Why FSBO Will Sell Your House Faster Than Any Agent
The FSBO approach for selling property is fast gaining popularity among home owners. FSBO or For Sale By Owner means you don’t engage the services of a real estate agent to sell your home. So who does? Well as the term implies, you do! Some owners think FSBO does not mean completely disregarding the services of a real estate agent; that perhaps a measure of involvement remains.
But FSBO is exactly that; a sale conducted by the home owner without the representation of a real estate agent. Traditionally; and by conventional wisdom, properties are sold with the assistance of real estate agents. As you know, transacting in real estate is not as simple as exchanging goods for currency.
Pricing is never clear cut. There are contracts to review, documents to submit and the process sometimes involves more than 2 parties. Even when buyer and seller agree to a deal, some city states allow for a “cooling off” period where the buyer has time to forfeit the purchase.
Once the sale has been consummated, it’s not an entirely done deal yet. Documents have to be registered at the Land Titles Office where an official transfer of title from seller to buyer is made. It may take 60 to 90 days to complete a sale of property.
Thus, selling real estate is a process that takes a lot of time, focus and resources. Real estate agents have the experience, expertise and know- how to get this done at your convenience.
So why is FSBO gaining favor among property owners?
The primary reason is that FSBO increases the return on the sale of the property. You no longer have to pay real estate agent’s commission which average 2% to 3%. You also have more control over expenses that an agent handling your property would incur. These expenses are related to marketing and promoting your home. All told these expenses could amount to 6% of your final selling price.
But another important reason why FSBO is growing in popularity is that it can help your home move faster in the real estate market.
How could this be possible when your network can’t possibly be bigger than a real estate agent’s? Building their network or leads list is one of the primary tasks of a real estate agent. They also know where to list your property to get the highest amount of exposure.
Finally, real estate agents have a list of priority buyers. These are the buyers who are given first crack to bid at select properties.
There are 2 reasons why going FSBO will sell your house faster than any agent:
1. More Flexible Pricing
You will notice that during their first meeting, the real estate agent will always ask the home owner for the price he wants for his home:
Real Estate Agent: “How much do you want to price your home?”
Home Owner: “I’m looking at $500,000.”
Real Estate Agent: “That’s too high. Let’s get it down to $480,000 which is the average selling price the last 6 months.”
The real estate agent will always advice you to lower the price because he wants a quick sale. The agent does not lose anything except a few hundred dollars in foregone commissions.
You lose more in terms of foregone sale, commission fees and marketing costs. If you agree with the agent, you will net $450,000. That’s foregone income of $30,000 to $50,000!
Are you willing to leave that much money on the table?
Buyers no matter how affluent will always want the best deals. If you decide to price your property at $500,000 because your research shows that is the average selling price, use the cost savings from commission fees to give the buyer a discount.
If the buyer wants to negotiate; which he most certainly will, give a 2% or $10,000 discount and offer the property at $490,000. Assuming there is another property similar to your home in size and features is being listed at $500,000, which one do you believe will the buyer prioritize?
By becoming more agreeable to a discount, the buyer would be more encouraged to buy your property.
2. Greater Time and Attention
Once you’ve come to terms with a real estate agent, you will be asked to sign an Exclusivity Agreement. This means you won’t allow any other agent to sell your property.
As the property owner, what does this mean to you? You have entrusted the sale of your property exclusively to one agent. Perhaps you were thinking given the vast network a real estate agent has plus his or her experience in marketing, there should be no problem getting your property to move in the market.
There’s just one problem: You’re not the only client of the real estate agent.
A real estate agent can handle multiple clients at any one time. The network you so confidently thought about? The contacts will also get to bid for the other properties in his or her listing.
The agent is subject to the same time constraints as you. There is only enough time in a day for the agent to allocate available resources to close a sale. If your property is located in a slow moving, low demand area, the agent will not prioritize it over locations that have a better probability of getting a deal done.
So while your property is exclusive to the agent, the agent is not exclusive to you.
It’s an onerous arrangement that is the current reality when selling property through a real estate agent.
By opting for the FSBO approach, you can devote more time and resources toward the sale of your property. You can focus on building a leads list that is specific to the interest of your property. Thus FSBO is the only exclusive way of having your home sold to the real estate market.
Ideally, your property should be sold within 4 months from the time you had it posted on the listing sites. The longer your property stays in the market the lower becomes its perceived value. It will weaken your pricing and negotiation position with buyers.
Real estate agents are a wonderful asset to sell property. But the truth is there is nothing they can do that you can’t do on your own. Most of all, you have your best interests at heart and the time to get it done faster.