Selling a Home Without a Realtor: Know These 4 Risks
An owner may consider selling a home without a realtor. It's called "for sale by owner" (FSBO) or "fizzbo." However, it's not always blue skies and butterflies when deciding to do this; the homeowner has to be cautious with this decision.
Know these 4 main risks in doing FSBO, before you proceed:
1. It May Take Too Much of Your Time
Selling a home is not as simple as it may look like. Yes, marketing can be simply posting your ads online or even asking your friends to promote it to their network of friends. However, you have to do most of the work by yourself like answering inquiries, setting-up appointments, meeting and touring your would-be buyers.
If you are working or you have your own business, you may need to clear some of your appointments to compromise with your client's free time. In essence, this may be quite tiring for you. You may even be risking opportunities in your own work or business by focusing on this.
If you find yourself complaining about too much work, then you might need to rethink if you are willing to do this all the way. This point is just the beginning.
2. Screening of Serious and Qualified Clients
You will have to do the screening of your potential buyers on your own, basing on their commitment and qualifications. Some prospects may appear too excited and committed to buy your home but then bail out in the last minute because of various reasons. They may also have not passed the loan requirements set by the banks. If you fail to assess them well, you risk losing the clients who are more serious and more qualified buyers.
Tip: You must be firm in accepting clients that are pre-approved by the banks, says a 2009 report by CNBC.
3. Not Knowing the Right Value For Your Home
A professional realtor is knowledgeable of the current asking prices and market values of the houses within your area. He could advise you if you are undervaluing your home or asking too much for it.
In 2014, the National Association of Realtor reported that the median price for a home sold with a broker was $215,000, while a house sold without a broker was $174,900, basing from a 2013 Profile of Home Buyers and Sellers study.
Imagine the difference of more thant $40,000! Most buyers think that they would be saving around 5-6 percent for broker's commission if they do it on their own. But basing from this report, if you do FSBO, you are actually not saving. You should be getting around 23 percent more of your asking price.
On the other hand, if you want to sell your house this spring season, asking too much could also increase the risk of not getting any sale at all, says Lynn Findlay, a Realtor with Coldwell Banker Residential Brokerage in Belmont, as reported in Bankrate.
Buyers have also surveyed 10-15 properties before buying, notes an NAR Study. This would mean, buyers are also knowledgeable of the prevailing market prices in your area.
4. Negotiation and Closing Problems
You have to close the sale on your own and with that, create a binding contract between you and the buyer. What if he asks for the furnishing to be included in the deal? What if he likes it in a rent to own style? What if he asks for a discount? A licensed realtor can help you by negotiating for you and he also makes sure that your contract is legally binding and complies with all local regulations, notes Realtor.
You may negotiate and draft your contract without any advice but must face risks of not being able to put important matters in the agreement or be shocked that the buyers find a loophole in your contract.
So, consider all these things first and decide if you will do the FSBO process.