Why Most For Sale by Owners (FSBO) Fail?
While the wealth of "For Sale by Owner" signs dotting the landscape can
seem like proof positive that this is the only way to sell a home, the
truth is quite different. The truth is that most for sale by owners (FSBOs)
fail. If your situation is to be different, it is important to know what
makes them fail, and to avoid making the same mistakes.
One problem many sellers make when selling their own home is trying to
copy everything the real estate agent would do. The real estate agent
puts a sign in the yard, so the homeowner puts a sign in the yard. The
real estate agent puts an ad in the newspaper, so the FSBO does the same
thing. The real estate agent would hold an open house, so the seller
copies that as well.
While this may seem like a winning strategy, the truth is that it
results in a successful sale only about 10% of the time. With this kind
of failure rate it is obvious that this is not the best way to go about
selling your own home. Besides, it seems that in their
desire to save the 5 percent to 7 percent fee that real estate brokers
charge for their services, For-Sale-By-Owner homes earn 16 percent less
than comparable homes that are listed with an experienced agent,
according to a survey by the National Association of Realtors.
Listing agents have better networks
Most FSBO do not realize that very few home buyers buy the house they
see on a newspaper ad. More often than not, most of the home buyers buy
another house that his/her agent knows about. The fact is that agents do
far more than FSBO actually see. Unlike FSBO who is trying to sell
directly to a home buyer, the listing agent is not trying to sell your
home, at least not directly.
Most of them will network and attempt to convince many other agents who
have interested customers looking to buy. Listing agents held 'open'
house, not to the general public, but to other agents. Moreover, the
agent will print up flyers, not directly to buyers, but to every single
agent in the local Multiple Listing Association who have interested
buyers looking to buy a house. The ability to network many other agents
is the secret to the successful of agent transaction. Unfortunately, FSBO sellers lack this kind of competitive advantage.
FSBO seller lack of real estate knowledge
FSBO seller needs to be ready to answer various questions the potential
buyers may have. "How does your home compare with others in the same
area?", "How did you come out the market value of your house?", "Do you
do seller financing? Can you help?", "Who will come up the paperwork if
I make an offer?"... etc.
It is important that anyone selling a home on their own be able to
honestly answer questions on the state of the local housing market, how
their home compares to other similar properties and what techniques were
used to determine the asking price of the home.
It is also important for the FSBO seller to determine how to handle
things like financing of the home. Some sellers will be comfortable
doing seller financing, while others will not. If you do not want to
finance the purchase of the home, you will need to know how to determine
whether or not the buyer can afford to buy your home.
In addition, many buyers of FSBO properties attempt to negotiate a lower
selling price on the fact that the seller is not paying an agent
fee. Therefore, FSBO seller has to be ready for this technique and to
know how to counter it. Many FSBO sellers are uncomfortable negotiating
directly on the sale of their homes and fail to answer these common
questions, are some reasons why almost 90% of FSBO transactions fail to
result in a sale.
The sale of a home is an important financial transaction, and it is
vital that it be treated with the respect and seriousness which it
deserves. It is important for the seller to protect themselves and not
to take unnecessary risks.
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