With the growth of the Internet, there has been a corresponding increase in the number of homes for sale by owners. As time goes on, FSBO is proving to be an attractive method for selling homes.
One of the major expenses involved in selling a property is the payment of a real estate agent’s commission, which is quite often in the 6% range. Nevertheless agents do earn their money, by providing expertise on the market and sales process, by advertising widely and by assisting in the negotiation and closing phases of a sale.
Even so, 6% of $250,000 is $15,000 and many find the prospect of keeping that money for themselves irresistible. Here are some things to consider when deciding whether to use a real estate agent or going the homes for sale by owner route.
In order to sell a property quickly and profitably, you have to know the market. If your listed price is even 1% off the average you will either sit on the property for a long time or fail to make as much as you could have on the sale.
Beyond the need to get an accurate, professional appraisal, which is a requirement whether taking the FSBO road or using an estate agent, agents can provide ‘comps’ listing the recent sale price of comparable properties. They also know the market and can often tell you whether your price is realistic.
However, with the growing availability of similar information on the Internet, for sale by owner is becoming a more practical alternative. If you can access and analyze the data, FSBO may well be for you.
Agents put your property in a database called an MLS, a Multiple Listing Service, to which other agents as well as potential buyers, via the agent, have access. Multiple Listing Service data is more difficult for the average person to gain access to and, in some states, you need a license to obtain such information. Just about in every case, a person is required to be a member of the MLS service and pay a fee.
This is only the first step toward advertising your property everywhere to potential buyers. But, again, with the growth of Internet sites advertising homes for sale by owners, along with other traditional options, you may find you no longer need the service once provided almost exclusively by real estate agents.
Some folks are natural negotiators and some have learned through long experience how to attract buyers and get the best deal. Some, though, will always be on the losing end of a proposition. Only you can decide how effective you can be in negotiating a fair, acceptable price and whether that process is enjoyable or torture.
Once you have listed the property, advertised it widely enough to attract buyers and negotiated a price one will accept, the most difficult part of the process begins. Every state and country has a long and complex list of laws about how a real estate transaction has to be carried out.
Deposits have to be made of the right amounts and at the right times in an escrow account, and insurance regulations have to be met. Title history is investigated and a hundred other details completed before ownership can be transferred and profits gained. If you do not have the knowledge or temperament for this sort of thing, the homes for sale by owners route is probably not for you. However, looking on the bright side, there are dozens of books, Internet sites, and inexpensive ‘seller assistance’ businesses that can guide you through the process, often at a much lower cost than agent commissions.