However, in the NAR 2017 Profile of Home Buyers and Sellers, FSBOs remain at an all-time low of 8%. Home sellers continue to work with real estate agents to sell their homes, as statistics remain at historical highs of 89 percent.
There are many reasons why FSBOs fail in real estate, especially if a seller doesn’t know how to price his or her home correctly, or if property inquiries were handled inefficiently. Here are the top reasons why we think FSBOs don’t actually work, and why it is best to hire a real estate agent who can help with the selling process.
One of the biggest reasons why FSBOs don’t actually work is because most homeowners don’t know how to properly screen potential buyers. Many sellers don’t know the right questions to ask to ensure only qualified buyers are walking through their home, which could save them from wasting countless hours and effort. The first thing they should know is whether the potential buyer is pre-approved, which can prove their capability to purchase the home.
Also, if you decide to FSBO, there are other people you must be prepared to negotiate with, not only the potential buyers who want the best deal as possible. Some of those people include the buyer’s agent, the buyer’s attorney (if needed, in some states), the home inspection companies which work for the buyer, the appraiser, and sometimes even your bank, in case of a short sale.
If you decide to FSBO but have a full-time job, who will handle the incoming property inquiries throughout the working day? Oftentimes, the homeowner doesn’t always have the time and availability to handle property inquiries and showing requests.
Homebuyers and buyer agents mostly want a quick response to their inquiries, so it’s possible that they will proceed to the next potential property if their concerns were not accommodated immediately.
Furthermore, buyers can also be quite pressured when the seller is around, as they couldn’t speak openly about the property without worrying. Real estate agents will let buyers have space so they can view the house on their own. They can also share some insights and stories about the neighborhood while showing the house, which could greatly help buyers decide.
It’s common for FSBOs to price their home too high, which could decrease the chances of the home getting sold. This is one of the biggest reasons why FSBOs fail in the market. Most sellers only use a free home valuation tool to set a price for their property, when actual market knowledge is needed in pricing a home for sale.
Likewise, FSBOs generally sell for less than the selling price of other homes. FSBO homes were sold at a median of $190,000 last year, and was significantly lower than the $250,000 median of homes assisted by agents. There’s a big $60,000 difference, so to speak!
FSBO sellers can’t post their homes on the Multiple Listing Service (MLS), which is the number one source for sellers to list their home and a database where both buyers and sellers can view thousands of listings. Certainly, some websites allow sellers to pay to market their properties, but those websites don’t get as much traffic as the MLS. Sellers may also place an ad in their local newspaper, but it may even cost them more without attracting the necessary audience. Another typical FSBO method of selling a home is putting up a yard sign, which on its own is very limited.
FSBOs take longer to sell in the market than most agent-assisted homes unless the seller already knows someone who wants to purchase the home. In the NAR report, at least 58% of FSBO homes were sold in less than two weeks — more quickly than homes listed with an agent — often because these homes are sold to someone the seller knows. Most of the time, FSBOs were unable to sell because they can’t get the selling price right. And when a home stays on the market for a long time, it’s more likely that buyers will assume there’s something wrong with the house, the neighborhood or location, or its pricing.
Real estate contracts can be confusing and extremely difficult. Most sellers don’t have a strong understanding of a real estate contract and don’t know how to negotiate specific parts of the contract with potential buyers.
The paperwork involved in buying and selling a home became more daunting and tricky as industry disclosures and regulations have become mandatory. Understanding and performing paperwork is one of the most difficult tasks for many FSBOs. The closing process itself can involve lots of pages of complicated paperwork, including the contract itself. Some states also require addenda that are designed to cover specific conditions regarding the property. A seller who doesn’t know the required paperwork in their local area and state can also be open to lawsuits.
