The truth about selling a home for sale by owner

Selling a home for sale by owner is certainly a viable option, and if done right, it can be a great decision. However, in many cases, selling for sale by owner is the worst decision. I have sold houses using both methods and am well aware of the different circumstances that make one option better than the other.

Please know that I have a significant bias when it comes to the real estate industry. I think it is one of the least ethical industries that I know well. I was a real estate agent long enough to see how corrupt the industry can be, and then my conscience forced me to walk away. They literally taught me how to take advantage of people and I can show you the training books that have it all documented.

That being said … my views should be considered with this bias in mind. I also believe that there are good and honest agents who maintain high ethical standards.

The benefits of selling for sale by owner

It is quite clear that the main reason people sell FSBO is to save all or part of the traditional 6% that is paid to real estate agents. Most people who sell FSBO pay the buyer’s agent, but that still leaves several thousand dollars in your pocket.

The challenges and risks of selling FSBO (more than the obvious ones)

Most people recognize that selling FSBO has its challenges, too. In fact, around 86% of people who start selling FSBOs switch to a Realtor because they lose confidence. Some of the causes of that stress include: the seller has to make sure the house is priced right, do all the paperwork, do the marketing materials and go online anywhere he can, deal with the displays without having a box. security tied to MLS, etc. .

Although the challenges mentioned above are annoying to face, it is very possible to face them. There is another list of challenges that buyers and sellers almost always overlook in a Sale by Owner transaction.

Price difference. When homes for sale are priced, or “offset,” based on the market values ​​of similar homes in the area, that price is made up of two components: (1) the price of the home and (2) the price of the real estate agent. commission. For example, if a house is priced at $ 200,000, then the buyer really knows that about $ 12,000 goes to the agents involved and the seller only receives $ 188,000.

If a home is trading at $ 200,000 and there is no broker involved, then it will be a major red flag to a buyer that the home is overpriced and should really sell for around $ 188,000. If a seller tries to justify the same sale price without resorting to an agent, a smart buyer will do the following:

• Real estate agents have a responsibility to ensure that everything has been done correctly and that important details have not been disclosed. Not selling with an agent adds risk and liability to the buyer.
• Not paying at least the buyer’s agent adds stress and work for the buyer. Most people who sell FSBOs pay a buyer’s agent, but an important legal detail often goes unnoticed. When a buyer uses an agent, the contract often says that the agent will charge a 6% commission. The agent must first try to collect from the seller, but the buyer must pay for anything that has not been paid. This means that a buyer could literally be paying up to 6% premium to buy your home, which they probably won’t be willing to do.

Again, in no way am I trying to defend one sales method over another, because it really depends on your circumstances. All I know is that all salespeople need to know these points (and others) when trying to make that decision. These concepts should also