There will always be people who are comfortable with selling their home without the assistance of a real estate professional. In 2019, 8% of sellers chose the For Sale By Owner approach. That’s an increased from 2018’s record low of 7%.
Here are some of the things with which you need to be comfortable if you choose the FSBO approach to selling your home.
Commissions: You will save on commissions, but not as much as you probably think. Listing commissions are negotiable, and the average commission is below the 6% you may think it is, and the listing commission includes the “co-op” commission paid to the buyer’s agent. In our market, that co-op commission is typically 2.8%.
Since most buyers choose to be represented by a buyer’s broker, you can expect that you won’t be able to save more than about 3% on commissions. Then you need to calculate whether selling without professional representation of your own is worth that reduced savings.
Net proceeds: It’s possible that you won’t get as high a price for your home without the marketing advantage of being listed on the MLS, which could attract multiple offers and even a bidding war.
Putting aside that bottom-line calculation, here are some other elements to be considered by the unrepresented seller.
Showings: How will you handle showings, including screening those who will be walking through your home? This is handled nicely by ShowingTime, the service utilized by virtually all agents in the Denver market. They make sure that only licensed agents are approved for showings. All licensed agents have been fingerprinted and passed a background check. In two decades of listing homes, I’ve never had an incident of theft or other crime associated with an agent showing of my listings.
Your time: Another consideration is the convenience of showings. Yes, you could purchase a lockbox and allow agent showings when you aren’t home, but you don’t want to give the lockbox code to buyers who don’t have an agent. Someone has to let them in.
Feedback: Another service provided by the showing service (only available to agents) is obtaining feedback after each showing and forwarding it to both seller and agent.
Disclosures: There are strict rules regarding disclosures of “adverse material conditions,” which real estate agents know well. If your home was built before 1978, there’s a 5-figure fine associated with failure to disclose possible lead-based paint hazards in your house, even if the disclosure would say there are no such hazards.
Pricing: Even in a seller’s market, an overpriced home can sit on the market for a long time and end up selling for less than if it were priced correctly in the beginning. Priced correctly, your home may attract competing offers, and an experienced agent (like us at Golden Real Estate) knows how to play those buyers against each other to get you the highest possible price.
“But it’s a seller’s market”: Yes, it’s easier in our long-running seller’s market to sell a single-family home (condos are stalling because of Covid-19), but that makes it all the more important to get your home in front of the full market to stimulate competition, which only a listing agent with access to the MLS can do for you. It’s no surprise that the number of FSBOs has fallen, not risen, because of this dynamic. Your net proceeds, even with a higher commission expense, could be much higher.