Ever want to elicit a visceral response from your even-keeled Realtor friend? Ask them about For Sale by Owner's. The idea of a member of the general public selling their home without the use of an agent absolutely drives some of peers crazy. I get it. My wife, the teacher, isn't a fan of homeschooling. In fact, most people who provide a service or a special set of skills aren't usually keen on individuals going the do-it-yourself route.
However, I certainly believe that there is a place for FSBO's. I choose to think about it like this: When done correctly, a For Sale by Owner can be a huge help to me and my business. First, I am able to avoid a situation with an unrealistic seller. Most people list FSBO, because of the financial ramifications. They don't see the value in a Realtor. This can lead to a challenging relationship from the start. Listing a home is not free. To hire the right photographer, stager, and contractors cost money. There are brokerage fees, open house fees, heck, even the sign in the front yard is money out of the pocket of the listing agent. To spend that kind of money on a listing where the owner doesn't trust you is bad business. It is much better for both parties if they list on their own.
Second, if the owner has done a halfway decent job of advertising their home, I will be able to find it and examine if it is a good fit for my buyers. Many buyers agent's will scour only the MLS for potential showings. Many will outright blackball any FSBO's and refuse to bring clients by. Again, this is great for me, because it means that I am going the extra mile to assist my clients where others might stop short. Is it more difficult to setup a showing with a FSBO, of course! With a listing, 95% of the time, I simply call a 3rd party service (or order online) to setup the showing with the owner, and they manage the confirmations and what not. With an owner, I am trying to reach someone who has a full-time job and is now a part-time "agent." It can be very difficult.
There are certainly challenges and advantages to negotiating directly with a homeowner. First, I am speaking with someone who may or may not have knowledge of the process. This can provide the buyer with a bit of an upper hand. There are certainly opportunities in every transaction to "beat" the other side. It might be creative wording, a well placed addendum, etc... I can think specifically of a family friend who sold their home on their own, and because they failed to properly understand the contract, did not realize that they were responsible for replacing their entire roof prior to closing. It ran them $40,000 and they were looking at around $20,000 in Realtor commissions.
There are certainly some disadvantages as well. Real Estate, though incredibly enjoyable, is not a hobby I do for fun. It is my job, and I need to see compensation. When working with a homeowner, I need to secure funding for my work. That means the individual who most likely opted not to use a Realtor because of the cost, and I, need to talk about what I am worth. Now if I listed a home and represented both the buyer and seller, I would reduce my commission to around 4%. I reduce it for two reasons. 1. It saves my sellers money, and increases their bottom line. 2. I will not be doing twice the work (6%), because my hands are tied in a limited agency setting. Should I ask for 4% from the sellers? Absolutely. Are they going to pay it? Not a chance. They already believe: a. I am overpaid. b. The negotiations are the easy part. c. They did all the work. Assuming that we can agree on a number, the negotiations can be painful. Balancing ethical duties to customers (the sellers), and my fiduciary duty to my client can be a bit trying. Also, if they fail to understand certain portions of the process, it becomes my duty to educate them. This helps my client, as it moves us closer to the closing, but it also increases my workload. I welcome the challenge, and I believe that my clients should be able to purchase the home of their dreams no matter who is selling it.
As there are pluses and minuses for the buyers agent, there are certainly pluses and minuses for the homeowner. First, you become a part-time agent. That means fielding the phone calls, the drop ins, the advertising, the tire kickers, the low-ballers, etc... It can be taxing, and you should certainly be prepared for some work. There are also going to be individuals that you will need to hire throughout the way. It might make sense to hire a Realtor or an appraiser to give you an accurate picture of what your home is worth. You will need to consult a real-estate attorney to look over any documents you may sign. Advertising can vary in cost. Getting your listing on Zillow is free, but the MLS can cost upwards of $1,000. All of this adds up. As mentioned above, if you opt not to consult anyone you can end up in an unfavorable contract, which can cost 2,3, and 4 times what you would have spent otherwise. There is also opportunity cost. If you are in an area that has sharp market swings with the seasons, listing your home by yourself during the peak can hinder your ability to sell down the road with a professional, if they are forced to sell during a "down" period. There are a multitude of factors to consider prior to putting your home on the market.
It's not all bad. I have always said that a good home, in a good area, for a good price, will sell. Whether that is by owner or agent, it will almost always sell. I have seen homes in my neighborhood that were listed by owner sell in 2 weeks, as well as 52 weeks. Good agents will continue to hunt down any home that is for sale and will work diligently to make sure there client is happy. That certainly holds true for FSBO's. Would I recommend selling your home on your own? In most cases, no. There are a myriad of potential pitfalls that most homeowners do not know exist, that can destroy you financially. Why risk it? However, there are absolutely instances where a FSBO can be successful.
If you are unsure of which scenario you might fall in, please feel free to reach out to me. I would be more than willing to speak with you about the value of your home, how I would get it sold, and if it might be best for you to go it alone.