Selling a home by yourself can seem like a great way to save money. Selling by yourself typically takes longer than listing with an agent. You will spend much more time researching the market and interpreting contracts when it comes down to the offer.
If all parties work you will have to leave work to open the house each time there is a showing. What if you are in an important meeting or out of town and a cash buyer is in town looking at home? Can you say lost opportunity?
The amount of money you are loosing here only depends on how much your time is worth unless you lose a sale because you were unable to show the property. But, lets get down to real cost of not selling your home with an agent. Lets start off with the hidden costs.
1. You’re paying for lots of extras, signage, flyers, photography, home inspection, an attorney if you need legal help. not to mention your portion of the buyers closing costs which can be thousands of dollars.( most buyers don’t have resources for down payment and closing costs.)
Most owners have limited resources. A recent profile of home buyers and sellers showed that 42% relied on a yard sign and 32% rely on friends and family to share. Only 15% use social media to share. Sellers are unable to know who the buyer demographic is for their home and how to reach those nor are they aware which print media is effective.
According to a recent profile of home buyers and sellers, understanding paperwork was a difficult task for FSBO’s. There are a variety of legal forms that are needed which include but are not limited to sales contract, lead base paint disclosure, Amendatory clauses, and much more. There is no one size fits all contract.
4.Getting stuck in a bad deal
Without an agent you are either stuck using an attorney to review each offer or risking it yourself. Many times sellers signed on the dotted line and then realize their is an error. Some even have to pay thousands in discount points and extra closing costs they can not get out of legally. Review of this by an attorney or real estate agent can save them from headaches and these mistakes.
5. By owners typically sell for less
Across the nation for sale by owners typically sell for 16% less sales price with a median sales price of 210,000. Whereas an agent assisted home sold for around 249,000. In 2015 if a for sale by owner sold to someone they knew the median sales price dropped from 210,00 to 159,000.
6. You’re willing to pay 3%
Most for sale by owners are willing to pay 3% for an agent to bring them a buyer. The agent represents the buyer and in turn the owner is paying the agent 3% to negotiate against them with no representation themselves and the lack of understanding some real estate terms can end up costing them thousands in excess closing costs and repairs/upgrades.
When a buyer has an inspection done and some things are not to code many buyers will say those are needed to get financing. Although some of these repairs are needed some are likely to code when house was built and will not cause any issues. Many sellers aren’t aware that there is a difference between appraisal and inspection repairs. Not knowing the difference can cost hundreds or thousands of repairs.
8. Transaction management
Now that you signed on the dotted line what’s next? Who will be handling the closing? What items should you be following up on? What time frame does the inspection have to be completed or is there a time frame? Does the buyer have a period that they can back out? How will you handle it if the property doesn’t appraise for contract sales price? What happens if you have spent money on repairs and buyers financing falls through?
The bottom line is if you get sick are you going to take care of it yourself or will you go see a doctor, if you have dental issue will you fix it yourself or go to the dentist. Hiring a professional is a small price to pay with one of the biggest investments of your life.
Chris Lee and Rusty’s Team at RealtySouth 205-233-5183