You might have heard of the term “FSBO” before. It simply means selling your property without a realtor – For Sale By the Owner. For some people, using a realtor seems to be a challenging option. And it’s understandable. But there are some pros and cons of going FSBO and before you take a side, weigh the two sides carefully. After all, you are about to make a significant financial decision in your life, and should be a well-informed decision with careful planning.
Let’s look at the principal duties of a real estate agent before you forgo representation. It might give you an overview of what you will be giving up and what going FSBO will look like because all the duties under a realtor’s responsibility are now under you.
Principle Duties of a Real Estate Agent
Setting a Realistic Price: Having a long-term experience with real estate, realtors know the local market better than anyone. And so they can help a seller set up a realistic price. Additionally, they know the stats of recent comps and real estate sales patterns in your area.
Preparing the House for Sale: A realtor can quickly identify your property’s negative aspects or issues and fix them accordingly before listing. They also know which discounts will best suit the listing price considering your property’s problems.
Staging: Staging a property is not easy and requires a lot of work. A realtor has to go through systematic cleaning, decluttering, maintenance, and renovation of your place before it goes up on the market.
Successful Marketing: Through strategic and clever marketing, real estate agents can attract a considerable crowd even before the property hits the market. They have an optimized social media presence and can attract better offers online.
Helping with Negotiations: A competent real estate agent has great negotiation skills. Whenever any prospect comes with an offer, a realtor’s expertise in local market sales experience comes in handy. Hence, you will get a quality offer In no time.
Usually, hiring a realtor seems to be an easy way out, but some well-organized owners and sellers can also fulfill these duties on their own. The pros and cons of going FSBO are listed below for further assistance.
Pros of Going FSBO
When selling a property, the overall expenses, and the total cost of the property matter the most. Here are some common advantages of going FSBO that most homeowners often mention.
A Cost-efficient Option
The biggest reason why homeowners decide to go FSBO is that it is a cost-efficient option. How? Well, it saves you the payment of the listing agent’s commission. When working with a real estate agent, you must pay 5-6% of the property’s selling price on commissions. About 3% of this commission will go to your listing agent, and the other 2-3% will be the buyer’s agent’s commission.
But when you decide to sell without a realtor, you will not be paying this 3% to the listing agent. Then you will only be responsible for the buyer’s agent’s commission. This can significantly reduce the costs you owe when closing the deal.
Gives you Complete Control
Another main pro of going FSBO for the property owner is that they are the ones in complete control of the whole process. If you are not a first-time home seller, then you must already be aware of how to market your home and set a fair price. Some agents usually rush their clients into accepting offers that they are not quite comfortable with or can be negotiated further. However, by being in authority, you will decide what kind of offer will best suit your needs.
Having complete control of your property’s sale sounds cool but there is a lot of effort in the background. You must familiarize yourself with setting a fair listing price and conduct effective marketing to attract good offers.
No Fuss in Dealing with Realtors
An agent-seller conflict, if triggered, is terrible news for a seller. Now that you are not working with any real estate agent, there will be no clashing in negotiation styles and aesthetic preferences. Often agents are critical of properties in the working-class area and end up making real derogatory comments about your property. This, in turn, affects the selling price from the agent’s perspective and can eventually cause you a financial loss.
Utilize your Knowledge of the Property
Let’s face it; no agent can know a home better than its owner. And hence you can best use this knowledge to your advantage by highlighting your house’s positive or selling points. Additionally, you can tend to the maintenance of the house in a better way since you know which renovations and repairs need to be taken care of.
Homeowners can also educate potential clients better. For example, during open house invites, people ask different questions, and the owner’s personal touch to the answers will indeed create a positive impact. Ultimately, going FSBO can sell your property at a price above the market value if done right.
Cons of Going FSBO
While selling a property without a realtor has its perks, there are pros and cons of going FSBO. If you are a first-time seller, the disadvantages will outweigh the advantages. You won’t know about your neighborhood’s local real estate market and comps. So, you need to educate yourself a great deal before stepping into the idea of going FSBO. Before making a final decision, compare both the pros and cons of going FSBO.
Lack of Experience
Becoming a professional broker or realtor requires years of study and experience in different markets. So comparatively, an FSBO seller does not have nearly as much experience. Their range of knowledge, skills, and methods would also be limited. Your lack of understanding can cause you a significant financial loss or might increase your financial or legal liability at some point in your selling process.
In competitive markets, a professional realtor can successfully set up a fair market value for your house and make room for negotiations. They can quickly judge the ups and downs of the real estate market and will advise you accordingly. Realtors will also provide guidance on legal standards, marketing strategy, and negotiations with inspectors, appraisers, lenders, etc. So, unless you have some expertise in the field of real estate or have sources that can help you through this, it’s better to hire a broker.
No Legal Knowledge of Real Estate
Real estate comprises legal documents and follows a set of laws at both the Federal and State levels. Professional realtors work directly with an attorney, so it’s easier for them to get any relevant information and abide by these laws.
When going FSBO, you should know about different real estate legal bindings, addendums, and disclosures, even if you hire an attorney. An attorney cannot advise you on financing, length of contingency periods, closing costs, etc. Their only job is to draw up a legally binding contract. So, before making any mistake that can result in a fine or a penalty, educate yourself about all the legal details of real estate first.
Lack of Knowledge about the Local Market
You may have lived in your area for a long time, but that does not mean you are also aware of the local market. Realtors are involved in numerous sales every year and can easily sniff out the changing trends of the market beforehand through years of experience and quantitative market analysis. They make actionable strategies accordingly that will benefit the seller. Because of your lack of expertise and knowledge of the local market, you cannot take advantage of such opportunities.
Poor Negotiation Skills
Getting the best offer for your house depends on your ability to negotiate. FSBO sellers do not have good negotiation skills and might say yes to any first offer to avoid heated arguments. Furthermore, you must factor in the monetary offer and contingencies each buyer offers.
Difficulty in Marketing
Selling a property depends on successful real estate marketing to get a pool of potential buyers. Most real estate buyers look for a house online, and not having an online presence is a huge con. You won’t find a buyer by posting your listing on your Instagram or Facebook. To build the trust of your audience, you will have to post consistently and create a significant online presence.
Sellers need targeted and robust marketing strategies to maintain a competitive price and maximize their exposure. Specific marketing channels will be inaccessible to you without a broker and are only built for real estate agents. So, you are not reaching a huge percentage of potential buyers.
Excessively Time Consuming
Selling a house is more of a full-time job and requires a lot of time and effort. The practical work begins after you educate yourself properly about real estate, the local market trends, legal terms, acronyms, and other confusing jargon. Consider this commitment both the pros and cons of FSBO; being the FSBO seller, you will be responsible for everything. You are to handle everything from house repairs and renovations, setting a listing price, and marketing to arranging open house invites and following up on every lead.
Without working with a realtor, the whole process of house selling can be overwhelming, especially if you already have a full-time job. When the offers begin, you will have to review each and negotiate to get a fair offering. Setting up a price itself will take a lot of time. Otherwise, both overpricing and underpricing your property are a disadvantage. Due to overpricing, your house will risk staying on the market for too long. In short, if you are not ready for such commitments mentally and physically, hire a good realtor.
Final Words – Is FSBO worth it?
Both pros and cons of going FSBO have been mentioned above in detail, and in the end, it is your choice to decide how you want to sell your house. Hiring a realtor saves you time and trouble, whereas selling by yourself gives you complete authority and much responsibility.
However, the best option is to hire a good realtor with extensive marketing and real estate experience. A seasoned realtor can skillfully handle any issues of a house inspection, mortgage, appraisal, etc.