If you are thinking about buying or selling with For Sale by Owner, please read this.
Several years ago (in a better market), John and Jane (names are changed to protect the innocent) decided to sell their home. Jane had some sales experience and thought it would be easy… few ads in the paper, couple open houses, sign in the yard – no problem. A couple of weeks later, someone called off the sign and she showed the house. She told them how much they liked living there, how much the kids liked the back yard. This couple made a verbal offer. A couple of weeks went by no contract, no contact, nothing. Few newspaper classifieds later and couple weeks – same thing happened again. And it kept happening. Finally after a few months, John and Jane enlisted a Realtor. Two months later, the home sold and closed. Sounds pretty simple – but it’s not.
There is a reason many people entrust professionals with buying and selling a home. Why? If you wouldn’t cut your own hair, stitch up your own wound, or represent yourself in a court case, it is the same reason. You could do it, but you don’t, because professionals have the experience, training, knowledge and resources to do it better. Of course, when using a Realtor, you have MLS access, but there is so much more to it. Selling a home can seem easy, but if you Sell by Owner, here are the pitfalls you can run into…
1. Price. How do you know what the market will bear? How do you know how to price it? This is the most important thing and can derail your efforts completely from the start because you know what you want, not what the market will pay. Agents know what the market is and how to price your property to sell. Location is no longer the most important thing – in this market – it is price, price, price.
2. Preparation. You may not see the torn wallpaper or unfinished trim anymore. You may like your bright walls and be comfortable with your rooms full of furniture. It is certain, buyers will see every flaw and they likely will not like what you like. Plus, they won’t think your rooms are big when you have it stuffed. But who is going to show you how to stage your home and prepare it for the market?
3. Marketing. Agents know how to market homes. It is not as simple as ads in the paper. Because they do this all the time, they have access to advertising discounts and tricks that you don’t have. You may just put ads in the classifieds or maybe go with an internet listing site. But since you are only doing your home, you can waste a lot of money on doing the wrong marketing with no reward. Plus, you have to pay for it. If you list with a Realtor, they pay for the marketing.
4. Showing your own home. When you visit a friend or a coworker at their home, do you look at their home and tell them the truth – no you say it is nice. Buyers are not going to tell you the truth either. They will just get in their car and never look back. If your home is not selling for a reason, you will never know it. And about the showing…Do you know how to read buyer reactions? Do you know how to accentuate the positive in the rooms and overcome objections they have? Do you know how to get them to see beyond the walls into how they can make the home theirs? Most for sale by owner sellers just show them around and tell them what each room is – if they are lucky. Most of the time, the owner tells tales to the buyers in each room about how they decorated or where they found this piece or how their kid fell off that coffee table. Interesting to you, the owner, but the buyer doesn’t care. Many buyers feel uncomfortable being toured through the home by the owner.
5. Follow up. Most sellers do not have the time or skills for phone or even email followup. People don’t just decide to buy. You need to sell them. Your life is probably busy enough. Adding this chore is difficult and usually not done.
6. Offers. Even if you are a UN negotiator, it is better to have a pro in your corner to ensure you didn’t leave money on the table. Some people have this skill in straw markets when buying a purse or hat on vacation or haggling for a car deal, but rest assured, because those people selling to you are seasoned, you are not getting the best deal, even if you think you are. Plus, emotion is always going to play into this. “How dare they offer that on my house.” “My house is worth much more”. Emotional negotiating never works for either party.
7. Contracts, Disclosures. This is a litigious world and we all need to be careful. Contracts and some disclosures are beneficial and sometimes required to ensure you are protected. How do you know what forms to use? You could use an attorney for the transaction and that will help, but they are not free either.
8. Inspections, Appraisals, Lenders, Title Companies. Is your person qualified? Do you know their lender? Do you know how to manage an appraiser or inspector to have a better shot at the deal going through? Do you know the best title company to use? These professionals are in the arsenal of every Realtor. They have used them and know what to expect and how to successfully use their services to meet the end goal – sale and close.
9. Safety. Did you know that someone who wishes you or your property harm is less likely to call off a Realtor sign to case the joint or worse? They are more likely to call a For Sale By Owner. Realtors will meet someone at their office or public place, get information from them and qualify them before they meet them and show their client’s house. You would be surprised what people will tell a stranger. “We saw the sign, can we see the house now?” “No, I am at work now or we are out of town next weekend, but we can do another time.”
So, add all these real and other costs up and what do you get? Marketing costs, attorney fees, time, effort, maybe damage to property or theft, and still probably get less money than you would with an agent. What is the real cost of avoiding the commission?
And if you are a Buyer, read all the above and ask yourself – do you really want to buy from someone who is not experienced and professional? Who is going to protect you? How do you know you are getting the best deal or a lemon? For Sale by Owners do not have to follow discrimination laws, in most cases, and some disclosure laws.
They say a person who represents themselves in court has a fool for a lawyer. This is a tough market. Leagues of Realtors have changed careers because it is so tough. If there was ever a time to use a professional in Buying and Selling – it is today.