Cons Of Selling Your Home On Your Own
Is saving money by not using an agent to sell your home really worth it?
Some people believe they can skip the “costs” of using an Agent and simply sell their home on their own. What these people often forget is all the hidden costs, legal obligations, and inherent risks that come with selling a home. Working with a qualified Agent mitigates the seller’s risk.
If you are thinking of selling your home on your own, read the below common mistakes that many For Sale By Owners (FSBOs) make.
Lots of Paperwork
Understanding and managing all of the paperwork is one of the most difficult tasks for FSBOs. Aside from the basic REPC (Real Estate Purchase Contract, there are a number of other possible required and recommended forms. Some of the more common real estate forms may include:
- Seller Financing Addendum
- FHA/VA Loan Addendum
- Assumption Addendum
- Owner Occupancy Addendum
- Seller’s Disclosures
- Lead-Based Paint Disclosure
- Buyer Financial Information Sheet
- Several Addenda that may be needed or required
Part of the real estate Agent’s responsibilities includes managing all of the paperwork and ensuring agreed-upon deadlines are met.
Mistakes happen, even in the real estate world. Only, when a mistake happens during an FSBO, the seller, who doesn’t have the representation of a licensed Agent, often pays. Conversely, a licensed Agent carries E&O insurance to cover common real estate errors or omissions. The real estate buying and selling process is a very legal-heavy affair. No homeowner wants to deal with lawsuits as part of the selling process.
FSBOs Stay On The Market Longer
FSBOs typically take longer to sell than homes that are listed by an Agent. This additional time on the market is largely due to an FSBO homeowner not having the same access to marketing tools, networks, listing services, or applicable buyers that a Real Estate Agent can provide. It makes sense, then, to realize that FSBOs also usually sell for lower than the original asking price as the seller has to lower the home price to get qualified buyers sooner.
FSBOs Sell For Less
FSBOs lose about 16% off their original asking price, on average. Many sellers who are selling their own homes aren’t able to dedicate the time needed to the selling process. Also, many aren’t trained to fully understand current market reports and trends or don’t have the experience to market and sell their home. You wouldn’t try to fly a plane if you had no proper training or education in the field. Nor would you likely handle all your own retirement plans and investments without a financial advisor or proper training in the financial world. Real estate is no different; Agents are educated, licensed, and provided with ongoing training. You want to use a professional Real Estate Agent to ensure what is likely your biggest financial investment.
FSBOs Are Stuck
Once an FSBO signs the real estate agreement, that seller is bound by the agreement. If there is an error or an issue, the seller may have to pay off the buyer to get out of the deal or eat some additional costs to fix the error. An Agent can protect a seller against these types of risks and concerns. An FSBO often lacks the experience and know-how of a qualified and tenured Agent.
The purpose for most to sell their home on their own is to cut costs and save money. With FSBOs, the seller ends up paying a lot for seemingly minor costs to market the property and complete the sale. These costs can include:
- Marketing materials, like signage, photography, MLS listing
- The credit report for the buyer(s)
- Home inspection
- Pest inspection
- Home warranty
- Attorney costs (if/when needed)
- Buyer’s Agent commission
An experienced Agent is also an experienced negotiator. When it comes to buying or selling real estate, there are several aspects that require key negotiating along the way. Your Agent’s responsibility is to protect your sell (or purchase) and ensure the transaction stays on course. With the real estate process, there may be several times when the buyer has questions or concerns, which can turn into requests or even demands to keep the transaction moving forward. A quality agent will help the seller navigate the process and respond to the requests.
It is also important to note, the real estate process can be a very emotionally charged experience. It can be difficult for the seller to remove the emotion and just focus on the transaction. An Agent helps act as a buffer throughout the process.
Showings Can Be Awkward
Sellers make a home showing somewhat awkward for potential buyers. It is easier for buyers to have full access to the home and do a home tour with their buyer’s Agent. FSBOs also aren’t as familiar with the real estate process and may not know how to work best with a buyer’s Agent.
Time Costs Money
Time and money are often the two things we need more of and can’t get enough of. It takes an FSBO a lot more time and energy to sell a home than it does a qualified Agent. The old question “What is your time worth?” is directly applicable here. How much time will you spend researching the market and monitoring the contract? Are you going to leave work to unlock the house each time there’s a showing or an interested buyer? Are you willing to research a buyer to determine his/her creditworthiness?
Scams Can Be Costly
Scams are prevalent and FSBO transactions are not immune. Both both buyers and sellers have little recourse when caught in a real estate scam, other than hiring a costly attorney to chase after justice. Common scams include:
Falsifying paperwork (such as appraisal documents, loan forms)
False foreign buyers (scammer sends too much in a bad check and then requests a refund)
Purchase through a third party (such as a fake attorney)
Asking for personal information that is not required for the transaction
Stealing loan information through a fraudulent wire transfer
So, What’s Your Alternative To Selling Your Home On Your Own?
The main goal for most FSBO sellers is to save the commission money that a real estate agent will earn. However, attempting to save the commission cost can result in a lot of additional risks and associated costs in the long run and throughout the real estate transaction process. Consider foregoing the commission savings to save yourself the hassles, hidden costs, and time that is involved in a real estate deal.
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