In a sellers’ market, some homeowners might be tempted to try to sell their house on their own (known as For Sale By Owner, or FSBO) instead of working with a trusted real estate professional. When the inventory of homes for sale is as low as it is today, buyers are eager to snatch up virtually any house that comes to market. This makes it even more tempting to FSBO. As a result, some sellers think selling their house will be a breeze and see today’s market as an opportunity to FSBO. Let’s unpack why that’s a big mistake and may actually cost you more in the long run.
Roughly 41% of homeowners who tried to sell their house as a FSBO did so to avoid paying a commission or fee. In reality, even in a sellers’ market, selling on your own likely means you’ll net a lower profit than when you sell with the help of an agent.
The NAR (National Association of Realtors) report explains:
“FSBOs typically sell for less than the selling price of other homes; FSBO homes sold at a median of $217,900 in 2020 (up from $200,000 in 2019), and still far lower than the median selling price of all homes at $242,300. Agent-assisted homes sold for a median of $295,000…Sellers who began as a FSBO, then ended up working with an agent, received 98 percent of the asking price, but had to reduce their price the most before arriving at a final listing price.”
That’s a lot of money to risk losing when you FSBO– far more than what you’d save on commission or other fees. Despite the advantages sellers have in today’s market, it’s still crucial to have the support of an expert to guide you through the process. Real estate professionals are trained negotiators with a ton of housing market insights that average homeowners may never have. An agent’s expertise can alleviate much of the stress of selling your house and help you close the best possible deal when you do.
Recently, I had a client make an offer on a FSBO. The seller set the price which I thought was 100k less than I would have recommended as a seller agent in the community. However, it was ok with me since I was working for the buyer.
Also, unfortunately for the seller, they didn’t really market the property so the pool of potential buyers wasn’t as large as it could have been if a realtor had listed it.
However, the result was not all bad for the sellers as they got well over their desired price and they didn’t pay a brokerage fee. Could they have gotten more? Probably and still would have covered the fee. Could the process have been a lot smoother i.e. better logistics and less emotional? Absolutely!
I learn something in everything transaction, every interaction I have with a customer or client and this time was no different. My takeaway was, even though I may be perceived as trying to “win” a FSBO listing, I still think I have an obligation to lay out some fundamentals of the market snd all its craziness, as well as the offer process, to a home seller. At that point, they can make an informed decision. The alternative is embarking into the unknown. Armed with additional knowledge, the result will be whatever is is they signed up for, with or without an agent, and expectations would have been met and set.
If you’re ready to sell your house this year and you’re considering doing so on your own, be sure to think through that decision carefully. Odds are, you stand to gain the most by working with a knowledgeable and experienced real estate agent. Let’s connect to discuss how a trusted advisor can help you, especially in today’s market.