As an MLO, when my friends and relatives ask: What do you think about selling “By Owner”? I emphatically respond “BAD IDEA!!!!!!!!!!!!
The following is an article that outlines why better than I ever could written by one of your successful peers.
Chris Rediger is the co-founder and president of Redefy Real Estate. Learn about Chris Twitter or Facebook.
After my “shout out” I find sellers are really asking “how can I sell for less”!
As Realtors, the last thing you want is sellers grinding you because in the end they will still ask for “just little things” and you end up providing full service at a reduced commission.
So, to avoid a “commissionectomy” you have to lay out a case why your service matches the value of your commission!
The following is an article that outlines why better than I ever could written by one of your successful peers. Chris Rediger is the co-founder and president of Redefy Real Estate. Learn about Chris Twitter or Facebook.
Here’s Why
1) FSBO scams happen to both buyers & sellers with no recourse besides hiring an attorney.
Common scams include: fraudulent papers(appraisals, loan documentation), foreign buyer deposits (scammer sends too much in a bad check and then requests a refund), purchases through a 3rd-party asking for personal info.
2. Liability is All on the Seller
Everyone makes mistakes. A seller (or buyer) who doesn’t have the representation of a licensed agent pays for those mistakes.
Attorneys can close a real estate transaction, but they don’t carry errors and omissions (E&O) insurance. Let’s face it: this is a litigious society, so what homeowner wants to be a target for lawsuits?
3. Paperwork is Daunting
The 2017 NAR’s Profile of Home Buyers and Sellers showed understanding paperwork was one of the most difficult tasks for FSBOs.
Depending on the state, there are a variety of legal forms needed, including but not limited to a sales contract, property disclosures, occupancy agreements and lead paint records.
Sure, ready-made contracts can be downloaded easily enough. But does an untrained seller understand what all that means?
Would the seller know how to customize that one-size-fits-all contract?
Editor’s Note: I’ve seen successful agents at the 1st meeting simply hand a 3″ thick binder of forms and look the seller in the eye and say ‘lets go over these why we have a moment!
After the seller’s eyes quit rolling around the negotiations usually began!
Great Listing Presentation Sales Tactic!!!!!!!!!
4. Sellers can get stuck in a Bad Deal
FSBOs who sign on the dotted line and then realize an error are stuck. They have to pay the buyer (if they’re willing) to get out of or just take the deal.
Let potential clients know you can save them from that headache.
5. FSBOs Sell for Less
In 2015, FSBOs lost about 16% of the sales price with a median selling price of $210,000 (agent-assisted homes sold for $249,000).
Homeowners selling by themselves simply don’t have the time to devote to the process, don’t know the market value, don’t understand market reports and don’t properly market the property.
If the FSBO seller sold to someone he or she knew, the median dropped to $151,900 (because cousin Sue is doing them a favor and expects a deal).
6. FSBOs Spend More Time on The Market
Unless the seller knows someone, who wants to buy the home, FSBOs take longer to sell than homes listed with an agent.
For the same reasons, they can’t get the right selling price. No one is “behind the curtain” running the marketing show.
On avg, 18% of FSBOs were unable to sell in a chosen time frame last year.
7. FSBOs Lack Representation
There’s no one looking out for the homeowners who sell on their own. They have no one to call if they have a problem or a question.
8. Inspections are Problematic
Sellers who don’t know rules get stuck with unnecessary & costly repairs.
Changes in the building codes, safety violations, overzealous inspectors (secretly representing the buyer) can all lead to a seller paying more in costs to repair the home (than necessary) or the buyer walking away.
9. Marketing is Limited
FSBOs have limited resources to market their home.
The 2015 NAR Profile of Home Buyers and Sellers showed 42% rely on a yard sign, 32% rely on friends & family, & about 15% use social media.
Even paying for the MLS listing won’t be enough because there’s no incentives for an agent to bring a buyer to a FSBO.
10. Hidden Costs Add Up
The mindset for most FSBOs is saving money. Chances are, these sellers are being nickeled and dimed into a pretty big chunk of change.
They’re paying for a lot of extras (in time and $$$) : i.e. signage, flyers, photography, MLS listing, home warranty, home inspection, a wood destroying pest inspection, contracts & the list goes on.
11. Time Costs the Seller Money
The biggest cost to a homeowner is their time. You might hear the argument that it doesn’t take an agent that much time to sell a house.
And honestly, given the technology at our disposal, that’s true to an extent.
But it will take an owner a lot longer. They don’t have the expertise or the access to the resources agents have. What is their own time worth to them?
How much time will a seller spend researching the market and contracts?
Are sellers going to leave work to show a house each time there’s a showing?
Not likely!!!!!!!!
Copywrite © August, 2018 Daniel Dobbs MHM Mortgage /// All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law. For permission requests, write to the publisher, addressed “Attention: Daniel Dobbs, Author- Managing Broker Mutual Home Mortgage 500 S. Kraemer #165 Brea, Ca. 92821 Cell: 949 250-3981 Dandobbs6@gmail.com NMLS #307631 BRE #00986886