For
Sale By Owner (FSBO)
 Most
people will consider the purchase and sale
of a home the biggest financial transactions
they will ever make. Because the process
of selling a home can be time consuming
and complex, many people will leave this
up to a realtor to work out. There are many
aspects of selling that a person must think
about, including the legal and financial
ramifications.
Sellers
need to keep in mind that buyers feel the
need to be protected and counseled by an
authority. It will also be the biggest financial
transaction that they ever make. This is
why most buyers will shy away from dealing
directly with a seller. It will be much
more costly and frustrating to deal with
a for sale by owner.
There
is great appeal to have homeowners sell
the home themselves, avoiding the commission
that a realtor will earn. Many people think
that it is very easy to sell a home. They
often compare it to selling anything else,
but the temptation to save a lot of money
drives people to do a for sale by owner
without knowing the actual costs and other
issues that will arise. If you are thinking
about for sale by owner, think about this:
according to national statistics, only 8%
of all homes in the for sale by owner category
are successful. And on average, these sales
net 1% less than it they would have paid
an agent to handle the whole thing.
Those
who wish to go this route will need to stay
close to their home for weeks or months
to be able to be ready on a moment’s
notice to show the home to prospective buyers.
The sellers need to be accessible during
normal work hours and they need to realize
they will be showing the home to those who
do not qualify to but it or those just looking
for a bargain.
The
Pitfalls of For Sale By Owner
1.
Bargain hunters know that you are not paying
a sales commission so they will deduct that
amount from their purchase offer. Since
a homeowner is probably not an expert in
negotiating, the homeowner could be getting
into more trouble than it is worth trying
to sell the home themselves. The property
could get tied up in escrow and could get
slammed with an endless amount of negotiations.
2.
A seller showing the house themselves will
have to let strangers in their home. They
have no way to meet the potential buyers
in advance. And buyers don’t want
anyone looking over their shoulders while
they look at the home—especially not
the owner. They want to be free to talk
and inspect the cabinets, floors, etc. Real
estate agents letting a person in your home
are responsible for those who they let in,
so you are protected that way.
3.
Sellers can never be sure if a buyer is
qualified to purchase the home. Why waste
time and effort showing the house to a person
who cannot afford it? Agents could easily
weed out the non-qualifiers.
4.
Emotions can run high with the seller. If
there is a lot of attachment to the house,
a seller displaying their emotions to buyers
will often turn them off of buying the house.
Emotions can also make negotiations very
difficult.
5.
If the seller is determining the price of
the home, they may miscalculate the value
because they are putting in emotional value
on top of the market value. Buyers will
instantly recognize this and not even bother
to make an offer. And when you have a wrong
price, your home could be sitting on the
market for months without offers. On the
other hand, a seller can get much less then
the home is worth just because they are
inexperienced at selling homes and knowing
how to value the home on the current market.
Real
estate negotiations can be very intimidating
because there are so many complexities.
And since purchase agreements are binding
on sellers but not buyers, this can get
sellers into a lot of trouble. Buyers have
the choice to buy or not, but sellers cannot
back out once an agreement is signed.
©
Copyright 2008
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