Disadvantages to Homes For Sale By Owner
Selling you house without using a real estate agent is tempting, if successful, you could save thousands of dollars in sales commissions. When you have to reduce the price in a housing slump, saving that money can be even more appealing.
However, the disadvantages of for sale by owner (or FSBO) efforts are potentially just as large as the savings. Cutting out the real estate agent could end up costing you more in profit loss when the expertise and marketing experience of an agent can attractive high bidding buyers.
Will a FSBO save you enough in real estate commissions to make up for the market knowledge, experience, potentially higher selling price, marketing efforts, negotiations and paperwork preparation that a real estate agent offers?
According to the National Association of Realtors, one in eight homes is sold by owner. Nearly half of successful FSBO sellers knew the buyer before the sale. So, the sellers did little in marketing to attract a larger pool of buyers on the open market.
Can a real estate agent secure you a higher selling price? Homes sold by agents bring 16% higher prices on average according to the NAR.
Marketing is the key to landing that highest bidder. As a homeowner selling by yourself, the question to ask is can attract the most buyers? Do you have the marketing skills and the market knowledge? Can you market the house as well as a real estate agent? Attracting more bidders, gets you multiple bids and would ultimately drive up the selling price.
Homes For Sale By Owner Disadvantages
As a FSBO seller, keep you emotions in check. Many FSBO sellers fail because they’re too emotionally invested in the home to be objective. Your emotional attachments to the home can cause mistakes, such as over pricing the property or inaccurate description. You may not show the kind of professional and objectivity that buyers like to see.
Difficult selling process: The process involves spending a lot of time and effort in making arrangements for this sale. You must work on everything like correctly pricing the home, conducting open houses, screening buyers, making the property for inspections to buyers, and advertising. The marketing costs can be more than the sales commission.
Lack experience and market knowledge: You will not have the kind of knowledge about the real estate market, the networking, law and finances, as a real estate agent has and this can be a disadvantage for you.
If you are not careful you could end up spending more than you thought, unless you know what it takes to close a real estate transaction. In the end, it’s a losing proposition for you when it cost more than what you would have saved in sales commission for a real estate agent.
