Selling a property can be a stressful and demanding process. So many things have to come together to find the right buyer for your home. Some sellers opt to sell their home on their own without the assistance of a real estate professional and opt the For Sale By Owner route. The most common reason to FSBO is to save a couple percent in potential commission, and a lot of people don't think that selling property is that hard, right? Wrong.
There are so many factors that going into selling and successfully closing a real estate transaction. Perhaps that is why we've seen a consistent decreasing trend in sellers participating in FSBO.
There are several factors to consider when looking at selling a home by owner. The first thing that comes to mind when selling a home is the cost. When selling a home by owner, it may seem as if there is a savings in doing so. In reality a lot of money is spent upfront with no guarantee of a return. Listing agents charge nothing upfront for things including professional photography, videography, marketing material, marketing advertisements, and, in some cases, pre-listing home inspections and staging. These things are considered part of their fee/commission. These costs can add up very quickly and can be thousands of dollars.
Another thing to consider is liability. Real estate professionals are required by law to stay up to date with all state laws. This includes the latest disclosure laws, both financial and property-wise. When selling a home by owner, any mistake large or small that is made in the contract or disclosures can cost a seller greatly. Real estate brokers have Errors and Omissions insurance—a protection to both the seller and broker in the event a mistake is made.
In the age of the internet, the tools real estate professionals have in their arsenal for property exposure are unsurpassed. The first of those tools is the Multiple Listing service. FSBOs can't list their home on this service unless they're a licensed Broker and belong to the local Realtor's association. There are hundreds of partner sites that pull the data from the MLS and provide much more internet exposure than FSBO properties receive.
According to the National Association of Realtors, the average sales price of a FSBO is 10 to 30 percent less than those who use a real estate professional. This is due in part to incorrect pricing and ineffective negotiation skills. Granted, there are a few exceptions, and you may hear of the occasional FSBO sale that did yield a market value sale; but by and large the statistics prove that working with a real estate professional will yield far more than the money a seller will save by trying to sell the property on their own.
Time is another factor. Most do not realize the amount of time that a real estate sale can take, from the marketing, showing of the property, negotiations and coordinating all of the moving parts once escrow is opened. Real estate professionals are skilled at handling these things. They make their living selling property and are experts in the field.
Think of it like this: When sick, it makes sense to go to a medical professional for treatment, as they are experts in the human body, correct? So why would one without the expertise opt to search WebMD and sift through a world of information they aren't experts in and attempt to treat themselves? It doesn't make practical sense to take the risk of making a mistake with the human body. The same goes for the largest purchase/sale most make in their lifetimes: wouldn't one want to work with a professional rather than assume the risk of doing it themselves?