FSBO (pronounced FIZ BO)
You wouldn’t trust yourself doing a medical procedure or a complicated mechanical repair, but some people still think that selling a home themselves is going to save them more money, avoid the hassle of dealing with an agent and run smoothly. Selling a home is a complex and difficult process. There are many moving parts, multiple professionals, and a folder full of legal contracts and issues to be considered while your home moves through the process. Before it can arrive safely at the closing table there are many obstacles to jump over.
In the beginning…..
The pretty pictures and a fancy sign in the yard is literally just the beginning. Taking attractive photos with a fancy camera (or the new iPhone 13) is a great start, but its not a substitute for a professional. The sign is also only a small part of the marketing plan. Figuring out how to stage the home and get the photos in front of buyers isn’t even the most important reason for hiring an agent.
An agents job at the start of the journey is to take great photos and videos as well as find creative and efficient ways to get your home noticed in a busy marketplace. The rest of the process is a tricky down hill, triple black diamond, ski slope that can turn on a dime leaving your without the skills to reach the end of the run injury free.
Why not……
One of the first reasons I hear sellers use for doing a FSBO is so they can save money on the commission. If you look back at our videos on commissions, you know that a buyers agent receives their commission typically from the sellers. (Sellers agree to allow the agent to split their commission with a buyers agent in exchange for the buyers agent bringing and working with the buyer).
Buying FSBO
If you are a buyer looking at a FSBO, you should consider the fact that we are dealing with a seller who may or may not understand the process.
Also if the seller decides they aren’t willing to pay the buyers agent commission, that cost will fall on you. If you don’t have the funds to pay the agreed upon commission your deal may fall apart. Your lender may not have calculated this cost into your closing cost and the deal gets very complicated very quickly.
Selling FSBO
If you are a seller you are going to likely be asked to pay the buyers agent commission. You can say no, but that means the buyer is going to have to do it, and more often than not, buyers aren’t prepared financially for that additional cost. If the buyers can’t afford to pay the agents commission, there’s a good chance they are going to move on to another house. Your home is going to miss out on the benefit of marketing and local exposure. Numerous potential buyers aren’t seeing your home
The ability of a high quality agent to fight and negotiate on your behalf is worth the added cost. The money you think you are saving is often times lost in the negotiations to get you to a higher contract price. A home being sold by owner typically results in higher days on market, which cost you in the long run.
The Devil is in the details
One of the main reasons I advise people against FSBO is the amount of contracts, paperwork and the legal process can be complex . The mountain of forms that must be filled out correctly alone can be a daunting task, and without representation there is no one to guide and advise when things turn ugly. Simply filling out the disclosures incorrectly opens you up to numerous issues through the inspection process, due diligence period and closing.
GOOD agents are worth it
Let me be clear here! Good agents are worth every cent you pay them to keep your deal moving forward…..but not every agent qualifies. There are also certainly some sellers who have the experience in buying and selling homes that an agent is not necessary. If you aren’t careful in selecting a quality agent or determining if you have the skills needed, you open yourself up to a world of headaches and heartaches.
It’s not uncommon for a seller to “Agent Up” in the middle of the process because things got complicated.
I am trying to release more material. I have a goal of 52 entries in my video series “Terms Tips and Tricks” this year, but I didn’t start the written blog at the same time, so I am trying to add written blogs to those early video entries. The entire series and more can be found on my YouTube channel. If you find any value in these post, I hope you will share them with your friends and family.
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Chris Whitehurst
Inner Banks Real Estate
ChrisWhitehurst.com
252 312 2263