Discover the common pitfalls of selling your home as a For Sale by Owner and save yourself from costly mistakes.
Nobody knows a home like its owner, but that doesn’t necessarily mean that they’re the best person for the job when it comes time to sell it. Just as a car owner isn’t necessarily to best person to perform repairs. Many homeowners are tempted to try For Sale by Owner transactions, often because they think it will be easy… especially when local real estate markets are in the throws of a sellers market. Still others take the route in an attempt to maximize their profit and avoid paying Realtor commissions.
Statistics show however, that homes sold with the assistance of a professional real estate agent will net sellers a greater profit, usually more than enough to cover the commission and pocket additional money.
According the National Association of Realtor’s Profile of Home Buyers and Sellers, For Sale by Owner (FSBO) transactions accounted for 10% of home sales. Of those, 50% already knew the buyer of the home. Within rural areas, 13% sold via FSBO compared to 6% of sellers in suburban areas.
The typical FSBO home sold for $225,000 compared to $345,000 for agent-assisted home sales, a difference of $120,000 – or an additional $99,300 after agent commissions.
Potential FSBO Dangers
Most homebuyers these days work with a buyers agent to protect their interests. For Sale By Owner sellers likely will be negotiating with a professional and depending on their own skills to finalize contracts. In addition to likely leaving money on the table, FSBO sellers could leave themselves open to legal problems without the benefit of an experienced real estate attorney.
FSBO transactions can be successful; the National Association of Realtors tell us that 10% of FSBO sellers are. But those other 90% of homeowners prefer to work with a professional rather than risk an unsatisfactory selling experience. Then there’s also the following risks to think about:
Most FSBO “success stories” involve buyers and sellers that previously knew each other.
Homes sold By Owner stay on the market an average of 8 weeks longer.
Buyers don’t typically pay commissions for a Realtor’s service, advice and insurance protections for. They hesitate to buy without this protection unless they get a good deal. This defeats the FSBO’s goal of getting more by saving on commissions.
Contracts with unqualified buyers tie up homes for weeks, costing you the attention of other, qualified buyers.
Buyer agents often avoid making offers on FSBO homes, effectively limiting your potential buyer pool.
Potential buyers to your home are completely unvetted. You don’t know who they are, if they are financially capable of buying your home, or what their motives are for visiting your home.
Most FSBO “success stories” involve buyers and sellers that previously knew each other.
Why you should consider hiring a pro
Realtors have access to market data; recent sales in the neighborhood as well as your competition… comparable properties that are also on the market. Studies have shown time and again that homes that are priced correctly when first listed sell faster and for more money than those that linger on the market.
Realtors can show your home when when you aren’t available, can respond quickly to calls from potential buyers and their agents, and get honest feedback from showings – all of which are typically much harder for homeowners to do.
Realtors tour homes daily and are most familiar with what the average homebuyer wants to see. They can look objectively at your home and suggest ways to improve its appeal, through minor repairs, cleaning and staging.
Buyers are FAR more comfortable touring properties without the seller present. This allows them to relax, and explore rooms, and visualize themselves in the home without the pressure of a seller hovering over them. At a For Sale by Owner sale, the seller must be present for all showings.
One of the primary duties listing agents are responsible for is screening visitors to your home, which provides a measure of safety that FSBO sellers simply don’t have. Realtors also prequalify potential homebuyers, making sure that only those people who can afford to buy are able to see your home. There’s no sense in showing your home to someone who can’t afford it.
Realtors have extensive marketing experience, relationships with other Realtors and buyer’s agents, and in most cases, the backing up a brokerage that is capable of syndicating marketing materials for your home much broader than sellers can as individuals.
Realtors are experienced negotiators, and can help ensure that you get an appropriate price for your home. They’ll guide you through all the appropriate paperwork making sure you’re compliant with all national, state and local regulations. And they’ll ensure that all timelines are carefully met including inspections, appraisals, survey, lending deadlines, and closing.
Still want to try FSBO?
Our duty is to educate on what is involved with selling real estate in the State of Texas. We’ve presented the potential dangers of selling FSBO and the reasons why you should consider hiring a pro. If you still want to try selling your property yourself, we’d like to be a resource and provide the most information we can. To that end, we’ve included this section just for you.
There are a lot of forms that could potentially be used in any given sales contract depending on the home itself, the location, the age and restrictions. The documents summarized below should cover the basics of MOST single family homes located in urban or suburban areas.
1-4 Family Residential Contract – Used for single family homes up to a four-plex.
Third Party Financing Addendum – Used when a loan is involved with the purchase.
HOA Addendum – Used when the property is subject to a Homeowner’s Association.
Water District Disclosure – Required by the State when a property is in a MUD/PUD.
Seller’s Disclosure Notice – Required by the State with VERY few exceptions.
T-47 Affidavit – Required when an existing survey is provided by the Seller.
Lead Based Paint Addendum – Required by the State for homes built prior to 1978.
Amendment – Used to change the terms of a contact after it has been executed.
* Note – the documents are updated regularly, sometimes as often as annually. The download package linked above features these documents as of June 13, 2023.
