Let’s face it. We live in a world where supply is low, demand is high, and the costs for goods are higher. Life is expensive, and we’re all in pursuit of cutting corners and lowering costs wherever we can. But while this may be reasonable when shopping for a new sweater, is it worth it when selling your home?
I always say that selling or buying a home is a highly emotional process. Without the right resources, it’s also incredibly complex and challenging. If you’re preparing to sell your home, you may feel the costs are steep and quickly cut into your potential profits. From experience, I know that the first thing you’ll look to save on is your agent’s commission. So, you may be considering selling “For Sale by Owner,” also known as FSBO for short. You need to realize that going this route may save you in one area only to lose you money in another and there are significant financial consequences involved.
Financial Consequences
Saving on a seller’s agent commission is undoubtedly appealing. But, 74% of home buyers will use a realtor, and as is customary, you, the seller, pay the buyer’s agent’s commission. So, there’s an incredibly high likelihood that you’ll still be paying someone a commission. Then there’s the price of your home. This is where you’d make a profit. According to The National Association of Realtors, FSBO homes often sell for $100,000 less. Why? Pricing a home is a highly practiced art that takes years of experience and in-depth market knowledge. The goal when pricing a home is to attract potential buyers while at the same time maximizing the value of your property against current market conditions. Things such as market trends, comparable sales, and the home’s unique features in the lens of a professional are all highly regarded when determining price. Without the guidance of a professional real estate agent, you will undoubtedly struggle to price your home accurately. You will underprice it, which means leaving money on the table. Or, you will overprice it, which means sitting on the market, undergoing a price cut, and ultimately selling for less than if initially priced lower and correctly, not to mention the history of attempting to sell it unsuccessfully, which will inevitably change your future buyer’s perception of the home. Worse yet, your home might not sell at all.
Marketing and Exposure
So, you’ve decided what your home is worth and settled on a price. Now for the fun part: marketing your home! Selling a home is time-consuming and requires significant effort and attention to detail. FSBO sellers must be prepared to take professional photographs, hire someone to do a floor plan, write a well-written description that appeals to buyers, coordinate and update an online listing on all third-party sites, place appealing and professional-looking signage in the front of the property, create sophisticated brochures (which buyers expect), create and post social media videos and ads, to name a few! These are all required to compete with all the other homes on the market. Not only do agents have marketing teams who can professionally optimize all these, but these all take significant time and money! It’s challenging and exhausting, and your efforts, as great as they are, might result in longer days on the market and lower offers.
Many sellers overlook the extensive networks agents have to help push their listings out and get maximum exposure. Real estate agents have access to multiple listing services (MLS) and professional marketing resources to ensure maximum exposure for your property. They will also take on the creation and costs of all marketing materials, such as professional brochures, carefully curated neighborhood guides, digital marketing, and captivating videos that not only help get the listing in front of more people but also elevate the perception of the listing to buyers, which ultimately leads to a higher purchase price. Additionally and perhaps most importantly, if you’re working with an agent with a good reputation, they’re well connected in your community, especially amongst other realtors, so their reach will go even further than marketing efforts alone.
Time Savings
We all wish there were thirty hours in a day or maybe eight days in a week. Life is busy with work, kids, and life in general. We constantly seek ways to take time-consuming things off our very full plates. The most overlooked factor when someone goes to sell their home themselves is the time it takes. Besides all of the marketing efforts mentioned above, a FSBO seller will also need to handle inquiries such as questions and showing requests, coordinate and attend showings (that may not fit into your schedule), attend inspections, open houses, contractor visits, and walkthroughs on top of vast amounts of paperwork. The FSBO sellers I have worked with have said they grossly underestimated the time the process takes. If your time is valuable, you may want to reassess this option.
Negotiation Skills
Now, if you were one of those lucky 57% of FSBO sellers who already know a buyer, it’s time to flex your negotiation skills and get the most for your home. Many sellers believe they know how to negotiate, but in my experience, when negotiating with FSBO sellers, money is often left on the table when negotiating the sales prices. Experienced real estate agents are skilled negotiators who can advocate for their client’s best interests. If you suddenly find yourself in an unfamiliar and high-stakes situation, you will wish you had that seasoned negotiator on your side.
Legal and Contractual Expertise
Throughout the process of selling your home, and especially once entering a contract, the legal and contractual aspects can be daunting. From drafting a comprehensive and legally sound sales contract, understanding state and local regulations, and having the basic knowledge of market terms such as earnest money and contingency dates, there are numerous opportunities for lost protection and costly missteps without the expertise of a real estate professional. You may think an attorney can assist with these contractual obligations. Still, the attorneys need to be made aware of the exact market conditions of your home and will not be able to offer as much leverage as a realtor would.
Financial gains and losses aside, the emotional toll of selling a home should be highly considered. They say that selling a home is one of the top 5 most stressful things you can go through in life, along with losing a loved one and divorce. Dealing directly with potential buyers, negotiating offers, and handling the intricacies of the transaction can be emotionally taxing. When working with a good agent, they will shield you from much of the stress and will de-escalate situations so they aren’t as stressful. They will also help be a sounding board and let you know if you are making an emotionally charged decision that will not benefit you. The expertise, resources, and support a professional real estate agent provides can ultimately result in a smoother, less stressful, and, believe it or not, more lucrative selling experience. So, if you’re still considering this route, make sure your decision is carefully evaluated based on your individual needs, priorities, and desire for a successful and rewarding selling experience.
Written by Hayley Westhoff