Do FSBO'S pop or fizzle?

FSBO = For Sale By Owner. Does it make cents to sell your home yourself? Maybe, maybe not. Certainly the motivation is money. While there is no set percentage rate and there are as many potential plans as there are people, the Agent commission is one of the largest costs of a sale. For the purpose of this blog, let's say the commission is six percent. That is $12,000. on a $200,000. house. We could all do a lot with that much money. So, let's look at some general statements or consistent ideas about FSBO's and the pros and the cons of this route.

I hear sellers say, "I am going to FSBO it and keep the agent commission for myself." I hear buyer's say "I am going to buy a FSBO and knock all the commission off and get the house for $12,000. less than market." Which is correct? Either or a hybrid could be true. I have observed some FSBO's to be incredibly under priced. I have seen many more to be very much overpriced. In the end, it will come down to a negotiation and that will determine who benefits.

If you decide to sell your home by yourself, what are some of the problems. First is access to buyers. In most markets, 85 percent or more of the buyers are associated with an agent. A buyer, in our example, is a $6000.00 business asset to the agent. If you are not willing to cooperate with the agent, why should he release his buyer to you? He has spent hours, if not months; many thousands of dollars becoming educated regarding the practices, principals and quirks of the local real estate market. He has likely spent much time driving that buyer around showing him property. For the FSBO to expect the Agent to say, "Here is my buyer, have a nice life" is the same as for you to walk into the hardware store and say "Gee, this is a nice hammer. I appreciate it. See you later." Then leave without paying. Second. How familiar are you with local real estate law? Two obvious questions that are often missed by sellers acting on their own behalf are the Lead Based Paint addendum for 1978 and older homes and the Property Disclosure Form which is required in many states. Failure to use either could result in legal problems or fines. Third. Selling or buying a home is very emotional for most people. Agents earn their money by being the Emotional Dead Zone where the heat can dissipate without damage to either party--at least in theory. Sometimes, you are just too close to the situation to be rational. An agent may keep it together for you in these circumstances. Fourth, how do you price your home? How do you know how high or low it should be? Are you pricing your home too high so it will not sell? Are you pricing it too low? If so, you may be giving away the commission and assuming the work and stress of the sale yourself. Does that make sense? And finally, costs. The agent generally spends a lot of money advertising your property. You are going to assume that bill. Also, the Multiple Listing Service (MLS) gives you access to Realtor.com and all the local agents. This tool is the single biggest benefit to a seller. Without listing your home with a Realtor, you lose this benefit. Your house becomes much less visible. Visibility sells. That, after-all is your target.

What is the benefit of being a FSBO? You MIGHT keep a few more dollars in your pocket. Obviously in the hot, hot, hot markets where nothing is available, being a FSBO may make sense. Also, if there is just no money to pay those costs, it might make sense. In any case, it is probably worth your time and money to buy and hour or two of an Agent's time to get your home priced, find out what forms are necessary and get a general state of the market. A good agent may charge you $100-200 an hour. It is usually money well spent. Certainly, it makes sense to enlist the aid of the buyer's agents by paying a buyer's agent commission of half or slightly more of the typical commission in your area. Remember, it is not legal to set industry commission rates. Rates are always negotiable. That does not mean an agent has an obligation to accept your offer. What is reasonable to you may not be to the agent. So, in our example. Pay the buyer's agent 3 - 4 percent. He is doing the work of both agents because he has to deal with your emotions as well as his buyers' stress. Believe me, he earns his money.

In the end, 85 percent or more of FSBOs list their property. Personally, I am not offended by FSBOs. I have sold many of their homes, I have helped many more with forms, information and photos. After-all, many ultimately become my listing or I help the seller buy their next home. I built a 2000+ sq foot barn. Took me 7 years to do it. The front is 49.5 feet, the back is 50.2 ft. Sheet rock does not come together just perfectly at the corners. But, it works. I wanted to do it myself, I did it, I am happy with it, but, I will never build another myself. Do you really want to sell your home yourself?

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