In an age when traditional markets everywhere are being disrupted by internet innovations, it’s tempting for home sellers to try to go it alone, use the web and forgo the services of a real estate agent. A slew of online sites offering advice, assistance and exposure make it now seem even more appealing. This new realm of Do-It-Yourself realty, known by the shorthand FSBO (i.e., For Sale By Owner, pronounced “fizzbo”) has become increasingly popular and has delivered real value to millions of home sellers. There is even a website dedicated to serving DIY home sellers called, not surprisingly, For Sale By Owner. But as with many other exciting new things on the web, the results don’t always live up to the buzz. FSBO home sales are not without their downsides. The real question is, as ever, “Is it right for me?”
To answer this question, it’s important to understand all the things a real estate agent does for you to earn that seemingly hefty commission for selling your house. The first, perhaps most important and least appreciated thing a real estate agent does for you, as any realtors will be happy to explain, is to price your home accurately. Understanding what the current local real estate market will consider an appropriate value for your home is always a thing of mystery. Hitting that sweet Cinderella spot where your home is priced “just right”, not too high or too low, is essential. Too high and your home may languish on the market and start to lose value precipitously. Too low and you are leaving money on the table. To hit that sweet spot requires more than the standard survey of comparatively priced homes, or “comps”, that realtors use. It also requires a sense, keenly honed by daily experience, of where that price is, something a web site won’t give you.
The second important thing real estate agents do for you is to screen customers and to assess their financial ability to actually buy your home, i.e. down payment, credit score, and, preferably, pre-qualification from a lender. Working on your own you may be flooded with scores if not hundreds of prospective buyers, many of whom will be window shoppers with no real motivation to buy, and others who will want to buy but have no way of financing a purchase, wasting your time and steering you away from the real buyers out there who are ready, willing and able to move forward. The huge burden of always being on call to answer calls and emails and show your home to anyone and everyone who expresses interest is only part of the issue. Handling this phase poorly can also cost you thousands in lost sale potential.
Thirdly, a real estate professional will help negotiate with the buyer or the buyer’s agent to iron out all of the many details, price being only one of them that go into the sale and transfer of property. There are a myriad of forms, procedures and disclaimers, all different in different locations, that are required by the government and by lenders to make sure that both you and the buyer are protected from unethical practices, environmental hazards and/or building defects. Sloppiness or ignorance in this area can have disastrous results. Even if you go it alone you will end up having to pay a lawyer to handle much of this, often at higher cost.
But price negotiation is of course a central part of the negotiating process, and here realtors earn their fees. Once the market is aware that you are selling your own home, it will expect a lower price since you are saving yourself a realtor’s fee. Also important is the ability to compare offers based on cash versus those involving buyer-financing—not something to be done by amateurs.
Money advisers disagree greatly on the go it alone approach. Some think it is a good idea that will save you loads of money. Others warn of the many pitfalls involved. Either way selling your home is a process you need to go into with your eyes wide open. Sizing up all of the variables before you go FSBO is essential, and should help you make the right choice.
Senior Mortgage Lender