Ten Reasons For Sale By Owners Almost Always Fail
Roughly 90% of For Sale By Owners (FSBO) fail to sell their home. And the 10% that do sell average $60,000 less than those who sold their home with a professional. There are several reasons for this, all of which can be avoided by hiring a real estate professional to assist with the selling of your home.
Here is a list of ten items that FSBOs do not know that hinder or prevent them from being able to sell their home.
1) Do Not Know How to Properly Price Their Home
This is probably the single most common reason as to why FSBOs fail to sell their home. Pricing a home involves many factors which a FSBO typically are not even aware of.
Most FSBOs will initially price their home too high, which greatly increases the likelihood that the home will not sell. Overpricing will result in the home sitting on the market for an extended period of time. This sets off red flags to many buyers who will assume that there is something wrong with the property because it has been sitting on the market for so long.
2) Do Not Know How to Prepare Their Home Before Listing It for Sale
Properly preparing your home for sale has a huge impact on the success of being able to get your home sold. It is extremely important to be sure that a home is ready to sell before placing it on the market.
The appearance of your home will greatly influence its appeal to any potential buyers. Home owners are typically not objective enough to know how to stage their home to appeal top the largest audience. Knowing what improvements and repairs to invest in and which may cost more that they will return on the sale is very important to know before beginning to show your home to potential buyers.
3) Do Not Know How to Properly Market Their Home
Another big reason why FSBOs fail is because they do not know how to get their home in front of the vast majority of potential buyers. Most FSBOs will place a sign in their yard and list their property on one or two websites that allow FSBO listings. Then they wait, and wait for buyers to come to them.
Most FSBOs do not know where the potential buyers are or how to best reach them. They simply do not have access to the avenues and networks that are available to a real estate professional.
4) Do Not Know How to Screen Potential Buyers
Most FSBOs do not know what they should be asking or how to screen potential buyers. Many do not even know that they should be screening.
If you are not properly screening, you can waste countless hours answering inquires from and showing your house to individuals who are not even able to purchase their home. FSBOs rarely know how to verify that individuals are pre-approved or pre-qualified and what the difference even is.
You may also be wasting time with individuals who have no interest in purchasing your home at all. Perhaps they are merely browsing around because they are curious how you live or they may have more sinister reasons for wanting to see your home, like casing it for security systems and where you keep your valuables.
5) Do Not Know How to Handle Inquires About Their Home
A large part of a real estate professional's day is spent fielding inquires about the properties they are selling. FSBOs rarely have the time, availability or sometimes even knowledge to answer these inquiries and requests quickly and efficiently. Home buyers and their agents are looking for quick, informed responses though, and while they are waiting for the FSBO to get back in touch with them, they may move on to another property.
FSBOs may not be able to answer inquiries for information or requests for showings as they are coming in. This may be because they have full-time jobs or other obligations other that trying to sell the home or they may simply not be that great at answering their phone or emails.
6) Do Not Know How to Handle Showings
Showings are extremely important to the sale of a home. FSBOs rarely have the availability or flexibility to schedule and manage showings of their home. Buyers are typically scheduling multiple homes to view in a trip and having to rearrange the entire day for your availability may result in them passing on viewing your home. Not being able to show the house when it is convenient for the buyer and their agent will result in lost sales.
FSBOs also fail to allow potential buyers space to view the home. Buyers do not like to feel pressured while looking at the home. Buyers need space to be able to talk with each other and their agent without worrying about the owner’s feelings or them overhearing their thoughts on a potential deal.
Listing agents typically collect feedback after the showing to assist with future showings or with reaching a deal with the potential buyer. Many buyers would be hesitant to share this information directly with an owner in the case of a FSBO.
7) Do Not Know How to Negotiate Offers or Contracts
Real estate contracts can be confusing. A FSBO who is not knowledgeable of real estate contracts and requirements may not know what they are agreeing to and will not be knowledgeable enough to negotiate certain parts of the contract.
There is a lot more to real estate negotiations than just the price. Real estate contracts are full of timelines, contingencies, clauses and the like. A lack of knowledge here could cause you to be agreeing to a whole lot more than you are aware of at the time you sign the contract.
8) Do Not Know All the Required Paperwork or Disclosures
In addition to the contract there are many other forms and documents that are required for the transaction. There are several disclosures that a seller is required to make to the buyer that you may not be aware of. These can even vary based on the neighbor hood or age or type of home being sold. Just because your friend across town didn’t need to provide a specific document does not mean that you won’t.
I you are not using a real estate professional and do not know every law and document related to a real estate transaction for your area, you are opening yourself up to a lawsuit.
9) Do Not Know How to Handle Inspection Findings
Buyers are going to want to have an inspection when buying a home. And typically FSBOs do not know how to handle this stage of the transaction. FSBOs may have believed that the negotiations were over when the price was reached and the contract signed, but now the buyer is coming to them with a list of issues they would like addressed before moving forward with the transaction.
The inspector is going to find issues with the home. And the buyer is not going to want to continue with the purchase of the home if there are issues that they feel they cannot live with. The FSBO may not know how to address these issues and what they are required to do about them. Failure on the FSBO’s side to deal with these issues to the satisfaction of the buyer can result in the buyer walking away from the transaction. (And, going back to point 7, the contract may allow the seller to walk away at little or no penalty; while the seller may not have such a luxury)
10) Do Not Know How to Make Sure the Deal Actually Closes
Between the time the contract is signed and the date the transaction actually closes, there are many items that must be addressed and completed by both parties. FSBOs fail at this point simply because they do not know what they need to do and do not have anyone to assist them with this process.
Some of the tasks that may need to be completed, possibly by a specific time set in the contract are: obtaining mortgage commitment and documentation; scheduling time for inspections and addressing the issues from them; any required/requested surveys; title work; insurance; having the abstract re-dated; making sure the attorneys have approved the contract and documents; and many other items. Missing something can cause the closing to be delayed or even canceled.
If you are truly serious about getting your home sold, you need to hire a real estate professional. They are trained and knowledgeable in what is required to get your home sold for the best possiable price.