Going the For Sale By Owner route might sound like a good idea to help save on the costs associated with selling a home, but it can actually end up costing more in the long run. There are a lot of extremely important decisions that need to be made throughout the process that have a direct impact on all expenses related to the transaction.
Real estate agents are professionally trained experts in their field, and are skilled at making the right decisions and negotiating to make sure the most money winds up in their clients’ pockets.
Here are some reasons why going the FSBO route could wind up costing you more over the long haul.
Real Estate Contracts Can Be Daunting
There’s a lot more paperwork involved in a real estate deal than just the purchase agreement (which itself is quite complex). There are disclosure forms, home inspection records, occupancy agreements, and other documents that you’ll be responsible for tackling on your own. If you’re not a real estate professional, going through all the documentation can leave you completely confused.
After all, there is plenty of information that the average person isn’t familiar with. If you’re not entirely knowledgeable about specific components, you could get stuck with a poor deal. If you fail to complete this paperwork accurately, the odds of a doomed deal are pretty high.
You Can’t Market on the MLS
While there are plenty of websites out there that you can use to market your property for sale, they pale in comparison to the Multiple Listing Service (MLS). Most buyers take to the internet to conduct their home search, and they typically end up on the MLS to check out current listings. As such, you’ll be shrinking the pool of buyers that will come across your listing.
In addition, professionals in the world of real estate have specific tactics that they use to market properties on the internet. Without tapping into their resources, you’ll be limiting your market reach.
You Risk Listing at an Inaccurate Price
Coming up with an accurate listing price that reflects the current market is crucial. You don’t want to price too high or you’ll scare off buyers. Likewise, you don’t want to price too low or you’ll miss out on the profit that you should be reaping.
Real estate agents are able to gather information on similar homes in the area that have recently sold in order to gain some valuable insight into what price point you should consider listing at. In addition, they have insider knowledge of the local market and how it influences the prices that properties should be listed for. Without a clear idea of the price you should list your home at, you could lose out on a solid offer.
Your Home Could Linger on the Market For Longer
Without professional representation from a licensed real estate agent, your home runs the risk of sticking around on the market longer than it needs to. The longer it lingers, the higher the odds of having to end up reducing the price just to attract an offer.
If that happens, you’ll be stuck with a lower sales price. If you market your property with an agent in the first place, you significantly increase the chances of selling a lot faster and for a higher price.
Any money that you may have been saving by doing the job yourself will be eaten by a lower selling price, not to mention all the carrying costs associated with hanging onto the home, such as property taxes, mortgage insurance, and utilities. According to the National Association of Realtors (NAR), homes sold by owners sold for an average of $210,000, compared to agent-sold homes that sold for an average price of $249,000 in 2014 (the latest data available).
Miscellaneous Expenses Can Chip Away at Any Savings
There are a number of costs associated with marketing and selling a home, including For Sale signs, fliers, door hangers, brochures, paperwork. These all cost money and can add up quickly, which will end up eating away at whatever money you believe you’re saving. Not only that, there’s a good chance that you’ll still have to pay the buyer agent’s portion of the commission in order to draw more buyers.
You Could Be Vulnerable to Litigation
Real estate agents have errors and omissions insurance that protects them from being personally sued should a mistake be made. There are plenty of ways that you can leave yourself vulnerable to being taken to court, such as failing to disclose an issue with the property, or inaccurately listing details of the property. A real estate professional is skilled enough to catch the majority of errors or omissions; the ones that do slip through the cracks are covered through insurance. On the other hand, a lack of such insurance can put you and your personal assets at risk.
You Could Leave Money on the Negotiating Table
Real estate agents are pros when it comes to wheeling and dealing. If you go up against a professional agent at the negotiating table, you might wind up selling at a lower price or agree to terms that might end up costing you more money.
The Bottom Line
If saving money on a real estate deal is on your agenda, the FSBO route is not exactly the best way to go about it. For many reasons, selling your home on your own without the help of an experienced real estate agent could actually do the opposite. These professionals will know exactly what to do to ensure that you come out on the other end of the transaction with the most money in your pocket.