With the deterioration of equity in homes over the past 3-4 years, many people look to go at it on their own to offset their losses by saving commission. Those that know me understand that I fully support giving everything a go – as long as you go hard. Many FSBO’s are misinformed and make many mistakes that ultimately cost them in the long run. Here are some of the misconceptions and mistakes I see frequently in today’s market by the FSBO enthusiast.
First, more often than not, homeowner’s have an inflated view of the value of their property. This is common among all homeowners. Whether they intend to use an agent or not, their home is “their home.” There is a sentimental value that the market just doesn’t appreciate. The best question I have to combat this is – “Would you pay X for your home today?” Many homeowners get the message right there. No, they wouldn’t. They’re aware of the market conditions, the changes that are constant, and the fluctuations you read about in the news today. Basically, what one wants for their home and what they themselves would pay for it are too completely different numbers. Take the lower, and begin to deduct. Where do FSBO’s get their pricing from? Zillow.com? Realtor.com? I can’t begin to tell you the misinformation that is out there – or the general lack of details that come with the information on those sites. Zillow.com often goes off of assessed values. That can give you a higher or lower number, depending on the age of the home, how and when it was assessed, whether or not permits were issued for all improvements, etc. Assessments are so rarely accurate, that I enjoy the “art of the appeal.” I have appealed taxes for 60 people, getting all 60 a reduction. One was over-assessed by $162k – and the home was purchased for less than $400k! Realtor.com will give you information on what’s on the market – but not what’s sold, how long the active listings have been on, what price they started at, or – perhaps most importantly – what has sold, and how long it took to get there.
Overpricing a home is a mistake on so many levels. The pricing of the home is one of the most important acts of getting a home to sell. Even in “today’s market” homes properly priced are selling in a reasonable amount of time. The price of a home should be one that (A) generates traffic and interest and (B) produces offers. If your home is not getting shown, or hasn’t gotten any offers – you’re overpriced.
Next, FSBO’s are slow to respond. I call FSBO’s to try and get them to list with me. Now, I would love to think that my name is so well known that when I leave a message they know who I am… but, I am simply a legend in my own mind. They don’t know who I am – yet, I called 3 this week, and I haven’t received a call back. Why? I don’t know – maybe because they’re selling their home Part-Time… In real estate, you sell part-time, full-time or BIG TIME. Part-timers and full-timers go simply by their hours. The BIG TIMERS go by volume, numbers, and results. Unless you’re willing to answer the phone when it rings, or call back the person within 15 minutes, FSBO is not for you.
On the line of responses – follow-up is typically nonexistent with FSBO’s. Selling your home is a “Sales Job.” You need to prospect, follow-up, and close. Most people think selling is easy, but it’s a wonder that more of them are not in it. It takes a unique personality to be persistent, no matter how many “no’s” one hears. Every “no” is one step closer to the “yes.” Also, the sales personality is comfortable asking the uncomfortable questions. Your home may be the greatest purchase you make – but it’s also the largest sale you’ll make. Do you really want to gamble on the sale of your greatest posession without using a professional?
Another fact in the marketplace is one that is simply staggering. 17% of all agents sell their listing themselves. What that means to a FSBO? Simply put… I – as a full-time/BIG TIME real estate professional, that has dedicated myself to marketing property, knowing the market, and networking with the other 900 realtors in my marketplace – have a 17% chance that I will find your buyer on my own. What are the chances that the FSBO homeowner, that is busy with their full-time job, family, kids, etc. and is not “connected” in the community will find the seller on their own? I am no math whiz – but I am guessing that the odds are stacked against them. Now, in fairness to all – I will say that selling in 2004 was a different world. You could likely walk out your front door and scream “FOR SALE” at the top of your lungs and at least get one appointment out of it. Not anymore.
Yet another fact… print advertising is dead. I don’t advertise in the paper – unless I am advertising myself (meaning JOE). People don’t look in the paper anymore. Don’t believe me? Then I insist you stop reading and crumble up this blog and throw it in the nearest trashcan. Oh wait… got it?
About 32% of buyers are shopping on the internet. So – is your property on Realtor.com? Craig’s List? Trulia? How about 50 different websites? And… oh yeah… is it in the MLS? The MLS is a big deal. There are over 900 agents in Berks County alone. Ask them to look up a FSBO for you to get the price – oops… they can’t – it’s not in there. So, as a FSBO, you’ve lost 900 of the top producing property salespeople in the county.
Finally, the biggest thing is right along the lines of the MLS issue. I recently had a conversation with a FSBO that went this way… he insisted that he wanted to give it a go on his own, because he didn’t really think his agent did much when he bought his home. “I mean, she showed me homes that I wanted to see…. but that’s really all she did. She found some homes and took me through them.” OK… I responded, “Sure, I can understand how you feel (buffer… sales 101), but, can I ask you a question?…. How many For Sale by Owner’s did she take you through?” The phone went silent – but I think I heard a light bulb go on. I always ask a FSBO if they’d pay me a commission if I were to bring a buyer. Typically, most would. So, most are willing to pay an approximate 3% for a buyer to come – but they don’t want to pay 3% to market the property.
FSBO sounds like a great idea to save money. So does coupon clipping and the barter system. It’s just not very efficient. Most FSBO’s will tell you they won’t do it again – unless they did it during the boom.
The bottom line is that selling a home can be work… believe me… it’s my JOB!