Occasionally, people will try to sell their homes “For Sale by Owner,” or FSBO. They do this to save money in real estate commission and fees. While you may be tempted to save that 3-6% in commissions, it could cost you thousands more by going it alone. According to the National Association of Realtors, “FSBOs accounted for 8% of home sales in 2016. The typical FSBO home sold for $190,000 compared to $249,000 for agent-assisted home sales.”
Below is a list of potential pitfalls of selling your home “For Sale by Owner” in Colorado Springs that can go terribly wrong. If you’re dedicated to the idea of FSBO, then I wish you the best of luck, but I invite you to consider these points before proceeding.
What an agent can do for you…
Time is money for many people, and a real estate agent can save you a lot. Agents can organize and schedule showings and open houses. They know the best contractors, home inspectors, and other contacts that you’ll need to prepare your home for a quick sale. Good real estate agents know the steps you’ll need to take to make sure you get top dollar in profits from your home sale. Also, they are familiar with everything that can go wrong with a sale, and they know how to avoid them.
Legal Problems and Scams
Both buyers and sellers can be victims of FSBO scams. And, worst of all, there is little recourse and hiring an attorney would only cost you more money. The most common scams are wire fraud, identity theft (by obtaining personal information from victim), fraudulent legal papers (loan documents), and foreign buyer deposits.
Time is money
Many people are under the impression that the real estate agent is merely the door opener for open houses and showings and they just sit back and collect commissions. Good real estate agents use advanced techniques and technologies that make it easier to sell a home. That technology works to the seller’s advantage because the less time it takes to sell the home, the better. Agents also have experience and resources that homeowners do not have at their disposal. The question to ask yourself is “How much do you value your time?” Are you in a job where you can leave at the last minute to show your home to prospective buyers? Do you have time to research contracts and the current market values? Can you devote hours of time to marketing?
As the seller, you could be sued if something goes awry - be it a misrepresentation of features in the listing or a title discrepancy. You’ll be the one to pay. Real estate agents have Errors and Omissions (E&O) insurance to cover mistakes such as incorrectly stating that a home has granite countertops when it was really Corian. Remember, a real estate transaction requires legal documents, so you’ll need to be well-versed in contract law in order to spot mistakes or problems, which leads us to the next point.
One of the most difficult tasks you’ll handle in your FSBO adventure is the daunting legal paperwork required to complete your transaction such as property disclosures, occupancy agreements, and the 18-page Colorado residential sales contract. Nowadays, you can download legal documents from the regulatory websites, but if you’re not well-versed in legal documentation and contracts, how will you know how to customize the template to fit your situation? Once you sign the sales contract and documentation, there’s no guarantee that you will be able to amend what you originally agreed to. This is where many FSBO sellers in Colorado Springs fall for bad deals.
Real estate agents know all about home inspections and what is required with specific homes. Sometimes inspectors will notate code changes, and the buyer demands these changes be made to code. The real estate agent knows that it all depends on what year the home was built and the codes that were in place at that time. If the home was built to code at the time of construction, then the seller is not always required to make changes. If you were selling FSBO, you may not know some of these details and that could cost you thousands of dollars in renovation costs.
Selling for Less
The absolute worst thing that can happen besides being sued over your FSBO is to earn thousands less in the final sale of your home. This is the number one reason why you should consider hiring a real estate agent to sell your home. As I mentioned, FSBOs lose around 23 percent of the sales price. The median selling price of FSBOs in 2016 was $190,000 while agent-assisted homes sold for $249,000. That’s a huge difference ($59,000!). Why is it that FSBOs sell for so much less? Inexperience and lack of time to devote to the real estate process are the main reasons for the lower sales numbers. Real estate agents, on the other hand, have hundreds of hours of experience working on home sales and contracts. They know the process, the legal documents, and the problems that can occur in the sale of a home.
FSBOs Languish on the Market
The more time that your home sits on the market, the less likely your home will sell for your asking price. When potential buyers see how long a home has been on the market, it makes them wonder what’s wrong with the house. Marketing with the latest technology and online tools is necessary in today’s real estate market as well as the exposure your listing will receive on MLS Colorado Springs. An agent provides all of these services and is available for showings and open houses. The attention that a real estate agent provides to the sale of your home makes all the difference in how long your home stays on the market. Most of all, the agent understands fair market value and pricing strategy. We know how to hit just the right price to attract buyers.
If you’ve tried selling FSBO, and it’s not working, please give us a call at (719) 576-4242. We can discuss pricing and marketing strategies and get your Colorado Springs home listed for sale today.