Before you FSBO, consider the TOP 10
Challenges For Sale By Owners face:
1. Pricing the
home to sell
The most important step to success is establishing
the right price. The price is
determined, not by what you think it is worth, but by what the market
determines it is worth. Like anything,
the value of your home is driven by current economic conditions but emotions
often try to justify a higher value. If
you price too high interest will be limited, price reductions will be needed
and it will take longer to make the sale.
Also remember that cost does not equal value. If you’ve made improvements, such as a new
roof, the cost of the roof cannot be tacked onto the price. The roof does add to the salability and peace
of mind for a buyer, but all buyers expect a roof that doesn’t leak.
2.
Finding/Qualifying the Buyer
When you list your home for sale by
owner a majority of active buyers won’t know about it. According the The
National Association of Realtors, 9 out of 10 buyers buy with the help of a
real estate agent. A FSBO listing
generally does not hit an agent’s radar, and even if it does, the Multiple
Listing Service (MLS) provides a significant list of more accessible homes to market
to buyers. When you get buyers to call you and preview your home, you will need
to have a means to qualify them. Buyers today must have job security, at least
3.5% down and a good credit score with credit history, a challenge within
itself for some buyers.
3.
Attracting the Wrong Buyers
Just as you are seeking to save the
brokerage, many buyers are interested in FSBOs for the same reason. They too
are looking for a deal. Some buyers simply do not have the means to buy a home,
yet they will contact you out of ignorance (they don’t know they aren’t
qualified) or curiosity. You will only want to spend your time showing your
home to ready, willing and able buyers or agents representing them, in which
case you will need to be willing to pay a buyer’s agent brokerage. At times
real estate investors will shop By Owners ads because they think you may not know
the value of your home. Some savvy buyers may attempt to take advantage of an
unrepresented seller.
4.
Follow-Up Failure
When you’re selling your home by
owner, you have to think follow-up. First, you should know that you’re going to
get a ton of phone calls once you add a yard sign or other type of Internet
marketing. The calls are going to come from agents that want to represent you.
At the same time, you will get calls from investors, bargain seekers, hopeful
buyers, and a few serious buyers. What many By Owners do is let their calls go
to voice mail, which is a BIG mistake. The act of screening your calls may cost
you the serious buyer. Buyers purchase at the height of their excitement, and
time is never on your side. If a caller is unable to obtain the information
they need they may see another appealing property within a few hours and lose
interest in your home by the time you call back. Also, if you make changes to
your listing, you’re far less likely to call the buyers, agents, or investors
back who first inquired about your home to tell them about your lower price or
updates.
5.
The Trust Factor
Some buyers may not know how to
approach you, and fear the process of dealing directly with you, especially
when it comes time to negotiate the price. Many buyers want agent
representation to help in taking care of the details. Begin establishing trust
with your potential buyers by providing a complete property disclosure and
material facts form. You may want to
have your home inspected by a professional Home Inspector so that you can show
your buyers that issues have been addressed.
However, don’t be offended if a buyer still takes what you say about the
home/price with a grain of salt. Try to
work together so that everyone is doing some give and take in a mutually
beneficial fashion.
6.
Being Objective
A Broker can show your home more
objectively than a seller who may be emotionally attached to the home, and who
may become unnerved by prospective buyers' critical comments. Buyers will likely prefer to look through the
home without feeling like they are being followed so secure valuables so that
you can feel comfortable giving them some space. Be available to answer questions and don’t
take offense to any questions. Remember that everyone is different and while
you may perceive your half acre lot as a peaceful and private retreat a buyer
may see it as hours of upkeep.
7.
Legalese
When you and your buyer arrive at a
meeting of the minds you will need to have a written agreement. Have your forms
available and be familiar with them so that you are ready when the buyer is
hot. Time is never on your side and a
delay could cause your buyer to have second thoughts. Use a standard “fill in
the blank” real estate contract and avoid drafting anything separate without
the assistance of an attorney. Get referrals and talk to a few real estate
attorneys, as their fees can vary considerably. Non-standard terms of the
contract may result in higher legal fees so make sure you understand all the
costs that may apply.
8.
Time is Money
More than likely you have a full
time position doing something else other than trying to sell your home. Buyers
have many needs and in some case, might need to see the home multiple times.
They’ll have it inspected and an appraisal done on the property if they intend
to finance the purchase. Sometimes a pest inspection is required by the lender
or they may want to come back to measure for new flooring etc. If your schedule
lacks flexibility you’ll have a hard time coordinating these appointments, not
to mention all the showing appointments leading up to the sale.
9.
Insufficient Marketing Exposure
Real Estate Agents like me have a
marketing budget. It takes money to make the phone ring with interested buyers.
Agents use a variety of methods to market properties including traditional ones
like signs, classified ads and MLS, but many firms also use cutting edge
methods such as phone apps that reach today's tech savvy buyers. Set a
marketing budget and employ as many different methods as you can, keeping in
mind that many home searches begin on the internet. A marketing budget will insure that you don’t
spend more on marketing than you wish to lose should you not be able to secure
a buyer or decide later to hire a Realtor.
10.
Understanding the value of a Realtor
Realtors are the glue that seals a
difficult deal. When you sell by owner, you will face challenges getting to the
closing table even if you secure a buyer. You are emotionally attached to your
home making it more difficult to understand a buyers many requests. This is
when an impartial agent can help navigate the bumpy road. If and when you are
ready to list, talk with a professional who will educate you on current market
conditions and customize a marketing plan to help you reach your goal. Choose someone you like and feel you can
trust. Foremost, remember that home
values in today’s market can surprise and sometime disappoint, but your Realtor
should show you hard facts that will point you in the right direction. For a free consultation call:
Mary Plybon, Realtor, Century 21 Triad, 336-712-5351,
msplybon@gmail.com
