Fact or FSBO (For Sale By Owner): Myth #1
Updated: Jan 28, 2019
I was sitting down with Jim and Carol - A lovely couple who had decided to sell their home by themselves. They were really nice people, clearly they loved their home and all the improvements they had made to it. As we walked through I could almost see what the house looked like before this couple had put their own personal touch on it. They loved their home.
After touring the house we sat down and I asked the same question I always ask when I meet with an individual or couple going through the home selling process alone.
“So, tell me, why did you choose to sell your house without the help of a Realtor®?”
In my experience, although everyone’s story is unique, there are only a few answers to this question.
I had a bad experience the last time I was buying/selling. I do everything else myself, selling a house is no different. I can make more money selling it myself.
Jim and Carol fell into the final category. They knew how much they wanted to get out of the house and “knew” that if they went with a Realtor® they would never get that amount.
The reality is buying and selling Real Estate comes with a lot of assumptions. Before we dive in, I am going to make an assumption of my own. You are reading this because you have thought of selling your house without a Realtor®, or you have sold a house without a Realtor®.
Let’s examine a few other assumptions people make when considering selling their house “By Owner.” Here are 4 wrong assumptions/myths of selling your house alone.
MYTH - I will make more money/I don’t have to pay Realtor® Fees
Heather and Aaron had me over to talk about selling their home. I had done some homework on the area and their home in order to come up with my estimation of the price. In addition, I brought with me the Zestimate™, so as we discussed pricing we could remove the emotions and look at facts.
Before we jumped in Heather and Aaron said, “We need to tell you that the house is probably going to sell for less than we owe on it. You see, we bought the house in 2007. We still owe $90,000 on it.” (The Zestimate™ was only for $75,000, and my price was even lower.) Here’s the problem, Zillow and I had the same stats to work off of, but what neither of us knew was the house had been slowly transformed over the last 11 years. Heather and Aaron LOVED home improvement! As soon as we started walking through the house I threw out my Market Analysis and started over entirely.
To make a long story short. I sold the house for them for $115,000 (above our initial asking price) with 10 showings and multiple offers in the first 4 days. I asked what they would have asked for it they hadn’t used me as their Realtor®, “Just enough to pay off the mortgage and closing costs.” Instead they are walking away with $10,000+ in their pockets.
The amazing thing… they aren’t the only ones who would have sold their house for far less than it’s worth.
According to a NAR (The National Association of Realtors®) study conducted in 2017, “FSBOs accounted for 8% of home sales in 2016. The typical FSBO home sold for $190,000 compared to $249,000 for agent-assisted home sales.”
8% is a great portion, but this same study found that 28% of the homes sold FSBO were not marketed at all, in other words, they were sold to a friend or relative (probably at a discount). In addition to over 1/4 of homes selling without marketing, 15% of people who sold their homes FSBO say the hardest part of the process is “Getting the Right Price.”
So, you decide that you aren’t going to make the pricing mistake and plan to take the advice you read on a website. You get an appraisal, it’s cheap and guarantees that your house will sell at the right price, right?
The appraiser says your house is work $190k, you start asking for 195k because you know anyone who is interested will want to negotiate. You put the house up on Zillow, put a sign out, take some good pictures and post those on your facebook, twitter, etc., and the calls start coming in!
The first week you get 10 calls!!!
7 from Realtors® who “Have a buyer for your home.” So you meet with the Realtors® who say, you know, the house is priced really fairly, but I don’t think my buyer will like it…. But I know other agents have clients who would be very interested in the house, if you let me put this in the MLS (Multiple Listing Service), and get the word out I know we could sell the house.
Inside secret. The buyer never existed. Even though there are buyers out there!
3 calls come from people asking to walk through the house, 2 actually show up. Neither of them are actually ready to purchase a house, they don’t even know if they can afford a house that’s worth $150k, let alone your house.
Weeks go by and you finally get an offer from someone using a Realtor®. They are willing to pay $180k for the house. You really don’t want to accept it, but you don’t have anyone else interested in the house. Reading through the contract it seems everything is in order. An FHA loan sounds familiar and although you aren’t sure what 3% seller concessions means, you had decided a long time ago that you were willing to pay 3% to the Realtor® who brings a buyer if you need to.
The rest of the sale is a fog to you. The FHA appraiser had you complete almost $5,000 in repairs and you are shocked at how low the check is at the closing table!
You had no idea that you would be paying $5,400 to help the buyer out with closing costs, along with paying your own closing costs, and $5,400 to the other agent. After all is said and done you walk away with less than $164k.
Contrast this scenario with using a Realtor®.
Multiple showings in the first week buy Realtors® who have Ready, Willing and Able buyers.
Competing offers asking for NO concessions and willing to offer more than what the house is worth because they LOVE it!
So, you want to sell your house for the highest NET possible. One simple solution. Higher a professional.
Want to learn more about the pit falls you need to avoid and the myths of selling your house FSBO?
Talk to Ben! (517) 917-5550