At some point in a homeowner’s life, they have thought about selling their home themselves. It’s a rational thought; why not? I can save money, right? Also known as a FSBO (For Sale by Owner), trying to sell your home by yourself means that you can avoid paying commission on the sale, but is that really an actual benefit to selling your own home?
Longer Market Time = Less Profit
Problems arise right from the beginning; homeowners tend to overprice their home, making it sit on the market for longer than necessary. The average real estate commission is about 6% on the sale of the property. Some higher-priced luxury homes may offer a different formula for calculating commission, but on average, 6% is typical. 3% usually goes to the listing agent and 3% to the buyer’s agent. For instance, on a $300,000 home, the 6% would be about $18,000. It sounds like a lot but let’s play this out in real time.
All homeowners want to get the most from the sale of their home, and they tend to price it higher than the market value assuming they are going to drop the price if there is no activity. The pitfall to this is that the home sits on the market for longer than anticipated, getting stale and unattractive to potential buyers. The homeowner then needs to lower the price even further just to attract a buyer. By the time home actually sells, it may be priced far lower than where it could have sold had it been priced correctly from the beginning. The homeowner actually loses money by selling it by themselves rather than paying the commission to get it sold correctly from the beginning.
Time = Money
This is just dollars and cents – we’re not even talking about time, stress and energy. If you honestly feel that time is money, taking the time and energy to sell your own home is not as simple as it may seem. Most people don’t have the time to market, advertise and show their homes. You have to be willing to put in the time, research, and effort and also be committed to the process all the way through. If you’re selling it yourself, you have to schedule showings around your work schedule and perhaps your family plan. You may miss out on a potential buyer due to inflexibility.
Are you protected?
How do you know your priorities, legal right, and terms are being protected? If you are unfamiliar with the details of the purchase and sale agreement, it can be confusing and frustrating to know what’s right and when you’re being taken for a ride. Also, many purchasers will still bring their own buyer’s agent in which you will need to pay a buyer’s agent commission. If you refuse, the consumer may choose not to go with your home since they trust the help and protection of a qualified buyer’s agent to facilitate the transaction.
Selling a home yourself means you also are vulnerable to those that only want to take advantage of you. Unless you have a lot of real estate experience, a con artist could swindle you out of massive deposits, proper terms and in the end, your ultimate profit.
“In 2008, the FBI issued a warning to consumers indicating that some con artists have managed to combine both identity theft and mortgage fraud, selling both vacant homes and homes with people still living in it. Mortgage paying homeowners have had their house sold, having no idea that one day shortly, they would get a knock on the door from a buyer who had unwittingly purchased the home and is wondering why people are living on the property.”[Source]
You are in control
Yes, being in control of your purchase and sale is the advantage of selling it yourself. You know the property better than anyone, but you may not be aware of the real estate market and industry as well. It’s been recorded that only 8% of homes sold each year are directly by homeowners. 92% of homes sell faster, for more money, and close quicker when sold through a real estate agent.
It is ultimately up to you, but understanding the pros and cons to selling a home yourself is crucial in deciding whether this is the right move for you, your family and your property. If you’d like some more information on selling your home in West Bloomfield, Farmington Hills or Bloomfield, give me a call at 248-752-3088.