Selling a Home For Sale By Owner: 11 Things All Home Sellers Should Know
Jan 14, 2019 January 14, 2019
When selling your home, it’s understandable that you’ll want to make as much money as possible from the sale, and you may be weighing the pros and cons of saving a little money by selling the home yourself without hiring a real estate agent. Real estate agents typically charge a 5-7% commission on the sale price of your home, so you could potentially save thousands of dollars by selling the home yourself, and this is the most common reason why home sellers make the decision to sell on their own. But is it a sound decision?
While saving money on commission sounds like it could be a benefit, there are actually several drawbacks to selling the home yourself unless you happen to be very well trained and experienced in the field of real estate, have lots of time on your hands, are a whiz at marketing, and have some legal know-how. According to The National Association of Realtors, more than 90% of all properties listed for sale by owner fail to sell, and sellers end up having to hire a real estate agent in the end anyway.
Below are some considerations that you must take into account if you are considering listing your home for sale by owner.
1. The most successful instances of sale by owner occur when the home is highly visible on a busy street.
If your home is on a busy street and you’ve put up a highly visible sign, it’s possible that passers-by may inquire about it, and a sale may result from this. Other successful sales occur when the home is in a neighborhood where several other homes are listed for sale by real estate agents. In these instances a seller may be able to profit from the marketing strategies of a good realtor who is successfully drawing buyers into the neighborhood to view properties they have listed. This means that if you are selling a condominium unit located inside a building, you will probably require the services of a good real estate agent, as specific condo units for sale are not normally visible from the street (as most of the time the association does not allow signs) and it will be nearly impossible to get anyone to view your home.
2. You may not save as much as you imagine when selling your home for sale by owner.
While you may save money by bypassing the realtor’s commission fee, the likelihood of fetching the best possible price for your home decreases substantially when you go it alone. Buyers look at for sale by owners as targets to get better deals, so they already come in with the expectation of negotiating you down. Typically, these buyers are looking for a cheap deal that benefits them, and assume that you will be willing to sell for a lower price since you won’t be paying a real estate agent’s fee. And in fact, most homes listed for sale by owner that do end up selling actually end up selling for less than what a professional realtor could have garnered for the sale.
You’ll also have to invest heavily in marketing, and devote considerable time to the sale of your home, potentially detracting from other income-earning activities. So in the end, you may not end up netting more.
3. The biggest mistake owners make when selling their homes is setting the wrong asking price.
Unless you happen to be a real estate expert yourself, you’ll benefit from the guidance of a competent real estate agent or property appraiser to help you set the right price for your home, as this task is one of the most difficult when it comes to selling properties. Even if you don’t want to hire the realtor to carry out the full sale, you should at least consider paying for a consultation with a seasoned and successful professional in the field to help you set the right price for your home. Actually, even some experienced real estate agents manage to set incorrect sale prices every day, so be sure to look for an agent that has a successful track record of selling homes in your area at top market value.
4. Marketing a condominium property for sale requires an established network.
It’s easy enough to list your home online and anybody can do it. But to actually attract buyers - the right kind of buyers for your home - will require much more than this. When a real estate agent lists a home online, they have access to a huge network of agents that are working to attract potential buyers in your area. Realtors benefit from the extensive reach of the Multiple Listing Service (MLS), as well as established sites such as Realtor.com where listings may be seen by hundreds of potential buyers. In addition, top real estate agents network with top real estate agents, and most of the sales happen within those agent-to-agent communications and networking. A good real estate agent is poised to reach a target market that your simple online listing could never aspire to, and most invest a sizable amount in expanding their reach through advanced marketing strategies. The best real estate agents operate through sophisticated websites that are magnets for prospects because they employ the services of top-quality, professional marketing consultants, as well as professionals who take care of such tasks as photographing and videoing properties, building the website, and writing the marketing copy.
5. Selling a home requires a lot of time.
Real estate agents exist because selling a property is a full-time job that requires a diverse professional team, and most sellers are individuals or couples who are busy working at other careers. To sell your home successfully, you will need to devote a considerable amount of time to the task, as you will need to develop a whole new set of skills, all of which are time-consuming. Your home will require a home inspection, and you’ll need to make any repairs necessary for legal compliance, as well as any repairs that may boost the sale of the property (again, a seasoned seller’s agent can help you assess what to fix and what not to fix). In addition to this, you must photograph, video, list, advertise, and show the property. Once an interested buyer shows up, you must be available to spend time on the phone answering their questions, as well as showing the home whenever they are available, and negotiate the correct asking price for the sale. All of this requires oodles of time (and skills) that you may not have if you are already a busy professional in a different line of business.
6. You may become a target for crime while selling your home.
It goes without saying that inviting strangers into your home is a risky prospect, just as listing personal information online for the world to see surely puts your privacy at risk. For this reason, professional real estate agents have developed tried and true methods of marketing and showing properties that protect a seller’s safety and privacy. If you go it alone, you will have to deal directly with the public, so you’ll need to be especially careful with what kind of information you include in your listing, as well as highly alert when showing your home to strangers. Never show the home when you are there alone. Always request that visitors sign a guest book and present a valid ID. Remove any valuable items such as fine art or expensive electronics from view before letting anyone enter your home, and take extra precautions if you plan on staging an “open house.” Frankly, open houses are not actually all that effective at scoring sales in all cases, and they may attract thieves and scam-artists to your home. A good real estate agent may be able to advise you as to whether hosting an open house is actually a good idea in your particular situation.
7. For sale by owner sites don’t actually produce many sales.
In today’s market, the vast majority of property sales begin online, but where your home is listed online can make all the difference in the world. Unfortunately, listing your home on the most popular for sale by owner sites isn’t going to result in great success, as these sites statistically attract only a small fraction of the traffic that you may attract by listing your sale on a professional real estate site.
8. You must ensure that you are complying with all legal requirements when selling your home.
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Laws and regulations related to home sales vary from region to region. You will have to do some due diligence and find out exactly what you have to do to comply as a seller with local regulations, and then you must prepare all required paperwork in accordance with the law. If you are unfamiliar with this process, bear in mind that it will take some time to get yourself acquainted with local regulations and really understand the way to do these things correctly. Not complying properly with legal requirements can ultimately cost you far more than a real estate agent’s fee, as failing to comply legally may open up a Pandora’s box of obstacles and headaches down the road. For this reason, the best real estate agents have the customary do’s and don’ts down pact, and when there are questions about legal nitty gritty, they know the right professionals to call to make sure all legally copacetic.
9. You will need to make sure the buyer is qualified to buy your home.
In addition to all of the aforementioned tasks, an important service that a qualified and experienced real estate agent provides is the vetting of any potential buyer to make sure they are qualified to purchase your home. If you’re fortunate enough to find a buyer on your own, you will have to assume this tricky task and again, this requires some experience, skill, and insight. While you may think that this is a simple matter and a mortgage letter will suffice to vet the buyer, it’s not actually that simple. A buyer that is pre-qualified for a mortgage is not the same as one that is fully approved or even properly pre-qualified, and an inexperienced seller may lose out on a good sale due to not understanding the distinction between these classifications. In many cases, a pre-qualification may actually be worthless. Again, the expertise of an experienced real estate agent may be well worth the commission fee.
10. You probably don’t have all the skills you’ll need to sell your home and may have to pay for them.
Even if you are fortunate to have plenty of free time available to attend to the sale of your home, few people actually possess the full set of skills that you’ll need to sell a home successfully in today’s market. Unless you are highly experienced in the sale of property, there will be a number of new things for you to learn through the process, and you typically won’t get the benefit of doing it over and over again in order to improve your ability at it. Many skills are required to produce a successful sale, such as setting the right asking price, making the right marketing choices to reach the right kind of buyers, determining which repairs to make, staging the home properly for presentation, qualifying a buyer, attending home inspections, and negotiating repair requests. Additionally, you’ll need to become skilled at some of the many other services that go into the marketing and sale of a home and that real estate agents typically hire professionals to do on their behalf, such as photographing and videotaping properties, web design, writing SEO marketing copy, and maximizing your site’s exposure online. Otherwise, be prepared to shell out cash to pay for these skills and services yourself. Again, it may just be more cost-effective to hire a realtor.
11. You will very likely have to pay a buyer’s agent to help sell your home.
In the likely event that a buyer’s agent procures a buyer who is interested in purchasing your property and qualified to buy it, as opposed to a buyer coming directly to you, you will have to pay the buyer’s agent a fee. While it may not be as high as the traditional seller’s agent fee, it will still be another expense that you will have to take into consideration when adding up the amount you can reasonably save by listing your home for sale by owner.
This information for those seeking to sell a home is provided by Sepehr Niakan, a top performing real estate agent working in the South Florida real estate market, including Midtown, Edgewater, Design District, Downtown Miami, Brickell, Coconut Grove, Upper East Side, Miami Beach, Miami Shores and other areas in the greater Miami area.