can buy your home — if not, what is acceptable to prove it?
10) Negotiating your own sale
Remember the part about emotions naturally being part of the process for a seller? For those selling a home by owner, they have no filter between themselves and the offer terms — terms that are often not seller-friendly on the outset. Mix a buyer-friendly offer with lack of seller experience, ample seller frustration and lack of an advocate and what do you get? A hot mess.
11) Handling the inspection
If you think a FSBO may have struggled so far, just wait until the inspection comes around … The inspection is an everyday, common occurrence in real estate. But when a seller is handling it without an agent’s guidance, it can get ugly. Does the seller attend the inspection? If so, they will likely hover over the inspector and explain why things are the way they are — a surefire turnoff for any potential buyer.
12) Attorney review & closing process
Even after the inspection, the often extensive attorney review period and remainder of the process are still ahead. Most FSBOs do have an attorney, but it’s hard to know whether it’s one that “does some real estate” or one that focuses exclusively on it.
Most sellers working with an agent also know that they should work with an attorney who’s sole business is real estate, while those selling on their own may think their cousin Joey might be able to handle it and save them a few bucks (and remember, they’re often motivated by the prospect of saving money). If I had a nickel for every time an unqualified attorney messed up an otherwise perfectly good deal, I’d have a lot of nickels.
13) Knowing reputable tradespeople
Yet another hidden benefit of working with a knowledgeable and experienced agent is tapping into their often extensive network of proven and trustworthy tradespeople. There are issues that come up at the inspection in almost every deal. Someone selling a home by owner may just look up someone online and hope for the best. An agent may have several solid options at the ready and be able to create potential solutions almost immediately.
Final word: Selling a home by owner
There is no law stating that someone must use an agent. For those who feel they must try FSBO, they should. There is a reason (or 13) why most of them decide to work with a realtor. The number of sellers working with a realtor has consistently grown while the number of FSBOs has consistently dropped. Not surprising at all.