Why would anyone try to sell a home without the help of a professional, licensed, real estate broker and marketing consultant.
Of course, it’s for the same reason they’d put a “For Sale” sign on the car and advertise it on Craig’s List: the seller wants to walk away from the sale with the most money possible. That means getting the best price possible and get out of paying a commission. Simple, really.
Well…. Maybe not that simple.
For a start, FSBOs attract a certain kind of buyer. The buyer (like the seller) wants to save the cost of the commission. Sadly, they can’t both save that cost, so either the buyer or the seller is going to be frustrated and disappointed.
The For Sale by Owner seller (FSBO) has a strong notion of what the home is worth. And for a few hundred bucks, the FSBO can get the house listed on the Multiple Listing Service (MLS) through one of those Entry Only brokers providing “limited service” to the sellers, which is to say pretty much none.
But wait…. Being on the MLS only works if the brokers who see it listed there want to show it, or if buyers scanning the internet see it on one of those web sites that pick up from the MLS.
But the brokers don’t really want to encourage FSBOs, so they will only show the FSBO home if it pays a good commission, is an unusually good (i.e. low) value for their buyer, or if it fills some unique need of a unique buyer. So now the FSBO has had to lower the price and pay a commission after all. Still, maybe saving even half the commission will pay for the lower price. The FSBO might still come out at least a little ahead, especially if they have good real estate negotiation skills. You can forget the “unique” buyer – that’s a niche, and marketing to a niche is expensive, takes special marketing skills to identify the niche, and takes access to specialized media.
But how about all those buyers searching the web for a home? They’ll see your home won’t they? They’ll call, won’t they? And if someone’s home, the phone will certainly be3 answered. If not, the caller might leave a coice mail, and if the buyer’s answering when you call bqack, maybe you can find a time when you’re both available for the buyer to see the home.
If that’s not working out, you can still have open houses, right? Interestingly, traditionally, open houses don’t do much to sell a particular home. Brokers like them because it’s a chance to recruit buyers for other homes, even when the attendees decide they don’t want the home they’re looking at right then. Which they usually don’t.
More recently, though, in the hot market we’ve been in for the last few years, open houses have become part of a marketing strategy that couples a crowded open house with time pressure and perceived value of the home to generate a big sales price. In that case, the open house has to be coupled with a good marketing plan so that people know about the open house and see the house as a good value before they even arrive. Achieving that isn’t a cinch, though.
Okay, then. Back to all those web sites that your FSBO home will go to from the MLS. When a potential buyer searches a web site, they will be shown tens, or even more, of choices, depending on how broad or narrow their search criteria is, which ones they click on to “view more detail” revolves around a few critical factors.
First, is the appearance of the home in the photo -- a ve4rsion of curb appeal – coupled with the listing price displayed next to it. The house in the picture has to look like it’s worth at least the price being asked for it.
The next critical factor is whether the listing stands out in some way from the other ones above and below it. Many sites have special ways of “featuring” a listing to attract more viewers to click on it. Of course these “featured listings” cost the brokers a little more to be shown on the web site.
Another factor in whether the viewer will click on the listing is the number of photos. The number is shown before the viewer clicks. So there has to be a good number of pictures. Now, honestly, once they’ve clicked to see all those pictures, they’d better be good ones: professional quality and showing considerable detail of what the buyer will find when they actually go to the house. The internet viewer will decide, based on those pictures and their perception of the value of the property whether they want to come see the FSBO or not. If they don’t come look, they’re unlikely to buy.
Incidentally, the brokers pays for the “featured listing” and for the photos out of the listing commission, but the FSBO would pay for all that on their own, so that’s eating into the savings again.
Then there are closing costs. They may or may not be lower if you through a broker. Certainly the legal fees should be lower, because you’ll be paying a lawyer to do the chores that the broker would ordinarily do. Again, you’re eating into your savings.
I should mention that it does appear that the odds of actually selling your home are higher with a broker than an Entry Only MLS listing. In the past year, for instance, in Winchester, MA, of the Entry Only listings of single family homes, most of them (56%) were withdrawn from the market, cancelled or expired without selling. Those were on the market for an average of about two months. On the other hand, the overwhelming majority of brokered MLS single family homes in Winchester sold, with a far smaller percentage (26%) being withdrawn, cancelled or expired.
Incidentally, of the 56% of the Entry Only homes that did not sell, 40% then sold, mostly turning to the services of a broker to get it done.
My final workd on this subject, for now, is that time, literally, is money. The longer it takes to sell your home, the more it costs you. If you’re still paying a mortgage, you’ve got that going out every month. On the one hand, your home, while you own it, is appreciating every day. On the other hand, once it’s on the market, the value is more or less capped. Any amount you might get above or at the list price will decline the longer your home is on the market. So, the quicker the better. The urgency to buy can be generated early on, but is unlikely to be sustained over a long period of time. No “waiting for the right buyer.”
Real estate is simp0le but not easy. It involves a lot of professionals even if the seller doesn’t use a broker and there’s endless detail, so, except under unusual circumstances, the FSBO option is best taken only by those who are oreoared to spend their time on a lot of minutiae and who don’t need to net the most money in the shortest time. Even if a FSBO deal goes smoothly, there can be little surprises left behind to cause trouble later.